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                                              Filed pursuant to Rule 424(b)(5)
                                              Registration No. 333-34029


PROSPECTUS SUPPLEMENT
(To Prospectus Dated August 26, 1997)

$750,000,000

INGERSOLL-RAND COMPANY

MEDIUM-TERM NOTES, SERIES B,
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE

Ingersoll-Rand Company (the "Company") may offer from time to time its
Medium-Term Notes, Series B, (the "Notes"), having an aggregate initial offering
price of up to $750,000,000 (or such greater amount if Notes are issued at an
original issue discount as shall result in aggregate gross proceeds to the
Company of $750,000,000), subject to reduction under certain circumstances as a
result of the sale of other securities of the Company under the Prospectus to
which this Prospectus Supplement relates. The Notes will be offered in varying
maturities of nine months or more from their date of issue and may be subject to
redemption at the option of the Company or repayment at the option of the
Holder, in each case, in whole or in part prior to the maturity date (as further
defined below, the "Stated Maturity") thereof as set forth in a pricing
supplement to this Prospectus Supplement (a "Pricing Supplement"). The Notes may
be issued as "Amortizing Notes" or "Original Issue Discount Notes." See
"Description of Notes."

                                                        (Continued on next page)

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
HERETO OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.



- --------------------------------------------------------------------------------
                      PRICE TO          AGENTS' COMMISSION     PROCEEDS TO
                      PUBLIC(1)         OR DISCOUNT(2)         COMPANY(2)(3)

                                                      
Per Note............  100%              0.125%-0.750%          99.250%-99.875%

Total...............  $750,000,000      $937,500-              $749,062,500-
                                        $5,625,000             $744,375,000
- --------------------------------------------------------------------------------


(1) Unless otherwise indicated in the applicable Pricing Supplement, Notes will
    be sold at 100% of their principal amount.

(2) The Company will pay Salomon Brothers Inc, Merrill Lynch & Co., Merrill
    Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc., and J.P.
    Morgan Securities Inc. (each an "Agent," and, collectively, the "Agents") a
    commission ranging from 0.125% to 0.750% of the principal amount of any
    Note, depending on its Stated Maturity, sold through such Agent. With
    respect to maturities greater than 30 years, the commission will be
    negotiated between the Company and the Agents. Any Agent, acting as
    principal, may also purchase Notes at a discount for resale to one or more
    investors or purchasers or one or more broker-dealers (acting as principal
    for purposes of resale) at varying prices related to prevailing market
    prices at the time of resale, as determined by such Agent, or, if so agreed,
    at a fixed public
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    offering price. In addition, any Agent may offer Notes purchased by it as
    principal to other dealers and may reallow a portion of their commission.
    The Company has agreed to reimburse the Agents for certain expenses. The
    Company has agreed to indemnity the Agents against certain liabilities,
    including liabilities under the Securities Act of 1933, as amended.

(3) Before deducting offering expenses payable by the Company estimated at U.S.
    $400,000.

The Notes are being offered on a continuing basis by the Company through the
Agents, each of which has agreed to use its reasonable efforts to solicit offers
to purchase the Notes. The Company has reserved the right to sell Notes directly
to investors on its own behalf, and on such sales no commissions will be paid.
The Notes will not be listed on any securities exchange, and there can be no
assurance that the Notes will be sold or that there will be a secondary market
for the Notes. The Company reserves the right to withdraw, cancel or modify the
offer made hereby without notice. The Company or any Agent may reject any offer
to purchase Notes in whole or in part. See "Supplemental Plan of Distribution."


SALOMON BROTHERS INC                                         MERRILL LYNCH & CO.
CHASE SECURITIES INC.                                          J.P. MORGAN & CO.

The date of this Prospectus Supplement is November 5, 1997.

                                      S-2
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(from preceding page)

    Each Note will bear interest at a fixed rate (a "Fixed Rate Note"), which
may be zero in the case of certain Notes issued at a price representing a
discount from the principal amount payable at maturity (a "Zero Coupon Note"),
or at a variable rate (a "Floating Rate Note") determined by reference to one or
more of the Commercial Paper Rate, CD Rate, Federal Funds Rate, CMT Rate, LIBOR,
Prime Rate or Treasury Rate or such other interest rate formula (the "Interest
Rate Basis") as may be indicated in the applicable Pricing Supplement, as
adjusted by a Spread and/or Spread Multiplier, if any, applicable to such Notes.
See "Description of Notes." Unless otherwise specified in the applicable Pricing
Supplement, interest on Fixed Rate Notes will be payable semi-annually on each
May 15 and November 15 (each an "Interest Payment Date" with respect to such
Fixed Rate Notes) and at Maturity (as defined herein). Interest on Floating Rate
Notes will be payable on such dates indicated in the applicable Pricing
Supplement (each an "Interest Payment Date" with respect to such Floating Rate
Notes).

    Each Note will be represented by either a Global Security (a "Book-Entry
Note") registered in the name of a nominee of The Depository Trust Company
("DTC") or other depositary (DTC or such other depositary as is indicated in the
applicable Pricing Supplement is referred to herein as the "Depositary"), or a
certificate issued in definitive form (a "Certificated Note"), as indicated in
the applicable Pricing Supplement. Beneficial interests in Book-Entry Notes will
be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its Participants (as defined herein). Owners of
beneficial interests in Book-Entry Notes will be entitled to physical delivery
of Certificated Notes only under the limited circumstances described herein. See
"Description of Notes--Book-Entry System." Unless otherwise indicated in the
applicable Pricing Supplement, Notes will be issued in denominations of $1,000
and integral multiples of $1,000 in excess thereof.

    IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY ONE OR MORE AGENTS AS
PRINCIPAL ON A FIXED OFFERING PRICE BASIS, SUCH AGENTS MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF NOTES
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES SEE "SUPPLEMENTAL PLAN OF
DISTRIBUTION."



                                       S-3
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                              DESCRIPTION OF NOTES

    THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES OFFERED
HEREBY SUPPLEMENTS AND, TO THE EXTENT INCONSISTENT THEREWITH REPLACES, THE
DESCRIPTION OF THE GENERAL TERMS AND PROVISIONS OF THE DEBT SECURITIES (AS
DEFINED IN THE ACCOMPANYING PROSPECTUS) SET FORTH UNDER THE HEADING "DESCRIPTION
OF DEBT SECURITIES" IN THE ACCOMPANYING PROSPECTUS, TO WHICH DESCRIPTION
REFERENCE IS HEREBY MADE. THE PROVISIONS OF THE NOTES SUMMARIZED HEREIN WILL
APPLY TO EACH NOTE UNLESS OTHERWISE INDICATED IN THE APPLICABLE PRICING
SUPPLEMENT. CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN HAVE THE MEANINGS
SPECIFIED IN THE INDENTURE (AS DEFINED BELOW) AND/OR THE NOTES.


GENERAL

    The Notes offered hereby will be issued under the Senior Indenture referred
to in the accompanying Prospectus (the "Indenture"). The summary contained
herein of certain provisions of the Notes does not purport to be complete and is
qualified in its entirety by reference to the provisions of the Indenture and
the forms of Notes, each of which has been filed as an exhibit to the
Registration Statement (the "Registration Statement"), of which the accompanying
Prospectus is a part, to which exhibits reference is hereby made.

    The Notes constitute a single series for purposes of the Indenture and are
limited to an aggregate initial offering price of up to $750,000,000 (or such
greater amount if Notes are issued at an original discount as shall result in
aggregate gross proceeds to the Company of $750,000,000).

    The Notes will constitute unsecured and unsubordinated indebtedness of the
Company and will rank on a parity with the Company's other unsecured and
unsubordinated indebtedness.

    The Notes are offered on a continuing basis and will mature on a day nine
months or more from their date of issue, as selected by the initial purchaser
and agreed to by the Company, and may be subject to redemption at the option of
the Company or repayment at the option of the Holder prior to Stated Maturity.
See "Redemption and Repayment" below.

    Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars, and payments of principal of, premium, if
any, and any interest on the Notes will be made in U.S. dollars.

    Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note. Except as set forth under "Book-Entry System" below,
Book-Entry Notes will not be issuable in certificated form. Notes will be issued
in denominations of $1,000 and integral multiples of $1,000 in excess thereof.

    Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other things, the aggregate principal amount of the Notes
purchased in any single transaction.

    Payments of interest and principal (and premium, if any) to Beneficial
Owners (as defined below) of Book-Entry Notes are expected to be made in
accordance with the Depositary's and its Participants'

                                       S-4
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procedures in effect from time to time as described below under "Book-Entry
System."

    Unless otherwise specified in the applicable Pricing Supplement, payments of
principal and interest, if any, and premium, if any, with respect to any
Certificated Note will be made by mailing a check to the Holder at the address
of such Holder appearing on the Security Register for the Notes on the
applicable Regular Record Date (as defined below). Notwithstanding the
foregoing, at the option of the Company, all payments on the Notes may be made
by wire transfer of immediately available funds as designated by each Holder not
less than 15 calendar days prior to the applicable Interest Payment Date. A
Holder of $10,000,000 or more in aggregate principal amount of Notes of like
tenor and terms with the same Interest Payment Date may demand payment by wire
transfer but only if appropriate payment instructions have been received in
writing by the Trustee not less than 15 calendar days prior to the applicable
Interest Payment Date. In the event that payment is so made in accordance with
instructions of the Holder, such wire transfer shall be deemed to constitute
full and complete payment of such interest and principal on the Notes. Payment
of the principal and interest, if any, with respect to any Certificated Note at
Maturity will be made in immediately available funds upon surrender of such Note
at the principal office of the Trustee in the Borough of Manhattan, The City of
New York accompanied by wire by wire transfer instructions, provided that the
Certificated Note is presented to the Trustee in time for the Trustee to make
such payments in such funds in accordance with its normal procedures.
Certificated Notes may be presented for registration of transfer or exchange at
the Corporate Trust Office of the Trustee in the Borough of Manhattan, The City
of New York.

    Notwithstanding anything in this Prospectus Supplement to the contrary,
unless otherwise specified in the applicable Pricing Supplement, if a Note is an
Original Issue Discount Note, the amount payable on such Note in the event the
principal thereof is declared to be due and payable immediately as described in
the accompanying Prospectus under "Description of Debt Securities--Events of
Default," or in the event of the redemption or repayment thereof prior to its
Stated Maturity shall be the Amortized Face Amount of such Note as of the date
of declaration, redemption or repayment, as the case may be. The "Amortized Face
Amount" of an Original Issue Discount Note shall be the amount equal to (i) the
principal amount of such Note multiplied by the Issue Price set forth in the
applicable Pricing Supplement plus (ii) the portion of the difference between
the dollar amount determined pursuant to the preceding clause (i) and the
principal amount of such Note that has accreted at the yield to maturity set
forth in the Pricing Supplement (computed in accordance with generally accepted
United States bond yield computation principles) to such date of declaration,
redemption or repayment, but in no event shall the Amortized Face Amount of an
Original Issue Discount Note exceed its principal amount.

    The Pricing Supplement relating to each Note will describe, among other
things, the following items: (i) the price (expressed as a percentage of the
aggregate principal amount thereof) at which such Note will be issued (the
"Issue Price"); (ii) the date on which such Note will be issued (the "Original
Issue Date"); (iii) the date on which such Note will mature (the "Stated
Maturity"); (iv) whether such Note is a Fixed Rate Note or a Floating Rate Note;
(v) if such Note is a Fixed

                                      S-5
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Rate Note, the rate per annum at which such Note will bear interest, if any, the
interest payment date or dates, if different from those set forth below under
"Fixed Rate Notes"; (vi) if such Note is a Floating Rate Note, the Initial
Interest Rate, the Interest Rate Basis, the Interest Reset Dates, the Interest
Payment Dates, the Index Maturity, the maximum interest rate, if any, the
minimum interest rate, if any, the Spread, if any, the Spread Multiplier, if any
(all as defined herein), and any other terms relating to the particular method
of calculating the interest rate for such Note; (vii) whether such Note is an
Original Issue Discount Note, and if so, the yield to maturity; (viii) whether
such Note is an Amortizing Note (as defined below), and if so, the basis or
formula for the amortization of principal and/or interest and the payment dates
for such periodic principal payments; (ix) the regular record date or dates (a
"Regular Record Date") if other than as below; (x) whether such Note may be
redeemed at the option of the Company, or repaid at the option of the Holder,
prior to Stated Maturity and, if so, the provisions relating to such redemption
or repayment; (xi) whether such Note will be issued initially as a Book-Entry
Note or a Certificated Note; and (xii) any other terms of such Note not
inconsistent with the provisions of the Indenture.

    All percentages resulting from any calculation with respect to any Notes
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded upward
(e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and
all dollar amounts used in or resulting from such calculation on any Note will
be rounded to the nearest cent with one half cent being rounded upward.

    As used herein, "Business Day" means, unless otherwise specified in the
applicable Pricing Supplement, any Monday, Tuesday, Wednesday, Thursday or
Friday that in The City of New York is not a day on which banking institutions
are authorized or required by law, regulation or executive order to close and,
with respect to Notes as to which LIBOR (as defined below) is an applicable Base
Rate (as defined below), is also a London Business Day. As used herein, "London
Business Day" means any day on which dealings in deposits denominated in U.S.
dollars are transacted in the London interbank market.

    The Notes are referred to in the accompanying Prospectus as the "Debt
Securities." For a description of the rights attaching to different series of
Securities under the Indenture, see "Description of Debt Securities" in the
Prospectus. Unless otherwise indicated in the applicable Pricing Supplement, the
Notes will have the terms described below.


INTEREST AND INTEREST RATES

    Unless otherwise specified in the applicable Pricing Supplement, each Note
(other than a Zero-Coupon Note) will bear interest from its Original Issue Date
or from and including the most recent Interest Payment Date to which interest on
such Note has been paid or duly provided for at a fixed rate per annum or at a
rate per annum determined pursuant to an Interest Rate Basis, stated therein and
in the applicable Pricing Supplement, that may be adjusted by a Spread and/or
Spread Multiplier, until the principal thereof is paid or made available for
payment. Unless otherwise set forth in the applicable Pricing


                                      S-6
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Supplement, interest will be payable on each Interest Payment Date and at
Maturity. "Maturity" means the date on which the principal of a Note becomes due
and payable in full in accordance with its terms and the terms of the Indenture,
whether at Stated Maturity, upon acceleration, redemption, repayment or
otherwise. Interest (other than defaulted interest which may be paid on a
special record date) will be payable to the Holder at the close of business on
the Regular Record Date next preceding such Interest Payment Date, provided,
however, that the first payment of interest on any Note originally issued
between a Regular Record Date and the next Interest Payment Date will be made on
the Interest Payment Date following the next succeeding Regular Record Date to
the Holder on such next succeeding Regular Record Date.

    Interest rates, interest rate formulae and other variable terms of the Notes
are subject to change by the Company from time to time, but no such change will
affect any Note already issued or as to which an offer to purchase has been
accepted by the Company. Unless otherwise indicated in the applicable Pricing
Supplement, the Interest Payment Dates and the Regular Record Dates for Fixed
Rate Notes shall be as described below under "Fixed Rate Notes." The Interest
Payment Dates for Floating Rate Notes shall be as indicated in the applicable
Pricing Supplement, and unless otherwise indicated in the applicable Pricing
Supplement, each Regular Record Date for a Floating Rate Note will be the
fifteenth day (whether or not a Business Day) preceding each Interest Payment
Date.

    Unless otherwise specified in the applicable Pricing Supplement, each Note
(other than a Zero-Coupon Note) will bear interest at either (a) a fixed rate or
(b) a floating rate determined by reference to an Interest Rate Basis which may
be adjusted by a Spread and/or Spread Multiplier. Any Floating Rate Note may
also have either or both of the following: (i) a maximum numerical interest rate
limitation, or ceiling, on the rate of interest which may accrue during any
interest period, and (ii) a minimum numerical interest rate limitation, or
floor, on the rate of interest which may accrue during any interest period. The
applicable Pricing Supplement relating to each Note will designate either a
fixed rate of interest per annum on the applicable Fixed Rate Note or one or
more of the following Interest Rate Bases as applicable to the relevant Floating
Rate Note: (a) the CD Rate, in which case such Note will be a "CD Rate Note,"
(b) the Commercial Paper Rate, in which case such Note will be a "Commercial
Paper Rate Note," (c) the Federal Funds Rate, in which case such Note will be a
"Federal Funds Rate Note," (d) LIBOR, in which case such Note will be a "LIBOR
Note," (e) the Treasury Rate, in which case such Note will be a "Treasury Rate
Note," (f) the Prime Rate, in which case such Note will be a "Prime Rate Note,"
(g) the CMT Rate, in which case such Note will be a "CMT Rate Note," or (h) such
other Interest Rate Basis or formula as is set forth in such Pricing Supplement.

    Notwithstanding the determination of the interest rate as provided below,
the interest rate on the Notes for any interest period shall not be greater than
the maximum interest rate, if any, or less than the minimum interest rate, if
any, specified in the applicable Pricing Supplement. The interest rate on the
Notes will in no event be higher than the maximum rate permitted by New York or
other applicable law, as the same may be modified by United States law of
general application. Under present New York law, the maximum rate of interest is
25% per

                                      S-7
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annum on a simple interest basis. This limit may not apply to Notes in which
$2,500,000 or more has been invested.


FIXED RATE NOTES

    Each Fixed Rate Note (other than a Zero-Coupon Note) will bear interest from
its date of issue at the annual rate stated on the face thereof, unless
otherwise specified in the applicable Pricing Supplement. Payments of interest
on any Fixed Rate Note with respect to any Interest Payment Date will include
interest accrued from and including the Original Issue Date, or from and
including the next preceding Interest Payment Date, to but excluding the
applicable Interest Payment Date or Maturity. Fixed Rate Notes may bear one or
more annual rates of interest during the periods or under the circumstances
specified therein and in the applicable Pricing Supplement. Interest on Fixed
Rate Notes will be computed and paid on the basis of a 360-day year of twelve
30-day months.

    Unless otherwise specified in the applicable Pricing Supplement, the
Interest Payment Dates for Fixed Rate Notes will be semi-annually on each May 15
and November 15 and the Regular Record Dates will be each May 1 and November 1
(whether or not a Business Day). If the Interest Payment Date or Maturity for
any Fixed Rate Note is a day that is not a Business Day, all payments to be made
on such day will be made on the next succeeding Business Day with the same force
and effect as if made on the due date, and no additional interest shall be
payable as a result of such delayed payment.


FLOATING RATE NOTES

    Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Floating Rate Note will be equal to (i) the interest rate
calculated by reference to the specified Interest Rate Basis plus or minus the
Spread, if any, and/or (ii) the interest rate calculated by reference to the
specified Interest Rate Basis multiplied by the Spread Multiplier, if any. The
"Spread" is the number of basis points (one basis point equals one-hundredth of
a percentage point) specified in the applicable Pricing Supplement as being
applicable to such Note, and the "Spread Multiplier" is the percentage specified
in the applicable Pricing Supplement as being applicable to such Note. The
applicable Pricing Supplement will specify the Interest Rate Basis and the
Spread and/or Spread Multiplier, if any, and the maximum or minimum interest
rate limitation, if any, applicable to each Floating Rate Note. In addition,
such Pricing Supplement will contain particulars as to the Calculation Agent
(unless specified in the applicable Pricing Supplement, The Bank of New York (in
such capacity, the "Calculation Agent")), Index Maturity, Original Issue Date,
the interest rate in effect for the period from the Original Issue Date to the
first Interest Reset Date set forth in the applicable Pricing Supplement (the
"Initial Interest Rate"), Interest Determination Dates, Interest Payment Dates,
Regular Record Dates and Interest Reset Dates with respect to such Note.

    Except as provided below or in the applicable Pricing Supplement, interest
on Floating Rate Notes will be payable, (i) in the case of Floating Rate Notes
that reset daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year, as
specified on the face thereof

                                      S-8
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and in the applicable Pricing Supplement; (ii) in the case of Floating Rate
Notes that reset quarterly, on the third Wednesday of March, June, September and
December of each year; (iii) in the case of Floating Rate Notes that reset
semi-annually, on the third Wednesday of each of two months of each year
specified on the face thereof and in the applicable Pricing Supplement; and (iv)
in the case of Floating Rate Notes that reset annually, on the third Wednesday
of one month of each year specified on the face thereof and in the applicable
Pricing Supplement (each such day being an "Interest Payment Date") and, in each
case, at Maturity. If any Interest Payment Date, other than at Maturity, for any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next day that is a Business Day,
except that in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding London Business Day. If the Maturity for any Floating Rate Note falls
on a day that is not a Business Day, payment of principal, premium, if any, and
interest with respect to such Note will be made on the next succeeding Business
Day with the same force and effect is if made on the due date, and no additional
interest shall be payable as a result of such delayed payment.

    Unless otherwise specified in the applicable Pricing Supplement, the rate of
interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semi-annually or annually (such period being the "Reset Period" for
such Note, and the first day of each Reset Period being an "Interest Reset
Date"), as specified in the applicable Pricing Supplement. The Interest Reset
Date will be, in the case of Floating Rate Notes which reset daily, each
Business Day; in the case of Floating Rate Notes (other than Treasury Rate
Notes) which reset weekly, the Wednesday of each week; in the case of Treasury
Rate Notes which reset weekly, the Tuesday of each week, except as provided
below; in the case of Floating Rate Notes which reset monthly, the third
Wednesday of each month; in the case of Floating Rate Notes which reset
quarterly the third Wednesday of each March, June, September and December; in
the case of Floating Rate Notes which reset semi-annually, the third Wednesday
of the two months of each year specified in the applicable Pricing Supplement;
and in the case of Floating Rate Notes which reset annually, the third Wednesday
of one month of each year specified in the applicable Pricing Supplement;
provided, however, that the interest rate in effect from the date of issue to
the first Interest Reset Date with respect to a Floating Rate Note will be the
Initial Interest Rate (as set forth in the applicable Pricing Supplement). If
any Interest Reset Date for any Floating Rate Note would otherwise be a day that
is not a Business Day for such Floating Rate Note, the Interest Reset Date for
such Floating Rate Note shall be postponed to the next day that is a Business
Day for such Floating Rate Note, except that in the case of a LIBOR Note, if
such Business Day is in the next succeeding calendar month, such Interest Reset
Date shall be the immediately preceding Business Day. Each adjusted rate shall
be applicable on and after the Interest Reset Date to which it relates, to, but
not including, the next succeeding Interest Reset Date or until Stated Maturity
or the date of redemption or repayment, as the case may be.

    The interest rate for each Reset Period will be the rate determined by the
Calculation Agent on the Calculation Date (as defined below) pertaining to the
Interest Determination Date pertaining to the Interest

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Reset Date for such Reset Period. Unless otherwise specified in the applicable
Pricing Supplement, the "Interest Determination Date" pertaining to an Interest
Reset Date for (a) a Commercial Paper Rate Note (the "Commercial Paper Interest
Determination Date"), (b) a Federal Funds Rate Note (the "Federal Funds Interest
Determination Date"), (c) a CD Rate Note (the "CD Interest Determination Date"),
(d) a Prime Rate Note (the "Prime Interest Determination Date") or (e) a CMT
Rate Note (the "CMT Interest Determination Date") will be the second Business
Day prior to such Interest Reset Date. Unless otherwise specified in the
applicable Pricing Supplement, the Interest Determination Date pertaining to an
Interest Reset Date for a LIBOR Note (the "LIBOR Interest Determination Date")
will be the second London Business Day immediately preceding each Interest Reset
Date. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Determination Date pertaining to an Interest Reset Date for a Treasury
Rate Note (the "Treasury Interest Determination Date") will be the day of the
week in which such Interest Reset Date falls on which Treasury bills would
normally be auctioned. Treasury bills are usually sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
usually held on the following Tuesday, except that such auction may be held on
the preceding Friday. If, as a result of a legal holiday, an auction is so held
on the preceding Friday, such Friday will be the Treasury Interest Determination
Date pertaining to the Reset Period commencing in the next succeeding week. If
an auction date shall fall on any Interest Reset Date for a Treasury Rate Note,
then such Interest Reset Date shall instead be the first Business Day
immediately following such auction date. Unless otherwise specified in the
applicable Pricing Supplement, the "Calculation Date" pertaining to any Interest
Determination Date shall be the earlier of (i) the tenth calendar day after the
Interest Determination Date or, if such day is not a Business Day, the next
succeeding Business Day, or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity, as the case may be.

    "Index Maturity" means, with respect to a Floating Rate Note, the period to
maturity of the instrument or obligation on which the interest rate formula is
based as specified in the applicable Pricing Supplement.

    Unless otherwise indicated in the applicable Pricing Supplement, interest on
Floating Rate Notes will accrue from and including the date of issue or from and
including the immediately preceding Interest Payment Date in respect of which
interest has been paid or duly provided for, as the case may be, to but
excluding the Interest Payment Date or Maturity, as the case may be. With
respect to Floating Rate Notes, accrued interest is calculated by multiplying
the face amount of a Note by an accrued interest factor. This accrued interest
factor is computed by adding the interest factors calculated for each day from
the date of issue, or from the last date to which interest has been paid, to the
date for which accrued interest is being calculated. Unless otherwise indicated
in the applicable Pricing Supplement, the interest factor for each such day
(unless otherwise specified) is computed by dividing the interest rate
applicable to such day by 360, in the case of Commercial Paper Rate Notes, CD
Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes or by the
actual number of days in the year, in the case of Treasury Rate Notes or CMT
Rate Notes.

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    Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent shall calculate the interest rate on the Floating Rate Notes,
as provided below. The Calculation Agent will, upon the request of the Holder of
any Floating Rate Note, provide the interest rate then in effect and, if then
determined, the interest rate which will become effective as a result of a
determination made with respect to the most recent Interest Determination Date
with respect to such Note. For purposes of calculating the rate of interest
payable on Floating Rate Notes, the Company will enter into an agreement with
the Calculation Agent. The Calculation Agent's determination of any interest
rate shall be final and binding in the absence of manifest error.

    Commercial Paper Rate Notes

    Each Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any) specified in the Commercial Paper Rate Note and in
the applicable Pricing Supplement.

    Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Interest Determination
Date, the Money Market Yield (calculated as described below) of the rate on such
date for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates" or any
successor publication of the Board of Governors ("H.15(519)") under the heading
"Commercial Paper -- Nonfinancial." In the event that such rate is not published
prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to
such Commercial Paper Interest Determination Date, then the Commercial Paper
Rate with respect to such Commercial Paper Interest Determination Date shall be
the Money Market Yield of the rate on such Commercial Paper Interest
Determination Date for commercial paper having the Index Maturity specified in
the applicable Pricing Supplement as published by the Federal Reserve Bank of
New York in its daily statistical release "Composite 3:30 P.M. Quotations for
U.S. Government Securities" or any successor publication ("Composite
Quotations") under the heading "Commercial Paper." If by 3:00 P.M., New York
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the Commercial Paper Rate for such
Commercial Paper Interest Determination Date shall be calculated by the
Calculation Agent and shall be the Money Market Yield of the arithmetic mean of
the offered rates (quoted on a bank discount basis) as of 11:00 A.M., New York
City time, on such Commercial Paper Interest Determination Date of three leading
dealers of commercial paper in The City of New York selected by the Calculation
Agent for commercial paper having the Index Maturity designated in the
applicable Pricing Supplement placed for an industrial issuer whose bond rating
is "AA," or the equivalent, from a nationally recognized statistical rating
agency; provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Commercial
Paper Rate with respect to such Commercial Paper Interest Determination Date
will be the Commercial Paper Rate in effect immediately prior to such Commercial
Paper Interest Determination Date.


                                      S-11
   12
    "Money Market Yield" shall be a yield (expressed as a percentage rounded, if
necessary, to the nearest one hundred-thousandth of a percent) calculated in
accordance with the following formula:

                    Money Market Yield =      D X 360       X 100
                                         ------------------
                                          360 -- (D X M)

where "D" refers to the per annum rate for commercial paper, quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the period for which accrued interest is being calculated.

    CD Rate Notes

    Each CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in the CD Rate Note and in the applicable Pricing Supplement.

    Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity specified in
the applicable Pricing Supplement as published in H.15(519) under the heading
"CDs (Secondary Market)." In the event that such rate is not published prior to
9:00 A.M., New York City time, on the Calculation Date pertaining to such CD
Interest Determination Date, then the CD Rate with respect to such CD Interest
Determination Date shall be the rate on such CD Interest Determination Date for
negotiable certificates of deposit having the Index Maturity specified in the
applicable Pricing Supplement as published in Composite Quotations under the
heading "Certificates of Deposit." If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not published in either H.15(519) or Composite
Quotations, then the CD Rate on such CD Interest Determination Date shall be
calculated by the Calculation Agent and shall be the arithmetic mean of the
secondary market offered rates as of 10:00 A.M., New York City time, on such CD
Interest Determination Date of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United States
money market banks (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the Index Maturity designated in the applicable
Pricing Supplement in a denomination of $5,000,000; provided, however, that if
the dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the CD Rate with respect to such CD Interest
Determination Date will be the CD Rate in effect immediately prior to such CD
Interest Determination Date.

    CMT Rate Notes

    Each CMT Rate Note will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in the CMT Rate Note and in the applicable Pricing Supplement.

    Unless otherwise indicated in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any CMT Interest Determination Date, the rate displayed
on the Designated CMT Telerate Page (as defined below) under the caption ". . .
Treasury Constant Maturities . . . Federal

                                      S-12
   13
Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M.," under the
column for the Designated CMT Maturity Index (as defined below) for (i) if the
Designated CMT Telerate Page is 7055, the rate on such CMT Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
week, or the month, as applicable, ended immediately preceding the week in which
the applicable CMT Interest Determination Date occurs. If such rate is no longer
displayed on the relevant page, or if not displayed by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such CMT Interest Determination
Date, then the CMT Rate for such CMT Interest Determination Date will be such
treasury constant maturity rate for the Designated CMT Maturity Index as
published in the relevant H.15(519). If such rate is no longer published, or if
not published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such CMT Interest Determination Date. then the CMT Rate for such
CMT Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Interest Determination Date with
respect to such Interest Reset Date as may then be published by either the Board
of Governors of the Federal Reserve System or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in the
relevant H.15(519). If such information is not provided by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such CMT Interest Determination
Date, then the CMT Rate for the CMT Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on the CMT Interest Determination
Date reported, according to their written records, by three leading primary
United States government securities dealers (each, a "Reference Dealer") in The
City of New York selected by the Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent and eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation (or,
in the event of equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United States ("Treasury
Notes") with an original maturity of approximately the Designated CMT Maturity
Index and a remaining term to maturity of not less than such Designated CMT
Maturity Index minus one year. If the Calculation Agent cannot obtain three such
Treasury Note quotations, the CMT Rate for such CMT Interest Determination Date
will be calculated by the Calculation Agent and will be a yield to maturity
based on the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on the CMT Interest Determination
Date of three Reference Dealers in The City of New York (from five such
Reference Dealers selected by the Calculation Agent and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)), for Treasury Notes
with an original maturity of the number of years that is the next highest to the
Designated CMT Maturity Index and a remaining term to maturity closest to the
Designated CMT Maturity Index and in an amount of at least $100,000,000. If
three or four (and not five) of such Reference Dealers are quoting as described
above, then the CMT Rate will be based on the arithmetic mean of the offer
prices obtained and neither the highest nor the lowest of such quotes will be
eliminated; provided, however, that if

                                      S-13
   14
fewer than three Reference Dealers selected by the Calculation Agent are quoting
as described herein, the CMT Rate will be the CMT Rate in effect on such CMT
Interest Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
Note with the shorter remaining term to maturity will be used.

    "Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified in the applicable Pricing Supplement (or any other
page as may replace such page on that service for the purpose of displaying
Treasury Constant Maturities as published in H.15(519)), for the purpose of
displaying Treasury Constant Maturities as published in H.15(519). If no such
page is specified in the applicable Pricing Supplement the Designated CMT
Telerate Page shall be 7052, for the most recent week.

    "Designated CMT Maturity Index" means the original period to maturity of the
Treasury Notes (either one, two, three, five, seven, ten, twenty or thirty
years) specified in the applicable Pricing Supplement with respect to which the
CMT Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be two years.

    Federal Funds Rate Notes

    Each Federal Funds Rate Note will bear interest at the interest rate
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any) specified in the Federal Funds Rate Note and in the
applicable Pricing Supplement.

    Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Federal Funds Rate Interest Determination
Date, the rate on such date for Federal Funds as published in H.15(519) under
the heading "Federal Funds (Effective)." In the event that such rate is not
published prior to 9:00 A.M., New York City time, on the Calculation Date
pertaining to such Federal Funds Interest Determination Date, then the Federal
Funds Rate with respect to such Federal Funds Interest Determination Date shall
be the rate on such Federal Funds Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate." If by
3:00 P.M., New York City time, on such Calculation Date such rate is not
published in either H.15(519) or Composite Quotations, then the Federal Funds
Rate with respect to such Federal Funds Interest Determination Date shall be
calculated by the Calculation Agent and shall be the arithmetic mean (each as
rounded, if necessary, to the nearest one hundred-thousandth of a percent) of
the rates as of 9:00 A.M., New York City time, on such Federal Funds Interest
Determination Date for the last transaction in overnight Federal Funds arranged
by three leading brokers of Federal Funds transactions in The City of New York
selected by the Calculation Agent; provided, however, that if the brokers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Rate with respect to such Federal Funds
Interest Determination Date will be the Federal Funds Rate in effect immediately
prior to such Federal Funds Interest Determination Date.

    LIBOR Notes

                                      S-14
   15
    Each LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in
the LIBOR Note and in the applicable Pricing Supplement.

    Unless otherwise indicated in the applicable Pricing Supplement, "LIBOR"
means, with respect to any LIBOR Interest Determination Date, the rate
determined in accordance with the following provisions:

      (i) With respect to any LIBOR Interest Determination Date, LIBOR will be
    either: (a) if "LIBOR Reuters" is specified in the Note and the applicable
    Pricing Supplement, the arithmetic mean of the offered rates (unless the
    specified designated LIBOR Page (as defined below) by its terms provides
    only for a single rate, in which case such single rate shall be used) for
    deposits denominated in U.S. Dollars (as defined below) having the Index
    Maturity designated in the Note and the applicable Pricing Supplement,
    commencing on the second London Business Day immediately following the LIBOR
    Interest Determination Date, which appear on the Designated LIBOR Page
    specified in the Note and the applicable Pricing Supplement as of 11:00
    A.M., London time, on that LIBOR Interest Determination Date, if at least
    two such offered rates appear (unless, as aforesaid, only a single rate is
    required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is
    specified in the Note and the applicable Pricing Supplement, the rate for
    deposits denominated in U.S. Dollars having the Index Maturity designated in
    the Note and the applicable Pricing Supplement, commencing on the second
    London Business Day immediately following such LIBOR Interest Determination
    Date, which appears on the Designated LIBOR Page specified in the Note and
    the applicable Pricing Supplement as of 11:00 A.M. London time on that LIBOR
    Interest Determination Date. Notwithstanding the foregoing, if fewer than
    two offered rates appear on the Designated LIBOR Page with respect to LIBOR
    Reuters (unless the specified Designated LIBOR Page with respect to LIBOR
    Reuters by its terms provides only for a single rate, in which case such
    single rate shall be used), or if no rate appears on the Designated LIBOR
    Page with respect to LIBOR Telerate, whichever may be applicable, LIBOR in
    respect of the related LIBOR Interest Determination Date will be determined
    as if the parties had specified the rate described in clause (ii) below.

      (ii) With respect to any LIBOR Interest Determination Date on which fewer
    than two offered rates appear on the Designated LIBOR Page with respect to
    LIBOR Reuters (unless the Designated LIBOR Page by its terms provides only
    for a single rate, in which case such single rate shall be used), or if no
    rate appears on the Designated LIBOR Page with respect to LIBOR Telerate, as
    the case may be, the Calculation Agent will request the principal London
    office of each of four major banks in the London interbank market selected
    by the Calculation Agent to provide the Calculation Agent with its offered
    rate quotation for deposits denominated in U.S. Dollars for the period of
    the Index Maturity designated in the Note and the applicable Pricing
    Supplement, commencing on the second London Business Day immediately
    following such LIBOR Interest Determination Date, to prime banks in the
    London interbank market as of 11:00 A.M., London time, on such LIBOR
    Interest Determination Date and in a principal amount that is representative
    for a single transaction in U.S. Dollars in such market at such time. If at
    least two such quotations are provided, LIBOR determined on such LIBOR
    Interest

                                      S-15
   16
    Determination Date will be the arithmetic mean of such quotations. If fewer
    than two quotations are provided, LIBOR determined on such LIBOR Interest
    Determination Date will be the arithmetic mean of the rates quoted as of
    11:00 A.M. in New York, on such LIBOR Interest Determination Date by three
    major banks in U.S. Dollars selected by the Calculation Agent for loans in
    New York City to leading European banks, having the Index Maturity
    designated in the Note and the applicable Pricing Supplement in a principal
    amount that is representative for a single transaction in U.S. Dollars in
    such market at such time; provided, however, that if the banks so selected
    by the Calculation Agent are not quoting as mentioned in this sentence,
    LIBOR determined on such LIBOR Interest Determination Date will be LIBOR in
    effect on such LIBOR Interest Determination Date.

    "Designated LIBOR Page" means either (a) the display on the Reuters Monitor
Money Rates Service for the purpose of displaying the London interbank rates of
major banks for U.S. Dollar Deposits (if "LIBOR Reuters" is designated in the
Note and the applicable Pricing Supplement), or (b) the display on the Dow Jones
Telerate Service for the purpose of displaying the London interbank rates of
major banks for U.S. Dollar Deposits (if "LIBOR Telerate" is designated in the
Note and the applicable Pricing Supplement). If neither LIBOR Reuters nor LIBOR
Telerate is specified in the Note and applicable Pricing Supplement, LIBOR will
be determined as if LIBOR Telerate page 3750 had been chosen.

    Prime Rate Notes

    Each Prime Rate Note will bear interest at the interest rate (calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any) specified in the Prime Rate Note and in the applicable Pricing Supplement.

    Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Prime Interest Determination Date, the rate set
forth on such date in H.15(519) under the heading "Bank Prime Loan." In the
event that such rate is not published prior to 9:00 A.M., New York City time, on
the Calculation Date pertaining to such Prime Interest Determination Date, then
the Prime Rate with respect to such Prime Interest Determination Date shall be
the arithmetic mean of the rates of interest publicly announced by each bank
that appears on the Reuters Screen USPRIME1 Page as such bank's prime rate or
base lending rate as in effect for that Prime Interest Determination Date. If
fewer than four such rates appear on the Reuters Screen USPRIME1 Page for the
Prime Interest Determination Date, the Prime Rate with respect to such Prime
Interest Determination Date shall be the arithmetic mean of the prime rates
quoted on the basis of the actual number of days in the year divided by 360 as
of the close of business on such Prime Interest Determination Date by at least
two of the three major money center banks in The City of New York selected by
the Calculation Agent. If fewer than two quotations are provided, the Prime Rate
with respect to such Prime Interest Determination Date shall be determined on
the basis of the rates furnished in The City of New York by the appropriate
number of substitute banks or trust companies organized and doing business under
the laws of the United States, or any state thereof, having total equity capital
of at least U.S. $500 million and being subject to supervision or examination by
Federal or state authority, selected by the Calculation Agent to provide such
rate or rates;

                                      S-16
   17
provided, however, that if the bank or trust company selected as aforesaid is
not quoting as mentioned in this sentence, the Prime Rate with respect to such
Prime Interest Determination Date will be the Prime Rate in effect immediately
prior to such Prime Interest Determination Date. "Reuters Screen USPRIME1 Page"
means the display designated as page "USPRIME1" on the Reuters Monitor Money
Rate Service (or such other page as may replace the USPRIME1 page on the service
for the purpose of displaying the prime rate or base lending rate of major
banks).

    Treasury Rate Notes

    Each Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any) specified in the Treasury Rate Note and in the applicable Pricing
Supplement.

    Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
for the most recent auction of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable Pricing
Supplement as published in H.15(519) under the heading, "Treasury bills--auction
average (investment)" or, if not so published by 3:00 P.M., New York City time,
on the Calculation Date pertaining to such Treasury Interest Determination Date,
the average auction rate (expressed as a bond equivalent, on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise
announced by the United States Department of the Treasury. In the event that
such rate is not available by 3:00 P M., New York City time, on such Treasury
Interest Determination Date, or if no such auction is held in a particular week,
then the Treasury Rate with respect to such Treasury Interest Determination Date
shall be calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Interest Determination Date, of three leading primary U.S.
government securities dealers selected by the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the Index Maturity
designated in the applicable Pricing Supplement; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate with respect to such Treasury
Interest Determination Date will be the Treasury Rate in effect immediately
prior to such Treasury Interest Determination Date.


ORIGINAL ISSUE DISCOUNT NOTES

    The Company may from time to time offer Original Issue Discount Notes. The
Pricing Supplement applicable to certain Original Issue Discount Notes may
provide that Holders of such Notes will not receive periodic payments of
interest. For purposes of determining whether Holders of the requisite principal
amount of Notes outstanding under the Indenture have made a demand or given a
notice or waiver or taken any other action, the outstanding principal amount of
Original Issue Discount Notes shall be deemed to be the amount of the principal
that would be due and payable upon declaration of acceleration of the Stated
Maturity thereof as of the date of such determination. See "General."

                                      S-17
   18
    "Original Issue Discount Note" means (i) a Note that has a stated redemption
price at Maturity that exceeds its Issue Price (as defined for U.S. Federal
income tax purposes) by at least 0.25% of its stated redemption price at
maturity multiplied by the number of full years from the Original Issue Date to
the Stated Maturity for such Notes and (ii) any other Note designated by the
Company as issued with original issue discount for U.S. Federal income tax
purposes.


AMORTIZING NOTES

    The Company may from time to time offer Notes for which payments of
principal and interest are made in installments over the life of the Note
("Amortizing Notes"). Interest on each Amortizing Note will be computed as set
forth in a Pricing Supplement or in the Book-Entry Note representing such
Amortizing Note. Unless otherwise provided in such Pricing Supplement or in such
Book-Entry Note, payments with respect to Amortizing Notes will be applied first
to interest due and payable thereon and then to the reduction of the unpaid
principal amount thereof. A table setting forth repayment information with
respect to each Amortizing Note will be provided to the original purchaser of
such Note and will be available upon request to the subsequent Holders thereof.


REDEMPTION AND REPAYMENT

    Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The Notes will be redeemable at the
option of the Company prior to the Stated Maturity only if an Initial Redemption
Date is specified in the applicable Pricing Supplement ("Initial Redemption
Date"). If so specified, the Notes will be subject to redemption at the option
of the Company on any date on and after the applicable Initial Redemption Date
in whole or from time to time in part in increments of $1,000 or the minimum
denomination specified in such Pricing Supplement (provided that any remaining
principal amount thereof shall be at least $1,000 or such minimum denomination),
at the applicable Redemption Price (as defined below) on notice given not more
than 60 nor less than 30 calendar days prior to the date of redemption and in
accordance with the provisions of the Indenture. "Redemption Price," with
respect to a Note, means an amount equal to the sum of (i) the Initial
Redemption Percentage specified in such Pricing Supplement (as adjusted by the
Annual Redemption Percentage Reduction, if applicable (as specified in such
Pricing Supplement)), multiplied by the unpaid principal amount or the portion
to be redeemed plus (ii) accrued interest to the date of redemption. The Initial
Redemption Percentage, if any, applicable to a Note shall decline at each
anniversary of the Initial Redemption Date by an amount equal to the applicable
Annual Redemption Percentage Reduction, if any, until the Redemption Price is
equal to 100% of the unpaid principal amount thereof or the portion thereof to
be redeemed.

    The Pricing Supplement relating to each Note will indicate either that such
Note cannot be repaid prior to Stated Maturity or that such Note will be
repayable at the option of the Holder on a date or dates specified prior to
Stated Maturity at a price or prices set forth in the applicable Pricing
Supplement, together with accrued interest to the date of repayment.

                                      S-18
   19
    In order for a Note that is repayable at the option of the Holder to be
repaid prior to Stated Maturity, the Paying Agent (initially, the Company has
appointed the Trustee as Paying Agent) must receive at least 30 but not more
than 45 calendar days prior to the repayment date (i) the Note with the form
entitled "Option to Elect Repayment" on the reverse of the Note duly completed
or (ii) a facsimile transmission or letter (first class, postage prepaid) from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States setting forth the name of the Holder of the Note, the principal amount of
the Note, the principal amount of the Note to be repaid, the certificate number
or a description of the tenor and terms of the Note, a statement that the option
to elect repayment is being exercised thereby and a guarantee that the Note to
be repaid with the form entitled "Option to Elect Repayment" on the reverse of
the Note duly completed will be received by the Paying Agent not later than five
Business Days after the date of such facsimile transmission or letter and such
Note and form duly completed are received by the Paying Agent by such fifth
Business Day. Exercise of the repayment option by the Holder of a Note shall be
irrevocable, except that a Holder who has tendered a Note for repayment may
revoke such tender for repayment by written notice to the Paying Agent received
prior to the close of business on the tenth calendar day prior to the repayment
date. The repayment option may be exercised by the Holder of a Note for less
than the entire principal amount of the Note provided that the principal amount
of the Note remaining outstanding after such repayment is an authorized
denomination.

    While the Book-Entry Notes are represented by the Global Securities held by
or on behalf of the Depositary, and registered in the name of the Depositary or
the Depositary's nominee, the option for repayment may be exercised by the
applicable Participant (as defined herein) that has an account with the
Depositary, on behalf of the beneficial owners of the Global Security or
Securities representing such Book-Entry Notes, by delivering a written notice
substantially similar to the above mentioned form to the Trustee at its
Corporate Trust Office (or such other address of which the Company shall from
time to time notify the Holders), not more than 60 nor less than 30 days prior
to the date of repayment. Notices of elections from Participants on behalf of
beneficial owners of the Global Security or Securities representing such
Book-Entry Notes to exercise their option to have such Book-Entry Notes repaid
must be received by the Trustee by 5:00 P.M., New York City time, on the last
day for giving such notice. In order to ensure that a notice is received by the
Trustee on a particular day, the beneficial owner of the Global Security or
Securities representing such Book-Entry Notes must so direct the applicable
Participant before such Participant's deadline for accepting instructions for
that day. Different firms may have different deadlines for accepting
instructions from their customers. Accordingly, beneficial owners of the Global
Security or Securities representing Book-Entry Notes should consult the
Participants through which they own their interest therein for the respective
deadlines for such Participants. All notices shall be executed by a duly
authorized officer of such Participant (with signatures guaranteed) and shall be
irrevocable. In addition, beneficial owners of the Global Security or Securities
representing Book-Entry Notes shall effect delivery at the time such notices of
election are given to the Depositary by causing the applicable Participant to
transfer such beneficial owner's interest in

                                      S-19
   20
the Global Security or Securities representing such Book-Entry Notes, on the
Depositary's records, to the Trustee. See "Book-Entry System."

    If applicable, the Company will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended, and any other securities
laws or regulations in connection with any such repayment.


REPURCHASE

    The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, may be surrendered to the Trustee
for cancellation.


OTHER PROVISIONS

    Any provisions with respect to the determination of an Interest Rate Basis,
the specifications of Interest Rate Basis, calculation of the interest rate
applicable to, or the principal payable at Maturity on, any Note, its Interest
Payment Dates or any other matter relating thereto may be modified by the terms
as specified under "Other Provisions" on the face of such Note, or in an
addendum relating thereto if so specified on the face thereof, and in the
applicable Pricing Supplement.


BOOK-ENTRY SYSTEM

    DTC will act as securities depositary for the Book-Entry Notes. The
Book-Entry Notes will be issued as fully-registered securities registered in the
name of Cede & Co. (DTC's partnership nominee). One fully-registered Global
Security will be issued for each issue of the Notes, each in the aggregate
principal amount of such issue, and will be deposited with DTC. If, however, the
aggregate principal amount of any issue exceeds $200 million, one Global
Security will be issued with respect to each $200 million of principal amount
and an additional Global Security will be issued with respect to any remaining
principal amount of such issue.

    DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants ("Direct Participants") include
securities brokers and dealers, banks, trust companies, clearing Corporations,
and certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to DTC's system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct

                                      S-20
   21
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Securities and
Exchange Commission.

    Purchases of Book-Entry Notes under DTC's system must be made by or through
Direct Participants, which will receive a credit for the Book-Entry Notes on
DTC's records. The ownership interest of each actual purchaser of each
Book-Entry Note ("Beneficial Owner") is in time to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Book-Entry Notes are to be accomplished by entries
made on the books of Participants acting on behalf of the Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Book-Entry Notes, except in the event that use of the book-entry
system for one or more Book-Entry Notes is discontinued.

    To facilitate subsequent transfers, all Global Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Global Securities with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Book-Entry Notes; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Book-Entry Notes are credited, which may or may not be the Beneficial Owners.
The Participants will remain responsible for keeping account of their holdings
on behalf of their customers.

    Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.

    Redemption notices shall be sent to Cede & Co. If less than all of the
Book-Entry Notes within an issue are being redeemed, DTC's current practice is
to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.

    Neither DTC nor Cede & Co. will consent or vote with respect to Book-Entry
Notes. Under its usual procedures, DTC will mail an "Omnibus Proxy" to the
Company as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Book-Entry Notes are credited on the record date (identified in a
listing attached to the Omnibus Proxy).

    Principal and interest payments on the Book-Entry Notes will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the payable date. Payments
by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as in the case of securities held for the accounts of

                                      S-21
   22
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, or the Company, subject to
any statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the Company,
disbursement of such payments to Direct Participants shall be the responsibility
of DTC, and disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.

    A Beneficial Owner shall give notice to elect to have its Book-Entry Notes
purchased or tendered, through its Participant, to the Paying Agent, and shall
effect delivery of such Book-Entry Notes by causing the Direct Participant to
transfer the Participant's interest in the Book-Entry Notes, on DTC's records,
to the Paying Agent. The requirement for physical delivery of Book-Entry Notes
in connection with a demand for purchase or a mandatory purchase will be deemed
satisfied when the ownership rights in the Book-Entry Notes are transferred by a
Direct Participant on DTC's records.

    DTC may discontinue providing its services as securities depositary with
respect to the Book-Entry Notes at any time by giving reasonable notice to the
Company or the Agents. Under such circumstances, in the event that a successor
securities depositary is not obtained, Certificated Notes will be printed and
delivered in exchange for the Book-Entry Notes represented by the Global
Securities held by DTC.

    The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
Certificated Notes will be printed and delivered in exchange for the Book-Entry
Notes represented by the Global Securities held by DTC.

    The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.

    Neither the Company, the Trustee, any Paying Agent nor the registrar for the
Notes will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.


DEFEASANCE

    Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be subject to defeasance and discharge as described under "Description of
the Debt Securities--Defeasance" in the Prospectus.


                          CERTAIN UNITED STATES FEDERAL
                             INCOME TAX CONSEQUENCES

    The following summary describes certain United States federal income tax
consequences of the ownership of Notes as of the date hereof. Except where
noted, it deals only with Notes held as capital assets by United States Holders
and does not deal with special situations, such as those of dealers in
securities or currencies, financial institutions, tax exempt entities, life
insurance companies, persons holding Notes as a

                                      S-22
   23
part of a hedging, conversion or constructive sale transaction or a straddle or
United States Holders whose "functional currency" is not the U.S. dollar.
Furthermore, the discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), and regulations, rulings and
judicial decisions thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified so as to result in federal income tax consequences
different from those discussed below. Any special United States federal income
tax considerations relevant to a particular issue of the Notes will be provided
in the applicable Pricing Supplement. PERSONS CONSIDERING THE PURCHASE,
OWNERSHIP OR DISPOSITION OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR
PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY
OTHER TAXING JURISDICTION.


PAYMENTS OF INTEREST

    Except as set forth below, interest on a Note will generally be taxable to a
United States Holder as ordinary income from domestic sources at the time it is
paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes. As used herein, a "United States Holder" of a Note
means a holder that is a citizen or resident of the United States, a corporation
or partnership created or organized in or under the laws of the United States or
any political subdivision thereof, an estate the income of which is subject to
United States federal income taxation regardless of its source or a trust which
is subject to the supervision of a court within the Unites States and the
control of a United States person as described in Section 7701(a)(30) of the
Code. A "Non-United States Holder" is a holder that is not a United States
Holder.


ORIGINAL ISSUE DISCOUNT

    United States Holders of Notes issued with original issue discount ("OID")
will be subject to special tax accounting rules, as described in greater detail
below. United States Holders of such Notes should be aware that they generally
must include OID in gross income in advance of the receipt of cash attributable
to that income. However, United States Holders of such Notes generally will not
be required to include separately in income cash payments received on the Notes,
even if denominated as interest, to the extent such payments do not constitute
qualified stated interest (as defined below). Notes issued with OID will be
referred to as "Original Issue Discount Notes." Notice will be given in the
applicable Pricing Supplement when the Company determines that a particular Note
will be an Original Issue Discount Note.

    This summary is based upon final Treasury regulations addressing debt
instruments issued with OID (the "OID Regulations"). The following discussion
does not address Notes providing for contingent payments other than Notes that
bear qualified stated interest.

    A Note with an "issue price" that is less than its stated redemption price
at maturity (the sum of all payments to be made on the Note other than
"qualified stated interest") will be issued with OID if such difference is at
least 0.25 percent of the stated redemption price at maturity multiplied by the
number of complete years to maturity or, in the case of an Amortizing Note, the
weighted average maturity. The

                                      S-23
   24
"issue price" of each Note in a particular offering will be the first price at
which a substantial amount of that particular offering is sold (other than to an
underwriter, placement agent or wholesaler). The term "qualified stated
interest" means stated interest that is unconditionally payable in cash or in
property (other than debt instruments of the issuer) at least annually at a
single fixed rate or, subject to certain conditions, based on one or more
interest indices. Interest is payable at a single fixed rate only if the rate
appropriately takes into account the length of the interval between payments.
Notice will be given in the applicable Pricing Supplement when the Company
determines that a particular Note will bear interest that is not qualified
stated interest.

    In the case of a Note issued with de minimis OID (i.e., discount that is not
OID because it is less than 0.25 percent of the stated redemption price at
maturity multiplied by the number of complete years to maturity), the United
States Holder generally must include such de minimis OID in income as principal
payments on the Notes are made in proportion to the stated principal amount of
the Note. Any amount of de minimis OID that has been included in income shall be
treated as capital gain.

    Certain of the Notes may be redeemed prior to their Stated Maturity at the
option of the Company and/or at the option of the holder. Original Issue
Discount Notes containing such features may be subject to rules that differ from
the general rules discussed herein. Persons considering the purchase of Original
Issue Discount Notes with such features should carefully examine the applicable
Pricing Supplement and should consult their own tax advisors with respect to
such features since the tax consequences with respect to OID will depend, in
part, on the particular terms and features of the Notes.

    United States Holders of Original Issue Discount Notes with a maturity upon
issuance of more than one year must, in general, include OID in income in
advance of the receipt of some or all of the related cash payments. The amount
of OID includible in income by the initial United States Holder of an Original
Issue Discount Note is the sum of the "daily portions" of OID with respect to
the Note for each day during the taxable year or portion of the taxable year in
which such United States Holder held such Note ("accrued OID"). The daily
portion is determined by allocating to each day in any "accrual period" a pro
rata portion of the OID allocable to that accrual period. The "accrual period"
for an Original Issue Discount Note may be of any length and may vary in length
over the term of the Note, provided that each accrual period is no longer than
one year and each scheduled payment of principal or interest occurs on the first
day or the final day of an accrual period. The amount of OID allocable to any
accrual period is an amount equal to the excess, if any, of (a) the product of
the Note's adjusted issue price at the beginning of such accrual period and its
yield to maturity (determined on the basis of compounding at the close of each
accrual period and properly adjusted for the length of the accrual period) over
(b) the sum of any qualified stated interest allocable to the accrual period.
OID allocable to a final accrual period is the difference between the amount
payable at maturity (other than a payment of qualified stated interest) and the
adjusted issue price at the beginning of the final accrual period. Special rules
will apply for calculating OID for an initial short accrual period. The
"adjusted issue

                                      S-24
   25
price" of a Note at the beginning of any accrual period is equal to its issue
price increased by the accrued OID for each prior accrual period (determined
without regard to the amortization of any acquisition or bond premium, as
described below) and reduced by any payments made on such Note (other than
qualified stated interest) on or before the first day of the accrual period.
Under these rules, a United States Holder will have to include in income
increasingly greater amounts of OID in successive accrual periods. The Company
is required to provide information returns stating the amount of OID accrued on
Notes held of record by persons other than corporations and other exempt
holders.

    In the case of an Original Issue Discount Note that is a Floating Rate Note,
both the "yield to maturity" and "qualified stated interest" will be determined
solely for purposes of calculating the accrual of OID as though the Note will
bear interest in all periods at a fixed rate generally equal to the rate that
would be applicable to interest payments on the Note on its date of issue or, in
the case of certain Floating Rate Notes, the rate that reflects the yield to
maturity that is reasonably expected for the Note. Additional rules may apply if
interest on a Floating Rate Note is based on more than one interest index.
Persons considering the purchase of Floating Rate Notes should carefully examine
the applicable Pricing Supplement and should consult their own tax advisors
regarding the U.S. federal income tax consequences of the holding and
disposition of such Notes.

     United States Holders may elect to treat all interest on any Note as OID
and calculate the amount includible in gross income under the constant yield
method described above. For the purposes of this election, interest includes
stated interest, acquisition discount, OID, de minimis OID, market discount, de
minimis market discount and unstated interest, as adjusted by any amortizable
bond premium or acquisition premium. The election is to be made for the taxable
year in which the United States Holder acquired the Note, and may not be revoked
without the consent of the Internal Revenue Service (the "IRS"). United States
Holders should consult with their own tax advisors about this election.


SHORT-TERM NOTES

    In the case of Original Issue Discount Notes having a term of one year or
less ("Short-Term Notes"), under the OID Regulations all payments (including all
stated interest) will be included in the stated redemption price at maturity
and, thus, United States Holders will generally be taxable on the discount in
lieu of stated interest. The discount will be equal to the excess of the stated
redemption price at maturity over the issue price of a Short-Term Note, unless
the United States Holder elects to compute this discount using tax basis instead
of issue price. In general, individuals and certain other cash method United
States Holders of a Short-Term Note are not required to include accrued discount
in their income currently unless they elect to do so (but may be required to
include any stated interest in income as it is received). United States Holders
that report income for federal income tax purposes on the accrual method and
certain other United States Holders are required to accrue discount on such
Short-Term Notes (as ordinary income) on a straight-line basis, unless an
election is made to accrue the discount according to a constant yield method
based on daily compounding. In the case of a United States Holder that is not
required, and does not elect, to include discount in income currently, any gain

                                      S-25
   26
realized on the sale, exchange or retirement of the Short-Term Note will be
ordinary income to the extent of the discount accrued through the date of sale,
exchange or retirement. In addition, a United States Holder that does not elect
to currently include accrued discount in income may be required to defer
deductions for a portion of the United States Holder's interest expense with
respect to any indebtedness incurred or continued to purchase or carry such
Notes.


MARKET DISCOUNT

    If a United States Holder purchases a Note (other than an Original Issue
Discount Note) for an amount that is less than its stated redemption price at
maturity or, in the case of an Original Issue Discount Note, its adjusted issue
price, the amount of the difference will be treated as "market discount" for
United States federal income tax purposes, unless such difference is less than a
specified de minimis amount. Under the market discount rules, a United States
Holder will be required to treat any principal payment on, or any gain on the
sale, exchange, retirement or other disposition of, a Note as ordinary income to
the extent of the market discount which has not previously been included in
income and is treated as having accrued on such Note at the time of such payment
or disposition. In addition, the United States Holder may be required to defer,
until the maturity of the Note or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or carry such Note.

    Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the United
States Holder elects to accrue on a constant interest method. A United States
Holder of a Note may elect to include market discount in income currently as it
accrues (on either a ratable or constant interest method), in which case the
rule described above regarding deferral of interest deductions will not apply.
This election to include market discount in income currently, once made, applies
to all market discount obligations acquired on or after the first taxable year
to which the election applies and may not be revoked without the consent of the
IRS.


ACQUISITION PREMIUM; AMORTIZABLE BOND PREMIUM

    A United States Holder that purchases a Note for an amount that is greater
than its adjusted issue price but equal to or less than the sum of all amounts
payable on the Note after the purchase date other than payments of qualified
stated interest will be considered to have purchased such Note at an
"acquisition premium." Under the acquisition premium rules, the amount of OID
which such holder must include in its gross income with respect to such Note for
any taxable year will be reduced by the portion of such acquisition premium
properly allocable to such year.

    A United States Holder that purchases a Note for an amount in excess of the
sum of all amounts payable on the Note after the purchase date other than
qualified stated interest will be considered to have purchased the Note at a
"premium" and will not be required to include any OID in income. A United States
Holder generally may elect to amortize the premium over the remaining term of
the Note on a constant

                                      S-26
   27
yield method. The amount amortized in any year will be treated as a reduction of
United States Holder's interest income from the Note. Bond premium on a Note
held by a United States Holder that does not make such an election will decrease
the gain or increase the loss otherwise recognized on disposition of the Note.
The election to amortize premium on a constant yield method once made applies to
all debt obligations held or subsequently acquired by the electing United States
Holder on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.

      Proposed Treasury regulations issued on June 27, 1996 would clarify the
treatment of bond premium. Among the provisions contained in the proposed
regulations is a provision that generally provides that premium may be amortized
to offset interest income only as a United States Holder takes the qualified
stated interest into account under the holder's regular accounting method.
Moreover, the proposed Treasury regulations generally provide that in the case
of instruments that provide for alternative payment schedules, bond premium is
calculated by assuming that both the issuer and the holder will exercise or not
exercise options in a manner that maximizes the holder's yield. If adopted, the
regulations would be effective for debt instruments acquired on or after the
date 60 days after the date final regulations are published in the Federal
Register. However, if a United States Holder elects to amortize bond premium for
the taxable year containing such effective date, the proposed Treasury
regulations would apply to all the United States Holder's debt instruments held
on or after the first day of that taxable year.


SALE, EXCHANGE AND RETIREMENT OF NOTES

    A United States Holder's tax basis in a Note will, in general, be the United
States Holder's cost therefor, increased by OID, market discount or any discount
with respect to a Short-Term Note previously included in income by the United
States Holder and reduced by any amortized premium and any cash payments on the
Note other than qualified stated interest. Upon the sale, exchange, retirement
or other disposition of a Note, a United States Holder will recognize gain or
loss equal to the difference between the amount realized upon the sale,
exchange, retirement or other disposition (less any accrued qualified stated
interest, which will be taxable as such) and the adjusted tax basis of the Note.
Except as described above with respect to certain Short-Term Notes or with
respect to market discount, such gain or loss will be capital gain or loss.
Under recently enacted legislation, capital gains of individuals derived in
respect of capital assets held for more than one year are eligible for reduced
rates of taxation which may vary depending upon the holding period of such
capital assets. Prospective investors should consult their own tax advisors with
respect to the tax consequences of the new legislation. The deductibility of
capital losses is subject to limitations.


NON-UNITED STATES HOLDERS

    Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:

      (a) no withholding of United States federal income tax will be required
    with respect to the payment by the Company or any Paying

                                      S-27
   28
    Agent of principal, premium, if any, or interest (which for purposes of this
    discussion includes OID) on a Note owned by a Non-United States Holder,
    provided (i) that the beneficial owner does not actually or constructively
    own 10% or more of the total combined voting power of all classes of stock
    of the Company entitled to vote within the meaning of section 871(h)(3) of
    the Code and the regulations thereunder, (ii) the beneficial owner is not a
    controlled foreign corporation that is related to the Company through stock
    ownership, (iii) the beneficial owner is not a bank whose receipt of
    interest on a Note is described in section 881(c)(3)(A) of the Code and (iv)
    the beneficial owner satisfies the statement requirement (described
    generally below) set forth in section 871(h) and section 881 (c) of the Code
    and the regulations thereunder;

      (b) no withholding of United States federal income tax will be required
    with respect to any gain or income realized by a Non-United States Holder
    upon the sale, exchange, retirement or other disposition of a Note; and

      (c) a Note beneficially owned by an individual who at the time of death is
    a Non-United States Holder will not be subject to United States federal
    estate tax as a result of such individual's death, provided that such
    individual does not actually or constructively own 10% or more of the total
    combined voting power of all classes of stock of the company entitled to
    vote within the meaning of section 871(h)(3) of the Code and provided that
    the interest payments with respect to such Note would not have been, if
    received at the time of such individual's death, effectively connected with
    the conduct of a United States trade or business by such individual.

    To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, a paying
agent of the Company with a statement to the effect that the beneficial owner is
not a U.S. person. Currently, these requirements will be met if (1) the
beneficial owner provides his name and address, and certifies, under penalties
of perjury, that he is not a U.S. person (which certification may be made on an
Internal Revenue Service ("IRS") Form W-8 (or successor form)) or (2) a
financial institution holding the Note on behalf of the beneficial owner
certifies, under penalties of perjury, that such statement has been received by
it and furnishes a paying agent with a copy thereof. Under recently finalized
Treasury regulations (the "Final Regulations"), the statement requirement
referred to in (a)(iv) above may also be satisfied with other documentary
evidence for interest paid after December 31, 1998 with respect to an offshore
account or through certain foreign intermediaries.

    If a non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of premium, if
any, and interest (including OID) made to such non-United States Holder will be
subject to a 30% withholding tax unless the beneficial owner of the Note
provides the Company or its paying agent, as the case may be, with a properly
executed (1) IRS Form 1001 (or successor form) claiming an exemption from
withholding under the benefit of a tax treaty or (2) IRS Form 4224 (or successor
form) stating that interest paid on the Note is not subject to withholding tax
because it

                                      S-28
   29
is effectively connected with the beneficial owner's conduct of a trade or
business in the United States. Under the Final Regulations, Non-United States
Holders will generally be required to provide IRS Form W-8 in lieu of IRS Form
1001 and IRS Form 4224, although alternative documentation may be applicable in
certain situations.

    If a Non-United States Holder is engaged in a trade or business in the
United States and premium, if any, and interest (including OID) on the Note is
effectively connected with the conduct of such trade or business, the Non-United
States Holder, although exempt from the withholding tax discussed above, will be
subject to United States federal income tax on such premium, interest and OID on
a net income basis in the same manner as if it were a United States Holder. In
addition, if such holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% of its effectively connected earnings and profits for
the taxable year, subject to adjustments. For this purpose, such premium, if
any, and interest (including OID) on a Note will be included in such foreign
corporation's earnings and profits.

    Any gain or income realized upon the sale, exchange, retirement or other
disposition of a Note generally will not be subject to United States federal
income tax unless (i) such gain or income is effectively connected with a trade
or business in the United States of the Non-United States Holder, or (ii) in the
case of a Non-United States Holder who is an individual, such individual is
present in the United States for 183 days or more in the taxable year of such
sale, exchange, retirement, or other disposition and certain other conditions
are met.


INFORMATION REPORTING AND BACKUP WITHHOLDING

    In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium paid on Notes and to the
proceeds of sale of a Note made to United States Holders other than certain
exempt recipients (such as corporations). A 31 percent backup withholding tax
will apply to such payments if the United States Holder fails to provide a
taxpayer identification number or certification of foreign or other exempt
status or fails to report in full dividend and interest income.

    No information reporting or backup withholding will be required with respect
to payments made by the Company or any paying agent to Non-United States Holders
if a statement described in (a)(iv) under "Non-United States Holders" has been
received and the payor does not have actual knowledge that the beneficial owner
is a United States person.

    In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, OID or premium on a Note are paid or
collected by a foreign office of a custodian, nominee or other foreign agent on
behalf of the beneficial owner of such Note, or if a foreign office of a broker
(as defined in applicable Treasury regulations) pays the proceeds of the sale of
a Note to the owner thereof. If, however, such nominee, custodian, agent or
broker is, for United States federal income tax purposes, a U.S. person, a
controlled foreign corporation or a foreign person that derives 50% or more of
its gross income for certain periods from the conduct of a trade or business in
the United States, such payments will not be subject to backup

                                      S-29
   30
withholding but will be subject to information reporting, unless (i) such
custodian, nominee, agent or broker has documentary evidence in its records that
the beneficial owner is not a U.S. person and certain other conditions are met
or (ii) the beneficial owner otherwise establishes an exemption. Under the Final
Regulations, backup withholding will not apply to such payments absent actual
knowledge that the payee is a United States person.

    Payments of principal, interest, OID and premium on a Note paid to the
beneficial owner of a Note by a United States office of a custodian, nominee or
agent, or the payment by the United States office of a broker of the proceeds of
sale of a Note, will be subject to both backup withholding and information
reporting unless the beneficial owner provides the statement referred to in
(a)(iv) above and the payor does not have actual knowledge that the beneficial
owner is a United States person or otherwise establishes an exemption.

    Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.


                        SUPPLEMENTAL PLAN OF DISTRIBUTION

    The Notes are offered on a continuing basis by the Company through the
Agents, each of which has agreed to use its reasonable efforts to solicit
purchases of the Notes. The Company will pay each Agent a commission of from
 .125% to .750% of the principal amount of each Note, depending upon its Stated
Maturity, sold through such Agent. With respect to maturities greater than 30
years, the commission will be negotiated between the Company and the Agents. The
Company will have the sole right to accept offers to purchase Notes and may
reject any such offer in whole or in part. Each Agent will have the right, in
its discretion reasonably exercised, to reject in whole or in part any offer to
purchase Notes received by such Agent.

    The Company also may sell Notes to any Agent, acting as principal, at a
discount to be agreed upon at the time of sale, for resale to one or more
investors or to one or more broker-dealers (acting as principal for purposes of
resale) at varying prices related to prevailing market prices at the time of
resale, as determined by such Agent, or, if so agreed, at a fixed public
offering price. Unless otherwise indicated in the applicable Pricing Supplement,
any Note purchased by an Agent as principal will be purchased at 100% of the
principal amount thereof less a percentage equal to the commission applicable to
an agency sale of a Note having an identical Stated Maturity. In addition,
unless otherwise indicated in the applicable Pricing Supplement, if any Note is
resold by an Agent to any broker-dealer at a discount, such discount will not be
in excess of the discount or commission received by such Agent from the Company.
After the initial public offering of the Notes, the public offering price (in
the case of Notes to be resold on a fixed public offering price basis), the
concession and the discount may be changed. The Company also reserves the right
to sell the Notes directly to investors on its own behalf in those jurisdictions
where it is authorized to do so or as otherwise provided in the applicable
Pricing Supplement. In such circumstances, the Company will have the sole right
to accept offers to purchase Notes and may reject any proposed purchase

                                      S-30
   31
of Notes in whole or in part. In the case of sales made directly by the Company,
no commission will be payable.

    The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Act"). The Company has agreed to
indemnify each Agent against certain liabilities, including liabilities under
the Act, or to contribute to payments each Agent may be required to make in
respect thereof. The Company has agreed to reimburse the Agents for certain of
the Agents' expenses, including, but not limited to, the fees and expenses of
counsel to the Agents.

    The Company has been advised by each Agent that it may from time to time
purchase and sell Notes in the secondary market, but that it is not obligated to
do so. There can be no assurance that there will be a secondary market for the
Notes or liquidity in the secondary market if one develops. From time to time,
each Agent may make a market in the Notes.

    In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent(s) will be permitted to
engage in certain transactions that stabilize the price of Notes. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of Notes. If the Agent creates or the Agents create, as
the case may be, a short position in Notes, i.e., if it sells or they sell Notes
in an aggregate principal amount exceeding that set forth in the applicable
Pricing Supplement, such Agent(s) may reduce that short position by purchasing
Notes in the open market. In general, purchases of Notes for the purpose of
stabilization or to reduce a short position could cause the price of Notes to be
higher than it might be in the absence of such purchases.

    Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described in the immediately preceding paragraph may have on the price of Notes.
In addition, neither the Company nor any of the Agents makes any representation
that the Agents will engage in any such transactions or that such transactions,
once commenced, will not be discontinued without notice.

    The Agents and their affiliates may engage in transactions with and perform
services for the Company and its affiliates in the ordinary course of business.
Affiliates of Chase Securities Inc. and J.P. Morgan Securities Inc. are lenders
under the Company's bank facilities and, to the extent that the proceeds hereof
are used to repay bank indebtedness, may receive a portion of the net proceeds
from this offering as a result of the repayment of a portion of the bank
indebtedness. See "Use of Proceeds" in the accompanying Prospectus.


                                      S-31
   32
PROSPECTUS
                                  $750,000,000
                             INGERSOLL-RAND COMPANY
                                  Common Stock
                                Preference Stock
                                 Debt Securities
                            Stock Purchase Contracts
                              Stock Purchase Units

                           INGERSOLL-RAND FINANCING I
                           INGERSOLL-RAND FINANCING II
                     Trust Preferred Securities, Guaranteed
                        To The Extent Set Forth Herein By
                             INGERSOLL-RAND COMPANY
                               ------------------


    Ingersoll-Rand Company ("Ingersoll-Rand" or the "Company") from time to time
may sell, up to an aggregate initial offering price of $750,000,000, in each
case on terms to be determined by market conditions at the time of sale, its (i)
common stock, $2 par value per share (the "Common Stock"), (ii) preference
stock, without par value, in one or more series (the "Preference Stock"), (iii)
debt securities in one or more series, which may be either senior (the "Senior
Debt Securities"), senior subordinated (the "Senior Subordinated Debt
Securities") or junior subordinated (the "Junior Subordinated Debt Securities",
and together with the Senior Debt Securities and the Senior Subordinated Debt
Securities, the "Debt Securities"), (iv) Stock Purchase Contracts (the "Stock
Purchase Contracts") to purchase Common Stock and (v) Stock Purchase Units (the
"Stock Purchase Units"), each representing ownership of a Stock Purchase
Contract and Debt Securities or Trust Preferred Securities (as defined) or debt
obligations of third parties, including U.S. Treasury Securities, securing the
holder's obligation to purchase the Common Stock under the Stock Purchase
Contract.

    Ingersoll-Rand Financing I and Ingersoll-Rand Financing II, each of which is
a statutory business trust created under the laws of the State of Delaware (each
a "Trust" or an "Ingersoll-Rand Trust"), the Trust Common Securities (as defined
herein) of which will be wholly-owned by the Company at the time of issuance of
any Trust Preferred Securities, may offer preferred securities representing
undivided beneficial ownership interests in the assets of the respective
Ingersoll-Rand Trust (the "Trust Preferred Securities"). The payment of periodic
cash distributions with respect to Trust Preferred Securities of each of the
Ingersoll-Rand Trusts out of moneys held by each of the Ingersoll-Rand Trusts,
and payments on liquidation, redemption or otherwise with respect to such Trust
Preferred Securities, will be guaranteed by the Company to the extent described
herein (each a "Trust Preferred Guarantee"). See "Description of Trust Preferred
Guarantees." The Company's obligations under the Trust Preferred Guarantees are
subordinate and junior in right of payment to all other liabilities of the
Company and rank pari passu with the most senior Preference Stock, if any,
issued from time to time by the Company. In the event an Ingersoll-Rand Trust
issues Trust Preferred Securities or Trust Common Securities, the proceeds to
such Ingersoll-Rand Trust from such offering will be invested in Junior
Subordinated Debt Securities (the "Corresponding Junior Subordinated Debt
Securities"), which will be issued and sold in one or more series by the Company
to such Ingersoll-Rand Trust or the trustee of such trust and which will have
terms corresponding to the terms of the related Trust Preferred Securities (the
"Related Trust Preferred Securities"). The Corresponding Junior Subordinated
Debt Securities purchased by an Ingersoll-Rand Trust may be subsequently
distributed pro rata to holders of the Related Trust Preferred Securities or
Trust Common Securities in connection with the dissolution of such
Ingersoll-Rand Trust upon the occurrence of certain events as may be described
in the related Prospectus Supplement. The Trust Preferred Securities, together
with the Common Stock, the Preference Stock, the Debt Securities, the Stock
Purchase Contracts, the Stock Purchase Units and the Trust Preferred Guarantees,
are collectively referred to as the "Securities."

    With respect to each series of Securities, a supplement to this Prospectus
will be delivered (a "Prospectus Supplement") together with this
   33
Prospectus setting forth the terms of such Securities, including, where
applicable, the specific designation, aggregate principal amount, denominations,
maturity, interest rate (which may be fixed or variable) and time of payment of
interest, if any, coin or currency in which principal, premium, if any, and
interest, if any, will be payable, any terms for redemption, any terms for
sinking fund payments, whether the Debt Securities will be subordinated, the
initial public offering price, the names of, the principal amounts to be
purchased by, and the compensation of underwriters, dealers or agents, if any,
any listing of the Securities on a securities exchange and the other terms in
connection with the offering and sale of such Securities. With respect to the
Stock Purchase Contracts, the related Prospectus Supplement will set forth,
among other things, the designation and number of shares of Common Stock
issuable thereunder, the purchase price of Common Stock, the date or dates on
which the Common Stock is required to be purchased by the holders of the Stock
Purchase Contracts, and any periodic payments required to be made by the Company
to the holders of the Stock Purchase Contracts or vice-versa. With respect to
the Stock Purchase Units, the related Prospectus Supplement will set forth,
among other things, the specific terms of the Stock Purchase Contracts and any
Debt Securities or Trust Preferred Securities or debt obligations of third
parties securing the holder's obligation to purchase the Common Stock under the
Stock Purchase Contracts. With respect to the Trust Preferred Securities, the
related Prospectus Supplement will set forth, among other things, the specific
designation, rights, preferences, privileges and restrictions thereof, including
distribution rate or rates (or method of ascertaining the same), distribution
payment dates, voting rights, liquidation preference, and any conversion,
exchange, redemption or sinking fund provisions, the terms upon which the
proceeds of the sale of the Trust Preferred Securities will be used to purchase
a specific series of Junior Subordinated Debt Securities of the Company and the
terms upon which the obligations of the Ingersoll-Rand Trust to make periodic
cash distributions on the Trust Preferred Securities or make payments upon
liquidation or dissolution of the Ingersoll-Rand Trust or upon redemption of the
Trust Preferred Securities, to the extent funds are available therefor, shall be
unconditionally guaranteed by Ingersoll-Rand.

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

  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
       EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
          COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
            ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA-
                   TION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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

    The Securities may be sold directly to purchasers or to or through
underwriters, dealers or agents. If any underwriters, dealers or agents are
involved in the sale of any Securities, their names and any applicable fee,
commission or discount arrangements will be set forth in the Prospectus
Supplement. The net proceeds to the Company or any Ingersoll-Rand Trust from
sales of Securities will be set forth in the related Prospectus Supplement and
will be the purchase price of such Securities less attributable issuance
expenses, including underwriters', dealers' or agents' compensation
arrangements. See "Plan of Distribution" for indemnification arrangements for
underwriters, dealers and agents.

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

                 The date of this Prospectus is August 26, 1997.


                                       2
   34
                              AVAILABLE INFORMATION

    The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company can be inspected and copied at the Commission's
public reference facilities at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional offices located 
at Seven World Trade Center, Suite 1300, New York, New York 10048, and the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Common Stock of the Company is listed on the New
York Stock Exchange, Inc., and reports, proxy statements and other information
concerning the Company may be inspected at the office of such Exchange, 20 Broad
Street, New York, N.Y. 10005. This Prospectus does not contain all information
set forth in the Registration Statement (of which this Prospectus is a part) and
the exhibits thereto which the Company has filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), and to which
reference is hereby made.

    No separate financial statements of the Ingersoll-Rand Trusts have been
included herein. The Company does not consider that such financial statements
would be material to holders of the Securities because: (i) the Company, a
reporting company under the 1934 Act, owns, directly or indirectly, all of the
voting securities of each Ingersoll-Rand Trust, (ii) neither Ingersoll-Rand
Trust has any independent operations but exists for the sole purpose of issuing
securities representing undivided beneficial interests in the assets of the
Ingersoll-Rand Trusts and investing the proceeds thereof in Subordinated Debt
Securities and (iii) the obligations of each Ingersoll-Rand Trust to make
periodic cash payments on Trust Preferred Securities and payments upon
liquidation or dissolution of such Ingersoll-Rand Trust or upon redemption of
the Trust Preferred Securities, to the extent funds are available therefor, are
unconditionally guaranteed by the Company. See "Description of Trust Preferred
Guarantees" and "Description of Debt Securities."


                  INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

    The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997 and the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997 are incorporated herein by reference and made a part of this
Prospectus, and all documents filed by the Company with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of
this Prospectus but prior to the termination of the offering of the Securities
shall be deemed to be incorporated herein by reference and made a part of this
Prospectus from the date of filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for
   35
purposes of this Prospectus and any amendment or supplement hereto to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus or any such amendment or supplement.

    The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Ingersoll-Rand Company, P.O. Box 8738, Woodcliff
Lake, New Jersey 07675, Attention: R.G. Heller, Secretary (telephone
201-573-0123).


                                   THE COMPANY

    Ingersoll-Rand was organized in 1905 under the laws of the State of New
Jersey as a consolidation of Ingersoll-Sergeant Drill Company and the Rand Drill
Company, whose businesses were established in the early 1870s. Over the years,
the Company has supplemented its original business, which consisted primarily of
the manufacture and sale of rock drilling equipment, with additional products
which have been developed internally or obtained through acquisition.

    Ingersoll-Rand manufactures and sells primarily non-electrical machinery and
equipment, including air compression systems, air tools, pumps, antifriction
bearings, construction equipment, architectural hardware and drilling equipment.
The products manufactured by Ingersoll-Rand and its subsidiaries and affiliates
are sold principally under the name Ingersoll-Rand and also under other names.
The manufacturing and sales operations of Ingersoll-Rand are conducted
throughout the world.

    The Company's principal executive offices are at 200 Chestnut Ridge Road,
Woodcliff Lake, New Jersey 07675 (telephone 201-573-0123). Unless the context
otherwise requires, the terms "Ingersoll-Rand" and "Company" refer to
Ingersoll-Rand Company and its consolidated subsidiaries.


                            THE INGERSOLL-RAND TRUSTS

    Each of Ingersoll-Rand Financing I and Ingersoll-Rand Financing II is a
statutory business trust created under Delaware law pursuant to (i) a separate
trust agreement executed by the Company, as Depositor for such trust (the
"Depositor"), and the trustees of such trust and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware. The
trust agreements will be amended and restated in their entirety (each as so
amended and restated, a "Trust Agreement") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus is a part and
will be qualified as Indentures under the Trust Indenture Act of 1939. Each
Ingersoll-Rand Trust exists for the exclusive purposes of (i) issuing the Trust

                                       3
   36
Preferred Securities and common securities representing undivided beneficial
interests in the assets of the Trust (the "Trust Common Securities" and,
together with the Trust Preferred Securities, the "Trust Securities"), (ii)
investing the proceeds received by the Ingersoll-Rand Trust from the sale of the
Trust Securities in Corresponding Junior Subordinated Debt Securities and (iii)
engaging in only those other activities necessary or incidental thereto. All of
the Trust Common Securities will be directly or indirectly owned by the Company.
The Trust Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Trust Preferred Securities, except that, upon an
event of default under a Trust Agreement, the rights of the holders of the Trust
Common Securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Trust Preferred Securities. The Company will directly or
indirectly acquire Trust Common Securities in an aggregate liquidation amount
equal to 3% of the total capital of each Ingersoll-Rand Trust. Each
Ingersoll-Rand Trust has a term of approximately 55 years but may dissolve
earlier, as provided in each Trust Agreement. Each Ingersoll-Rand Trust's
business and affairs will be conducted by its trustees, including a Property
Trustee (as defined below), a Delaware Trustee (as defined below) and three
individual trustees (the "Administrative Trustees") who are employees or
officers of or affiliated with the Company (collectively, the "Ingersoll-Rand
Trustees") appointed by the Company as the direct or indirect holder of all the
Trust Common Securities. The holder of the Trust Common Securities of a Trust,
or the holders of a majority in liquidation amount of the Related Trust
Preferred Securities if an event of default under the Trust Agreement for such
Trust has occurred and is continuing, will be entitled to appoint, remove or
replace the Property Trustee and/or the Delaware Trustee for such Trust. In no
event will the holders of the Trust Preferred Securities have the right to vote
to appoint, remove or replace the Administrative Trustees; such voting rights
are vested exclusively in the holder of the Trust Common Securities. The duties
and obligations of the Ingersoll-Rand Trustees shall be governed by the Trust
Agreement of such Ingersoll-Rand Trust. One Ingersoll-Rand Trustee of each
Ingersoll-Rand Trust will be a financial institution that is not affiliated with
the Company and has combined capital and surplus of not less than $50,000,000,
which shall act as property trustee and as indenture trustee for the purposes of
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
pursuant to the terms set forth in the related Prospectus Supplement (the
"Property Trustee"). In addition, unless the Property Trustee maintains a
principal place of business in the State of Delaware and otherwise meets the
requirements of applicable law, one Ingersoll-Rand Trustee of each
Ingersoll-Rand Trust will have a principal place of business or reside in the
State of Delaware (the "Delaware Trustee"). The Company will pay all fees and
expenses related to the Ingersoll-Rand Trusts and the offering of the Trust
Securities.

    The office of the Delaware Trustee for each Ingersoll-Rand Trust is c/o The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801. The
address for each Ingersoll-Rand Trust is c/o the Company, the Depositor of each
Trust, at 200 Chestnut Ridge Road, Woodcliff Lake, New Jersey 07675.


                                       4
   37
                                 USE OF PROCEEDS

    The Company intends to apply the net proceeds from the sale of the
Securities to which this Prospectus relates to its general funds to be used for
capital expenditures, acquisitions and other general corporate purposes. Funds
not required immediately for such purposes may be invested in short-term
obligations or used to reduce the future level of the Company's commercial paper
obligations.


                             SELECTED FINANCIAL DATA

    The following table sets forth selected financial data of the Company for
each of the years in the five year period ended December 31, 1996 and the six
month periods ended June 30, 1997 and 1996. Information on a per share basis is
presented as reported and restated to reflect the 3-for-2 stock split which will
be effected in the form of a stock dividend, declared on August 6, 1997 and
payable on September 2, 1997 to shareholders of record on August 19, 1997:



                                   SIX MONTHS ENDED
                                        JUNE 30,               YEARS ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------------------
                                     1997      1996     1996     1995     1994     1993    1992
- ---------------------------------------------------------------------------------------------------
                                           (IN MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
                                      (UNAUDITED)
- ---------------------------------------------------------------------------------------------------
                                                                      
Net sales                           $3,476.8 $3,366.7 $6,702.9 $5,729.0 $4,507.5 $4,021.1  $3,783.8
- ---------------------------------------------------------------------------------------------------
Net earnings (loss)                    189.4    166.8    358.0    270.3    211.1    142.5    (234.4)
- ---------------------------------------------------------------------------------------------------
Total assets                         5,903.7  5,695.8  5,621.6  5,563.3  3,596.9  3,375.3   3,387.6
- ---------------------------------------------------------------------------------------------------
Long-term debt                       1,164.9  1,303.7  1,163.8  1,304.4    315.9    314.1     355.6
- ---------------------------------------------------------------------------------------------------
Shareholders' equity                 2,231.8  1,927.5  2,090.8  1,795.5  1,531.3  1,349.8   1,293.4
- ---------------------------------------------------------------------------------------------------
Earnings (loss) per common share(1)     1.75     1.56     3.33     2.55     2.00     1.36     (2.25)
- ---------------------------------------------------------------------------------------------------
Earnings (loss) per common share(2)     1.16     1.04     2.22     1.70     1.33     0.91     (1.50)
- ---------------------------------------------------------------------------------------------------
Dividends per common share(1)           0.41     0.37     0.78     0.74     0.72     0.70      0.69
- ---------------------------------------------------------------------------------------------------
Dividends per common share(2)           0.27     0.25     0.52     0.49     0.48     0.47      0.46
- ---------------------------------------------------------------------------------------------------


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

(1) Prior to the 3-for-2 stock split.

                                        5
   38
(2) Restated to give effect to the 3-for-2 stock split.


                       RATIOS OF EARNINGS TO FIXED CHARGES

    The following table sets forth the ratio of earnings to fixed charges for
the Company for each of the years in the five year period ended December 31,
1996 and for the six month period ended June 30, 1997. For the purpose of
computing the ratios of earnings to fixed charges, earnings consist of earnings
before income taxes and fixed charges, excluding the Company's proportionate
share in the undistributed earnings (losses) of less than fifty-percent-owned
affiliates (accounted for using the equity method), minority interests and
capitalized interest. Fixed charges consist of interest (including capitalized
interest), amortization of debt discount and expense and that portion
(one-third) of rental expense deemed to be representative of an interest factor
included therein.



 SIX MONTH
PERIOD ENDED
 JUNE 30,                     YEAR ENDED DECEMBER 31,
- -----------------------------------------------------------------------
   1997        1996        1995        1994       1993        1992
- -----------------------------------------------------------------------
                                              
   5.26      5.01 (1)      4.51        5.46      3.69 (2)    2.45 (3)
- -----------------------------------------------------------------------


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

(1) The 1996 calculation includes the effect of a $42.4 million pretax charge
    mainly relating to the realignment of the Company's foreign operations. The
    1996 calculation also includes the $55 million of pretax income relating to
    the sales of the Process Systems Group. Excluding these amounts, the ratio
    would have been 4.93.
(2) The 1993 calculation includes the effect of the $5 million pretax charge
    relating to the restructure of the Company's underground mining machinery
    business. Excluding this amount, the ratio would have been 3.75.
(3) The Company's portion of the earnings and fixed charges of the Dresser-Rand
    Company (a joint venture formed effective January 1, 1987 with Dresser
    Industries, Inc.) is included through September 30, 1992. Effective October
    1, 1992, the Company's ownership interest in the Dresser-Rand Company was
    reduced from 50% to 49%. The 1992 calculation includes (i) the effect of the
    $10 million pretax charge relating to the restructure of the Company's
    aerospace bearings business and (ii) the full effect of the $70 million
    pretax restructure of operations charge relating to the Ingersoll-Dresser
    Pump Company. Excluding the 1992 restructure charges, the ratio would have
    been 3.35.


                                       6
   39
                          DESCRIPTION OF CAPITAL STOCK

    The following description of the Company's capital stock summarizes certain
provisions of the Company's Restated Certificate of Incorporation (as it may be
amended, the "Certificate of Incorporation"), the Rights Agreement, as amended,
between the Company and The Bank of New York, as Rights Agent (the "Rights
Agreement") and the New Jersey Business Corporation Act (the "NJBCA") and is
subject to and is qualified in its entirety by reference to such documents and
provisions.


GENERAL

    The authorized capital stock of the Company consists of 400,000,000 shares
of Common Stock and 10,000,000 shares of preference stock, of which 563,000
shares of Series A Preference Stock (the "Series A Preference Stock") have been
reserved for issuance. At June 30, 1997, no shares of the authorized Preference
Stock were issued and outstanding and 110,550,296 shares of the authorized
Common Stock were issued and outstanding. The Company also had outstanding, as
of such date, 55,275,148 Series A Preference Stock Purchase Rights (the
"Rights"). On August 6, 1997, the Board of Directors of the Company declared a
three-for-two stock split payable on September 2, 1997 to shareholders of record
on August 19, 1997. See "--Rights Plan."


COMMON STOCK

    Dividends. Subject to the rights of holders of Preference Stock, the Board
of Directors may, in its discretion, out of funds legally available for the
payment of dividends and at such times and in such manner as determined by the
Board of Directors, declare and pay dividends on the Common Stock.

    Liquidation, Dissolution and Winding Up. In the event of any liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary,
after payment in full has been made to the holders of Preference Stock of the
amounts to which they are respectively entitled or sufficient sums have been set
apart for the payment thereof, the holders of Common Stock shall be entitled to
receive ratably any and all assets remaining to be paid or distributed, and the
holders of Preference Stock shall not be entitled to share therein.

    Voting. Except as otherwise expressly provided in the Certificate of
Incorporation or as may be required by law, the holders of Common Stock of the
Company shall be entitled at all meetings of stockholders to one vote for each
share of such stock held by them respectively and shall vote together with the
holders of Preference Stock as one class. At all elections of directors, each
holder of Common Stock shall be entitled to as many votes as shall equal the
number of votes which such holder would be entitled to cast, multiplied by the
number of directors to be elected, and such holder may cast all such votes for a
single director, or may distribute them, among the number to be voted for or any
two or more of such directors.

    Preemptive Rights. No holder of shares of Common Stock shall have any
preemptive or preferential rights to subscribe to or purchase any shares

                                       7
   40
of any class or series of stock of the Company, now or hereafter authorized, or
any series convertible into, or warrants or other evidences of optional rights
to purchase or subscribe to, shares of any class or series of the Company, now
or hereafter authorized.

    All the outstanding shares of Common Stock are fully paid and
non-assessable.

    The registrar and transfer agent for the Common Stock is The Bank of New
York.


PREFERENCE STOCK

    The Certificate of Incorporation provides for Preference Stock which may be
issued, from time to time, in one or more series with certain rights and
limitations as may be fixed by the Board of Directors of the Company. The
Company has no present plan to issue any Preference Stock other than in
accordance with the Rights Plan (as defined herein). However, the Board of
Directors of the Company, without stockholder approval, may issue Preference
Stock that could adversely affect the voting power of holders of the Common
Stock. Issuance of Preference Stock could be utilized, under certain
circumstances, in an attempt to prevent a takeover of the Company.

    The following description sets forth certain general terms and provisions of
the Preference Stock to which a Prospectus Supplement may relate. Certain terms
of a series of the Preference Stock offered by a Prospectus Supplement will be
described in such Prospectus Supplement. If so indicated in the Prospectus
Supplement and if permitted by the Certificate of Incorporation and by law, the
terms of any such series may differ from the terms set forth below. The
following description of the Preference Stock summarizes certain provisions of
the Certificate of Incorporation and is subject to and qualified in its entirety
by reference to the Certificate of Incorporation and the Certificate of
Amendment thereto which will be filed with the Commission promptly after any
offering of such series of Preference Stock. The following description, together
with any description of the terms of a series of Preference Stock set forth in
the related Prospectus Supplement, summarizes all of the material terms of such
series of Preference Stock.

    General. The Board of Directors may cause Preference Stock to be issued from
time to time in one or more series and is expressly authorized to fix:

        (i) the distinctive designation of such series and the number of shares
    which shall constitute such series, which number may be increased (except as
    otherwise provided by the Board of Directors in creating such series) or
    decreased (but not below the number of shares thereof then outstanding) from
    time to time by the Board of Directors;

       (ii) the rate of dividends payable on shares of such series and the date
    or dates from which dividends shall accumulate;

      (iii) the terms, if any, on which shares of such series may be redeemed,
    including, without limitation, the redemption price or prices for such
    series, which may consist of a redemption price or

                                       8
   41
    scale of redemption prices applicable only to redemption in connection with
    a sinking fund (which term as used herein shall include any fund or
    requirement for the periodic purchase or redemption of shares), and the same
    or a different redemption price or scale of redemption prices applicable to
    any other redemption;

       (iv) the terms and amount of any sinking fund provided for the purchase
    or redemption of shares of such series;

        (v) the amount or amounts which shall be paid to the holders of shares
    of such series in case of liquidation, dissolution or winding up of the
    Company, whether voluntary or involuntary;

       (vi) the terms, if any, upon which the holders of shares of such series
    may convert shares thereof into stock of any other class or classes or of
    any one or more series of the same class or of another class or classes; and

      (vii) such other rights, preferences and limitations as may be permitted
    to be fixed by the Board of Directors of the Company under the laws of the
    State of New Jersey as in effect at the time of the creation of such series.

    All shares of Preference Stock, irrespective of series, shall be of equal
rank, and shall be identical in all respects except to the terms fixed by the
Board of Directors as permitted in the Certificate of Incorporation. The Board
of Directors is authorized to change the designation, rights, preferences and
limitations of any series of Preference Stock theretofore established, no shares
of which have been issued. The Board of Directors is authorized to amend the
Certificate of Incorporation to set forth the designation, number of shares,
rights, preferences and limitations of any series of Preference Stock fixed by
the Board of Directors, or to reflect any change therein made by the Board of
Directors, as permitted in the Certificate of Incorporation.

    Dividends. The holders of Preference Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the payment of dividends, cumulative dividends in cash at the
annual rate for each particular series theretofore fixed by the Board of
Directors, payable in respect of each series on the date or dates which shall be
fixed by the Board of Directors with respect to each particular series.

    If at any time there are two or more series of Preference Stock outstanding,
any dividend paid upon shares of Preference Stock in an amount less than all
dividends accrued and unpaid on all outstanding shares of Preference Stock shall
be paid ratably among all series of Preference Stock in proportion to the full
amount of dividends accrued and unpaid on each such series.

    So long as any Preference Stock is outstanding, no dividend shall be paid or
declared, nor any distribution be made, on the Common Stock or any other stock
of the Company ranking junior to the Preference Stock in the payment of
dividends (other than a dividend payable in stock of junior rank), nor shall any
shares of Common Stock or any other stock of junior rank be acquired for
consideration by the Company or by any subsidiary except in exchange for shares
of stock of junior rank unless

                                       9
   42
(i) full dividends on the Preference Stock for all past dividend periods shall
have been paid or shall have been declared and a sufficient sum set apart for
the payment thereof and (ii) all obligations of the Company, if any, with
respect to the redemption or purchase of shares of Preference Stock in
accordance with the requirements of any sinking fund have been met. Subject to
the foregoing provisions, such dividends (payable in cash, stock or otherwise)
as may be determined from time to time by the Board of Directors may be declared
and paid on the Common Stock or any other stock of junior rank out of the
remaining funds of the Company legally available for the payment of dividends;
and the Preference Stock shall not be entitled to participate in any such
dividends, whether payable in cash, stock or otherwise.

    Redemption. If so provided by the Board of Directors, the Company, at the
option of the Board of Directors, or in accordance with the requirements of any
sinking fund for the Preference Stock or any series thereof, may redeem the
whole or any part of the Preference Stock at any time outstanding, or the whole
or any part of any series thereof, at such time or times and from time to time
and at such redemption price or prices as may be fixed by the Board of Directors
pursuant to the Certificate of Incorporation, together in each case with an
amount equal to all unpaid dividends accrued thereon to the date fixed for such
redemption, and otherwise upon the terms and conditions fixed by the Board of
Directors for any such redemption; provided, however, that no optional
redemption of less than all of the Preference Stock shall take place unless (i)
full dividends on the Preference Stock for all past dividend periods shall have
been paid or declared and a sufficient sum set apart for the payment thereof and
(ii) all obligations of the Company, if any, with respect to the redemption or
purchase of shares of Preference Stock in accordance with the requirements of
any sinking fund have been met. If at any time there are two or more series of
Preference Stock outstanding, any amount expended in purchasing or redeeming
shares of Preference Stock pursuant to the provisions of sinking funds therefor
which is less than the amount then required to be so expended under all such
funds shall be expended ratably among all series of Preference Stock in
proportion to the full amount of expenditures of such funds then required in
respect of each such series.

    Liquidation, Dissolution and Winding Up. In the event of any liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary, the
holders of each series of Preference Stock then outstanding shall be entitled to
receive out of the assets of the Company, before any distribution or payment
shall be made to the holders of the Common Stock or any other stock of Company
ranking junior to the Preference Stock with respect to the distribution of
assets, the amount determined by the Board of Directors in creating such series,
plus in each case an amount equal to all unpaid dividends accrued thereon to the
date fixed for such payment to the holders of the Preference Stock. If upon any
such liquidation, dissolution or winding up, two or more series of Preference
Stock are outstanding, any distribution to holders of Preference Stock in an
aggregate amount less than the total payable with respect to all outstanding
Preference Stock shall be made ratably among all series of Preference Stock in
proportion to the full amount payable upon such liquidation, dissolution or
winding up in respect of each such series.

                                       10
   43
    Voting. The holders of Preference Stock shall have the voting rights set
forth below:

      (a) Except as otherwise expressly provided in the Certificate of
Incorporation or as may be required by law, the holders of Preference Stock
shall be entitled at all meetings of stockholders to three votes for each five
shares of such stock held by them respectively (a holder of less than five
shares being entitled to no vote) and the holders of all series of Preference
Stock shall vote together with the holders of Common Stock as one class. At all
elections of directors, each holder of Preference Stock shall be entitled to as
many votes as shall equal the number of votes which such holder would be
entitled to cast, multiplied by the number of directors to be elected, and such
holder may cast all such votes for a single director, or may distribute them
among the number to be voted for or any two or more of them as such holder may
see fit.

      (b) If and whenever dividends on the Preference Stock shall be in arrears
in an amount equivalent to six quarterly dividends or mandatory sinking fund
payments shall be in arrears in an amount equal to the aggregate of all such
payments required during one year, then, at any ensuing annual meeting of
stockholders at which at least a majority of the outstanding shares of
Preference Stock are represented, the holders of Preference Stock of all series
thereof then outstanding, voting separately as a class, shall be entitled to
elect two directors. Such right of the holders of Preference Stock shall
continue to be exercisable until all dividends in arrears on Preference Stock
shall have been paid in full or declared and a sum sufficient for the payment
thereof set apart and all mandatory sinking fund payments in arrears shall have
been paid in full, whereupon such right shall cease. During any time that the
holders of Preference Stock are entitled to elect two such directors, they shall
also be entitled to participate with the Common Stock in the election of any
other directors.

      (c) Notwithstanding any other provision of the Certificate of
Incorporation:

         (i) the affirmative approval of the holders of at least two-thirds in
interest of Preference Stock of all series thereof then outstanding present and
voting at a meeting, acting as a single class without regard to series, shall be
required for any amendment of the Certificate of Incorporation altering
materially and adversely any existing provision of the Preference Stock or for
the creation, or an increase in the authorized amount, of any class of stock
ranking, as to dividends or assets, prior to the Preference Stock; and

         (ii) the affirmative approval of the holders of at least a majority in
interest of Preference Stock of all series thereof then outstanding present and
voting at a meeting, acting as a single class without regard to series, shall be
required for an increase in the authorized amount of Preference Stock, or for
the creation, or an increase in the authorized amount, of any class of stock
ranking, as to dividends or assets, on a parity with the Preference Stock;

provided, however, that if any amendment to the Certificate of Incorporation
shall affect adversely the rights or preferences of one or

                                       11
   44
more, but not all, of the series of Preference Stock at the time outstanding, or
shall unequally adversely affect the rights or preferences of different series
of Preference Stock at the time outstanding, the affirmative approval of the
holders of at least two-thirds in interest of the shares of each such series so
adversely or unequally adversely affected present and voting at a meeting shall
be required in lieu of or (if such affirmative approval is required by law) in
addition to the affirmative approval of the holders of at least two-thirds in
interest of the shares of Preference Stock as a class present and voting at such
meeting.

    Preemptive Rights. No holder of shares of any series of Preference Stock
shall have any preemptive or preferential rights to subscribe to or purchase
shares of any class or series of stock of the Company, now or hereafter
authorized, or any securities convertible into, or warrants or other evidences
of optional rights to purchase or subscribe to, shares of any laws or series of
the Company, now or hereafter authorized.

    Other Provisions. Subject to the requirements of paragraph (c) under
"--Voting" above, but notwithstanding any other provisions of the Certificate of
Incorporation, the Board of Directors, in the resolution or resolutions
providing for the issue of any series of Preference Stock, may determine, to the
extent that the Board of Directors may be permitted to do so under the laws of
the State of New Jersey as in effect at the time of the creation of such series:

       (i) the voting rights, full or limited, if any, of the shares of such
series; and whether or not and under what conditions the shares of such series
(alone or together with the shares of one or more other series having similar
provisions) shall be entitled to vote separately as a single class, for the
election of one or more additional directors of the Company in case of dividend
arrearages or other specified events, or upon other matters;

       (ii) whether or not and upon what conditions dividends on shares of such
series shall be cumulative and, if cumulative, the date or dates from which
dividends shall accumulate;

       (iii) whether or not the holders of shares of such series shall have any
preemptive or preferential rights to subscribe to or purchase shares of any
class or series of stock of the Company, now or hereafter authorized, or any
securities convertible into, or warrants or other evidences of optional rights
to purchase or subscribe to, shares of any class or series of the Company, now
or hereafter authorized; and

       (iv) whether or not the issuance of additional shares of such series, or
of any shares of any other series, shall be subject to restrictions as to
issuance, or as to the preferences, rights and qualifications of any such other
series.

VOTING REQUIREMENTS

    Majority Voting Requirements. Subject to the provisions described below
under "--Greater Voting Requirements" and except as otherwise expressly provided
in the Certificate of Incorporation or as may be required by law, the majority
voting requirements prescribed in

                                       12
   45
subsections 14A:10-3(2) and 14A:12-4(4) and in paragraphs 14A:9-2(4)(c) and
14A:10-11(1)(c) of the NJBCA shall apply to the Company. As a result, in the
case of each of (i) a plan of merger or consolidation, (ii) a dissolution of the
Company, (iii) an amendment to the Certificate of Incorporation and (iv) a sale,
lease, exchange or other disposition of all, or substantially all, of the assets
of the Company, any such action shall be approved upon receiving the affirmative
vote of a majority of the votes cast by the holders of shares of the Company
entitled to vote therein, and, in addition, if any class or series is entitled
to vote thereon as a class, the affirmative vote of a majority of the votes cast
in each class vote. Such voting requirements shall generally be subject to such
greater requirements as are provided in the NJBCA for specific amendments or as
may be provided in the Certificate of Incorporation.

    Greater Voting Requirements. The affirmative vote of the holders of
four-fifths of the outstanding shares of all classes of stock of the Company
entitled to vote, considered for the purposes of this paragraph as one class,
shall be required to authorize (i) the merger or consolidation of the Company or
a subsidiary of the Company with or into any other corporation, person or other
entity, (ii) any sale, lease, exchange or other disposition of all or any
material part of the assets of the Company or of any subsidiary of the Company
to or with any other corporation, person or other entity or (iii) any issuance
or transfer of securities of the Company upon conversion of or in exchange for
the securities or assets of any other corporation, person or entity if (as of
the date of any action taken by the Board of Directors with respect to such
transaction or as of any record date for the determination of stockholders
entitled to notice and to vote with respect thereto or immediately prior to the
consummation of such transaction) such other corporation, person or other entity
referred to in clause (i), clause (ii) or clause (iii) above is the beneficial
owner, directly or indirectly, of more than 10% of any class of capital stock of
the Company. For the purposes hereof, any corporation, person or other entity
shall be deemed to be the beneficial owner of any shares of capital stock of the
Company, (x) which it has the right to acquire pursuant to any agreement, or
upon exercise of conversion rights, warrants or options, or otherwise, or (y)
which are beneficially owned, directly or indirectly (including shares deemed
owned through application of clause (x) above) by any other corporation, person
or other entity with which it has any agreement, arrangement or understanding
with respect to the acquisition, holding, voting or disposition of stock or of
any material part of the assets of the Company or of it, or which is its
"affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the 1934 Act, as in effect on January 1,
1970. Any determination made in good faith by the Board of Directors, on the
basis of information at the time available to it, as to whether any corporation,
person or other entity is the beneficial owner of more than 10% of any class of
capital stock of the Company, or is an "affiliate" or "associate", as above
defined, shall be conclusive and binding for all purposes of this paragraph. The
provisions described in this paragraph shall not apply to any agreement for the
merger of any subsidiary of the Company with the Company or with another
subsidiary of the Company where the Company or such other subsidiary shall be
the surviving corporation

                                       13
   46
and where the provisions described in this paragraph shall not be changed or
otherwise affected by or by virtue of the merger.

DIRECTORS

    The Board of Directors shall be divided as equally as may be into three
classes, each of which shall consist of such number as the by-laws may from time
to time provide, but no class shall consist of less than two members. At each
annual election, the successors of the directors of the class whose terms expire
in that year are elected to hold office for the term of three years, so that the
term of office of one class of directors shall expire in each year. If the
number of directors is changed, any newly created directorships or decrease in
directorships shall be so apportioned among the classes as to make all classes
as nearly equal in number as possible. In case of any increase in the number of
directors of any class or classes, the additional directors may be elected by
the Board of Directors, but any such director so elected shall hold office only
until the next succeeding annual meeting of stockholders and until his successor
shall have been elected and qualified. No decrease in the number of directors
shall shorten the term of any incumbent director. Directors may be removed
without cause only upon the affirmative vote of the holders of at least
four-fifths of the shares of capital stock entitled to vote for the election of
directors. Directors may be removed for cause upon the affirmative vote of
two-thirds of the entire Board. The affirmative vote of the holders of at least
four-fifths of the shares of capital stock entitled to vote for the election of
the directors shall be required for any amendment or deletion of this provision,
unless such amendment or deletion shall have been approved by the unanimous vote
of the directors then in office, in which case the majority voting requirements
of the NJBCA described above shall apply thereto.

      The provisions of the Certificate of Incorporation relating to directors
shall have no application to any directors who may be elected by the holders of
Preference Stock or any series thereof, voting as a class or series, as the case
may be, pursuant to a right to elect directors conferred upon such holders by
reason of default in the payment of dividends, failure to discharge sinking fund
obligations or otherwise. Any such directors shall be in addition to the
directors to be elected pursuant to the paragraph immediately above and shall be
elected in the manner, and serve for such term, as may be provided in the
Certificate of Incorporation.


RIGHTS PLAN

    On December 7, 1988, the Board of Directors of the Company declared a
dividend distribution of one Right for each outstanding share of Common Stock of
the Company. The dividend was payable on December 22, 1988 to shareholders of
record on that date. Each Right entitles the registered holder to purchase from
the Company one-hundredth (1/100) of a share of a series of preference stock of
the Company, designated as Series A Preference Stock, without par value (the
"Series A Preference Stock"), at a price of $130 (the "Purchase Price").

    On May 6, 1992, the Board of Directors of the Company declared a two-for-one
stock split in the form of a dividend distribution of one share

                                       14
   47
of Common Stock for each outstanding share of Common Stock (the "First Common
Stock Dividend"). The First Common Stock Dividend was payable on June 1, 1992 to
shareholders of record on May 19, 1992. After giving effect to receipt of the
First Common Stock Dividend, each holder of a Right was deemed to be the holder
of (i) one-half of a Right in respect of the share of Common Stock pursuant to
which such Right originally had been issued and (ii) one-half of a Right in
respect of the share of Common Stock received by such holder pursuant to the
First Common Stock Dividend.

    On August 6, 1997, the Board of Directors of the Company declared a
three-for-two stock split in the form of a dividend distribution of one share of
Common Stock for every two outstanding shares of Common Stock (the "Second
Common Stock Dividend"). The Second Common Stock Dividend will be payable on
September 2, 1997 to shareholders of record on August 19, 1997. After giving
effect to receipt of the Second Common Stock Dividend, each holder of a Right
will be deemed to be the holder of (i) one-third of a Right in respect of the
share of Common Stock pursuant to which such Right originally had been issued,
(ii) one-third of a Right in respect of the share of Common Stock received by
such holder pursuant to the First Common Stock Dividend and (iii) one-third of a
Right in respect of the share of Common Stock received by such holder pursuant
to the Second Common Stock Dividend.

    Until the close of business on the Distribution Date, which will occur on
the earlier to occur of (i) the tenth day following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person")
other than the Company, any subsidiary of the Company or any employee benefit
plan or employee stock plan of the Company or of any subsidiary of the Company
(an "Exempt Person"), has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Stock (the "Stock Acquisition
Date"), (ii) the declaration by the Board of Directors that any Person is an
Adverse Person or (iii) the tenth day after the date of the commencement of, or
the first public announcement of the intent of any person (other than an Exempt
Person) to commence, a tender offer or exchange offer (other than a tender or
exchange offer by an Exempt Person) which would result in the ownership of 15%
or more of the outstanding Common Stock (the earlier of such dates being called
the "Distribution Date"), the Rights will be represented by and transferred
with, and only with, the Common Stock. Until the Distribution Date, new
certificates issued for Common Stock after December 22, 1988 contain a legend
incorporating the Rights Agreement by reference, and the surrender for transfer
of any of the Company's Common Stock certificates constitute the transfer of the
Rights associated with the Common Stock represented by such certificates. As
soon as practicable following the Distribution Date, separate Right Certificates
will be mailed to holders of record of the Common Stock at the close of business
on the Distribution Date, and thereafter the separate certificates alone will
evidence the Rights.

    The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on December 22, 1998, unless earlier redeemed by
the Company as described below.

    The Series A Preference Stock will be nonredeemable and, unless otherwise
provided in connection with the creation of a subsequent

                                       15
   48
series of Preference Stock, subordinate to any other series of Preference Stock.
The Series A Preference Stock will, however, rank prior to the Common Stock. The
Series A Preference Stock may not be issued except upon exercise of Rights. Each
share of Series A Preference Stock will be entitled to receive when, as and if
declared, a quarterly dividend in an amount per share equal to 100 times the
cash dividends declared on the Company's Common Stock. In addition, the Series A
Preference Stock is entitled to 100 times any non-cash dividends (other than
dividends payable in equity securities) declared on the Common Stock, in like
kind. In the event of a default on such dividends, the holders of the Series A
Preference Stock (together with the holders of any other Preference Stock
similarly entitled) will be entitled to elect two directors. In the event of
liquidation, the holders of Series A Preference Stock will be entitled to
receive a liquidation payment in an amount equal to 100 times the payment made
per share of Common Stock. Each share of Series A Preference Stock will have 100
votes, voting together with the Common Stock and not as a separate class unless
otherwise required by law or the Certificate of Incorporation. In the event of
any merger, consolidation or other transaction in which common shares are
exchanged, each share of Series A Preference Stock will be entitled to receive
100 times the amount received per share of Common Stock. The rights of the
Series A Preference Stock as to dividends, liquidation and voting are protected
by antidilution provisions.

    The Purchase Price payable, and the number of shares of Series A Preference
Stock or other securities or property issuable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Series A Preference Stock, (ii) upon the grant to holders of the Series A
Preference Stock of certain rights or warrants to subscribe for Series A
Preference Stock or convertible securities at less than the current market price
of the Series A Preference Stock or (iii) upon the distribution to holders of
the Series A Preference Stock of evidences of indebtedness or assets (excluding
regular cash dividends and dividends payable in Series A Preference Stock) or of
subscription rights or warrants (other than those referred to above).

    If (i) any Person (other than an Exempt Person) becomes the beneficial owner
of 15% or more of the then outstanding shares of Common Stock, (ii) the Board of
Directors of the Company, by majority vote, shall declare any Person to be an
Adverse Person, (iii) any Acquiring Person, Adverse Person or any affiliates or
associates thereof engages in one or more "self-dealing" transactions as
described in the Rights Agreement, then each holder of a Right, other than the
Acquiring Person or Adverse Person, will have the right to receive in lieu of
Series A Preference Stock, upon payment of the Purchase Price, a number of
shares of Common Stock having a market value equal to twice the Purchase Price.
This same right will be available to each holder of record of a Right, other
than the Acquiring Person or Adverse Person, if, while there is an Acquiring
Person or Adverse Person, there occurs any reclassification of securities, any
recapitalization of the Company, or any merger or consolidation or other
transaction involving the Company or any of its

                                       16
   49
subsidiaries which has the effect of increasing by more than 1% the
proportionate ownership interest of the Company or any of its subsidiaries which
is owned or controlled by the Acquiring Person or Adverse Person. Alternatively,
at any time after any person or group acquires 15% or more of the Common Stock
or the Board of Directors determines that a Person is an Adverse Person, the
Board of Directors of the Company may exchange one share of the Common Stock (or
an equivalent share of the Series A Preference Stock) for each outstanding Right
other than Rights held by an Acquiring Person or Adverse Person, which become
void. To the extent that insufficient shares of Common Stock are available for
the exercise in full of the Rights, holders of Rights will receive upon exercise
shares of Common Stock to the extent available and then Series A Preference
Stock, cash, property or other securities of the Company (which may be
accompanied by a reduction in the Purchase Price), in proportions determined by
the Company, so that the aggregate value received is equal to twice the Purchase
Price. Rights are not exercisable following the occurrence of the events
described in this paragraph until the expiration of the period during which the
Rights may be redeemed as described below. Notwithstanding the foregoing,
following the occurrence of the events described in this paragraph, Rights that
are (or, under certain circumstances, Rights that were) beneficially owned by an
Acquiring Person or an Adverse Person will be void.

    Unless the Rights are redeemed earlier, if, after the Stock Acquisition Date
or the declaration by the Board of Directors that a person is an Adverse Person,
the Company is acquired in a merger or other business combination (in which any
shares of the Common Stock are changed into or exchanged for other securities or
assets) or more than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) were to be sold or transferred in one or a
series of related transactions, the Rights Agreement provides that proper
provision shall be made so that each holder of record of a Right will from and
after that time have the right to receive, upon payment of the Purchase Price,
that number of shares of common stock of the acquiring company which has a
market value at the time of such transaction equal to two times the Purchase
Price.

    Fractions of shares of Series A Preference Stock may, at the election of the
Company, be evidenced by depositary receipts. The Company may also issue cash in
lieu of fractional shares which are not integral multiples of one one-hundredth
of a share.

    At any time until ten days following the Stock Acquisition Date or the
declaration by the Board of Directors that a person is an Adverse Person
(subject to extension by the Board of Directors), the Board of Directors (with
the concurrence of a majority of the Independent Directors) may cause the
Company to redeem the Rights in whole, but not in part, at a price of $0.01 per
Right. Under certain circumstances set forth in the Rights Agreement, the
decision to redeem shall require the concurrence of a majority of the
Independent Continuing Directors. Immediately upon the action of the Board of
Directors of the Company authorizing redemption of the Rights, the right to
exercise the Rights will terminate, and the only right of the holders of Rights
will be to receive the Redemption Price without any interest thereon. The term
"Independent Directors" means any member of the Board of Directors of the
Company who is not an officer of the Company. The term "Independent Continuing
Directors" means any Independent Director who was a member of

                                       17
   50
the Board of Directors immediately prior to the time that any Person shall
become an Acquiring Person or Adverse Person, and any Independent Director who
becomes a member of the Board of Directors subsequent to the time that any
Person shall become an Acquiring Person or Adverse Person if such Independent
Director is recommended or nominated to election on the Board of Directors by a
majority of the Independent Continuing Directors, but shall not include an
Acquiring Person or Adverse Person, or any representative of such Acquiring
Person or Adverse Person.

    Until the close of business on the tenth day following the Stock Acquisition
Date or the declaration by the Board of Directors that a person is an Adverse
Person, and thereafter for as long as the Rights are redeemable, the Board of
Directors (with the concurrence of a majority of the Independent Directors) may
cause the Company to amend the Rights in any manner, including an amendment to
extend the time period in which the Rights may be redeemed, but no such
amendment shall alter the redemption price, the date of expiration of the
Rights, or the number of one one-hundredths of a share of Series A Preference
Stock for which a Right is exercisable. At any time when the Rights are not then
redeemable, the Company (with the concurrence of a majority of the Independent
Continuing Directors) may amend the Rights in any manner that does not adversely
affect the interests of holders of the Rights as such.

    Until a Right is exercised, the holder, as such, will have no rights as a
shareholder of the Company, including, without limitation, the right to vote or
to receive dividends.


                         DESCRIPTION OF DEBT SECURITIES

    The following description of Debt Securities sets forth certain general
terms and provisions of Debt Securities to which any Prospectus Supplement may
relate. The particular terms of the Debt Securities offered by any Prospectus
Supplement (the "Offered Debt Securities") and the extent, if any, to which such
general provisions do not apply to the Offered Debt Securities will be described
in the Prospectus Supplement relating to such Offered Debt Securities.

    The Company may issue Debt Securities either separately, or together with,
or upon the conversion of or in exchange for, other Securities. The Debt
Securities may be (i) senior unsecured obligations (the "Senior Debt
Securities") of the Company issued in one or more series under an Indenture
dated as of August 1, 1986, as supplemented (as so supplemented, the "Senior
Indenture") between the Company and The Bank of New York, as Trustee (the
"Senior Trustee"), (ii) senior subordinated unsecured obligations (the "Senior
Subordinated Debt Securities") of the Company issued in one or more series under
an Indenture (the "Senior Subordinated Indenture") to be entered into between
the Company and a trustee to be named therein (the "Senior Subordinated
Trustee") or (iii) junior subordinated unsecured obligations (the "Junior
Subordinated Debt Securities") of the Company issued in one or more series under
an Indenture (the "Junior Subordinated Indenture") to be entered into between
the Company and a trustee to be named therein (the "Junior Subordinated
Trustee"). The Senior Indenture, the Senior Subordinated

                                       18
   51
Indenture and the Junior Subordinated Indenture are sometimes hereinafter
referred to, collectively, as the "Indentures, and, individually, as an
"Indenture"; and the Senior Trustee, Senior Subordinated Trustee and Junior
Subordinated Trustee are sometimes hereinafter referred to, collectively, as the
"Trustees" or individually, as a "Trustee."

    The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of each Indenture, including the definitions
therein of certain terms. Numerical references in parentheses below are to
sections in the applicable Indenture or Indentures. Whenever particular sections
or defined terms of an Indenture are referred to, such sections or defined terms
are incorporated herein by reference.


GENERAL

    The Indentures do not limit the amount of Debt Securities which may be
issued thereunder and provide that Debt Securities may be issued thereunder from
time to time in one or more series up to the aggregate principal amount which
may be authorized from time to time by the Company. Except as described below,
the Indentures do not limit the amount of other indebtedness or securities which
may be issued by the Company.

    Reference is made to the Prospectus Supplement relating to the particular
series of Offered Debt Securities offered thereby for the following terms of
such series of Offered Debt Securities: (1) the designation, aggregate principal
amount and authorized denominations of such Offered Debt Securities; (2) the
purchase price of such Offered Debt Securities (expressed as a percentage of the
principal amount thereof); (3) the date or dates on which such Offered Debt
Securities will mature; (4) the rate or rates per annum, if any (which may be
fixed or variable), at which such Offered Debt Securities will bear interest or
the method by which such rate or rates will be determined; (5) the dates on
which such interest will be payable and the record dates for payment of
interest, if any; (6) the coin or currency in which payment of the principal of
(and premium, if any) or interest, if any, on such Offered Debt Securities will
be payable; (7) the terms of any mandatory or optional redemption (including any
sinking fund) or any obligation of the Company to repurchase Offered Debt
Securities; (8) whether such Offered Debt Securities are to be issued in whole
or in part in the form of one or more temporary or permanent global Debt
Securities ("Global Notes") and, if so, the identity of the depositary, if any,
for such Global Note or Notes; (9) whether such Offered Debt Securities will be
Senior Debt Securities, Senior Subordinated Debt Securities or Junior
Subordinated Debt Securities; (10) the terms, if any, upon which such Debt
Securities may be convertible into or exchangeable for other Securities; (11) in
the case of Corresponding Junior Subordinated Debt Securities, the form of Trust
Agreement and Guarantee Agreement and any other provisions relating to deferral
of interest, extension of maturity and any other covenants and provisions
applicable thereto; and (12) any other additional provisions or specific terms
which may be applicable to that series of Offered Debt Securities.

                                       19
   52
    Principal, premium, if any, and interest, if any, will be payable, and the
Debt Securities will be transferable or exchangeable, at the office or agency of
the Company maintained for such purposes in the Borough of Manhattan, The City
of New York, provided that payment of interest on any Debt Securities may, at
the option of the Company, be made by check mailed to the registered holders.
Interest, if any, will be payable on any interest payment date to the persons in
whose names the Debt Securities are registered at the close of business on the
record date with respect to such interest payment date.

    Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Debt Securities will be issued only in fully registered form without coupons
in denominations of $1,000 or any integral multiple thereof. No service charge
will be made for any registration of, transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

    Some or all of the Debt Securities may be issued as discounted Debt
Securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates) to be sold at a substantial discount below their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such discounted Debt Securities will be
described in the Prospectus Supplement relating thereto.


RANKING OF DEBT SECURITIES

    The Senior Debt Securities will be unsecured unsubordinated obligations of
the Company and will rank on a parity in right of payment with all other
unsecured and unsubordinated indebtedness of the Company. The Senior
Subordinated Debt Securities will be unsecured senior subordinated obligations
of the Company and will be subordinated in right of payment to all existing and
future Senior Indebtedness (as defined in the supplemental indenture and the
applicable Prospectus Supplement) of the Company, including the Senior Debt
Securities. The Junior Subordinated Debt Securities will be unsecured junior
subordinated obligations of the Company and will be subordinated in right of
payment to all existing and future Senior Indebtedness (as defined in the
applicable Prospectus Supplement) of the Company, including the Senior Debt
Securities and the Senior Subordinated Debt Securities). See "--Subordination of
Senior Subordinated and Junior Subordinated Debt Securities."


CONVERSION AND EXCHANGE

    The terms, if any, on which Debt Securities of any series are convertible
into or exchangeable for Common Stock, Preference Stock or other Debt Securities
will be set forth in the applicable Prospectus Supplement. Such terms may
include provisions for conversion or exchange, either mandatory, at the option
of the holders or at the option of the Company.

                                       20
   53
GLOBAL NOTES

    The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Notes that will be deposited with or on behalf of a
depositary located in the United States (a "U.S. Depositary") identified in the
Prospectus Supplement relating to such series.

    The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will apply
to all depositary arrangements.

    Unless otherwise specified in an applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Note to be deposited with or
on behalf of a U.S. Depositary will be represented by a Global Note registered
in the name of such depositary or its nominee. Upon the issuance of a Global
Note in registered form, the U.S. Depositary for such Global Note will credit,
on its book-entry registration and transfer system, the respective principal
amounts of the Debt Securities represented by such Global Note to the accounts
of institutions that have accounts with such depositary or its nominee
("participants"). The accounts to be credited shall be designated by the
underwriters or agents of such Debt Securities or by the Company, if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in such Global Notes will be limited to participants or persons that
may hold interests through participants. Ownership of beneficial interests by
participants in such Global Notes will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the U.S.
Depositary or its nominee for such Global Notes. Ownership of beneficial
interests in Global Notes by persons that hold such beneficial interests through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by
such participant. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Note.

    So long as the U.S. Depositary for a Global Note in registered form, or its
nominee, is the registered owner of such Global Note, such depositary or such
nominee, as the case may be, will be considered the sole owner or holder of the
Debt Securities represented by such Global Note for all purposes under the
applicable Indenture governing such Debt Securities. Except as set forth below,
owners of beneficial interests in such Global Notes will not be entitled to have
Debt Securities of the series represented by such Global Notes registered in
their names, will not receive or be entitled to receive physical delivery of
Debt Securities of such series in definitive form and will not be considered the
owners or holders thereof under the applicable Indenture.

    Payment of principal of, premium, if any, and any interest on Debt
Securities registered in the name of or held by a U.S. Depositary or its nominee
will be made to the U.S. Depositary or its nominee, as the case may be, as the
registered owner or the holder of the Global Note representing such Debt
Securities. None of the Company, the Trustee, any

                                       21
   54
Paying Agent or the Security Registrar for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Note for
such Debt Securities or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

    The Company expects that the U.S. Depositary for Debt Securities of a
series, upon receipt of any payment of principal, premium or interest in respect
of a permanent Global Note, will credit immediately participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Note as shown on the records of such
depositary. The Company also expects that payments by participants to owners of
beneficial interests in such Global Note held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name", and will be the responsibility of such participants.

    A Global Note may not be transferred except as a whole by the U.S.
Depositary for such Global Note to a nominee of such depositary or by a nominee
of such depositary to such depositary or another nominee of such depositary or
by such depositary or any such nominee to a successor of such depositary or a
nominee of such successor. If a U.S. Depositary for Debt Securities of a series
is at any time unwilling or unable to continue as a depositary and a successor
depositary is not appointed by the Company within ninety days, the Company will
issue Debt Securities in definitive registered form in exchange for the Global
Note or Notes representing such Debt Securities. In addition, the Company may at
any time and in its sole discretion determine not to have any Debt Securities in
registered form represented by one or more Global Notes and, in such event, will
issue Debt Securities in definitive form in exchange for the Global Note or
Notes representing such Debt Securities. In any such instance, an owner of a
beneficial interest in a Global Note will be entitled to physical delivery in
definitive form of Debt Securities of the series represented by such Global Note
equal in principal amount to such beneficial interest and to have such Debt
Securities registered in its name.


CERTAIN COVENANTS OF THE COMPANY

    SENIOR DEBT SECURITIES. The Senior Debt Securities will include the
following covenants:

    Limitation on Liens. Unless otherwise indicated in the Prospectus Supplement
relating to a series of Senior Debt Securities, the Company will not, and will
not permit any Restricted Subsidiary to, create, assume or guarantee any
indebtedness for money borrowed, secured by any mortgage, lien, pledge, charge
or other security interest or encumbrance (hereinafter referred to as a
"Mortgage" or "Mortgages") on any Principal Property of the Company or a
Restricted Subsidiary or on any shares or Funded Indebtedness of a Restricted
Subsidiary (whether such Principal Property, shares or Funded Indebtedness are
now owned or hereafter acquired) without, in any such case, effectively
providing

                                       22
   55
concurrently with the creation, assumption or guaranteeing of such indebtedness
that the Senior Debt Securities (together, if the Company shall so determine,
with any other indebtedness then or thereafter existing, created, assumed or
guaranteed by the Company or such Restricted Subsidiary ranking equally with the
Senior Debt Securities) shall be secured equally and ratably with or prior to
such indebtedness. The Senior Indenture excludes, however, from the foregoing
any indebtedness secured by a Mortgage (including any extension, renewal or
replacement of any Mortgage hereinafter specified or any indebtedness secured
thereby, without increase of the principal of such indebtedness) (i) on
property, shares or Funded Indebtedness of any corporation existing at the time
such corporation becomes a Restricted Subsidiary; (ii) on property existing at
the time of acquisition of such property, or to secure indebtedness incurred for
the purpose of financing the purchase price of such property or improvements or
construction thereon which indebtedness is incurred prior to or within 180 days
after the later of such acquisition, completion of such construction or the
commencement of commercial operation of such property; (iii) on property, shares
or Funded Indebtedness of a corporation existing at the time such corporation is
merged into or consolidated with the Company or a Restricted Subsidiary, or at
the time of a sale, lease or other disposition of the properties of a
corporation as an entirety or substantially as an entirety to the Company or a
Restricted Subsidiary; (iv) on property of a Restricted Subsidiary to secure
indebtedness of such Restricted Subsidiary to the Company or another Restricted
Subsidiary; (v) on property of the Company or a Restricted Subsidiary in favor
of the United States of America or any State thereof, or any department, agency
or instrumentality or political subdivision of the United States of America or
any State thereof, to secure partial, progress, advance or other payments
pursuant to any contract or statute or to secure any indebtedness incurred for
the purpose of financing all or any part of the purchase price or the cost of
constructing or improving the property subject to such Mortgage; or (vi)
existing at the date of the Senior Indenture; provided, however, that any
Mortgage permitted by any of the foregoing clauses (i), (ii), (iii) and (v)
shall not extend to or cover any property of the Company or such Restricted
Subsidiary, as the case may be, other than the property specified in such
clauses and improvements thereto. See also "Exempted Indebtedness" below.

    Limitation on Sale and Leaseback Transactions. Unless otherwise indicated in
the Prospectus Supplement relating to a series of Senior Debt Securities, sale
and leaseback transactions (which are defined in the Senior Indenture to exclude
leases expiring within three years of making, leases between the Company and a
Restricted Subsidiary or between Restricted Subsidiaries and any lease of part
of a Principal Property, which has been sold, for use in connection with the
winding up or termination of the business conducted on such Principal Property)
by the Company or any Restricted Subsidiary of any Principal Property are
prohibited, unless (a) the Company would be entitled to incur indebtedness
secured by a Mortgage on such Principal Property (see "Limitations on Liens"
above) or (b) an amount equal to the fair value of the Principal Property so
leased (as determined by the Board of Directors of the Company) is applied
within 180 days to the retirement (otherwise than by payment at maturity or
pursuant to mandatory sinking

                                       23
   56
funds) of Senior Debt Securities or Funded Indebtedness of the Company or any
Restricted Subsidiary on a parity with the Senior Debt Securities or to
purchase, improve or construct Principal Properties. See also "Exempted
Indebtedness" below.

    Exempted Indebtedness. Notwithstanding the limitations on Mortgages and sale
and leaseback transactions described above, the Company or any Restricted
Subsidiary may, in addition to amounts permitted under such restrictions,
create, assume or guarantee secured indebtedness or enter into sale and
leaseback transactions which would otherwise be prohibited, provided that at the
time of such event, and after giving effect thereto, the sum of such outstanding
secured indebtedness plus the Attributable Debt in respect of such sale and
leaseback transactions (other than sale and leaseback transactions entered into
prior to the date of the Senior Indenture and sale and leaseback transactions
whose proceeds have been applied in accordance with clause (b) under "Limitation
on Sale and Leaseback Transactions") does not exceed 5% of the shareholders'
equity in the Company and its consolidated Subsidiaries. "Attributable Debt"
means, as of any particular time, the then present value of the total net amount
of rent required to be paid under such leases during the remaining terms thereof
(excluding any renewal term unless the renewal is at the option of the lessor),
discounted at the actual interest factor included in such rent, or, if such
interest factor is not readily determinable, then at the rate of 8-3/8% per
annum.

    Restrictions Upon Merger and Sales of Assets. Upon any consolidation or
merger of the Company with or into any other corporation or any sale, conveyance
or lease of all or substantially all the property of the Company to any other
corporation, the corporation (if other than the Company) formed by such
consolidation, or into which the Company shall have been merged, or the
corporation which shall have acquired or leased such property (which corporation
shall be a solvent corporation organized under the laws of the United States of
America or a State thereof or the District of Columbia) shall expressly assume
the due and punctual payment of the principal of and premium, if any, and
interest, if any, on all of the Senior Debt Securities. The Company will not so
consolidate or merge, or make any such sale, lease or other disposition, and the
Company will not permit any other corporation to merge into the Company, unless
immediately after giving effect thereto, the Company or such successor
corporation, as the case may be, will not be in default under the Senior
Indenture. If, upon any such consolidation, merger, sale, conveyance or lease,
or upon any consolidation or merger of any Restricted Subsidiary, or upon the
sale, conveyance or lease of all or substantially all the property of any
Restricted Subsidiary to any other corporation, any Principal Property or any
shares or Funded Indebtedness of any Restricted Subsidiary would become subject
to any Mortgage, the Company will secure the due and punctual payment of the
principal of, premium, if any, and interest, if any, on the Senior Debt
Securities (together with, if the Company shall so determine, any other
indebtedness of or guarantee by the Company or such Restricted Subsidiary
ranking equally with the Senior Debt Securities) by a Mortgage, the lien of
which will rank prior to the lien of such Mortgage of such other corporation on
all assets owned by the Company or such Restricted Subsidiary.

                                       24
   57
    Certain Definitions. The term "Principal Property" means any manufacturing
plant or other manufacturing facility of the Company or any Restricted
Subsidiary, which plant or facility is located within the United States of
America, except any such plant or facility which the Board of Directors by
resolution declares is not of material importance to the total business
conducted by the Company and its Restricted Subsidiaries. The term "Funded
Indebtedness" means indebtedness created, assumed or guaranteed by a person for
money borrowed which matures by its terms, or is renewable by the borrower to a
date, more than one year after the date of its original creation, assumption or
guarantee. The term "Restricted Subsidiary" means any Subsidiary which owns a
Principal Property excluding, however, any corporation the greater part of the
operating assets of which are located or the principal business of which is
carried on outside the United States of America. The term "Subsidiary" means any
corporation of which at least a majority of the outstanding stock having voting
power under ordinary circumstances to elect a majority of the board of directors
of said corporation shall at the time be owned by the Company or by the Company
and one or more Subsidiaries or by one or more Subsidiaries.

    SENIOR SUBORDINATED DEBT SECURITIES. The Senior Subordinated Debt Securities
will include those covenants which may be set forth in the Prospectus Supplement
to which such Debt Securities relate, including the following:

    Restrictions Upon Merger and Sales of Assets. Upon any consolidation or
merger of the Company with or into any other corporation or any sale, conveyance
or lease of all or substantially all the property of the Company to any other
corporation, the corporation (if other than the Company) formed by such
consolidation, or into which the Company shall have been merged, or the
corporation which shall have acquired or leased such property (which corporation
shall be a solvent corporation organized under the laws of the United States of
America or a State thereof or the District of Columbia) shall expressly assume
the due and punctual payment of the principal of and premium, if any, and
interest, if any, on all of the Senior Subordinated Debt Securities. The Company
will not so consolidate or merge, or make any such sale, lease or other
disposition, and the Company will not permit any other corporation to merge into
the Company, unless immediately after giving effect thereto, the Company or such
successor corporation, as the case may be, will not be in default under the
Senior Subordinated Indenture.

    Anti-Layering Restriction. The Senior Subordinated Debt Securities will also
include a covenant prohibiting the Company from incurring indebtedness which is
subordinated to any other indebtedness of the Company unless such indebtedness
is made (i) pari passu in right of payment to such Senior Subordinated Debt
Securities or (ii) subordinate in right of payment to such Senior Subordinated
Debt Securities.

    JUNIOR SUBORDINATED DEBT SECURITIES. The Junior Subordinated Debt Securities
will include those covenants which may be set forth in the Prospectus Supplement
to which such Debt Securities relate, including the following:

    Restrictions Upon Merger and Sales of Assets. Upon any consolidation or
merger of the Company with or into any other corporation or any sale,

                                       25
   58
conveyance or lease of all or substantially all the property of the Company to
any other corporation, the corporation (if other than the Company) formed by
such consolidation, or into which the Company shall have been merged, or the
corporation which shall have acquired or leased such property (which corporation
shall be a solvent corporation organized under the laws of the United States of
America or a State thereof or the District of Columbia) shall expressly assume
the due and punctual payment of the principal of and premium, if any, and
interest, if any, on all of the Junior Subordinated Debt Securities. The Company
will not so consolidate or merge, or make any such sale, lease or other
disposition, and the Company will not permit any other corporation to merge into
the Company, unless immediately after giving effect thereto, the Company or such
successor corporation, as the case may be, will not be in default under the
Junior Subordinated Indenture. In the case of Corresponding Junior Subordinated
Debt Securities, any such transaction must also be permitted under the related
Trust Agreement and Guarantee and must not give rise to any breach or violation
of the related Trust Agreement and Guarantee.

    In addition, in the event Corresponding Junior Subordinated Debt Securities
are issued to an Ingersoll-Rand Trust or a trustee of such Trust in connection
with the issuance of Trust Securities by such Ingersoll-Rand Trust, such
Corresponding Junior Subordinated Debt Securities subsequently may be
distributed pro rata to the holders of such Trust Securities in connection with
the dissolution of such Ingersoll-Rand Trust upon the occurrence of certain
events described in the Prospectus Supplement relating to such Trust Securities.
Only one series of Corresponding Junior Subordinated Debt Securities will be
issued to an Ingersoll-Rand Trust or a trustee of such Trust in connection with
the issuance of Trust Securities by such Ingersoll-Rand Trust.

    Unless otherwise provided in the applicable Prospectus Supplement, if
Corresponding Junior Subordinated Debt Securities are issued to an
Ingersoll-Rand Trust or a trustee of such Trust in connection with the issuance
of Trust Securities by such Ingersoll-Rand Trust and (i) there shall have
occurred an event that would constitute an Event of Default, (ii) the Company
shall be in default with respect to its payment of any obligations under the
related Trust Preferred Guarantee or Trust Common Guarantee or (iii) the Company
shall have given notice of its election to defer payments of interest on such
Corresponding Junior Subordinated Debt Securities by extending the interest
payment period as provided in the Indenture and such period, or any extension
thereof, shall be continuing, then (a) the Company shall not declare or pay any
dividend on, make any distribution with respect to, or redeem, purchase or make
a liquidation payment with respect to, any of its capital stock, and (b) the
Company shall not make any payment of interest, principal or premium, if any, on
or repay, repurchase or redeem any debt securities which rank pari passu with or
junior to such Corresponding Junior Subordinated Debt Securities; provided that
the foregoing restriction does not apply to any stock dividends paid by the
Company where the dividend stock is of the same class as that of the stock held
by the holders receiving the dividend.

                                       26
   59
    If provided in the applicable Prospectus Supplement, the Company will have
the right at any time and from time to time during the term of any series of
Corresponding Junior Subordinated Debt Securities to defer payment of interest
for up to such number of consecutive interest payment periods as may be
specified in the applicable Prospectus Supplement (each, an "Extension Period"),
subject to the terms, conditions and covenants, if any, specified in such
Prospectus Supplement, provided that such Extension Period may not extend beyond
the Stated Maturity of such series of Corresponding Junior Subordinated Debt
Securities. Certain United States federal income tax consequences and special
considerations applicable to any such Corresponding Junior Subordinated Debt
Securities will be described in the applicable Prospectus Supplement.

    In the Junior Subordinated Indenture, the Company, as borrower, will agree
to pay to each Trust all debts and other obligations (other than with respect to
the Trust Securities) and all costs and expenses of such Trust (including costs
and expenses relating to the organization of such Trust, the fees and expenses
of the related Ingersoll-Rand Trustees and the costs and expenses relating to
the operation of such Trust) and the offering of the Trust Preferred Securities,
and to pay any and all taxes, duties, assessments or other similar governmental
charges (other than United States withholding taxes), and all costs and expenses
with respect to the foregoing, to which such Trust might become subject.


EVENTS OF DEFAULT

    As to each series of Debt Securities, an Event of Default is defined in each
Indenture as being: default in payment of any interest or any sinking fund
payment on such series which continues for 30 days (subject to the deferral of
any interest payment in the case of an Extension Period in the case of the
Junior Subordinated Indenture); default in payment of any principal or premium,
if any, on such series; default after written notice in performance of any other
covenant in such Indenture (other than a covenant included solely for the
benefit of Debt Securities of another series) which continues for 90 days;
certain events in bankruptcy, insolvency or reorganization; or other Events of
Default specified in or pursuant to a Board Resolution or in a supplemental
indenture. Each Indenture provides that the Trustee may withhold notice to the
holders of Debt Securities of such series of any default (except in payment of
principal, interest, if any, or premium, if any, on such series or in payment of
any sinking fund installment on such series) if the Trustee considers it in the
interest of such holders to do so.

    In case an Event of Default shall occur and be continuing with respect to
the Debt Securities of any series, the Trustee or the holders of not less than
25% in aggregate principal amount of the Debt Securities then outstanding of
that series may declare the principal of the Debt Securities of such series (or,
if the Debt Securities of that series were issued as discounted Debt Securities,
such portion of the principal as may be specified in the terms of that series)
to be due and payable and, in the case of Corresponding Junior Subordinated Debt
Securities, should the Trustee or the holders of such Corresponding Junior
Subordinated Debt Securities fail to make such declaration, the

                                       27
   60
holders of at least 25% in aggregate liquidation amount of the Related Trust
Preferred Securities shall have such right. Any Event of Default with respect to
the Debt Securities of any series (except defaults in payment of principal or
premium, if any, or interest, if any, on the Debt Securities of such series) may
be waived by the holders of a majority in aggregate principal amount of the Debt
Securities of that series then outstanding. In the case of Corresponding Junior
Subordinated Debt Securities of a series, should the holders of such
Corresponding Junior Subordinated Debt Securities fail to annul a declaration or
waive such default, the holders of a majority in aggregate liquidation amount of
the series of Related Trust Preferred Securities affected shall have such right.

    Subject to the provisions of each Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
is under no obligation to exercise any of the rights or powers under such
Indenture at the request, order or direction of any of the holders of Debt
Securities, unless such holders shall have offered to the Trustee reasonable
security or indemnity. Subject to such provisions for the indemnification of the
Trustee and certain limitations contained in each Indenture, the holders of a
majority in principal amount of the Debt Securities of any series then
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Debt Securities
of such series. In case an Event of Default shall occur and be continuing as to
a series of Corresponding Junior Subordinated Debt Securities, the Property
Trustee will have the right to declare the principal of and the interest on such
Corresponding Junior Subordinated Debt Securities, and any other amounts payable
under the Junior Subordinated Indenture, to be forthwith due and payable and to
enforce its other rights as a creditor with respect to such Corresponding Junior
Subordinated Debt Securities. The Company is required annually to deliver to the
Trustee an officers' certificate stating whether or not the signers have
knowledge of any default in performance by the Company of the covenants
described above.

    If an Event of Default with respect to a series of Corresponding Junior
Subordinated Debt Securities has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest, premium (if any) or
principal on such Corresponding Junior Subordinated Debt Securities on the date
such interest, premium (if any) on principal is due and payable, a holder of
Related Trust Preferred Securities may institute a legal proceeding directly
against the Company for enforcement of payment to such holder of the principal
of or interest or premium (if any) on such Corresponding Junior Subordinated
Debt Securities having a principal amount equal to the aggregate liquidation
amount of the Related Trust Preferred Securities of such holder (a "Direct
Action"). The Company may not amend the Junior Subordinated Indenture to remove
the foregoing right to bring a Direct Action without the prior written consent
of the holders of all of the Trust Preferred Securities outstanding. If the
right to bring a Direct Action is removed, the applicable Trust may become
subject to the reporting obligations under the Exchange Act. The Company shall
have the right under the Junior Subordinated Indenture to set-off any payment

                                       28
   61
made to such holder of Trust Preferred Securities by the Company in connection
with a Direct Action.

    The holders of the Trust Preferred Securities will not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Corresponding Junior Subordinated Debt
Securities unless there shall have been an event of default under the Trust
Agreement.


DEFEASANCE

    Each Indenture provides that the Company, at its option, (a) will be
discharged from any and all obligations with respect to any series of Debt
Securities (except for certain obligations which include registering the
transfer or exchange of the Debt Securities, replacing stolen, lost or mutilated
Debt Securities, maintaining payment agencies and holding monies for payment in
trust) or (b) need not comply with certain restrictive covenants of such
Indenture as to any series of Debt Securities (in the case of Senior Debt
Securities as described above under "Certain Covenants of the
Company--Limitation on Liens", "Limitation on Sale and Leaseback Transactions"
and the last sentence of "Restrictions Upon Merger and Sales of Assets"), in
each case upon the deposit with the Trustee (and in the case of a discharge 91
days after such deposit), in trust, of money, or U.S. Government Obligations, or
a combination thereof, which, through the payment of interest thereon and
principal thereof in accordance with their terms, will provide money, in an
amount sufficient to pay all the principal (including any mandatory sinking fund
payments, if any) of, and interest, if any, or premium, if any, on the Debt
Securities of such series on the dates such payments are due in accordance with
the terms of such Debt Securities to their stated maturities or to and including
a redemption date which has been irrevocably designated by the Company for
redemption of such Debt Securities. To exercise any such option, the Company is
required to meet certain conditions, including delivering to the Trustee an
opinion of counsel to the effect that the deposit and related defeasance would
not cause the holders of the Debt Securities to recognize income, gain or loss
for Federal income tax purposes and, in the case of a discharge pursuant to
clause (a), accompanied by a ruling of the United States Internal Revenue
Service (the "IRS") to such effect or an opinion of counsel to such effect based
upon a ruling of the IRS.


MODIFICATION OF THE INDENTURES

    Each Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66-2/3% in principal amount of
the outstanding Debt Securities of all series affected by such modification
(voting as one class), to modify such Indenture or the rights of the holders of
the Debt Securities, except that no such modification shall, without the consent
of the holder of each Debt Security so affected, (i) change the maturity of any
Debt Security, or reduce the rate or extend the time of payment of interest
thereon, or reduce the principal amount thereof (including, in the case of a
discounted Debt Security, the amount payable thereon in the event of
acceleration) or any redemption premium thereon, or change the place or medium
of payment of such Debt Security, or impair the right of any

                                       29
   62
holder to institute suit for payment thereof or (ii) reduce the percentage of
Debt Securities, the consent of the holders of which is required for any such
modification or for certain waivers under such Indenture, provided that, in the
case of Corresponding Junior Subordinated Debt Securities, so long as any
Related Trust Preferred Securities remain outstanding, (a) no such modification
may be made that adversely affects the holders of such Trust Preferred
Securities in any material respect, and no termination of the Junior
Subordinated Indenture may occur, and no waiver of any Event of Default or
compliance with any covenant under the Junior Subordinated Indenture may be
effective, without the prior consent of the holders of at least a majority of
the aggregate liquidation amount of all Related Trust Preferred Securities
affected unless and until the principal of the Corresponding Junior Subordinated
Debt Securities and all accrued and unpaid interest thereon have been paid in
full and certain other conditions have been satisfied, and (b) where a consent
under the Junior Subordinated Indenture would require the consent of each holder
of Corresponding Junior Subordinated Debt Securities, no such consent shall be
given by the Property Trustee without the prior consent of each holder of
Related Trust Preferred Securities.


SUBORDINATION OF SENIOR SUBORDINATED AND JUNIOR SUBORDINATED DEBT SECURITIES

    The payment of the principal of, premium, if any, and interest, if any, on
the Senior Subordinated Debt Securities and the Junior Subordinated Debt
Securities will be subordinated, to the extent and in the manner set forth in
the Senior Subordinated Indenture and Junior Subordinated Indenture,
respectively, and as may be further described in the applicable Prospectus
Supplement, in right of payment to the prior payment in full in cash or cash
equivalents of all Senior Indebtedness which may at any time and from time to
time be outstanding.

    Unless otherwise provided in the applicable Prospectus Supplement with
respect to an issue of Senior Subordinated Debt Securities or Junior
Subordinated Debt Securities, in the event of any insolvency or bankruptcy case
or proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relating to the Company or its
assets, or any liquidation, dissolution or other winding-up of the Company,
whether voluntary or involuntary, or any assignment for the benefit of creditors
or other marshalling of assets or liabilities of the Company, all Senior
Indebtedness of the Company must be paid in full or such payment must be
provided for before any payment or distribution (excluding the distribution of
certain permitted equity or subordinated securities) is made on account of the
principal, premium, if any, sinking fund, if any, or interest, if any, on any
Senior Subordinated Debt Securities or Junior Subordinated Debt Securities, as
the case may be.

    In addition, the applicable Prospectus Supplement may provide that no
payment on account of the Senior Subordinated Debt Securities or Junior
Subordinated Debt Securities offered thereby shall be made during the
continuance of certain defaults with respect to the Senior Indebtedness or
certain designated Senior Indebtedness of the Company.

                                       30
   63
    In the event that, notwithstanding the foregoing, any payment or
distribution of assets (excluding the distribution of certain permitted equity
or subordinated securities) of the Company is received by the Senior
Subordinated Trustee or the Junior Subordinated Trustee or the holders of any of
the Senior Subordinated Debt Securities or Junior Subordinated Debt Securities,
as the case may be, under the circumstances described above and before all
Senior Indebtedness is paid in full, such payment or distribution will be paid
over to the holders of such Senior Indebtedness or on their behalf for
application to the payment of all such Senior Indebtedness remaining unpaid
until all such Senior Indebtedness has been paid in full or such payment
provided for, after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness.

    If the Company fails to make any payments on the Senior Subordinated Debt
Securities or the Junior Subordinated Debt Securities of any series when due or
within any applicable grace period, whether or not on account of any payment
blockage provisions that may be set forth in the applicable Prospectus
Supplement, such failure would constitute an Event of Default under the relevant
Indenture and would enable the holders of such Debt Securities to accelerate the
maturity thereof. See "--Events of Default."

    By reason of such subordination, in the event of any distribution of assets
of the Company upon dissolution, winding up, liquidation, reorganization or
other similar proceedings of the Company, (i) holders of Senior Indebtedness
will be entitled to be paid in full before payments may be made on the Senior
Subordinated Debt Securities or the Junior Subordinated Debt Securities and the
holders of Senior Subordinated Debt Securities and Junior Subordinated Debt
Securities will be required to pay over their share of such distribution to the
holders of Senior Indebtedness until such Senior Indebtedness is paid in full
and (ii) creditors of the Company who are neither holders of Senior Subordinated
Debt Securities or Junior Subordinated Debt Securities nor holders of Senior
Indebtedness may recover less, ratably, than holders of Senior Indebtedness and
may recover more, ratably, than the holders of the Senior Subordinated Debt
Securities and Junior Subordinated Debt Securities. Furthermore, such
subordination may result in a reduction or elimination of payments to the
holders of Senior Subordinated Debt Securities and Subordinated Debt Securities.
The Senior Subordinated Indenture and Junior Subordinated Indenture provide that
the subordination provisions thereof will not apply to any money and securities
held in trust pursuant to the discharge, defeasance and covenant defeasance
provisions of such Indenture (see "--Defeasance" above).

    If this Prospectus is being delivered in connection with the offering of a
series of Senior Subordinated Debt Securities or Junior Subordinated Debt
Securities, the accompanying Prospectus Supplement or the information
incorporated by reference herein will set forth the definitions of Senior
Indebtedness and Designated Senior Indebtedness applicable thereto, any payment
blockage provisions and the approximate amount of such Senior Indebtedness
outstanding as of a recent date.

                                       31
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CONCERNING THE TRUSTEE

    The Company may from time to time maintain lines of credit and have other
customary banking relationships with each Trustee and its affiliated banks.


CORRESPONDING JUNIOR SUBORDINATED DEBT SECURITIES

    The Corresponding Junior Subordinated Debt Securities may be issued in one
or more series of Junior Subordinated Debt Securities under the Junior
Subordinated Indenture with terms corresponding to the terms of a series of
Related Trust Preferred Securities. In that event, concurrently with the
issuance of the Related Trust Preferred Securities, such Trust will invest the
proceeds thereof and the consideration paid by the Company for the Trust Common
Securities of such Trust in such series of Corresponding Junior Subordinated
Debt Securities issued by the Company to such Trust. Each series of
Corresponding Junior Subordinated Debt Securities will be in the principal
amount equal to the aggregate stated liquidation amount of the Related Trust
Preferred Securities and the Trust Common Securities of such Trust and will rank
pari passu with all other series of Junior Subordinated Debt Securities. Holders
of the Related Trust Preferred Securities for a series of Corresponding Junior
Subordinated Debt Securities will have the rights, in connection with
modifications to the Junior Subordinated Indenture or upon occurrence of Events
of Default, as described above under "--Modification of the Indentures" and
"--Events of Default," unless provided otherwise in the Prospectus Supplement
for such Related Trust Preferred Securities.

    The applicable Prospectus Supplement will also set forth the terms of any
redemption provisions applicable to the Corresponding Junior Subordinated Debt
Securities and any other provisions and covenants.

    The Company will covenant, as to each series of Corresponding Junior
Subordinated Debt Securities, (i) to maintain directly or indirectly 100%
ownership of the Trust Common Securities of the Trust to which such
Corresponding Junior Subordinated Debt Securities have been issued, provided
that certain successors which are permitted pursuant to the Junior Subordinated
Indenture may succeed to the Company's ownership of the Trust Common Securities,
(ii) not to voluntarily terminate, wind up or liquidate any Trust, except (a) in
connection with a distribution of Corresponding Junior Subordinated Debt
Securities to the holders of the Trust Preferred Securities in exchange therefor
upon liquidation of such Trust, or (b) in connection with certain mergers or
consolidations permitted by the related Trust Agreement and (iii) to use its
reasonable efforts, consistent with the terms and provisions of the related
Trust Agreement, to cause such Trust to remain classified as a grantor trust and
not as an association taxable as a corporation for United States federal income
tax purposes.

                                       32
   65
        DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS

    The Company may issue Stock Purchase Contracts, representing contracts
obligating holders to purchase from the Company, and the Company to sell to the
holders, a specified number of shares of Common Stock at a future date or dates.
The price per share of Common Stock may be fixed at the time the Stock Purchase
Contracts are issued or may be determined by reference to a specific formula set
forth in the Stock Purchase Contracts. The Stock Purchase Contracts may be
issued separately or as a part of Stock Purchase Units consisting of a Stock
Purchase Contract and Debt Securities or Trust Preferred Securities or debt
obligations of third parties, including U.S. Treasury securities, securing the
holders' obligations to purchase the Common Stock under the Stock Purchase
Contracts. The Stock Purchase Contracts may require the Company to make periodic
payments to the holders of the Stock Purchase Units or vice-versa, and such
payments may be unsecured or prefunded on some basis. The Stock Purchase
Contracts may require holders to secure their obligations thereunder in a
specified manner.

    The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units.


                    DESCRIPTION OF TRUST PREFERRED SECURITIES

    Each Ingersoll-Rand Trust may issue only one series of Trust Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Trust Agreement of each Ingersoll-Rand Trust authorizes the Regular Trustees
of each Ingersoll-Rand Trust to issue on behalf of such Ingersoll-Rand Trust one
series of Trust Preferred Securities. The Trust Agreement will be qualified as
an indenture under the Trust Indenture Act. The Trust Preferred Securities will
have such terms, including distributions, redemption, voting, liquidation rights
and such other preferred, deferred or other special rights or such restrictions,
as shall be set forth in the Trust Agreement or made part of the Trust Agreement
by the Trust Indenture Act. Reference is made to any Prospectus Supplement
relating to the Trust Preferred Securities for specific terms including (i) the
distinctive designation of such Trust Preferred Securities, (ii) the number of
Trust Preferred Securities issued, (iii) the annual distribution rate (or method
of determining such rate) for Trust Preferred Securities and the date or dates
upon which such distributions shall be payable, (iv) whether distributions on
Trust Preferred Securities shall be cumulative, and, in the case of Trust
Preferred Securities having such cumulative distribution rights, the date or
dates or method determining the date or dates from which distributions on Trust
Preferred Securities shall be cumulative, (v) the amount or amounts which shall
be paid out of the assets of such trust to the holders of Trust Preferred
Securities upon voluntary or involuntary dissolution, winding-up or termination
of such Ingersoll-Rand Trust, (vi) the obligation, if any, of such
Ingersoll-Rand Trust to purchase or redeem Trust Preferred Securities and the
price or prices at which, the period or periods within which and the terms and
conditions upon which Trust Preferred Securities issued by such Ingersoll-Rand
Trust shall be purchased or redeemed, in whole or in part, pursuant to such
obligation, (vii) the voting rights, if any, of Trust Preferred Securities
issued by such Ingersoll-Rand Trust in addition to those required by law,

                                       33
   66
including the number of votes per Trust Preferred Security and any requirement
for the approval by the holders of Trust Preferred Securities, or of Trust
Preferred Securities issued by both Ingersoll-Rand Trusts, as a condition to
specified action or amendments to the Trust Agreement of such Ingersoll-Rand
Trust, (viii) whether the Trust Preferred Securities will be issued in the form
of one or more global securities and (ix) any other relevant rights,
preferences, privileges, limitations or restrictions of Trust Preferred
Securities issued by such Ingersoll-Rand Trust consistent with the Trust
Agreement of such Trust or with applicable law. All Trust Preferred Securities
offered hereby will be guaranteed by the Company to the extent set forth below
under "Description of Trust Preferred Guarantees." Certain United States federal
income tax consideration applicable to any offering of Trust Preferred
Securities will be described in the Prospectus Supplement relating thereto.

    In connection with the issuance of Trust Preferred Securities, each
Ingersoll-Rand Trust will issue one series of Trust Common Securities. The Trust
Agreement of each Ingersoll-Rand Trust authorizes the Regular Trustees to issue
on behalf of such Ingersoll-Rand Trust one series of Trust Common Securities
having such terms including distributions, redemption, voting, liquidation
rights or such restrictions as shall be set forth therein. The terms of the
Trust Common Securities issued by an Ingersoll-Rand Trust will be substantially
identical to the terms of the Trust Preferred Securities issued by such trust
and the Trust Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Trust Preferred Securities except that, upon the
occurrence and during the continuation of an event of default under the Trust
Agreement, the rights of the holders of the Trust Common Securities to payment
in respect of distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. Except in certain limited circumstances, the Trust Common
Securities will also carry the right to vote and to appoint, remove or replace
any of the Ingersoll-Rand Trustees. All of the Trust Common Securities will be
directly or indirectly owned by the Company.


                    DESCRIPTION OF TRUST PREFERRED GUARANTEES

    Set forth below is a summary of information concerning the Trust Preferred
Guarantees that will be executed and delivered by the Company for the benefit of
the holders, from time to time, of Trust Preferred Securities. Each Trust
Preferred Guarantee Agreement under which Trust Preferred Guarantees are issued
will be qualified as an indenture under the Trust Indenture Act. The trustee
under each Trust Preferred Guarantee (the "Guarantee Trustee") will be
identified in the relevant Prospectus Supplement, and will be a financial
institution not affiliated with the Company that has a combined capital and
surplus of not less than $50,000,000. The terms of each Trust Preferred
Guarantee will be those set forth in such Trust Preferred Guarantee and those
made part of such Trust Preferred Guarantee by the Trust Indenture Act. This
summary does not purport to be complete and makes use of certain terms defined
in the Trust Preferred Guarantee Agreement and is subject in all respects to the
provisions of, and is qualified in its entirety by

                                       34
   67
reference to, the form of Trust Preferred Guarantee, which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, and
the Trust Indenture Act. Each Trust Preferred Guarantee will be held by the
Trust Preferred Guarantee Trustee for the benefit of the holders of the Trust
Preferred Securities of the applicable Ingersoll-Rand Trust.


GENERAL

    Pursuant to each Trust Preferred Guarantee, the Company will unconditionally
agree, to the extent set forth herein, to pay in full to the holders of the
Trust Preferred Securities issued by each Ingersoll-Rand Trust, the Trust
Preferred Guarantee Payments (as defined herein) (except to the extent paid by
such Ingersoll-Rand Trust), as and when due, regardless of any defense, right of
set-off or counterclaim which such Ingersoll-Rand Trust may have or assert. The
following payments with respect to Trust Preferred Securities issued by each
Ingersoll-Rand Trust (the "Trust Preferred Guarantee Payments"), to the extent
not paid by such Ingersoll-Rand Trust, will be subject to the Trust Preferred
Guarantee (without duplication): (i) any accumulated and unpaid distributions
that are required to be paid on such Trust Preferred Securities, but if and only
to the extent that in each case the Company has made a payment to the related
Property Trustee of interest, principal and premium, if any, on the subordinated
Debt Securities held in such Ingersoll-Rand Trust as trust assets, (ii) the
redemption price, including all accrued and unpaid distributions (the
"Redemption Price"), but if and only to the extent that in each case the Company
has made a payment to the related Property Trustee of interest and principal on
the subordinated Debt Securities held in such Ingersoll-Rand Trust as trust
assets with respect to any Trust Preferred Securities called for redemption by
such Ingersoll-Rand Trust and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of such Ingersoll-Rand Trust (other than in connection
with the distribution of Corresponding Junior Subordinated Debt Securities to
the holders of Trust Preferred Securities or the redemption of all of the Trust
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on such Trust Preferred Securities to
the date of payment to the extent such Ingersoll-Rand Trust has funds available
therefor or (b) the amount of assets of such Ingersoll-Rand Trust remaining
available for distribution to holders of such Trust Preferred Securities in
liquidation of such Ingersoll-Rand Trust. The Company's obligation to make a
Trust Preferred Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of Trust Preferred Securities or
by causing the applicable Ingersoll-Rand Trust to pay such amounts to such
holders.

    Each Trust Preferred Guarantee will be a guarantee with respect to the Trust
Preferred Securities issued by the applicable Ingersoll-Rand Trust from the time
of issuance of such Trust Preferred Securities but will not apply to any payment
of distributions except to the extent the Company has made a payment to the
related Property Trustee of interest or principal on the subordinated Debt
Securities held in such Ingersoll-Rand Trust as trust assets. If the Company
does not make interest payments on the Corresponding Junior Subordinated Debt
Securities

                                       35
   68
purchased by an Ingersoll-Rand Trust, such Ingersoll-Rand Trust will not pay
distributions on the Trust Preferred Securities issued by such Ingersoll-Rand
Trust and will not have funds available therefor and such payment obligation
will therefore not be guaranteed by the Company under the Trust Preferred
Guarantee. See "Description of Trust Preferred Securities" and "Description of
Debt Securities--Certain Covenants of the Company."

    The Company's obligations under the Trust Agreement for each Ingersoll-Rand
Trust, the Trust Preferred Guarantee issued with respect to Trust Preferred
Securities issued by that Ingersoll-Rand Trust, the Corresponding Junior
Subordinated Debt Securities purchased by that Ingersoll-Rand Trust and the
related Junior Subordinated Indenture in the aggregate will provide a full and
unconditional guarantee on a junior subordinated basis by the Company of
payments due on the Trust Preferred Securities issued by that Ingersoll-Rand
Trust.

    The Company has also agreed to unconditionally guarantee the obligations of
the Ingersoll-Rand Trusts with respect to the Trust Common Securities (the
"Trust Common Guarantees") to the same extent as the Trust Preferred Guarantees,
except that, upon an event of default under the Subordinated Indenture, holders
of Trust Preferred Securities under the Trust Preferred Guarantees shall have
priority over holders of Trust Common Securities under the Trust Common
Guarantee with respect to distributions and payments on liquidation, redemption
or otherwise.


CERTAIN COVENANTS OF THE COMPANY

    In each Trust Preferred Guarantee, the Company will covenant that, so long
as any Trust Preferred Securities issued by the applicable Ingersoll-Rand Trust
remain outstanding, if there shall have occurred any event that would constitute
an event of default under such Trust Preferred Guarantee or the Declaration of
such Ingersoll-Rand Trust, then (a) the Company shall not declare or pay any
dividend on, or make any distribution with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
and (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company which rank junior to such Corresponding Junior Subordinated Debt
Securities. However, each Trust Preferred Guarantee will except from the
foregoing any stock dividends paid by the Company, or any of its subsidiaries,
where the dividend stock is of the same class as that on which the dividend is
being paid.


MODIFICATION OF THE TRUST PREFERRED GUARANTEES; ASSIGNMENT

    Except with respect to any changes that do not adversely affect the rights
of holders of Trust Preferred Securities in any material respect (in which case
no vote will be required), each Trust Preferred Guarantee may be amended only
with the prior approval of the holders of not less than a majority in
liquidation amount of the outstanding Trust Preferred Securities issued by the
applicable Ingersoll-Rand Trust. The manner of obtaining any such approval of
holders of such Trust Preferred Securities will be set forth in an accompanying
Prospectus Supplement. All guarantees and agreements contained in a Trust
Preferred Guarantee

                                       36
   69
shall bind the successor, assignees, receivers, trustees and representatives of
the Company and shall inure to the benefit of the holders of the Trust Preferred
Securities of the applicable Ingersoll-Rand Trust then outstanding.


EVENTS OF DEFAULT

    An Event of Default under the Trust Preferred Guarantee will occur upon the
failure of the Company to perform any of its payments or other obligations
thereunder. The holders of a majority in liquidation amount of the Trust
Preferred Securities to which a Trust Preferred Guarantee relates have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trust Preferred Guarantee Trustee in respect of the Trust
Preferred Guarantee or to direct the exercise of any trust or power conferred
upon the Trust Preferred Guarantee Trustee under the Trust Preferred Guarantee.

    If the Trust Preferred Guarantee Trustee fails to enforce such Trust
Preferred Guarantee, any holder of Trust Preferred Securities relating to such
Trust Preferred Guarantee may, after a period of 30 days has elapsed from such
holder's written request to the Trust Preferred Guarantee Trustee to enforce the
Trust Preferred Guarantee, institute a legal proceeding directly against the
Company to enforce the Trust Preferred Guarantee Trustee's rights under such
Trust Preferred Guarantee without first instituting a legal proceeding against
the relevant Ingersoll-Rand Trust, the Trust Preferred Guarantee Trustee or any
other person or entity.

    The Company will be required to provide annually to the Trust Preferred
Guarantee Trustee a statement as to the performance by the Company of certain of
its obligations under each of the Trust Preferred Guarantees and as to any
default in such performance and an officer's certificate as to the Company's
compliance with all conditions under each of the Trust Preferred Guarantees.


TERMINATION OF TRUST PREFERRED GUARANTEES

    Each Trust Preferred Guarantee will terminate as to the Trust Preferred
Securities issued by the applicable Ingersoll-Rand Trust upon full payment of
all distributions relating to the Trust Preferred Securities or the Redemption
Price of all Trust Preferred Securities of such Trust, upon distribution of the
Subordinated Debt Securities held by such Ingersoll-Rand Trust to the holders of
the Trust Preferred Securities of such Ingersoll-Rand Trust or upon full payment
of the amounts payable in accordance with the Declaration of such Ingersoll-Rand
Trust upon liquidation of such Ingersoll-Rand Trust. Each Trust Preferred
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Trust Preferred Securities issued by the
applicable Ingersoll-Rand Trust must restore payment of any sums paid under such
Trust Preferred Securities or such Trust Preferred Guarantee.

                                       37
   70
STATUS OF TRUST PREFERRED GUARANTEES

    Each Trust Preferred Guarantee will constitute an unsecured obligation of
the Company and will rank (i) subordinate and junior in right of payment to all
other liabilities of the Company, (ii) pari passu with the most senior
Preference Stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any Preference Stock
of any affiliate of the Company and (iii) senior to the Company's Common Stock.
The terms of the Trust Preferred Securities provide that each holder of Trust
Preferred Securities issued by such Ingersoll-Rand Trust by acceptance thereof
agrees to the subordination provisions and other terms of the applicable Trust
Preferred Guarantee.

    The Trust Preferred Guarantee Trustee shall enforce the Trust Preferred
Guarantee on behalf of the holders of the Trust Preferred Securities issued by
the applicable Ingersoll-Rand Trust. The holders of not less than a majority in
aggregate liquidation amount of the Trust Preferred Securities issued by the
applicable Ingersoll-Rand Trust have the right to direct the time, method and
place of conducting any proceeding for any remedy available in respect of the
related Trust Preferred Guarantee, including the giving of directions of the
Trust Preferred Guarantee Trustee. If the Trust Preferred Guarantee Trustee
fails to enforce such Trust Preferred Guarantee, any holder of Trust Preferred
Securities issued by the applicable Ingersoll-Rand Trust may institute a legal
proceeding directly against the Company, as Guarantor, to enforce its rights
under such Trust Preferred Guarantee, without first instituting a legal
proceeding against the applicable Ingersoll-Rand Trust or any other person or
entity.

    Each Trust Preferred Guarantee will constitute a guarantee of payment and
not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under a Trust
Preferred Guarantee without instituting a legal proceeding against any other
person or entity).


                              PLAN OF DISTRIBUTION

    The Company or any Ingersoll-Rand Trust may sell the Securities to which
this Prospectus relates to or for resale to the public through one or more
underwriters, acting alone or in underwriting syndicates led by one or more
managing underwriters, and also may sell such Securities directly to other
purchasers or dealers or through agents.

    The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed from time to
time, at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Each Prospectus Supplement
will describe the method of distribution of the offered Securities.

    In connection with the sale of Securities, such underwriters, dealers and
agents may receive compensation from the Company or an Ingersoll-Rand Trust, or
from purchasers of Securities for whom they may act as agents, in the form of
discounts, concessions or commissions. Underwriters, dealers and agents that
participate in the distribution of

                                       38
   71
Securities and, in certain cases, direct purchasers from the Company or from an
Ingersoll-Rand Trust, may be deemed to be "underwriters" and any discounts or
commissions received by them and any profit on the resale of Securities by them
may be deemed to be underwriting discounts and commissions under the Securities
Act. Any such underwriters, dealers or agents will be identified and any such
compensation will be described in the Prospectus Supplement.

    Under agreements which may be entered into by the Company or by an
Ingersoll-Rand Trust, underwriters, dealers and agents who participate in the
distribution of Securities may be entitled to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act. The
place and time of delivery for offered Securities in respect of which this
Prospectus is delivered are set forth in the accompanying Prospectus Supplement.


                                  LEGAL MATTERS

    Certain legal matters with respect to the Securities (other than the Trust
Preferred Securities) will be passed upon for the Company by Patricia Nachtigal,
Esq., Vice President and General Counsel of the Company. The validity of the
Trust Preferred Securities will be passed upon for the Company and the
Ingersoll-Rand Trusts by Richards, Layton & Finger. Certain legal matters will
be passed upon for the underwriters, dealers or other agents, if any, by Simpson
Thacher & Bartlett (a partnership which includes professional corporations), 425
Lexington Avenue, New York, New York 10017. Simpson Thacher & Bartlett renders
legal services to the Company on a regular basis.


                                     EXPERTS

    The financial statements incorporated in this Prospectus by reference to
Ingersoll-Rand Company's Annual Report on Form 10-K for the year ended December
31, 1996 have been so incorporated in reliance on the reports of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.

                                       39
   72
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
SUCH PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.


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


                                TABLE OF CONTENTS



                                                                                Page
                                                                                ----

                                PROSPECTUS SUPPLEMENT
                                                                            
Description of Notes............................................................ S-3
Certain United States Federal Income Tax
   Consequences................................................................ S-14
Supplemental Plan of Distribution.............................................. S-19

                                     PROSPECTUS
Available Information............................................................. 3
Incorporation of Certain Documents by Reference................................... 3
The Company....................................................................... 3
The Ingersoll-Rand Trusts......................................................... 4
Use of Proceeds................................................................... 4
Selected Financial Data........................................................... 5
Ratio of Earnings to Fixed Charges................................................ 5
Description of Capital Stock...................................................... 6
Description of Debt Securities................................................... 13
Description of Stock Purchase Contracts and
   Stock Purchase Units.......................................................... 22
Description of Trust Preferred Securities........................................ 22
Description of Trust Preferred Guarantees........................................ 23
Plan of Distribution............................................................. 25
Legal Matters.................................................................... 26
Experts.......................................................................... 26



                                  $750,000,000



                                 INGERSOLL-RAND
                                    COMPANY



                               MEDIUM-TERM NOTES,
                                    SERIES B



                                DUE NINE MONTHS
                                    OR MORE
                               FROM DATE OF ISSUE



                             SALOMON BROTHERS INC
                              MERRILL LYNCH & CO.
                             CHASE SECURITIES INC.
                          J.P. MORGAN SECURITIES INC.



                             PROSPECTUS SUPPLEMENT
                             DATED NOVEMBER 5, 1997