SEC Filing | Ashland Inc.

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================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003 Commission file number 1-2918 ASHLAND INC. (a Kentucky corporation) I.R.S. No. 61-0122250 50 E. RiverCenter Boulevard P. O. Box 391 Covington, Kentucky 41012-0391 Telephone Number: (859) 815-3333 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes[x] No Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes[x] No At July 31, 2003, there were 68,251,752 shares of Registrant's Common Stock outstanding. One Right to purchase one-thousandth of a share of Series A Participating Cumulative Preferred Stock accompanies each outstanding share of Registrant's Common Stock. ================================================================================

PART I - FINANCIAL INFORMATION ------------------------------ ITEM 1. FINANCIAL STATEMENTS - ------------------------------------------------------------------------------------------------------------------------------------ ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME - ------------------------------------------------------------------------------------------------------------------------------------ Three months ended Nine months ended June 30 June 30 ----------------------- ------------------------ (In millions except per share data) 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ REVENUES Sales and operating revenues $ 2,006 $ 1,997 $ 5,388 $ 5,315 Equity income 104 80 169 141 Other income 15 7 43 35 ---------- ---------- ----------- ---------- 2,125 2,084 5,600 5,491 COSTS AND EXPENSES Cost of sales and operating expenses 1,648 1,602 4,430 4,285 Selling, general and administrative expenses 290 298 870 828 Depreciation, depletion and amortization 49 52 153 153 ---------- ---------- ----------- ---------- 1,987 1,952 5,453 5,266 ---------- ---------- ----------- ---------- OPERATING INCOME 138 132 147 225 Net interest and other financial costs (31) (33) (97) (103) ---------- ---------- ----------- ---------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 107 99 50 122 Income taxes (36) (38) (17) (47) ---------- ---------- ----------- ---------- INCOME FROM CONTINUING OPERATIONS 71 61 33 75 Results from discontinued operations (net of income taxes) - Note B (1) 4 (94) 7 ---------- ---------- ----------- ---------- INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE 70 65 (61) 82 Cumulative effect of accounting change (net of income taxes) - Note C - - - (12) ---------- ---------- ----------- ---------- NET INCOME (LOSS) $ 70 $ 65 $ (61) $ 70 ========== ========== =========== ========== BASIC EARNINGS (LOSS) PER SHARE - Note A Income from continuing operations $ 1.04 $ .88 $ .48 $ 1.08 Results from discontinued operations (.02) .06 (1.38) .10 Cumulative effect of accounting change - - - (.16) ---------- ---------- ----------- ---------- Net income (loss) $ 1.02 $ .94 $ (.90) $ 1.02 ========== ========== =========== ========== DILUTED EARNINGS (LOSS) PER SHARE - Note A Income from continuing operations $ 1.03 $ .87 $ .48 $ 1.06 Results from discontinued operations (.02) .06 (1.37) .10 Cumulative effect of accounting change - - - (.16) ---------- ---------- ----------- ---------- Net income (loss) $ 1.01 $ .93 $ (.89) $ 1.00 ========== ========== =========== ========== DIVIDENDS PAID PER COMMON SHARE $ .275 $ .275 $ .825 $ .825 SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 2

- ------------------------------------------------------------------------------------------------------------------------------------ ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS - ------------------------------------------------------------------------------------------------------------------------------------ June 30 September 30 June 30 (In millions) 2003 2002 2002 - ------------------------------------------------------------------------------------------------------------------------------------ ASSETS ------ CURRENT ASSETS Cash and cash equivalents $ 112 $ 90 $ 101 Accounts receivable 1,085 1,090 1,089 Allowance for doubtful accounts (40) (34) (36) Inventories - Note A 512 456 469 Deferred income taxes 98 119 130 Current assets of discontinued operations held for sale 198 211 60 Other current assets 186 139 128 -------------- -------------- -------------- 2,151 2,071 1,941 INVESTMENTS AND OTHER ASSETS Investment in Marathon Ashland Petroleum LLC (MAP) 2,401 2,350 2,406 Goodwill 519 510 507 Asbestos insurance receivable (noncurrent portion) 398 171 168 Noncurrent assets of discontinued operations held for sale - - 146 Other noncurrent assets 345 329 380 -------------- -------------- -------------- 3,663 3,360 3,607 PROPERTY, PLANT AND EQUIPMENT Cost 2,949 2,920 2,912 Accumulated depreciation, depletion and amortization (1,725) (1,629) (1,603) -------------- -------------- -------------- 1,224 1,291 1,309 -------------- -------------- -------------- $ 7,038 $ 6,722 $ 6,857 ============== ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES Debt due within one year $ 296 $ 201 $ 302 Trade and other payables 1,235 1,256 1,225 Current liabilities of discontinued operations held for sale 28 39 23 Income taxes 16 24 53 -------------- -------------- -------------- 1,575 1,520 1,603 NONCURRENT LIABILITIES Long-term debt (less current portion) 1,564 1,606 1,600 Employee benefit obligations 493 509 400 Deferred income taxes 201 246 271 Reserves of captive insurance companies 184 166 182 Asbestos litigation reserve (noncurrent portion) 535 152 148 Noncurrent liabilities of discontinued operations held for sale - - 13 Other long-term liabilities and deferred credits 346 350 378 Commitments and contingencies - Notes E and F -------------- -------------- -------------- 3,323 3,029 2,992 COMMON STOCKHOLDERS' EQUITY 2,140 2,173 2,262 -------------- -------------- -------------- $ 7,038 $ 6,722 $ 6,857 ============== ============== ============== SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 3

- ------------------------------------------------------------------------------------------------------------------------------------ ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF CONSOLIDATED COMMON STOCKHOLDERS' EQUITY - ------------------------------------------------------------------------------------------------------------------------------------ Accumulated other Common Paid-in Retained comprehensive (In millions) stock capital earnings loss Total - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE AT OCTOBER 1, 2001 $ 69 $ 363 $ 1,920 $ (126) $ 2,226 Total comprehensive income (1) 70 18 88 Cash dividends (57) (57) Issued common stock under stock incentive plans 16 16 Repurchase of common stock (11) (11) -------------- -------------- -------------- -------------- -------------- BALANCE AT JUNE 30, 2002 $ 69 $ 368 $ 1,933 $ (108) $ 2,262 ============== ============== ============== ============== ============== BALANCE AT OCTOBER 1, 2002 $ 68 $ 338 $ 1,961 $ (194) $ 2,173 Total comprehensive income (1) (61) 76 15 Cash dividends (56) (56) Issued common stock under stock incentive plans 8 8 -------------- -------------- -------------- -------------- -------------- BALANCE AT JUNE 30, 2003 $ 68 $ 346 $ 1,844 $ (118) $ 2,140 ============== ============== ============== ============== ============== - ------------------------------------------------------------------------------------------------------------------------------------ (1) Reconciliations of net income (loss) to total comprehensive income follow. Three months ended Nine months ended June 30 June 30 -------------------------------- ---------------------------------- (In millions) 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------------------------ Net income (loss) $ 70 $ 65 $ (61) $ 70 Minimum pension liability adjustment - - 19 - Related tax expense - - (7) - Unrealized translation gains 32 26 64 17 Related tax benefit (expense) - (2) - 1 -------------- -------------- -------------- -------------- Total comprehensive income $ 102 $ 89 $ 15 $ 88 ============== ============== ============== ============== - ------------------------------------------------------------------------------------------------------------------------------------ At June 30, 2003, the accumulated other comprehensive loss of $118 million (after tax) was comprised of net unrealized translation gains of $1 million and a minimum pension liability of $119 million. SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. 4

- -------------------------------------------------------------------------------- ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE A - SIGNIFICANT ACCOUNTING POLICIES (continued) STOCK INCENTIVE PLANS As of October 1, 2002, Ashland began expensing employee stock options in accordance with Financial Accounting Standards Board (FASB) Statement No. 123 (FAS 123), "Accounting for Stock-Based Compensation," and its related amendments. Ashland elected the modified prospective method of adoption, under which compensation costs recorded in the periods ended June 30, 2003 are the same as that which would have been recorded had the recognition provisions of FAS 123 been applied from its original effective date. Results for prior periods have not been restated. Prior to October 1, 2002, Ashland accounted for stock options under Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees," and related Interpretations, and no expense was recorded. In addition to stock options, Ashland grants nonvested stock awards to key employees and directors, which are expensed over their vesting period under either APB 25 or FAS 123. The following table illustrates the effect on net income and earnings per share if FAS 123 had been applied in 2002 to all outstanding and unvested awards. - ------------------------------------------------------------------------------------------------------------------------ Three months ended Nine months ended June 30 June 30 ------------------------ ----------------------- (In millions except per share data) 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------ Net income (loss) as reported $ 70 $ 65 $ (61) $ 70 Add: Stock-based employee compensation expense included in reported net income, net of related tax effects 1 - 3 - Deduct: Total stock-based employee compensation expense determined under FAS 123 for all awards, net of related tax effects (1) (1) (3) (3) ---------- ----------- ---------- ---------- Pro forma net income (loss) $ 70 $ 64 $ (61) $ 67 ========== =========== ========== ========== Earnings (loss) per share: Basic - as reported $ 1.02 $ .94 $ (.90) $ 1.02 Basic - pro forma $ 1.02 $ .92 $ (.90) $ .97 Diluted - as reported $ 1.01 $ .93 $ (.89) $ 1.00 Diluted - pro forma $ 1.01 $ .92 $ (.89) $ .96 NOTE B - DISCONTINUED OPERATIONS Ashland is subject to liabilities from claims alleging personal injury caused by exposure to asbestos. During the quarter ended December 31, 2002, Ashland increased its reserve for asbestos claims by $390 million to cover litigation defense and claim settlement costs expected to be paid during the next ten years. The reserve was increased by an additional $30 million during the six months ended June 30, 2003, to maintain the reserve at a level adequate to cover future payments over a rolling 10-year period. Because insurance provides reimbursements for most of these costs and coverage-in-place agreements exist with the insurance companies that provide substantially all of the coverage currently being accessed, these increases in the asbestos reserve are expected to be offset in part by probable insurance recoveries valued at $250 million. The resulting $170 million pretax charge to income (net of deferred income tax benefits of $66 million) was reflected as an after-tax loss from discontinued operations of $104 million in the Statements of Consolidated Income. See Note F for further discussion of Ashland's asbestos-related litigation. 7

- -------------------------------------------------------------------------------- ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE B - DISCONTINUED OPERATIONS (CONTINUED) Ashland announced on June 30, 2003, it had signed a definitive agreement to sell the net assets of its Electronic Chemicals business and certain related subsidiaries to Air Products in a transaction valued at approximately $300 million before tax. Electronic Chemicals is a part of Ashland Specialty Chemical and provides ultra pure chemicals and other products and services to the worldwide semiconductor industry. The sale reflects Ashland's strategy to optimize its business mix and focus greater attention on the remaining specialty chemical businesses and other transportation-related and construction operations where it can achieve strategic advantage. Ashland's after-tax proceeds will be used primarily to reduce debt. On July 16, 2003, Honeywell International filed suit in a Delaware state court seeking to enjoin this transaction. Honeywell claims, among other things, that the transaction would violate the strategic alliance agreement between Air Products and GEM Microelectronic Materials, a joint venture of Honeywell and Texas Ultrapure Inc. On August 11, 2003, Teamsters Local No. 773 filed suit in a Pennsylvania federal court seeking to enjoin the transaction, claiming it violates a collective bargaining agreement concerning the Electronic Chemicals manufacturing facility in Easton, Pennsylvania. Ashland expects the transaction to be completed, although these legal proceedings may delay the projected closing date of August 29, 2003. Components of amounts reflected in the income and cash flow statements and balance sheets related to the discontinued operations of Electronic Chemicals are presented in the following table. All assets and liabilities of that business are classified as current starting with the September 30, 2002 balance sheet. - ------------------------------------------------------------------------------------------------------------------------ Three months ended Nine months ended June 30 June 30 ----------------------- ------------------------- (In millions) 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------ INCOME STATEMENT DATA Revenues $ 56 $ 56 $ 163 $ 157 Costs and expenses (51) (51) (151) (149) ---------- ---------- ----------- ----------- Operating income 5 5 12 8 Income taxes (1) (1) (2) (1) ---------- ---------- ----------- ----------- Results from discontinued operations $ 4 $ 4 $ 10 $ 7 ========== ========== =========== =========== CASH FLOW DATA Cash flows from operations $ 15 $ 13 Cash flows from investments (3) (6) ----------- ----------- Cash provided by discontinued operations $ 12 $ 7 =========== =========== June 30 September 30 June 30 2003 2002 2002 ---------------------------------------- BALANCE SHEET DATA Current assets of discontinued operations held for sale Current assets $ 52 $ 62 $ 60 Investments and other assets 26 23 - Property, plant and equipment - net 120 126 - Noncurrent assets of discontinued operations held for sale Investments and other assets - - 23 Property, plant and equipment - net - - 123 Current liabilities of discontinued operations held for sale Current liabilities 15 27 23 Noncurrent liabilities 13 12 - Noncurrent liabilities of discontinued operations held for sale - - 13 8

- -------------------------------------------------------------------------------- ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE F - LITIGATION, CLAIMS AND CONTINGENCIES (CONTINUED) During the December 2002 quarter, Ashland increased its reserve for asbestos claims by $390 million to cover the litigation defense and claim settlement costs expected to be paid during the next ten years. The reserve was increased by an additional $30 million during the six months ended June 30, 2003, to maintain the reserve at a level adequate to cover future payments over a rolling 10-year period. Prior to December 31, 2002, the asbestos reserve was based on the estimated costs that would be incurred to settle open claims. The estimates of future asbestos claims and related costs were developed with the assistance of Hamilton, Rabinovitz & Alschuler, Inc. (HR&A), nationally recognized experts in that field. Reflecting the additional provisions, Ashland's reserve for asbestos claims on an undiscounted basis amounted to $585 million at June 30, 2003, compared to $195 million at June 30, 2002. The methodology used by HR&A to project future asbestos costs was based largely on Ashland's recent experience, including claim-filing and settlement rates, disease mix, open claims, and litigation defense and claim settlement costs. Ashland's claim experience was compared to the results of previously conducted epidemiological studies estimating the number of people likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population expected to have been exposed to asbestos. Using that information, HR&A estimated the number of future claims that would be filed, as well as the related costs that would be incurred in resolving those claims. However, projecting future asbestos costs is subject to numerous variables that are extremely difficult to predict. In addition to the significant uncertainties surrounding the number of claims that might be received, other variables include the type and severity of the disease alleged by each claimant, the long latency period associated with asbestos exposure, dismissal rates, 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. Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, Ashland believes that ten years is the most reasonable period for recognizing a reserve for future costs, and that costs that might be incurred after that period are not reasonably estimable. Because insurance provides reimbursements for most of these costs and coverage-in-place agreements exist with the insurance companies that provide substantially all of the coverage currently being accessed, the current year increases in the asbestos reserve are expected to be offset in part by probable insurance recoveries valued at $250 million. At June 30, 2003, Ashland's receivable for recoveries of such costs from its insurers amounted to $423 million, of which $33 million relates to costs previously paid. Receivables from insurance companies amounted to $190 million at June 30, 2002. Ashland retained the services of Tillinghast-Towers Perrin to assist management in the estimation of probable insurance recoveries. Such recoveries are based on assumptions and estimates surrounding the available insurance coverage, including the continued viability of all solvent insurance carriers. About 35% of the estimated receivables from insurance companies at June 30, 2003, are expected to be due from Equitas Limited (Equitas) and other London companies. Of the remainder, over 90% is expected to come from companies or groups that are rated A or higher by A. M. Best. Although coverage limits are resolved in the coverage-in-place agreement with Equitas and other London companies, there is a disagreement with these companies over the timing of recoveries. The resolution of this disagreement could have a material effect on the value of insurance recoveries from those companies. In estimating the value of future recoveries at June 30, 2003, Ashland used the least favorable interpretation of this agreement and will continue to do so until such time as the disagreement is resolved. 11

- ------------------------------------------------------------------------------------------------------------------------------------ ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES OPERATING INFORMATION BY INDUSTRY SEGMENT - ------------------------------------------------------------------------------------------------------------------------------------ Three months ended Nine months ended June 30 June 30 ------------------------ ------------------------- 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------------------ APAC Construction backlog at June 30 (millions) (1) $ 1,824 $ 1,797 Hot-mix asphalt production (million tons) 9.8 11.4 21.0 25.3 Aggregate production (million tons) 8.1 8.5 20.5 22.2 Ready-mix concrete production (million cubic yards) 0.6 0.6 1.5 1.5 ASHLAND DISTRIBUTION (2) Sales per shipping day (millions) $ 11.6 $ 10.5 $ 11.1 $ 10.0 Gross profit as a percent of sales 15.1% 15.6% 15.3% 16.3% ASHLAND SPECIALTY CHEMICAL (2) Sales per shipping day (millions) $ 4.9 $ 4.5 $ 4.6 $ 4.3 Gross profit as a percent of sales 33.1% 38.0% 33.8% 37.2% VALVOLINE Lubricant sales (million gallons) 49.2 53.7 142.2 145.5 Premium lubricants (percent of U.S. branded volumes) 19.8% 17.2% 18.5% 15.7% REFINING AND MARKETING (3) Refinery runs (thousand barrels per day) Crude oil refined 951 973 878 930 Other charge and blend stocks 129 134 130 156 Refined product yields (thousand barrels per day) Gasoline 582 598 544 602 Distillates 292 308 276 298 Asphalt 76 77 69 71 Other 138 131 123 122 ----------- ---------- ---------- ----------- Total 1,088 1,114 1,012 1,093 Refined product sales (thousand barrels per day) (4) 1,346 1,351 1,311 1,299 Refining and wholesale marketing margin (per barrel) (5) $ 2.94 $ 2.18 $ 2.21 $ 1.89 Speedway SuperAmerica (SSA) Retail outlets at June 30 1,802 2,081 Gasoline and distillate sales (million gallons) 882 911 2,608 2,679 Gross margin - gasoline and distillates (per gallon) $ .1229 $ .1116 $ .1134 $ .1032 Merchandise sales (millions) (6) $ 590 $ 612 $ 1,695 $ 1,736 Merchandise margin (as a percent of sales) 23.9% 25.5% 24.4% 24.5% - ------------------------------------------------------------------------------------------------------------------------------------ (1) Includes APAC's proportionate share of the backlog of unconsolidated joint ventures. (2) 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. (3) Amounts represent 100% of MAP's operations, in which Ashland owns a 38% interest. (4) Total average daily volume of all refined product sales to MAP's wholesale, branded and retail (SSA) customers. (5) Sales revenue less cost of refinery inputs, purchased products and manufacturing expenses, including depreciation. (6) Effective January 1, 2003, SSA adopted EITF 02-16, "Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor," which requires rebates from vendors to be recorded as reductions to cost of sales. Rebates from vendors recorded in SSA merchandise sales for periods prior to January 1, 2003 have not been restated and included $38 million in the three months ended June 30, 2002; $46 million in the nine months ended June 30, 2003; and $129 million in the nine months ended June 30, 2002. 14

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------------------------------------------- RESULTS OF OPERATIONS Ashland reported income from continuing operations of $71 million for the quarter ended June 30, 2003, compared to $61 million for the quarter ended June 30, 2002. For the nine months ended June 30, 2003, Ashland reported income from continuing operations of $33 million, compared to $75 million for the nine months ended June 30, 2002. An analysis of operating income by industry segment follows. APAC CURRENT QUARTER - APAC reported operating income of $17 million for the June 2003 quarter, compared to $42 million for the June 2002 quarter. APAC continues to suffer from adverse weather that has significantly hampered construction activity. Twelve of the 14 states in APAC's operating area experienced much higher than normal rainfall for the quarter, continuing the pattern that has persisted throughout the fiscal year. In addition to hampering the overall level of construction activity, the weather conditions created significant inefficiencies in completing the construction work that APAC was still able to perform. Net construction job revenue (total revenue less subcontract costs) decreased 11% from the prior year period, while production of hot-mix asphalt declined 14% and aggregate production dropped 5%. In addition, the cost of liquid asphalt increased 15% compared to the June 2002 quarter. YEAR-TO-DATE - APAC reported an operating loss of $39 million for the nine months ended June 30, 2003, compared to operating income of $64 million for the nine months ended June 30, 2002. The decline reflects the same factors described in the current quarter comparison. Net construction job revenue declined 14%, while production of hot-mix asphalt declined 17% and production of aggregate dropped 8%. Operating expenses included a 15% increase in the cost of liquid asphalt and higher fuel and power costs. Construction backlog, which consists of work awarded and funded but not yet performed, continues to grow and was at a record high for the June quarter of $1.8 billion. APAC has completed its strategic reorganization, reducing the number of operating units to 24 from 38 and decreasing field overhead expenses by approximately $8 million per year. In addition, financial shared services were implemented for four more operating units during the quarter, bringing to 11 the total number sharing financial services. This centralization of resources, resulting from the Project PASS business redesign effort, advances APAC's competitive position as a low-cost, operationally efficient organization. ASHLAND DISTRIBUTION CURRENT QUARTER - Ashland Distribution reported operating income of $11 million for the June 2003 quarter compared to $3 million for the June 2002 quarter. Ashland Distribution continues to revitalize its business and to improve service to customers by aggressively implementing quality initiatives. Sales per shipping day increased 10% reflecting increased prices, while the gross profit percentage declined 3% reflecting higher raw material costs. YEAR-TO-DATE - Ashland Distribution reported operating income of $27 million for the nine months ended June 30, 2003, compared to $8 million for the same period of 2002. Sales per shipping day increased 11% reflecting a 6% increase in the average price per pound and a 5% increase in volumes. The gross profit percentage declined 6% reflecting higher raw material costs. A significant portion of the profits for both periods ($6 million in 2003 and $7 million in 2002) came from litigation settlements and gains on asset sales. 15

- -------------------------------------------------------------------------------- ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------------------------------------------- ASHLAND SPECIALTY CHEMICAL CURRENT QUARTER - Operating income for Ashland Specialty Chemical was $3 million in the June 2003 quarter and included an impairment charge of $10 million for a maleic anhydride production facility in Neville Island, Pa. These results compared to operating income of $20 million in the June 2002 quarter. Sales per shipping day increased 9% reflecting higher product prices. Although demand for durable goods dipped by a combined 2.7 percent in April and May, adversely affecting sales volumes, volumes improved in June. Ashland Specialty Chemical's gross profit percentage declined 13% reflecting higher raw material costs. Composite polymers was hardest hit, due to higher styrene costs. However, margins improved in June as previously announced price increases took effect. YEAR-TO-DATE - Ashland Specialty Chemical reported operating income of $21 million for the nine months ended June 30, 2003, compared to $50 million for the same period of 2002. The decline reflects the same factors described in the current quarter comparison. Sales per shipping day increased 7% reflecting increased prices. However, the gross profit percentage declined 9% reflecting higher raw material costs, especially for composite polymers. VALVOLINE CURRENT QUARTER - Valvoline reported operating income of $24 million for the June 2003 quarter compared to $25 million for the June 2002 quarter. Although overall sales volumes declined, Valvoline increased its market share in a very soft market. Premium product sales volumes increased 7 percent. Lower margins in the core lubricants business reflected higher raw material costs. Valvoline Instant Oil Change (VIOC) had a record June quarter, due in part to a 20% increase in non-oil change revenues and a 12% increase in premium oil changes. In addition, results from Valvoline International improved due to better volumes in key markets and strengthening foreign currencies. YEAR-TO-DATE - Valvoline reported operating income of $56 million for the nine months ended June 30, 2003, compared to $53 million for the same period of 2002. Results from Valvoline International improved on the strength of higher earnings in Europe, Asia and Australia. Improved earnings from VIOC reflected an 18% increase in non-oil change revenues and a 14% increase in premium oil changes. Results for the core lubricants business declined reflecting decreased lubricant volumes and lower margins due to higher raw material costs. REFINING AND MARKETING CURRENT QUARTER - Operating income from Refining and Marketing, which consists primarily of equity income from Ashland's 38% ownership interest in MAP, amounted to $100 million for the quarter ended June 30, 2003, compared to $66 million for the June 2002 quarter. Equity income from MAP's refining and wholesale marketing operations increased $12 million. Demand for petroleum products was soft in the quarter due to high crude oil prices and a weak industrial economy. However, MAP refineries operated well, and MAP's refining and wholesale marketing margin improved 76 cents per barrel over the June 2002 quarter. This improvement was partially offset by higher operating and administrative expenses. Equity income from MAP's retail operations (Speedway SuperAmerica and a 50% interest in the Pilot Travel Centers joint venture) increased $10 million, reflecting an $8 million gain on the sale of 190 Speedway SuperAmerica stores and increased product margins. The net costs of Ashland's retained refining and marketing activities declined $12 million. The June 2003 quarter included gains of $4 million on petroleum crack-spread futures contracts, while the June 2002 quarter included $7 million in fines and settlement costs related to a 1997 fire at the St. Paul Park, Minnesota refinery. 16

- -------------------------------------------------------------------------------- ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------------------------------------------- REFINING AND MARKETING (CONTINUED) YEAR-TO-DATE - Operating income from Refining and Marketing amounted to $145 million for the nine months ended June 30, 2003, compared to $111 million for the comparable 2002 period. Equity income from MAP's refining and wholesale marketing operations increased $7 million, reflecting a 32 cents per barrel increase in MAP's refining and wholesale marketing margin, partially offset by higher operating and administrative expenses. Equity income from MAP's retail operations increased $15 million, while the net costs of Ashland's retained refining and marketing activities declined $14 million, reflecting the same factors described in the current quarter comparison. CORPORATE Corporate expenses amounted to $17 million in the quarter ended June 30, 2003, compared to $24 million in the June 2002 quarter. The decline reflects the impact of Ashland's program initiated last fall to reduce general and administrative (G&A) costs by $25 million per year. Corporate expenses on a year-to-date basis amounted to $63 million in the 2003 period, compared to $61 million in the 2002 period. The increase reflects the net effect of an $8 million charge in the December 2002 quarter for severance and other transition costs related to the cost-reduction program, the expensing of employee stock options which began October 1, 2002, and the cost savings from the G&A cost reduction program. NET INTEREST AND OTHER FINANCIAL COSTS For the quarter ended June 30, 2003, net interest and other financial costs totaled $31 million, compared to $33 million for the June 2002 quarter. For the year-to-date, net interest and other financial costs amounted to $97 million in the 2003 period, compared to $103 million in the 2002 period. The decline reflects the repayment of currently maturing long-term debt with lower rate short-term debt, and reduced interest rates. DISCONTINUED OPERATIONS AND ACCOUNTING CHANGE As described in Notes B and F to the Condensed Consolidated Financial Statements, Ashland's results from discontinued operations include charges associated with estimated future asbestos liabilities less probable insurance recoveries, as well as net income from the discontinued operations of its Electronic Chemicals business. Such amounts are summarized below. - ------------------------------------------------------------------------------------------------------------------------ Three months ended Nine months ended June 30 June 30 ----------------------- ------------------------- (In millions) 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------ Asbestos-related charges (net of deferred income tax benefits) $ (5) $ - $ (104) $ - Net income of Electronic Chemicals business 4 4 10 7 ---------- ---------- ----------- ----------- Results from discontinued operations (net of income taxes) $ (1) $ 4 $ (94) $ 7 ========== ========== =========== =========== As described in Note C to the Condensed Consolidated Financial Statements, Ashland recognized an impairment loss of $12 million after income taxes related to the goodwill of Ashland Distribution, as a result of the adoption of FAS 142 as of October 1, 2001. 17

- -------------------------------------------------------------------------------- ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------------------------------------------- FINANCIAL POSITION LIQUIDITY Cash flows from operations, a major source of Ashland's liquidity, amounted to $111 million for the nine months ended June 30, 2003, compared to $7 million for the nine months ended June 30, 2002. Cash flows from Ashland's wholly owned operations were down primarily as a result of lower earnings from APAC. Cash distributions from MAP were also somewhat lower, amounting to $108 million in the 2003 period and $119 million in the 2002 period. However, income taxes paid by Ashland related to MAP's earnings were $142 million lower in the 2003 period than in the 2002 period. Ashland pays income taxes on most of its share of the taxable earnings reported by MAP in the following year, creating timing issues in Ashland's cash flows from year to year. Ashland's capital requirements for net property additions and dividends exceeded cash flows from operations by $23 million for the nine months ended June 30, 2003. 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 $350 million in borrowings. Under a shelf registration, Ashland can also issue an additional $545 million in debt and equity securities should future opportunities or needs arise. While the revolving credit agreements contain a covenant limiting new borrowings based on Ashland's stockholders' equity, these agreements would have permitted an additional $1.3 billion of borrowings at June 30, 2003. Additional permissible borrowings are increased (decreased) by 150% of any increase (decrease) in stockholders' equity. On August 7, 2003, S&P revised its outlook on Ashland to negative from stable, and lowered Ashland's commercial paper rating to A-3 from A-2. This action will materially restrict, and could at times eliminate, the availability of the commercial paper market to Ashland. S&P affirmed its investment-grade long-term ratings for Ashland at BBB. On August 8, 2003, Ashland borrowed $100 million under its 364-day revolving credit facility that matures in June 2004, to repay maturing commercial paper. Ashland will likely utilize a portion of its $250 million revolving credit facility, which also matures in June 2004, to repay additional maturing commercial paper. S&P's action does not trigger any obligations or other provisions under Ashland's financing agreements or other contractual relationships. At June 30, 2003, working capital (excluding debt due within one year) amounted to $872 million, compared to $752 million at September 30, 2002, and $640 million at June 30, 2002. This comparison is affected by the classification of all of the assets and liabilities of Electronic Chemicals as current at June 30, 2003, and September 30, 2002. 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 $74 million at June 30, 2003, $61 million at September 30, 2002, and $59 million at June 30, 2002. Liquid assets (cash, cash equivalents and accounts receivable) amounted to 73% of current liabilities at June 30, 2003, compared to 75% at September 30, 2002, and 72% at June 30, 2002. CAPITAL RESOURCES For the nine months ended June 30, 2003, property additions amounted to $84 million, compared to $130 million for the same period last year. Ashland anticipates meeting its remaining 2003 capital requirements for property additions and dividends from internally generated funds. 18

- -------------------------------------------------------------------------------- ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS - -------------------------------------------------------------------------------- CAPITAL RESOURCES (CONTINUED) Ashland's debt level amounted to $1.9 billion at June 30, 2003, compared to $1.8 billion at September 30, 2002, and $1.9 billion at June 30, 2002. Debt as a percent of capital employed amounted to 46.5% at June 30, 2003, compared to 45.4% at September 30, 2002, and 45.7% at June 30, 2002. At June 30, 2003, Ashland's debt included $292 million of floating-rate obligations, including $253 million of short-term commercial paper and $39 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 floating-rate interest costs on $289 million of third-party debt underlying those transactions. As a result, Ashland was exposed to fluctuations in short-term interest rates on $734 million of debt obligations at June 30, 2003. ASBESTOS-RELATED LITIGATION AND ENVIRONMENTAL REMEDIATION For a discussion of Ashland's asbestos-related litigation and environmental remediation matters, see Note F to the Condensed Consolidated Financial Statements. 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 Results of Operations, Capital Resources, Asbestos-Related Litigation and Environmental Remediation sections of this MD&A. Estimates as to operating performance, earnings, and scope and effect of asbestos and environmental liabilities are based upon a number of assumptions, including those mentioned in MD&A. Such estimates are also based upon internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, weather, operating efficiencies and economic conditions, such as prices, supply and demand, cost of raw materials, and legal proceedings and claims (including asbestos and environmental matters). Although Ashland believes its expectations are based on reasonable assumptions, it cannot assure the expectations reflected in MD&A will be achieved. This forward-looking information may prove to be inaccurate and actual results may differ significantly from those anticipated if one or more of the underlying assumptions or expectations proves to be inaccurate or is unrealized, or if other unexpected conditions or events occur. Other factors and risks affecting Ashland are contained in Risks and Uncertainties in Note A to the Consolidated Financial Statements in Ashland's 2002 Annual Report and in Ashland's Form 10-K for the fiscal year ended September 30, 2002, as amended. Ashland undertakes no obligation to subsequently update or revise these forward-looking statements. 19

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Ashland's market risk exposure at June 30, 2003 is generally consistent with the types and amounts of market risk exposures presented in Ashland's Form 10-K for the fiscal year ended September 30, 2002. ITEM 4. CONTROLS AND PROCEDURES (a) As of the end of the period covered by this quarterly report, Ashland, under the supervision and with the participation of its management, including Ashland's Chief Executive Officer and its Chief Financial Officer, evaluated the effectiveness of Ashland's disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) promulgated under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective. (b) There were no significant changes in Ashland's internal control over financial reporting, or in other factors, that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, Ashland's internal control over financial reporting. 20

PART II - OTHER INFORMATION - -------------------------------------------------------------------------------- ITEM 1. LEGAL PROCEEDINGS ENVIRONMENTAL PROCEEDINGS - As of June 30, 2003, 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 100 waste treatment or disposal sites. These sites are currently subject to ongoing investigation and remedial activities, overseen by the United States Environmental Protection Agency 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. For additional information regarding environmental matters and reserves, see Note F to the Condensed Consolidated Financial Statements. ASBESTOS-RELATED LITIGATION - Ashland is subject to liabilities from claims alleging personal injury caused by exposure to asbestos. For additional information regarding liabilities arising from asbestos-related litigation, see Note F to the Condensed Consolidated Financial Statements. 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 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 5. OTHER INFORMATION On June 30, 2003, Ashland filed a Form 8-K disclosing that it had signed a definitive agreement to sell the net assets of its Electronic Chemicals business and certain related subsidiaries to Air Products. On August 11, 2003, Teamsters Local Union No. 773 in Allentown, Pennsylvania ("Union") filed suit against Ashland in the United States District Court for the Eastern District of Pennsylvania based upon an alleged breach of a collective bargaining agreement between Ashland and the Union. The collective 21

bargaining agreement at issue concerns Ashland's Electronic Chemicals manufacturing facility in Easton, Pennsylvania. The lawsuit seeks, among other remedies, a preliminary and permanent injuction preventing the consumation of Air Products' proposed purchase of the net assets of Ashland's Electronic Chemicals business and certain related subsidiaries. Honeywell International has also filed suit in a Delaware state court seeking to enjoin this proposed transaction, as was described in Ashland's Form 8-K filed July 18, 2003. Ashland still expects the proposed transaction to be completed, although the current legal proceedings may delay the projected closing date of August 29, 2003. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits -------- 10.1 Ashland Inc. Deferred Compensation Plan 10.2 Ashland Inc. Deferred Compensation Plan for Non-Employee Directors 10.3 Eleventh Amended and Restated Ashland Inc. Supplemental Early Retirement Plan for Certain Employees 10.4 Ashland Inc. Nonqualified Excess Pension Benefit Plan - 2003 Restatement 12 Computation of Ratio of Earnings to Fixed Charges. 31.1 Certificate of James J. O'Brien, Chief Executive Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certificate of J. Marvin Quin, Chief Financial Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certificate of James J. O'Brien, Chief Executive Officer of Ashland, and J. Marvin Quin, Chief Financial Officer of Ashland, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350. (b) Reports on Form 8-K ------------------- During the quarter ended June 30, 2003, and between such date and the filing of this Form 10-Q, Ashland filed or furnished the following reports on Form 8-K: (1) Form 8-K dated April 22, 2003 reporting Ashland's second quarter results. (2) Form 8-K dated May 2, 2003 containing a Regulation FD disclosure. (3) Form 8-K dated May 23, 2003 containing a Regulation FD disclosure. (4) Form 8-K dated June 27, 2003 containing a Regulation FD disclosure. (5) Form 8-K dated June 30, 2003 reporting the execution of an agreement to sell the net assets of Ashland's Electronic Chemicals business and certain related subsidiaries. (6) Form 8-K dated July 18, 2003 reporting the filing of a lawsuit by a third party seeking, among other remedies, a preliminary and permanent injunction preventing the consummation of the proposed sale of the net assets of Ashland's Electronic Chemicals business and certain related subsidiaries. (7) Form 8-K dated July 22, 2003 reporting Ashland's third quarter results. (8) Form 8-K dated July 23, 2003 containing a Regulation FD disclosure. 22

SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Ashland Inc. ------------------------------------------ (Registrant) Date: August 13, 2003 /s/ J. Marvin Quin ------------------------------------------ J. Marvin Quin Senior Vice President and Chief Financial Officer (on behalf of the Registrant and as principal financial officer) EXHIBIT INDEX Exhibit No. Description - ------- ----------------------------------------------------------------------- 10.1 Ashland Inc. Deferred Compensation Plan 10.2 Ashland Inc. Deferred Compensation Plan for Non-Employee Directors 10.3 Eleventh Amended and Restated Ashland Inc. Supplemental Early Retirement Plan for Certain Employees 10.4 Ashland Inc. Nonqualified Excess Pension Benefit Plan - 2003 Restatement 12 Computation of Ratio of Earnings to Fixed Charges. 31.1 Certificate of James J. O'Brien, Chief Executive Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certificate of J. Marvin Quin, Chief Financial Officer of Ashland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certificate of James J. O'Brien, Chief Executive Officer of Ashland, and J. Marvin Quin, Chief Financial Officer of Ashland, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, U.S.C. Section 1350. 23

Exhibit 10.1 ASHLAND INC. DEFERRED COMPENSATION PLAN (Amended and Restated as of April 1, 2003) 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) "Employee Savings Plan" means the Ashland Inc. Employee Savings Plan, as it now exists or as it may hereafter be amended. (r) "Excess Payments" means payments made to a Participant pursuant to the Plan and the Excess Plan. (s) "Excess Plan" means the Ashland Inc. Nonqualified Excess Benefit Pension Plan, as it now exists or as it may hereafter be amended. (t) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(u) "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. (v) "Fiscal Year" means that annual period commencing October 1 and ending the following September 30. (w) "In-Service Account" means the account(s) to which the Participant's Deferred Compensation is credited and from which, pursuant to Section 11, distributions are made. (x) "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. (y) "Plan" means this Ashland Inc. Deferred Compensation Plan as it now exists or as it may hereafter be amended. (z) "Retirement Account" means the account(s) to which the Participant's Deferred Compensation is credited and from which, pursuant to Section 11, distributions are made. (aa) "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. (bb) "SERP Payments" means payments made to a Participant pursuant to the Plan and the SERP. (cc) "Stock Unit(s)" means the share equivalents credited to the Common Stock Fund of a Participant's Compensation Account pursuant to Section 6. (dd) "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 10. 7. WITHDRAWAL - 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. WITHDRAWAL - GOOD REASON (a) Availability of Withdrawal Prior to Retirement. Upon the written request of a Participant or a Participant's legal representative and a finding that good reason exists for early withdrawal of some or all of the Participant's account balance, the Committee, in its sole discretion, may authorize 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, provided the conditions specified in Sections 8(b), 8(c), 8(d) and 8(e) hereof are satisfied. It is intended that the Committee shall deem requests for early withdrawal for purposes similar to the following to constitute "good reason": (a) the purchase of a new home; (b) education expenses; or (c) charitable contributions.

(b) Forfeiture Penalty. In the event of a withdrawal pursuant to Section 8(a), the Participant shall forfeit from such Compensation Account an amount equal to 5% of the amount of the withdrawal. The forfeited amount shall be deducted from the Compensation Account prior to giving effect to the requested withdrawal. 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. (c) Minimum Withdrawal. In no event shall the amount withdrawn in accordance with Section 8(a) be less than $50,000, or the entire balance of the Participant's Compensation Account immediately prior to the withdrawal, whichever is less. The withdrawal must be taken in increments of $25,000, except to the extent that the Participant's Compensation Account balance is less than $50,000 immediately prior to the withdrawal, and, in such an event, the Participant must withdraw the entire Compensation Account balance. (d) Suspension from Deferrals. In the event of a withdrawal pursuant to Section 8(a), a Participant who is otherwise eligible to make deferrals of Compensation under the 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; however, during this period of suspension Participants shall be allowed to continue to defer enough compensation into the Plan to allow them to receive the company match they would otherwise receive under the Employee Savings Plan but for the dollar limitations for allowable contributions to such plan. (e) Suspension from Withdrawals. Participants shall be prohibited from requesting a second withdrawal under Section 8(a) for a period of 60 months following any withdrawal under Section 8(a). 9. WITHDRAWAL - 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 9(c), 9(d) and 9(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 9(c) and 9(e) hereof are satisfied. (c) Forfeiture Penalty. In the event of a withdrawal pursuant to Section 9(a), or an accelerated distribution pursuant to Section 9(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 9(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 9(a) or 9(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; however, during this period of suspension, Participants shall be allowed to continue to defer enough compensation into the Plan to allow them to receive the company match they would otherwise receive under the Employee Savings Plan but for the dollar limitations for allowable contributions to such plan. 10. 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 12 hereof. 11. 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 fifteen 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) Request to Change in Distribution of Compensation Account. A Participant will be allowed to request a change in his or her Election as to the distribution of Deferred Compensation of his or her Retirement Account for all amounts previously deferred pursuant to such Election. Any such request shall not be effective without the approval of the Committee or the Company, which approval shall be in their sole discretion. Such request 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 request a change to his or her Election as to the distribution of Deferred Compensation in his or her In-Service Account(s) except as otherwise set forth in Sections 7, 8 and 9. 12. 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. 13. 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 13 may not be amended after a Change in Control occurs without the written consent of a majority in number of Participants.

14. 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 14. 15. 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. 16. 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. 17. 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 April 1, 2003.

Exhibit 10.2 ASHLAND INC. DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS (Amended as of April 1, 2003) 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" means the Governance and Nominating Committee 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, 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. 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. 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 5. 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, which may include a Common Stock Fund, as elected by the Participant under the terms of Article III, Section 5. (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. WITHDRAWAL - 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 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 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, or the Company'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, the Participant shall abstain from the Committee's determination as to whether the payment shall be made.

3. WITHDRAWAL - GOOD REASON (a) Availability of Withdrawal Prior to Retirement. Upon the written request of a Participant or a Participant's legal representative and a finding that good reason exists for early withdrawal of some or all of the Participant's account balance, the Committee may authorize 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 Participant, provided the conditions specified in subsections (b), (c), (d), and (e) of this Article III, Section 3, are satisfied. It is intended that the Committee shall deem requests for early withdrawal for purposes similar to the following to constitute "good reason": (a) the purchase of a new home; (b) education expenses; or (c) charitable contributions. If the Participant requesting such a payment is a member of the Committee, the Participant shall abstain from the Committee's determination as to whether the payment shall be made. (b) Forfeiture Penalty. In the event of a withdrawal pursuant to subsection (a) of this Article III, Section 3, the Participant shall forfeit from such Deferral Account an amount equal to 5% of the amount of the withdrawal. The forfeited amount shall be deducted from the Deferral Account prior to giving effect to the requested withdrawal. 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. (c) Minimum Withdrawal. In no event shall the amount withdrawn in accordance with subsection (a) of this Article III, Section 3 be less than $50,000, or the entire balance of the Participant's Deferral Account immediately prior to the withdrawal, whichever is less. The withdrawal must be taken in increments of $25,000, except to the extent that the Participant's Deferral Account balance is less than $50,000 immediately prior to the withdrawal, and, in such an event, the Participant must withdraw the entire Deferral Account balance. (d) Suspension from Deferrals. In the event of a withdrawal pursuant to subsection (a) of this Article III, Section 3, a Participant who is otherwise eligible to make deferrals of Fees under the 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 Years of the Plan shall be void and of no effect. (e) Suspension from Withdrawals. Participants shall be prohibited from requesting a second withdrawal under subsection (a) of this Article III, Section 3 for a period of 60 months following any withdrawal under subsection (a) of this Article III, Section 3. 4. WITHDRAWAL - 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 4 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 4 are satisfied.

(c) Forfeiture Penalty. In the event of a withdrawal pursuant to subsection (a) of this Article III, Section 4, or an accelerated distribution pursuant to subsection (b) of this Article III, Section 4, 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 4 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 4, 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. 5. 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. An effective election to defer Fees may not be revoked or modified except as otherwise determined by the Company or the Committee 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 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 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.

6. DISTRIBUTION (a) Deferral Account. In accordance with the Participant's Election and as prescribed by the Committee, 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, 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 fifteen years following the date of the Participant's Termination. (b) Request to Change in Distribution of Deferral Account. A Participant will be allowed to request a change in his or her Election as to the distribution of Deferred Compensation of his or her Deferral Account for all amounts previously deferred pursuant to such Election. Any such request shall not be effective without the approval of the Committee or the Company, which approval shall be in their sole discretion. 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, such Participant shall abstain from the Committee's decision to approve or disapprove such change. 7. 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. 8. 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 8 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 may amend, alter or terminate this Plan at any time without the prior approval of the Directors; provided, however, that the Committee 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, 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 April 1, 2003.

                                                                Exhibit 10.3
                          ELEVENTH AMENDED AND RESTATED
                                  ASHLAND INC.
                       SUPPLEMENTAL EARLY RETIREMENT PLAN
                              FOR CERTAIN EMPLOYEES
                     JULY 1, 2003 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 Eleventh  Amended and Restated  Ashland  Inc.  Supplemental  Early
Retirement  Plan for Certain  Employees is amended and  restated  effective
July 1, 2003.  This amended and restated Plan supercedes all prior versions
of this Plan  that  were  effective  on or  before  July 1, 2003  regarding
Effective  Retirement Dates that occur on or after such date, except as may
otherwise  be provided  herein.  Employees  on June 30, 2003 that are in an
employment classification that potentially makes them eligible for the Plan
and that - are at least  age 55 on June 30,  2003;  or the sum of whose Age
and Continuous Service is 80 (hereinafter  called Transition  Participants)
shall remain subject to the terms of the Plan in effect before July 1, 2003
addressing the calculation and amount of benefits.  These Employees  shall,
however,  be subject to the other  changes  that are  effective  on July 1,
2003,  such as those  addressing  the vesting of benefits and the change to
the  Effective  Retirement  Date.  The  rights  and  obligations  of former
Employees  receiving Plan benefits before July 1, 2003 shall be governed by
the terms of the Plan in effect at the time of each such former  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 "CONTINUOUS SERVICE" - means Continuous Service as defined in the
Ashland Inc. and Affiliates  Pension Plan,  except as the  determination of
Continuous Service is modified for purposes of this Plan.

     2.08  "EFFECTIVE  RETIREMENT  DATE" - means:  (a) AFTER JUNE 30, 2003.
After June 30, 2003, the Effective Retirement Date of an Employee that is a
Participant  under Section 3.01 is whichever of the following  applies,  so
long as the Participant has at least five years of Continuous Service.  (1)
The Effective  Retirement  Date is the first day of the month following the
date a Participant incurs a Termination of Employment - (i) on or after the
date the sum of the Participant's Age and Continuous Service is 80; or (ii)
on or after the date the  Participant  attains  Age 55.  (2) The  Effective
Retirement  Date of a Participant  that incurs a Termination  of Employment
before  the  dates  specified  in (1)  above is the  first day of the month
following the date the  Participant  attains Age 55.

     (b) CHANGE IN CONTROL. The Effective Retirement Date in the event of a
Change  in  Control  of a  Participant  considered  to be a  Level  I or II
participant  in the  Incentive  Compensation  Plan  who  has an  Employment
Agreement  shall  be  the  first  day  of  the  month  following  (i)  such
Participant's  termination  for  reasons  other  than  "Cause" or (ii) such
Participant's  resignation for "Good Reason." The Effective Retirement Date
in the event of a Change in Control  of a  Participant  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  Participant's  termination  for
reasons other than "Cause". For Participant's who do not have an Employment
Agreement  with Ashland,  "Cause" shall have the meaning given to that word
in Section  3.02.  In the event a Change in Control  occurs  after June 30,
2003, all Participants  shall be completely  vested in their Plan benefits,
regardless of the number of their years of Continuous Service

     2.09  "EMPLOYEE" - means,  effective after June 30, 2003, a common law
employee of Ashland.

     2.10 "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.

     2.11 "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 Effective  Retirement Dates after June
30, 2003, the calculation of the eighty-four month period shall be measured
back from the Participant's Termination of Employment that is nearest to or
which is coincident with the  Participant's  Effective  Retirement Date. If
the Participant  becomes classified below a Level V Employee after June 30,
2003 and before the  Termination of Employment  identified in the preceding
sentence, then the date of such change in classification is substituted for
the said  Termination  Date.  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. The bonus paid that
is used compute the average  described in this Section 2.11 shall only be a
bonus that is paid to the Participant when such Participant is considered a
Level III, IV or V participant in the Incentive Compensation Plan.

     2.12  "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 Effective Retirement Dates after
June 30, 2003,  the  calculation of the  eighty-four  month period shall be
measured back from the  Participant's  Termination  of  Employment  that is
nearest  to  or  which  is  coincident  with  the  Participant's  Effective
Retirement Date, provided that the Termination of Employment occurred after
June 30,  2003.  If the  Participant  becomes  classified  below a Level II
Employee  after  June 30,  2003 and before the  Termination  of  Employment
identified  in the  preceding  sentence,  then the date of such  change  in
classification  is  substituted  for the said  Termination  Date. 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  2.11. 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. The total compensation
paid that is used compute the average  described in this Section 2.12 shall
only be  total  compensation  that is paid  to the  Participant  when  such
Participant  is  considered a Level I or II  participant  in the  Incentive
Compensation Plan.

     2.13 "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.

     2.14 "PARTICIPANT" - means for Effective  Retirement Dates before July
1, 2003 an Employee who was approved for participation in the Plan pursuant
to Article III or Section 5.06, as they existed at the applicable time. For
Effective  Retirement  Dates  after  June 30,  2003,  Participant  means an
Employee that meets the applicable  requirements of Article III and who has
not incurred a Termination of Employment  for Cause,  as defined in Section
3.02. A former  Employee that did not incur a Termination of Employment for
Cause and who has a benefit  being paid or payable  from the Plan is also a
Participant.

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

     2.16  "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  2.16,  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.  Effective July 1, 2003, Service shall be calculated based
on the rules for calculating  Periods of Service under the Ashland Inc. and
Affiliates Pension Plan, except as the determination of Service is modified
for purposes of this Plan.

     2.17  "TERMINATION  OF EMPLOYMENT" - means the date an Employee ceases
to be an Employee of Ashland.

ARTICLE III.      PARTICIPATION IN PLAN.
- -----------       ---------------------

     Eligibility for benefits shall be determined as follows:

3.01     PARTICIPATION AFTER JUNE 30, 2003

     Effective  after  June  30,  2003,  approval  shall  no  longer  be  a
prerequisite  for an  Employee  to become a  Participant  in the Plan.  All
Employees  classified on the records of Ashland on or after July 1, 2003 as
a Level I, II, III, IV or V Employee  or under any  equivalent  designation
shall be Participants  in the Plan.  After earning five years of Continuous
Service, whether such service is in whole or in part before July 1, 2003 or
after  June 30,  2003,  a  Participant  shall be  completely  vested in the
applicable benefit under Plan. The determination of whether a Level III, IV
or V Employee  receives a reduced  benefit for  commencement  before age 62
under Section 5.02(c) is made based on the Employee's  deemed status on the
Effective  Retirement  Date.  Notwithstanding  such vesting,  a Participant
forfeits  the  right  to  receive  any  benefit  under  this  Plan  if  the
Participant  incurs a Termination  of Employment  for Cause,  as defined in
Section 3.02. A Participant  may also forfeit the right to the Plan benefit
and may have to repay a prior  distribution  pursuant to the  provisions of
Section 4.04.

3.02     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 3.02,  "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.

3.03     AUTOMATIC VESTING 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 completely vested in their benefits,  regardless of
the number of their years of Continuous Service.

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  after a Change in Control.  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.        RETIREMENT INCOME AND OTHER BENEFITS.
- ---------         ------------------------------------
5.01     LEVELS I AND II.

     The Transition  Participants  described in Section 1.2 that are deemed
to be Level I or II participants under the Incentive  Compensation Plan are
eligible to receive Annual Retirement Income equal to:

(a) PRE-AGE 62 BENEFIT

     A  Transition  Participant  who retires  under this Plan,  including a
Transition  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  Transition
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  Transition  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  Transition  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  Transition  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 Transition Participant's Annual Retirement Income shall be equal
to 50% of Final Average Compensation;  provided, however, that in the event
such  Transition  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  Transition
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  Transition  Participant's  benefit under the Ashland Inc. and
Affiliates  Pension  Plan  (the  "Pension  Plan")  (assuming  50%  of  such
Transition  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  Transition  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  Transition  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 Transition  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 Transition 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  Transition
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,  if
applicable.  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
(if applicable) 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 (if applicable) 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 SEPARATION FROM                           NUMBER OF YEARS
                        EMPLOYMENT                                           (THE APPLICABLE AMOUNT)
                                                          
- ------------------------------------------------------------ ---------------------------------------------------------
Up to 5 years                                                3 months
- ------------------------------------------------------------ ---------------------------------------------------------
More than 5 and up to 10 years                               6 months
- ------------------------------------------------------------ ---------------------------------------------------------
More than 10 and up to 15 years                              1 year
- ------------------------------------------------------------ ---------------------------------------------------------
More than 15 and up to 20 years                              1 year and 6 months
- ------------------------------------------------------------ ---------------------------------------------------------
More than 20 years                                           2 years
- ------------------------------------------------------------ ---------------------------------------------------------

     These  additions  to  Age  and  Service  shall,  except  as  otherwise
provided,  apply for purposes of computing the single life annuity  payment
(if applicable) 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 (if applicable) 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  (if   applicable)  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.

     (e) BENEFIT AFTER JUNE 30, 2003. Subject to the applicable  provisions
of paragraph (d) above,  the vested benefit payable to a Participant on the
Effective  Retirement  Date for the  period  such  Participant  was  deemed
classified as a Level I or II  participant  in the  Incentive  Compensation
Plan is equal to 25% of Final Average  Compensation  multiplied by years of
Service  not to  exceed  20 years of  Service.  Service  includes  full and
fractional years. There is no reduction for commencement  before age 62 and
there is no increase for commencement  after age 62. The normal form of the
benefit so computed is a single  lump sum  payment.  The benefit so payable
shall be reduced by the actuarially  equivalent (as defined below) lump sum
benefit from the following  plans from which the Participant is entitled to
a distribution:

     (1) the Ashland Inc. and Affiliates  Pension Plan (the "Pension Plan")
(assuming  50% of such  Participant's  account - if any - 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);

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

     (3) the benefit  under the Ashland Inc.  Nonqualified  Excess  Benefit
Pension Plan; and

     (4)  the  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%.

     Effective  for  benefits  payable  to any  Participant  that  is not a
Transition Participant,  actuarial equivalence shall be determined using an
interest  rate  assumption  of 8% and using the Section  415/417  Mortality
Table  in  the  Ashland  Inc.  and  Affiliates   Pension  Plan.   Actuarial
equivalence shall be determined as of the Effective Retirement Date.

     (f) CHANGES IN STATUS.

     (1) Subject to the  applicable  provisions of paragraph  (d) above,  a
Participant  that earned a benefit  under this  Section  5.01 and that also
earned a benefit  under  Section 5.02 shall  receive the greater of the two
benefits produced.

     (2) If a Participant that earns a benefit  hereunder is not considered
to  be a  Level  I,  II,  III,  IV or V  participant  under  the  Incentive
Compensation Plan on the earlier of the Participant's  Effective Retirement
Date or Termination of Employment,  then the Service after such Participant
ceased to be considered a Level I, II, III, IV or V  participant  under the
Incentive  Compensation Plan shall be disregarded for purposes of computing
the benefit  payable under the Plan.  In that event,  the only Service that
shall be counted for purposes of computing  the benefit  payable  under the
Plan shall be the Service the Participant  earned while  considered to be a
Level I, II,  III, IV or V  participant  under the  Incentive  Compensation
Plan.  Notwithstanding  anything in the foregoing to the  contrary,  such a
Participant  shall be credited with a minimum of five years of Service,  so
long as such Participant has at least five years of Continuous Service.

     5.02 LEVELS III, IV AND V.

     (a) GENERAL

     The Annual Retirement Income of a Transition Participant as defined in
Section 1.2  (including a Transition  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
the Transition  Participant's Final Average Bonus; provided,  however, that
in the event such Transition 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 Transition  Participant may
elect to  commence  benefits  under  this  Plan  upon his or her  Effective
Retirement  Date, there shall be an actuarial  adjustment  (consistent with
that applied under Ashland's  qualified  pension plan, as from time to time
in effect) for  Participants  receiving  benefits  under this  Section 5.02
whose Effective Retirement Date is prior to age 62.

     (b) BENEFIT AFTER A CHANGE IN CONTROL

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


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

     These  additions  to  Age  and  Service  shall,  except  as  otherwise
provided,  apply for purposes of computing the single life annuity  payment
(if applicable) 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 (if
applicable)  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 (if applicable) 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.

     (c) BENEFIT AFTER JUNE 30, 2003. Subject to the applicable  provisions
of paragraph (b) above,  the vested benefit payable to a Participant on the
Effective  Retirement  Date for the  period  such  Participant  was  deemed
classified  as  a  Level  III,  IV  or  V  participant   in  the  Incentive
Compensation  Plan is equal to 25% of Final  Average  Bonus  multiplied  by
years of Service not to exceed 20 years of Service.  Service  includes full
and fractional years. There is no reduction for commencement  before age 62
for  Participants  deemed  classified  as a Level  III  participant  in the
Incentive  Compensation Plan at the Effective  Retirement Date. There is no
increase for  commencement  after age 62 for any  Participant.  There is an
actuarial  reduction  to  the  benefit  of a  Participant  that  is  deemed
classified  as a Level IV or V participant  in the  Incentive  Compensation
Plan at the Effective  Retirement  Date. The actuarial  reduction  shall be
made on the same basis as in the Ashland Inc. and  Affiliates  Pension Plan
for the  early  commencement  of a  benefit  in  Articles  5, 6,  and 7, as
applicable.  The appropriate  actuarial reduction shall be determined as of
the Effective  Retirement  Date. The normal form of the benefit so computed
under this paragraph (c) is a single lump sum payment.

     (d) CHANGES IN STATUS.

     (1) Subject to the  applicable  provisions of paragraph  (b) above,  a
Participant that earned a benefit under Section 5.02 and that also earned a
benefit  under  Section 5.01 shall  receive the greater of the two benefits
produced.

     (2) If a Participant that earns a benefit  hereunder is not considered
to  be a  Level  I,  II,  III,  IV or V  participant  under  the  Incentive
Compensation Plan on the earlier of the Participant's  Effective Retirement
Date or Termination of Employment,  then the Service after such Participant
ceased to be considered a Level I, II, III, IV or V  participant  under the
Incentive  Compensation Plan shall be disregarded for purposes of computing
the benefit  payable under the Plan.  In that event,  the only Service that
shall be counted for purposes of computing  the benefit  payable  under the
Plan shall be the Service the Participant  earned while  considered to be a
Level I, II,  III, IV or V  participant  under the  Incentive  Compensation
Plan.  Notwithstanding  anything in the foregoing to the  contrary,  such a
Participant  shall be credited with a minimum of five years of Service,  so
long as such Participant has at least five years of Continuous Service.

     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  who  makes  an  election  under  Section
5.04(b)(2)  shall make such  election  by the earlier of - (1) the date six
months  prior  to  Participant's  Effective  Retirement  Date;  or (2)  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 Except for the Transition  Participants  described
in Section 1.2, the normal form of distribution for the benefit provided by
the Plan shall be a single lump sum payment,  computed under the applicable
provisions of Article V. A  Participant's  benefit is paid as a lump sum on
the  Effective  Retirement  Date  (or  as  soon  thereafter  as  reasonably
possible),  unless a different election is made by the Participant pursuant
to  rules in the  Plan  and  rules  prescribed  by  Ashland.  A  Transition
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  Transition
Participant  shall be computed on the basis of the  actuarially  equivalent
present  value of such  Transition  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 Transition  Participant's  Effective  Retirement Date, or at such later
date as Ashland or its delegate may determine, in its sole discretion.

     (2) LUMP SUM  DEFERRAL  OPTION A  Participant  (including a Transition
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  or Transition  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. In the case of a Transition Participant,  actuarial equivalence
is  determined on the basis of the  applicable  actuarial  assumptions  and
other  relevant  provisions  used for the same in the Pension  Plan. In the
case of all other Participants,  actuarial  equivalence is determined using
the assumptions identified in Section 5.01(e).

     (4) JOINT AND  SURVIVOR  INCOME  OPTION A  Participant  or  Transition
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) In the case of a Transition Participant,  actuarial equivalence is
determined on the basis of the applicable  actuarial  assumptions and other
relevant  provisions  used for the same in the Pension Plan. In the case of
all other  Participants,  actuarial  equivalence  is  determined  using the
assumptions identified in Section 5.01(e).

     (5)  PERIOD   CERTAIN   INCOME  OPTION  A  Participant  or  Transition
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  for  Transition  Participants  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.  In the  case  of  all  other  Participants,  actuarial
equivalence  is  determined  using the  assumptions  identified  in Section
5.01(e).

     5.05. PAYMENT OF SMALL AMOUNTS

     Unless a Transition  Participant or 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 a Participant  receiving Annual Retirement Income benefits dies 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 a Participant while an Employee
dies while in active service with Ashland

     (1) at a time  when  the  Participant  is a Level I or II  participant
under  the  Incentive   Compensation   Plan,   regardless  of  whether  the
Participant is vested; or

     (2) after becoming  vested and eligible to receive a distribution  but
for not having  incurred a Termination of Employment but prior to making an
election  pursuant to Section 5.04(a) and said  Participant is a Level I -V
participant under the Incentive Compensation Plan; then such Employee shall
be deemed:

     (i) 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;  and

     (ii) to have  commenced  such benefit one (1) day prior to the date of
the Employee's death.

     The surviving  spouse  entitled to a benefit under this  paragraph (b)
may commence the benefit as of the first day of a month. Such benefit shall
be distributed as an actuarially  equivalent lump sum using the assumptions
for actuarial  equivalence in Section 5.01(e). The benefit must commence as
soon as possible after the deceased Participant would have attained age 62.
If the Participant were 62 or older at death,  then the distribution to the
surviving  spouse must  commence  as soon as  possible.  Distributions  are
subject to rules  prescribed by Ashland from time to time.

     (c) In the event a  Participant  dies after  making an election  under
Section  5.04(a) but prior to his or her Effective  Retirement  Date,  then
such Participant  shall be deemed to have commenced  distributions  one (1)
day prior to the date of death and payment shall be made under this Plan in
accordance with the Participant's election.

     5.07  PARTICIPATION  IN OTHER BENEFITS After the Effective  Retirement
Date, a Participant may continue to participate in the benefits  offered by
Ashland  to former  Employee's  and  retiree's  similarly  situated  to the
Participant.  Ashland  reserves all rights to change those  benefits at any
time,  including the right to terminate them. 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 and shall be completely vested in his or
her benefit.  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 and in  connection
with a division of property  under a domestic  relations  proceeding  under
state law, no right or interest of the  Participants  under this Plan shall
be subject to involuntary alienation, assignment or transfer of any kind. A
Participant may voluntarily assign the Participant's rights under the Plan.
Ashland,  the Board,  the  Committee and any of their  delegates  shall not
review,  confirm,  guarantee or otherwise  comment on the legal validity of
any voluntary  assignment.  Ashland and its  delegates may review,  provide
recommendations  and approve  submitted  domestic  relations  orders  using
procedures  similar  to those that apply to  qualified  domestic  relations
orders under the qualified pension plans sponsored by Ashland.

     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.

     7.07 (a) INITIAL  CLAIM - NOTICE OF DENIAL.  If any claim for benefits
(within the meaning of section 503 of ERISA) is denied in whole or in part,
Ashland  (which  shall  include  Ashland or its  delegate  throughout  this
Section 7.07) will provide written  notification of the denied claim to the
Participant or beneficiary, as applicable,  (hereinafter referred to as the
claimant)  in a  reasonable  period,  but not later  than 90 days after the
claim  is  received.  The  90-day  period  can be  extended  under  special
circumstances.  If  special  circumstances  apply,  the  claimant  will  be
notified  before the end of the 90-day period after the claim was received.
The notice will  identify the special  circumstances.  It will also specify
the expected date of the decision.  When special  circumstances  apply, the
claimant must be notified of the decision not later than 180 days after the
claim is received.

     The written decision will include:

     (i) The reasons for the denial.

     (ii)  Reference to the Plan  provisions  on which the denial is based.
The reference need not be to page numbers or to section headings or titles.
The reference  only needs to  sufficiently  describe the provisions so that
the provisions could be identified based on that description.

     (iii) A description of additional  materials or information  needed to
process the claim.  It will also explain why those materials or information
are needed.

     (iv) A description  of the  procedure to appeal the denial,  including
the time limits applicable to those procedures. It will also state that the
claimant may file a civil action under  section 502 of ERISA (ERISA - ss.29
U.S.C. 1132). The claimant must complete the Plan's appeal procedure before
filing a civil action in court.

     If the claimant  does not receive  notice of the decision on the claim
within the prescribed  time periods,  the claim is deemed  denied.  In that
event the claimant may proceed with the appeal procedure described below.

     (b) APPEAL OF DENIED CLAIM.  The claimant may file a written appeal of
a denied claim with Ashland in such manner as determined from time to time.
Ashland is the named  fiduciary  under ERISA for  purposes of the appeal of
the denied claim.  Ashland may delegate its authority to rule on appeals of
denied  claims and any person or persons or entity to which such  authority
is delegated may  re-delegate  that  authority.  The appeal must be sent at
least 60 days after the claimant  received the denial of the initial claim.
If the appeal is not sent  within  this time,  then the right to appeal the
denial is waived.

     The claimant may submit  materials and other  information  relating to
the claim.  Ashland will  appropriately  consider these materials and other
information,  even if they were not part of the initial  claim  submission.
The claimant will also be given  reasonable and free access to or copies of
documents, records and other information relevant to the claim.

     Written  notification  of the decision on the appeal will be delivered
to the  claimant in a reasonable  period,  but not later than 60 days after
the appeal is received.  The 60-day  period can be extended  under  special
circumstances.  If  special  circumstances  apply,  the  claimant  will  be
notified before the end of the 60-day period after the appeal was received.
The notice will  identify the special  circumstances.  It will also specify
the expected date of the decision.  When special  circumstances  apply, the
claimant must be notified of the decision not later than 120 days after the
appeal is received.

     Special  rules  apply  if  Ashland   designates  a  committee  as  the
appropriate  named  fiduciary  for  purposes of deciding  appeals of denied
claims.  For the special rules to apply,  the committee must meet regularly
on at least a quarterly basis.

     When the special  rules for committee  meetings  apply the decision on
the appeal  must be made not later than the date of the  committee  meeting
immediately  following the receipt of the appeal. If the appeal is received
within 30 days of the next following meeting, then the decision must not be
made later  than the date of the second  committee  meeting  following  the
receipt of the appeal.

     The period for making the decision on the appeal can be extended under
special circumstances. If special circumstances apply, the claimant will be
notified by the  committee or its delegate  before the end of the otherwise
applicable period within which to make a decision. The notice will identify
the special  circumstances.  It will also specify the expected  date of the
decision.  When special  circumstances apply, the claimant must be notified
of the  decision  not later  than the date of the third  committee  meeting
after the appeal is received.

     In any event,  the  claimant  will be provided  written  notice of the
decision within a reasonable period after the meeting at which the decision
is made. The  notification  will not be later than 5 days after the meeting
at which the decision is made.

     Whether the  decision  on the appeal is made by a committee  or not, a
denial of the appeal will include:

     (i) The reasons for the denial.

     (ii)  Reference to the Plan  provisions  on which the denial is based.
The reference need not be to page numbers or to section headings or titles.
The reference  only needs to  sufficiently  describe the provisions so that
the provisions could be identified based on that description.

     (iii) A  statement  that  the  claimant  may  receive  free of  charge
reasonable access to or copies of documents,  records and other information
relevant to the claim.

     (iv)  A  description  of any  voluntary  procedure  for an  additional
appeal, if there is such a procedure.  It will also state that the claimant
may file a civil  action  under  section 502 of ERISA (ERISA - ss.29 U.S.C.
1132).


     If the claimant does not receive  notice of the decision on the appeal
within the prescribed  time periods,  the appeal is deemed denied.  In that
event the claimant may file a civil action in court. The decision regarding
a denied  claim is final and  binding on all those who are  affected by the
decision. No additional appeals regarding that claim are allowed.






         IN WITNESS WHEREOF, this amendment and restatement of the Plan is
executed this 1st day of July, 2003.


ATTEST:                                  ASHLAND INC.



 /s/ Richard P. Thomas         By:  /s/ Susan Esler
- --------------------------     -----------------------------------
     Secretary                 Vice President Human Resources -
                               Programs and Services

Exhibit 10.4 ASHLAND INC. NONQUALIFIED EXCESS BENEFIT PENSION PLAN - 2003 RESTATEMENT July 1, 2003 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, the Plan was amended and completely restated as of September 19, 1996; 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 July 1, 2003, 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 not been terminated from employment due to Cause. Cause shall mean the willful and continuous failure of an employee 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 an employee in gross misconduct materially and demonstrably injurious to Ashland, each to be determined by Ashland in its sole discretion. 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 IF NOT ELIGIBLE FOR RETIREMENT GROWTH ACCOUNT. The computation described in this paragraph (i) applies to retirees that are not eligible for the Retirement Growth Account in the Ashland Inc. and Affiliates Pension Plan. 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)COMPUTATION IF ELIGIBLE FOR RETIREMENT GROWTH ACCOUNT. The computation described in this paragraph (ii) applies to retirees that are eligible for the Retirement Growth Account in the Ashland Pension Plan. 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 balance of the Retirement Growth Account added to the actuarially equivalent lump sum of any single life annuity that would be payable at age 62 to such retiree under the Affected Plans (other than the Ashland Pension Plan) based upon the applicable actuarial assumptions and other relevant provisions used for the same in 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 Retirement Growth Account balance 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");' (B) shall be the balance of the Retirement Growth Account added to the actuarially equivalent lump sum of any single life annuity that would be payable at age 62 to such retiree under the Affected Plans (other than the Ashland Pension Plan) based upon the applicable actuarial assumptions and other relevant provisions used for the same in 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 Retirement Growth Account balance 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 (C) shall be 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. (iii) Commencement. Subject to Section 6, the benefit computed under paragraph (i) or (ii) 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 earlier of - -

(A) the date six months prior to the first day of the month following such retiree's termination from employment; or (B) 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(i) 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. A lump sum benefit payment of a benefit under Section 3(i) shall be computed on the basis of the actuarially equivalent present value of such retiree's benefit under Section 3(i) 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 Personnel and Compensation Committee of Ashland's Board of Directors (Committee). The normal form of payment for a benefit under Section 3(ii) shall be a single lump sum. (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 receives 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. SURVIVOR BENEFIT. In the event a retiree who was eligible under Section 2 for the benefit under Section 3(i) 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. In the event a retiree who was eligible under Section 2 for the benefit under Section 3(ii) 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 surviving spouse shall be entitled to the lump sum amount of the benefit as calculated under Section 3(ii) and payable no later than the time such a benefit would have to be paid under the Ashland Pension Plan. If such a retiree dies under the foregoing described circumstances without leaving a surviving spouse, then the benefit so computed under Section 3(ii) shall be paid to the beneficiary to whom such retiree's Retirement Growth Account balance is payable under the Ashland Pension Plan. 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 and in connection with a division of property under a domestic relations proceeding under state law, no right or interest of of any person entitled to a benefit under the Plan shall be subject to involuntary alienation, assignment or transfer of any kind. A person entitled to a benefit under this Plan may voluntarily assign his or her rights under the Plan. Ashland, the Committee and any of their delegates shall not review, confirm, guarantee or otherwise comment on the legal validity of any voluntary assignment. Ashland and its delegates may review, provide recommendations and approve submitted domestic relations orders using procedures similar to those that apply to qualified domestic relations orders under the Ashland Pension Plan. Ashland or any affiliate may, however, 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 July 1, 2003, all provisions in the Ashland Inc. Nonqualified Pension Plan as Amended, dated as of September 19, 1996, 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 or is not eligible to retire or terminate with a vested early, normal or deferred retirement benefit under any Affected Plan, shall be deemed to have a vested benefit 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.

12 (a) INITIAL CLAIM - NOTICE OF DENIAL. If any claim for benefits (within the meaning of section 503 of ERISA) is denied in whole or in part, Ashland (which shall include Ashland or its delegate throughout this Section 12) will provide written notification of the denied claim to the participant or beneficiary, as applicable, (hereinafter referred to as the claimant) in a reasonable period, but not later than 90 days after the claim is received. The 90-day period can be extended under special circumstances. If special circumstances apply, the claimant will be notified before the end of the 90-day period after the claim was received. The notice will identify the special circumstances. It will also specify the expected date of the decision. When special circumstances apply, the claimant must be notified of the decision not later than 180 days after the claim is received. The written decision will include: (i) The reasons for the denial. (ii) Reference to the Plan provisions on which the denial is based. The reference need not be to page numbers or to section headings or titles. The reference only needs to sufficiently describe the provisions so that the provisions could be identified based on that description. (iii) A description of additional materials or information needed to process the claim. It will also explain why those materials or information are needed. (iv) A description of the procedure to appeal the denial, including the time limits applicable to those procedures. It will also state that the claimant may file a civil action under section 502 of ERISA (ERISA - ss.29 U.S.C. 1132). The claimant must complete the Plan's appeal procedure before filing a civil action in court. If the claimant does not receive notice of the decision on the claim within the prescribed time periods, the claim is deemed denied. In that event the claimant may proceed with the appeal procedure described below. (b) APPEAL OF DENIED CLAIM. The claimant may file a written appeal of a denied claim with Ashland in such manner as determined from time to time. Ashland is the named fiduciary under ERISA for purposes of the appeal of the denied claim. Ashland may delegate its authority to rule on appeals of denied claims and any person or persons or entity to which such authority is delegated may re-delegate that authority. The appeal must be sent at least 60 days after the claimant received the denial of the initial claim. If the appeal is not sent within this time, then the right to appeal the denial is waived.

The claimant may submit materials and other information relating to the claim. Ashland will appropriately consider these materials and other information, even if they were not part of the initial claim submission. The claimant will also be given reasonable and free access to or copies of documents, records and other information relevant to the claim. Written notification of the decision on the appeal will be delivered to the claimant in a reasonable period, but not later than 60 days after the appeal is received. The 60-day period can be extended under special circumstances. If special circumstances apply, the claimant will be notified before the end of the 60-day period after the appeal was received. The notice will identify the special circumstances. It will also specify the expected date of the decision. When special circumstances apply, the claimant must be notified of the decision not later than 120 days after the appeal is received. Special rules apply if Ashland designates a committee as the appropriate named fiduciary for purposes of deciding appeals of denied claims. For the special rules to apply, the committee must meet regularly on at least a quarterly basis. When the special rules for committee meetings apply the decision on the appeal must be made not later than the date of the committee meeting immediately following the receipt of the appeal. If the appeal is received within 30 days of the next following meeting, then the decision must not be made later than the date of the second committee meeting following the receipt of the appeal. The period for making the decision on the appeal can be extended under special circumstances. If special circumstances apply, the claimant will be notified by the committee or its delegate before the end of the otherwise applicable period within which to make a decision. The notice will identify the special circumstances. It will also specify the expected date of the decision. When special circumstances apply, the claimant must be notified of the decision not later than the date of the third committee meeting after the appeal is received. In any event, the claimant will be provided written notice of the decision within a reasonable period after the meeting at which the decision is made. The notification will not be later than 5 days after the meeting at which the decision is made.

Whether the decision on the appeal is made by a committee or not, a denial of the appeal will include: (i) The reasons for the denial. (ii) Reference to the Plan provisions on which the denial is based. The reference need not be to page numbers or to section headings or titles. The reference only needs to sufficiently describe the provisions so that the provisions could be identified based on that description. (iii) A statement that the claimant may receive free of charge reasonable access to or copies of documents, records and other information relevant to the claim. (iv) A description of any voluntary procedure for an additional appeal, if there is such a procedure. It will also state that the claimant may file a civil action under section 502 of ERISA (ERISA - ss.29 U.S.C. 1132). If the claimant does not receive notice of the decision on the appeal within the prescribed time periods, the appeal is deemed denied. In that event the claimant may file a civil action in court. The decision regarding a denied claim is final and binding on all those who are affected by the decision. No additional appeals regarding that claim are allowed. IN WITNESS WHEREOF, this amendment and restatement of the Plan is executed this 1st day of July, 2003. ATTEST: ASHLAND INC. /s/ Richard P. Thomas By: /s/ Susan Esler - ------------------------ -------------------------------- Secretary Vice President Human Resources - Programs and Services

                                                                  EXHIBIT 12

                                  ASHLAND INC.

                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                                  (In millions)



                                                                                                               Nine months ended
                                                                     Years ended September 30                        June 30
                                                      ----------------------------------------------------   --------------------
                                                          1998       1999       2000       2001       2002       2002       2003
                                                      --------   --------   --------   --------   --------   --------   ---------
                                                                                                   
EARNINGS
- --------

Income (loss) from continuing operations              $    172   $    283   $    272   $    390   $    115   $     75   $     33
Income taxes                                               108        188        179        266         68         47         17
Interest expense                                           133        141        189        160        133        100         94
Interest portion of rental expense                          39         34         39         40         35         26         23
Amortization of deferred debt expense                        1          1          2          2          2          2          1
Distributions in excess of (less than) earnings
    of unconsolidated affiliates                           (62)       (11)      (112)       (91)        20        (21)       (55)
                                                      --------   --------   --------   --------   --------   --------   ---------
                                                      $    391   $    636   $    569   $    767   $    373   $    229   $    113
                                                      ========   ========   ========   ========   ========   ========   =========


FIXED CHARGES
- -------------

Interest expense                                      $    133   $    141   $    189   $    160   $    133   $    100   $     94
Interest portion of rental expense                          39         34         39         40         35         26         23
Amortization of deferred debt expense                        1          1          2          2          2          2          1
                                                      --------   --------   --------   --------   --------   --------   ---------
                                                      $    173   $    176   $    230   $    202   $    170   $    128   $    118
                                                      ========   ========   ========   ========   ========   ========   =========

RATIO OF EARNINGS TO FIXED CHARGES                        2.26       3.61       2.47       3.80       2.19       1.79       0.96


                                                        Exhibit 31.1

                               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  quarterly  report on Form 10-Q of  Ashland
         Inc.;

2.       Based on my knowledge,  this quarterly 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  quarterly
         report;

3.       Based  on  my  knowledge,  the  financial  statements,  and  other
         financial  information  included in this quarterly 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 quarterly 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-15 and 15d-15(e)
         for the registrant and have:

a)       Designed such disclosure  controls and procedures,  or caused such
         disclosure  controls  and  procedures  to be  designed  under  our
         supervision,  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 quarterly report is being prepared;

b)       Evaluated  the   effectiveness  of  the  registrant's   disclosure
         controls  and   procedures   and  presented  in  this  report  our
         conclusions about the effectiveness of the disclosure controls and
         procedures,  as of the end of the period covered by this quarterly
         report based on such evaluation; and

c)       Disclosed in this quarterly  report any change in the registrant's
         internal control over financial reporting that occurred during the
         registrant's  most recent fiscal quarter that occurred  during the
         registrant's most recent fiscal quarter (the  registrant's  fourth
         fiscal  quarter  in  the  case  of  an  annual  report)  that  has
         materially affected, or is reasonably likely to materially affect,
         the registrant's internal control over financial reporting; and

5.       The registrant's other certifying officers and I have disclosed,
         based on our most recent evaluation of internal control over
         financial reporting, 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 and material weaknesses in the design
         or operation of internal  control over financial  reporting  which
         are reasonably likely to adversely affect the registrant's ability
         to record,  process,  summarize and report financial  information;
         and

b)       Any fraud,  whether or not material,  that involves  management or
         other  employees who have a significant  role in the  registrant's
         internal control over financial reporting.

Date: August 13, 2003

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

                                                        Exhibit 31.2


                               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 quarterly report on Form 10-Q of Ashland Inc.;

2.       Based on my  knowledge,  this  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 report;

3.       Based  on  my  knowledge,  the  financial  statements,  and  other
         financial  information included in this 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 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-15 and 15d-15(e)
         for the registrant and have:

a)       Designed such disclosure  controls and procedures,  or caused such
         disclosure  controls  and  procedures  to be  designed  under  our
         supervision,  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 report is being prepared;

b)       Evaluated  the   effectiveness  of  the  registrant's   disclosure
         controls  and   procedures   and  presented  in  this  report  our
         conclusions about the effectiveness of the disclosure controls and
         procedures,  as of the end of the period  covered  by this  report
         based on such evaluation; and

c)       Disclosed in this report any change in the  registrant's  internal
         control  over  financial   reporting  that  occurred   during  the
         registrant's  most recent fiscal quarter that occurred  during the
         registrant's most recent fiscal quarter (the  registrant's  fourth
         fiscal  quarter  in  the  case  of  an  annual  report)  that  has
         materially affected, or is reasonably likely to materially affect,
         the registrant's internal control over financial reporting; and

5.       The registrant's  other certifying  officers and I have disclosed,
         based on our most  recent  evaluation  of  internal  control  over
         financial  reporting,  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 and material weaknesses in the design
         or operation of internal  control over financial  reporting  which
         are reasonably likely to adversely affect the registrant's ability
         to record,  process,  summarize and report financial  information;
         and

b)       Any fraud,  whether or not material,  that involves  management or
         other  employees who have a significant  role in the  registrant's
         internal control over financial reporting.

Date: August 13, 2003

                               /s/ J. Marvin Quin
                               -----------------------
                               Chief Financial Officer

                                                        Exhibit 32

                               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 Quarterly  Report of Ashland Inc. (the "Company") on
Form 10-Q for the period  ended June 30, 2003 as filed with the  Securities
and  Exchange  Commission  on the date hereof (the  "Report"),  each of the
undersigned,  James J. O'Brien, Chief Executive Officer of the Company, and
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, to the best of his knowledge, 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
August 13, 2003

/s/ J. Marvin Quin
J. Marvin Quin
Chief Financial Officer
August 13, 2003


A signed  original of this  written  statement  required by Section 906 has
been  provided to Ashland  Inc.  and will be retained by Ashland  Inc.  and
furnished to the Securities and Exchange Commission or staff upon request.