ASHLAND INC, S-3, 2000-05-12

ASHLAND INC
S-3, 2000-05-12
PETROLEUM REFINING

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<PAGE>

As filed with the Securities and Exchange Commission on May 12, 2000

Registration Statement No. 333-[ ]

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM S-3
REGISTRATION STATEMENT
Under
the Securities Act of 1933

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ASHLAND INC.
(Exact name of Registrant as specified in its charter)

Kentucky 61-0122250
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

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50 E. RiverCenter Boulevard
P.O. Box 391
Covington, KY 41012-0391
(859) 815-3333
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

David L. Hausrath, Esq.
Vice President and General Counsel
50 E. RiverCenter Boulevard
P.O. Box 391
Covington, KY 41012-0391
(859) 815-4711
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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Copies to:

Susan Webster, Esq. Francis S. Morison, Esq.
Cravath, Swaine & Moore Davis Polk & Wardwell
825 Eighth Avenue 450 Lexington Avenue
New York, NY 10019 New York, NY 10017
(212) 474-1000 (212) 450-4000

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Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [_]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box: [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following box. [_]

CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed
Proposed Maximum
Title of each Class of Amount Maximum Aggregate Amount of
Securities to be to be Offering Price Offering Registration
Registered(1) Registered(2) Per Unit(3)(4) Price(4)(5) Fee(6)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities, Debt
Warrants, Preferred
Stock, Depositary
Shares, Preferred
Stock Warrants, Common
Stock and related
Rights and Common
Stock Warrants........ -- -- $251,500,000 $66,396
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</TABLE>

(Footnotes continued next page)

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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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<PAGE>

(Continued from previous page)
- ---------------------
(1) This Registration Statement also covers (i) Debt Securities, Preferred
Stock and Common Stock and related Rights which may be issued upon exercise
of Securities Warrants and (ii) such indeterminate amount of securities as
may be issued in exchange for or upon conversion of, as the case may be,
the securities registered hereunder. In addition, any other securities
registered hereunder may be sold separately or as units with other
securities registered hereunder.
(2) In no event will the aggregate initial offering price of Debt Securities,
Debt Warrants, Preferred Stock, Depositary Shares, Preferred Stock
Warrants, Common Stock and related Rights and Common Stock Warrants issued
under this Registration Statement exceed $251,500,000, or the equivalent
thereof in one or more foreign currencies or composite currencies.
(3) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D of Form S-3 under the Securities Act of 1933.
(4) The proposed maximum offering price per unit will be determined from time
to time by the Registrant in connection with, and at the time of, the
issuance by the Registrant of the securities registered hereunder.
(5) Estimated solely for the purposes of computing the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933.
(6) The prospectus included in this Registration Statement also relates to
$231,311,000 in Debt Securities, Debt Warrants, Preferred Stock, Depositary
Shares, Preferred Stock Warrants, Common Stock and Common Stock Warrants
previously registered pursuant to Registration Statement No. 333-70651. A
registration fee of $64,304 was paid in connection with Registration
Statement No. 333-70651, of which all of that fee related to such
securities. The Prospectus included in this Registration Statement also
relates to $117,189,000 in Debt Securities, Debt Warrants, Preferred Stock,
Depositary Shares, Preferred Stock Warrants, Common Stock and Common Stock
Warrants previously registered pursuant to Registration Statement No. 33-
57011. A registration fee of $206,897 was paid in connection with
Registration Statement No. 33-57011, of which $40,410 related to such
Securities. In the event that any such previously registered securities are
offered and sold prior to the effective date of this Registration
Statement, the amount of such securities so offered and sold will not be
included in a prospectus hereunder.

Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
included in this Registration Statement also relates to the securities of the
Registrant previously registered under the Registrant's Statement on Form S-3
(No. 333-70651) and Registration Statement on Form S-3 (No. 33-57011). This
Registration Statement constitutes Post-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form S-3 (No. 333-70651) and Post-
Effective Amendment No. 4 to the Registrant's Registration Statement on Form S-
3 (No. 33-57011) .

Pursuant to Rule 429 of the rules and regulations of the Commission under
the Securities Act of 1933, the prospectus included in this Registration
Statement is a combined prospectus and relates to the Registration Statement on
Form S-3 (No. 333-70651) that was previously filed by Ashland Inc. and
Registration Statement on Form S-3 (No. 33-57011) that was previously filed by
Ashland Oil, Inc. Ashland Oil, Inc. changed its name to Ashland Inc. on January
27, 1995.
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities, and it is not soliciting an offer to buy +
+these securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED MAY 12, 2000

PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 2000

U.S. $300,000,000

Ashland Inc.
50 E. RiverCenter Boulevard
P.O. Box 391
Covington, Kentucky 41012-0391
(859) 815-3333
Medium-Term Notes, Series J
Due Nine Months or more from Date of Issue

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Ashland Inc. may offer from time to time up to $300,000,000 of its Medium-
Term Notes, Series J. Each note will mature on a date nine months or more from
its date of original issuance. Unless we specify otherwise in the applicable
pricing supplement to this prospectus supplement, we will pay interest on fixed
rate notes on each February 15 and August 15 and at maturity. We will pay
interest on floating rate notes on the dates specified in the applicable
pricing supplement. Notes may contain optional redemption provisions or may
obligate us to repay at the option of the holder. Generally, there will not be
a sinking fund. We will establish and the pricing supplement will describe the
specific terms of each note.

--------

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

<TABLE>
<CAPTION>
Price to Agents Proceeds to
Public Commissions Company
-------- ----------- -----------
<S> <C> <C> <C>
Per Note........ 100% .125%-.750% 99.875%-99.250%
Total(1)........ U.S.$300,000,000 $375,000-$2,250,000 $299,625,000-$297,750,000
</TABLE>
(1) Or the equivalent in other currencies or currency units.

--------

We are offering the notes on a continuing basis through Credit Suisse First
Boston Corporation, Salomon Smith Barney Inc., and Chase Securities Inc., which
are acting as agents. Each agent has agreed to use reasonable efforts to
solicit offers to purchase the notes. We may also sell notes at or above par to
any agent, acting as principal; to other agents, dealers or underwriters acting
as agents or principals for resale to investors or to dealers for resale by
them and directly to investors on our own behalf. The notes will not be listed
on any securities exchange. You cannot be assured that the notes offered by
this prospectus supplement will be sold or that there will be a secondary
market for the notes.

Credit Suisse First Boston

Salomon Smith Barney

Chase Securities Inc.

The date of this prospectus supplement is , 2000.
<PAGE>

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Supplement
About this Prospectus Supplement; Pricing Supplements...................... S-3
Description of the Notes................................................... S-4
Special Provisions Relating to Foreign Currency Notes...................... S-12
United States Taxation..................................................... S-14
Plan of Distribution....................................................... S-20
Legal Opinions............................................................. S-21
Glossary................................................................... S-22
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Prospectus
Summary.................................................................... 1
Ashland Inc................................................................ 5
Use of Proceeds............................................................ 5
Description of Debt Securities............................................. 5
Description of Preferred Stock............................................. 18
Description of Depositary Shares........................................... 21
Description of Common Stock................................................ 23
Description of Securities Warrants......................................... 24
Plan of Distribution....................................................... 25
Legal Matters.............................................................. 26
Experts.................................................................... 26
</TABLE>
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You should rely only on the information incorporated by reference or
provided in this prospectus supplement, the attached prospectus and the
attached pricing supplement. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus supplement, the attached prospectus or the
attached pricing supplement is accurate as of any date other than the date on
the front of the applicable document.

S-2
<PAGE>

ABOUT THIS PROSPECTUS SUPPLEMENT; PRICING SUPPLEMENTS

We may use this prospectus supplement, together with the attached prospectus
and an attached pricing supplement, to offer our senior Medium-Term Notes,
Series J, at various times. The total initial public offering price of notes
that may be offered by use of this prospectus supplement is $300,000,000 (or
the equivalent in foreign or composite currencies). Of this amount,
$198,500,000 represents the initial public offering price of notes previously
offered but never issued by use of the prospectus supplement dated September 3,
1999 relating to our senior Medium-Term Notes, Series I.

This prospectus supplement sets forth certain terms of the notes that we may
offer. It supplements the description of the debt securities and senior
securities contained in the attached prospectus. If information in this
prospectus supplement is inconsistent with the prospectus, this prospectus
supplement will apply and will supersede that information in the prospectus.

Each time we issue notes we will attach a pricing supplement to this
prospectus supplement. The pricing supplement will contain the specific
description of the notes being offered and the terms of the offering. The
pricing supplement may also add, update or change information in this
prospectus supplement or the attached prospectus. Any information in the
pricing supplement, including any changes in the method of calculating interest
on any note, that is inconsistent with this prospectus supplement will apply
and will supersede that information in this prospectus supplement.

It is important for you to read and consider all information contained in
this prospectus supplement and the attached prospectus and pricing supplement
in making your investment decision. You should also read and consider the
information in the documents we have referred you to in "Where You Can Find
More Information About Ashland" on page 3 of the attached prospectus.

S-3
<PAGE>

DESCRIPTION OF THE NOTES

General

The following summary of certain terms of the notes is not complete. You
should refer to the senior indenture with Citibank, N.A., as trustee, under
which the notes will be issued, a copy of which is incorporated as an exhibit
to the registration statement. The definitions of certain capitalized terms
used in this prospectus supplement are provided in the glossary beginning on
page S-19. A number of terms used but not defined in this prospectus supplement
(including the glossary) have the same meanings as in the indenture.

The notes will be "senior securities" as described in the attached
prospectus. The notes will constitute one series of senior securities issued
under the indenture. They will have the same rank as all of our other senior
securities. See "Description of Debt Securities" in the attached prospectus.

We will offer the notes on a continuing basis. Each note will mature 9
months or more from its date of issue, as agreed between us and the initial
purchaser.

We will not redeem any note prior to the redemption date fixed at the time
of sale and set forth in the attached pricing supplement. If the pricing
supplement does not indicate a redemption date for a note, we will not redeem
the note before its stated maturity. Unless the attached pricing supplement
indicates otherwise, on or after any indicated redemption date, we may, at our
option, redeem the related note wholly or partially in increments of $1,000. If
we choose to redeem the note, we will do so at the redemption price or prices
set forth in the attached pricing supplement, together with interest payable to
the date of redemption. We must give notice of this redemption not more than 60
nor less than 30 days prior to the redemption date. The notes will not have a
sinking fund unless the attached pricing supplement specifies otherwise.

We may provide that any note will be repayable at the holder's option, at
the times and on the terms and conditions set forth in the note and described
in the attached pricing supplement.

The notes may bear interest at (a) a fixed rate or (b) a floating rate.
Interest on floating rate notes will be determined, and adjusted periodically,
using an interest rate basis or quotation, adjusted by any spread or spread
multiplier. See "Interest and Interest Rates" below.

Unless the attached pricing supplement specifies otherwise, the notes will
be denominated in U.S. dollars and payments of principal of and interest on the
notes will be made in U.S. dollars. If denominated in U.S. dollars, the notes
will be issued in denominations of $1,000 and multiples of $1,000 greater than
$1,000. The attached pricing supplement will set forth the authorized
denominations of notes not denominated in U.S. dollars and additional
information. This information would include any exchange rate information,
relevant for these notes and notes for which principal, premium, if any, and
interest may be payable at the holder's or our option in a denomination
different from that of the note. See "Special Provisions Relating to Foreign
Currency Notes" below.

Each note will be issued in fully registered form without coupons. Each note
will be issued either in definitive form as a certificate or in global form and
deposited with or on behalf of DTC, as depositary, in book-entry form as
described in the attached prospectus under the caption "Description of Debt
Securities--Global Securities". Unless the attached pricing supplement
specifies otherwise, each note will be issued in book-entry form. Beneficial
interests in a book-entry note will be shown on records maintained by DTC or
its participants. Transfers of the beneficial interests can only be effected
through those records. Holders may not exchange book-entry notes for
certificated notes and book-entry notes will not generally be issuable in
definitive form. The attached prospectus describes the exceptions to this. We
will make payments of principal, any premium and interest on book-entry notes
to DTC or its nominee. DTC and its participants will make payments to
beneficial owners of interests in book-entry notes. A further description of
the depositary's procedures regarding global securities representing book-entry
notes is set forth in the attached prospectus

S-4
<PAGE>

under "Description of Debt Securities--Global Securities". DTC has confirmed to
the agents, the trustee and us that it intends to follow those procedures.

You may present certificated notes for registration of transfer or exchange
at the corporate trust office of Citibank, N.A. in the Borough of Manhattan,
New York City. Unless the attached pricing supplement indicates otherwise, we
will make payments of principal, premium, if any, and interest on certificated
notes in immediately available funds at the paying agent's office in the
Borough of Manhattan, New York City, or another office or agency we may choose.
However, we will make payments in these funds only if the certificated notes
are presented to the paying agent in time for the paying agent to make the
payments through normal procedures. At our option, we may pay interest on the
certificated notes by check to the person in whose name a certificated note is
registered at the close of business on the applicable regular record date
before each interest payment date. This option does not apply for interest
payable at maturity. However, certain holders will be entitled to receive the
payments by wire transfer of immediately available funds to an account
maintained by that holder with a bank located in the U.S. These holders include
any holders of $10,000,000 or more in aggregate principal amount of notes
denominated and payable in U.S. dollars with the same interest payment date. To
take this option, these holders must provide appropriate payment instructions
in writing to the trustee on or before the relevant regular record date.

We have initially designated Citibank, N.A., acting through its principal
corporate trust office in the Borough of Manhattan, New York City, as paying
agent for the certificated notes.

Except as described in the attached prospectus under the heading "Certain
Rights to Require Purchase of Securities by Ashland Upon Unapproved Change in
Control and Decline in Debt Rating", the indenture does not contain any
covenants or provisions designed to protect the holders of the notes if we
enter into a transaction that adversely affects our debt-to-equity ratio.

For a description of the rights attaching to different series of debt
securities under the indenture, see "Description of Debt Securities" in the
prospectus.

Interest and Interest Rates

The applicable pricing supplement will designate whether a particular note
is a fixed rate note or a floating rate note. In the case of a floating rate
note, the attached pricing supplement will also specify whether the note will
bear interest based on the commercial paper rate, the prime rate, LIBOR, the
Treasury rate, the Federal funds rate, the CD rate or on another interest rate
quotation set forth in the attached pricing supplement. In addition, a floating
rate note may bear interest at the lowest, highest or average of two or more
interest rate quotations.

We will select an interest rate or interest rate quotations for each issue
of notes based on market conditions at the time of issuance. In doing so, we
will take into account, among other things, expectations concerning the level
of interest rates that will prevail during the period the notes will be
outstanding, the relative attractiveness of the interest rate or interest rate
quotation to prospective investors and our financial needs. Unless the attached
pricing supplement provides otherwise, Citibank, N.A. will be the calculation
agent with respect to the floating rate notes.

We may change the interest rates, or interest rate quotations at various
times. No such change will affect any note already issued or for which we have
accepted an offer to purchase.

The rate of interest on floating rate notes will reset daily, weekly,
monthly, quarterly, semi-annually or annually. The interest reset dates will be
specified in the attached pricing supplement and on the face of each note. In
addition, the pricing supplement will specify any spread, spread multiplier,
maximum interest rate or minimum interest rate that applies for a floating rate
note. The pricing supplement relating to an offering of notes may also specify,
where applicable, the calculation dates, index maturity, initial interest rate,
interest

S-5
<PAGE>

determination dates, interest payment dates, interest reset dates and regular
record dates with respect to each note. See "Glossary" on beginning page S-19
for definitions of the above terms. The interest rate on the notes will in no
event be higher than the maximum rate permitted by applicable law. Under New
York law in effect on the date of this prospectus supplement, the maximum
annual interest rate on a simple interest basis is 25%. The limit may not apply
to notes in which $2,500,000 or more has been invested.

Each interest bearing note will accrue interest from and including the date
of issue or the most recent interest payment date for which interest has been
paid or provided. The notes will bear interest until the principal is paid or
made available for payment. We will make any interest payments in the amount of
interest accrued in the manner described up to but excluding the applicable
interest payment date.

We will pay any interest at each interest payment date and at maturity. See
"Description of Debt Securities--Payment and Paying Agents" in the prospectus.
We will pay interest to the person in whose name a note is registered at the
close of business on the regular record date preceding the interest payment
date. However, we will pay interest at maturity to the person to whom principal
is payable. For book-entry notes, this person will be the depositary for both
kinds of payments. Interest on a note will be payable on the first interest
payment date following its date of issue. However, if the date of a note's
issue is on or after the regular record date for that interest payment date,
interest will be payable beginning on the second interest payment date
following the note's issue.

Fixed Rate Notes

The applicable pricing supplement relating to a fixed rate note will
designate a fixed annual interest rate payable on the fixed rate note. Unless
the attached pricing supplement indicates otherwise, the interest payment dates
for the fixed rate notes will be February 15 and August 15 of each year and at
maturity. The regular record dates for the fixed rate notes will be the
February 1 and August 1 preceding the February 15 and August 15 interest
payment dates. Unless the attached pricing supplement indicates otherwise,
interest on fixed rate notes will be computed on the basis of a 360-day year of
twelve 30-day months.

Floating Rate Notes

Upon the request of a registered holder of a floating rate note, the
calculation agent will provide the interest rate then in effect. The
calculation agent will also provide any new interest rate that will become
effective as a result of a determination the calculation agent has made on the
most recent interest determination date with respect to that floating rate
note.

The calculation agent will calculate accrued interest on a floating rate
note by multiplying the principal amount of the note by an accrued interest
factor. The calculation agent will compute the accrued interest factor by
adding the interest factors calculated for each day in the accrual period.
Unless the attached pricing supplement specifies otherwise, the calculation
agent will compute the interest factor for each day by dividing the interest
rate for that day by (a) the actual number of days in the year, in the case of
treasury rate notes or (b) 360, in the case of all other floating rate notes.

The interest rate on a floating rate note in effect on any day will be (a)
if the day is an interest reset date, the interest rate with respect to the
interest determination date for that interest reset date, or (b) if the day is
not an interest reset date, the interest rate with respect to the interest
determination date for the preceding interest reset date. However, the interest
rate on a floating rate note from its issue date up to but not including the
first interest reset date for the note will be the initial interest rate set
forth in the attached pricing supplement. The interest rate is subject to
adjustment by any spread or a spread multiplier and to any maximum interest
rate or minimum interest rate limitation. However, the interest rate for the
ten calendar days prior to the date of maturity will be the one in effect on
the tenth calendar day before maturity.

S-6
<PAGE>

All percentages resulting from any calculation of floating rate notes will
be rounded to the nearest one- hundred thousandth of a percentage point, with
five one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) being rounded to 9.87655% (or .0987655), and 9.876544% (or
.09876544) being rounded to 9.87654% (or .0987654)), and all dollar amounts
used in or resulting from this calculation will be rounded to the nearest cent
(with one-half cent being rounded upwards).

Commercial Paper Rate Notes. Commercial paper rate notes will bear interest
at the interest rates (calculated with reference to the commercial paper rate
and any spread or spread multiplier) specified on the face of the commercial
paper rate note and in the attached pricing supplement.

Unless the attached pricing supplement indicates otherwise, the "commercial
paper rate" for any commercial paper interest determination date is the money
market yield of the rate on that date for commercial paper having the index
maturity specified in the pricing supplement as published in H.15(519) prior to
3:00 P.M., New York City time, on the calculation date relating to that
commercial paper interest determination date under the heading "Commercial
Paper--Nonfinancial".

The following procedures will be followed if the commercial paper rate
cannot be determined as described above:

. If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the calculation date, the commercial paper rate will be
the money market yield of the rate on that commercial paper rate
interest determination date for commercial paper having the index
maturity designated in the pricing supplement, as published in H.15
Daily Update under the heading "Commercial Paper--Nonfinancial".

. If that rate is not published in H.15 Daily Update by 3:00 P.M., New
York City time, on the calculation date, then the calculation agent will
determine the commercial paper rate to be the money market yield of the
average of certain offered rates of three leading dealers of commercial
paper in New York City as of 11:00 A.M., New York City time, on that
commercial paper rate interest determination date. These offered rates
will be for commercial paper having the index maturity specified in the
pricing supplement for a non-financial issuer whose bond rating is "Aa",
or the equivalent, from a nationally recognized rating agency. The
calculation agent will select the three dealers referred to above, which
may include the agents or their affiliates.

. If fewer than three dealers selected by the calculation agent are
quoting as mentioned above, the commercial paper rate will be the
commercial paper rate in effect on that commercial paper rate interest
determination date.

Prime Rate Notes. A prime rate note will bear interest at the interest rate
(calculated with reference to the prime rate and any spread or spread
multiplier) specified on the face of the prime rate note and in the attached
pricing supplement.

Unless the attached pricing supplement indicates otherwise, the "prime rate"
for any prime rate interest determination date is the prime rate on that date,
as published in H.15(519) by 3:00 P.M., New York City time, on the calculation
date relating to that prime rate interest determination date under the heading
"Bank Prime Loan".

The following procedures will be followed if the prime rate cannot be
determined as described above:

. If the above rate is not published in H.15(519) by 3:00 P.M., New York
City time, on the calculation date, then the prime rate will be the rate
on that prime rate interest determination date as published in H.15
Daily Update opposite the caption "Bank Prime Loan".

. If that rate is not published in H.15 Daily Update by 3:00 P.M., New
York City time, on the calculation date, then the calculation agent will
determine the prime rate to be the average of certain

S-7
<PAGE>

interest rates publicly announced by each bank that appears on the
Reuters Screen USPRIME1 Page. For each bank, those announced rates will
be that bank's prime rate or base lending rate in effect for that prime
rate interest determination date at 11:00 A.M. New York City time.

. If fewer than four of those rates appear on the Reuters Screen USPRIME1
Page for that prime rate interest determination date, then the prime
rate will be the average of the announced prime rates quoted (on the
basis of the actual number of days in the year divided by 360) by at
least three major money center banks in New York City as of the close of
business on that prime rate interest determination date. The calculation
agent will select the banks referred to above, which may include the
agents or their affiliates.

. If fewer than two quotations are provided as mentioned in the previous
item, the prime rate will be determined on the basis of the rates
furnished in New York City by the appropriate number of substitute banks
or trust companies organized and doing business under the laws of the
United States, or any state. These substitute banks must have total
equity capital of at least $500 million and subject to supervision or
examination by Federal or state authority. The calculation agent will
select the banks or trust companies referred to above.

. If the banks or trust companies described in the previous item are not
quoting as mentioned above, the prime rate will be the prime rate in
effect on that prime rate interest determination date.

LIBOR Notes. A LIBOR note will bear interest at the interest rate
(calculated with reference to LIBOR and any spread or spread multiplier)
specified on the face of the LIBOR note and in the attached pricing supplement.

Unless the attached pricing supplement indicates otherwise, the calculation
agent will determine LIBOR as follows:

On each LIBOR rate interest determination date:

. If "LIBOR Reuters" is specified in the attached pricing supplement,
LIBOR will be the average of certain offered rates for deposits in the
index currency having the index maturity specified in the pricing
supplement beginning on the applicable interest reset date. Those rates
will be the ones which appear on the designated LIBOR page as of 11:00
A.M., London time, on that LIBOR rate interest determination date, if at
least two of those offered rates appear on the designated LIBOR page. If
the designated LIBOR page provides only for a single rate, that single
rate will be used regardless of the foregoing provisions requiring more
than one rate.

. If "LIBOR Telerate" is specified in the attached pricing supplement,
LIBOR will be a certain rate for deposits in the index currency having
the index maturity specified in the pricing supplement beginning on that
interest reset date. That rate will be the one which appears on the
designated LIBOR page as of 11:00 A.M., London time, on that LIBOR rate
interest determination date.

. If neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
attached pricing supplement as the method for calculating LIBOR, LIBOR
will be calculated as if "LIBOR Telerate" had been specified.

On any LIBOR rate interest determination date on which fewer than two of
those offered rates appear or no rate appears, as applicable, on the designated
LIBOR page, the calculation agent will determine LIBOR as follows:

. LIBOR will be determined on the basis of the offered rates at which
deposits in the index currency having the index maturity specified in
the applicable pricing supplement beginning on the applicable interest
reset date and in a principal amount that is representative for a single
transaction in that index currency in that market at that time by four
major banks in the London interbank market (which may include the agents
or their affiliates) at approximately 11:00 A.M., London time, on that
LIBOR rate

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interest determination date to prime banks in the London interbank
market. The calculation agent will select the four banks and request the
principal London office of each of those banks to provide a quotation of
its rate. If at least two quotations are provided, LIBOR on that LIBOR
rate interest determination date will be the average of those
quotations.

. If fewer than two of those quotations are provided as mentioned above,
LIBOR on that LIBOR rate interest determination date will be the average
of the rates quoted at approximately 11:00 A.M., in the applicable
principal financial center, on that LIBOR rate interest determination
date by three major banks in that principal financial center (which may
include the agents or their affiliates) for loans in the index currency
to leading European banks, having the index maturity specified in the
applicable pricing supplement and in a principal amount representative
for a single transaction in that index currency in that market at that
time. The calculation agent will select the three banks referred to
above.

. If the banks selected by the calculation agent are not quoting as
mentioned above, LIBOR will be LIBOR in effect on the LIBOR rate
interest determination date.

Treasury Rate Notes. A Treasury rate note will bear interest at the interest
rate (calculated with reference to the Treasury rate and any spread or spread
multiplier) specified on the face of the Treasury rate note and in the attached
pricing supplement.

Unless the attached pricing supplement indicates otherwise, "Treasury rate"
for any Treasury rate interest determination date means a certain rate from the
most recent auction of direct obligations of the United States ("Treasury
bills") having the index maturity specified in the pricing supplement. That
rate will be the one that appears on the display designated as page 56 or the
display designated as page 57 on the Dow Jones Telerate Service under the
heading "AVGE INVEST YIELD".

The following procedures will be followed if the Treasury rate cannot be
determined as described above:

. If the above rate is not displayed on the relevant page by 3:00 P.M.,
New York City time, on the calculation date, the Treasury rate will be
the auction average rate for that auction as otherwise announced by the
United States Department of the Treasury. The auction average rate will
be expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis.

. If the results of the auction of Treasury bills having the index
maturity specified in the pricing supplement are not published or
reported as provided above by 3:00 P.M., New York City time, on the
calculation date, or if no auction is held in a particular week, then
the Treasury rate will be the rate as published in H.15(519) under the
heading "U.S. Government Securities/Treasury Bills/Secondary Market".

. If the rate described in the previous item is not published by 3:00
P.M., New York City time, on the calculation date, then the calculation
agent will determine the Treasury rate to be a yield to maturity of the
average of certain secondary market bid rates, as of approximately 3:30
P.M., New York City time, on that Treasury rate interest determination
date. The bid rates will be those of three leading primary U.S.
government securities dealers in New York City for the issue of Treasury
bills with a remaining maturity closest to the index maturity specified
in the pricing supplement. The rates will be expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis. The calculation agent will select the three
dealers referred to above, which may include the agents or their
affiliates.

. If fewer than three dealers selected by the calculation agent are
quoting as mentioned above, the Treasury rate will be the Treasury rate
in effect on that Treasury rate interest determination date.

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Federal Funds Rate Notes. A Federal funds rate note will bear interest at
the interest rate calculated with reference to the Federal funds rate and any
spread or spread multiplier, as specified on the face of the Federal funds rate
note and in the attached pricing supplement.

Unless the attached pricing supplement indicates otherwise, the "Federal
funds rate" for any Federal funds rate interest determination date is the rate
on that day for Federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)" as displayed on Bridge Telerate Inc. on page 120 or
any page that replaces page 120.

The following procedures will be followed if the Federal funds rate cannot
be determined as described above:

. If the above rate does not appear on Telerate page 120 and is not
published in H.15(519) by 3:00 P.M., New York City time, on the
calculation date, the Federal funds rate will be the rate on that
Federal funds rate interest determination date for U.S. dollar Federal
funds, as published in H.15 Daily Update under the heading "Federal
Funds (Effective)".

. If that rate is not published in H.15 Daily Update by 3:00 P.M., New
York City time, on the calculation date, then the calculation agent will
determine the Federal funds rate to be the arithmetic mean of the rates
for the last transaction in overnight Federal funds arranged by three
leading brokers of Federal funds transactions in New York City as of
9:00 A.M., New York City time, on that Federal funds rate interest
determination date. The calculation agent will select the three brokers
referred to above.

. If fewer than three brokers selected by the calculation agent are
quoting as mentioned above, the Federal funds rate will be the Federal
funds rate in effect on that Federal funds rate interest determination
date.

CD Rate Notes. A CD rate note will bear interest at the interest rate
(calculated with reference to the CD rate and any spread or spread multiplier)
specified in the CD rate note and in the attached pricing supplement.

Unless the attached pricing supplement indicates otherwise, the "CD rate"
for any CD rate interest determination date is the rate on that date for
negotiable certificates of deposit having the index maturity specified in the
pricing supplement, as published in H.15(519) prior to 3:00 P.M., New York City
time, on the calculation date relating to that CD rate interest determination
date under the heading "CDs (Secondary Market)".

The following procedures will be followed if the CD rate cannot be
determined as described above:

. If the above rate is not published by 3:00 P.M., New York City time, on
the calculation date, the CD rate will be the rate on that CD rate
interest determination date for negotiable certificates of deposit of
the index maturity specified in the pricing supplement as published in
H.15 Daily Update under the caption "CDs (Secondary Market)".

. If that rate is not published in H.15 Daily Update by 3:00 P.M., New
York City time, on the calculation date, then the calculation agent will
determine the CD rate to be the average of certain secondary market
offered rates as of 10:00 A.M., New York City time, on that CD rate
interest determination date. The offered rates will be ones quoted by
three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in New York City. The dealers will provide quoted rates for
negotiable certificates of deposit in a denomination of $5,000,000 of
major U.S. money market banks of the highest credit standing (in the
market for negotiable certificates of deposit) with a remaining maturity
closest to the index maturity designated in the applicable pricing
supplement. The calculation agent will select the three dealers referred
to above.

. If fewer than three dealers are quoting as mentioned above, the CD rate
will be the CD rate in effect on that CD rate interest determination
date.

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Indexed Notes

We may issue notes as indexed notes, as indicated in the attached pricing
supplement. Holders of indexed notes may receive a principal amount at maturity
that is greater than or less than the face amount of the notes depending upon
the fluctuation of the relative value, rate or price of the specified index.
The attached pricing supplement will describe specific information relating to
the method for determining the principal amount payable at maturity, a
historical comparison of the relative value, rate or price of the specified
index and the face amount of the indexed note and certain additional tax
considerations.

Other Provisions; Addenda

Any provisions relating to any note may be modified as specified under
"Other Provisions" on the face of that note or in an addendum relating to that
note. These provisions might include the determination of an interest rate
basis, the calculation of the interest rate applicable to a floating rate note,
and the specification of one or more interest rate bases, the interest payment
dates, the maturity or any other variable term relating to that note.

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SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES

General

Unless the attached pricing supplement indicates otherwise, the notes will
be denominated in U.S. dollars and we will make payments of principal of and
interest on the notes in U.S. dollars. If we designate any of the notes to be
denominated in a currency or currency unit other than U.S. dollars the
following provisions will apply. These provisions are in addition to and, where
inconsistent, replace the description of general terms and provisions of notes
set forth in the attached prospectus and elsewhere in this prospectus
supplement. We refer below to any currency or currency unit designated in this
manner as the "specified currency."

Notes not denominated in U.S. dollars are issuable in registered form only,
without coupons. The pricing supplement will specify the denominations for
particular foreign currency notes.

Unless the attached pricing supplement provides otherwise, you are required
to pay the purchase price of foreign currency notes in immediately available
funds.

Notes denominated in specified currencies other than euros will not be sold
in, or to residents of, the country of the specified currency in which
particular notes are denominated unless the pricing supplement specifies
otherwise.

Currencies

Unless the attached pricing supplement specifies otherwise, you are required
to pay for foreign currency notes in the specified currency. At the present
time there are limited facilities in the United States for the conversion of
U.S. dollars into the specified currencies and vice versa, and banks do not
generally offer non-U.S. dollar checking or savings accounts in the United
States. However, you may ask the agent who presented your offer to purchase
foreign currency notes to us to use its reasonable best efforts to arrange for
the exchange of U.S. dollars into the relevant specified currency to enable you
to pay for the notes. You must make this request on or before the third
business day preceding the delivery date for the note or by a later date if
allowed by the agent. Each exchange will be made on the terms and conditions
established by the agent in accordance with its regular foreign exchange
practices and you will pay for all related costs.

The attached pricing supplement will contain specific information about the
foreign currency or currency units in which a particular foreign currency note
is denominated, including historical exchange rates and a description of the
currency and any exchange controls.

Payment of Principal and Interest

We will pay the principal of and interest on foreign currency notes in U.S.
dollars. However, unless the attached pricing supplement specifies otherwise,
the holder of a foreign currency note may elect to receive the payments in the
specified currency as described below. The exchange rate agent will determine
the rate of conversion for all payments of principal of and interest on foreign
currency notes to U.S. dollars. "Exchange rate agent" means the agent appointed
by us to make those determinations. Unless the pricing supplement specifies
otherwise, the exchange rate agent will be Citibank, N.A.

Unless the attached pricing supplement specifies otherwise, any U.S. dollar
amount to be received by a holder of a foreign currency note will be based on
the following:

. The highest bid quotation in New York City received by the exchange rate
agent at approximately 11:00 A.M., New York City time, on the second
business day preceding the applicable payment date from three recognized
foreign exchange dealers (one of which may be the exchange rate agent or
an agent) for the purchase by the quoting dealer of the specified
currency for U.S. dollars for settlement on that payment date in the
aggregate amount of the specified currency payable to all holders of

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foreign currency notes scheduled to receive U.S. dollar payments and at
which the applicable dealer commits to execute a contract. The exchange
rate agent will select and we will approve that selection of the three
dealers referred to above.

. If fewer than three of these bid quotations are available, payments will
be made in the specified currency.

The holder of the foreign currency note will bear all of these currency
exchange costs through payment deductions.

Unless the attached pricing supplement specifies otherwise, a holder of
foreign currency notes may elect to receive payment of the principal of and
interest on the notes in the specified currency by transmitting a request for
the payment to the corporate trust department of Citibank, N.A. in the Borough
of Manhattan, New York City, on or before the regular record date or at least
sixteen days before maturity, as the case may be. The request must be in
writing (mailed or hand delivered) or by cable, telex or other form of
facsimile transmission. If a holder elects to receive all principal and
interest payments in the specified currency that holder need not file a
separate election for each payment. The election will remain in effect until
revoked by written notice to Citibank, N.A. in the Borough of Manhattan, New
York City. Written notice of any revocation of this kind must be received by
Citibank, N.A. in the Borough of Manhattan, New York City on or before the
regular record date or at least sixteen days before maturity, as the case may
be. Holders of foreign currency notes held in the name of a broker or nominee
should contact that broker or nominee to determine whether and how an election
to receive payments in the specified currency may be made.

We will pay interest on and principal of foreign currency notes paid in U.S.
dollars in the manner specified in the attached prospectus and elsewhere in
this prospectus supplement. Interest on foreign currency notes paid in the
specified currency will be paid by a check drawn on an account maintained at a
bank outside the U.S., unless other arrangements have been made. The principal
and interest due at maturity of foreign currency notes paid in the specified
currency will be paid in immediately available funds by wire transfer to an
account maintained with a bank outside the U.S. designated at least sixteen
days before maturity by the holders. However, those foreign currency notes must
be presented to the trustee or the paying agents designated in the attached
pricing supplement to allow time for payment. Any payment of principal or
interest required to be made on an interest payment date or at maturity of a
foreign currency Note that is not a business day may be made instead on the
following business day. In this case, no interest will accrue for the period
from and after the interest payment date or maturity.

Payment Currency

At various times, a specified currency may not available for the payment of
principal or interest with respect to a foreign currency note due to the
imposition of exchange controls or other circumstances beyond our control. If
this is the case, we will be entitled to satisfy our obligations to holders of
foreign currency notes by making the payment in U.S. dollars on the basis of
the market exchange rate on the date of payment, or if the market exchange rate
is not available at that time, on the basis of the most recently available
market exchange rate.

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UNITED STATES TAXATION

General

This section summarizes the material U.S. tax consequences to holders of
notes. It represents the views of our tax counsel, Cravath, Swaine & Moore.
However, the discussion is limited in the following ways:

. The discussion only covers you if you buy your notes in the initial
offering of those notes.

. The discussion only covers you if you hold your notes as a capital asset
(that is, for investment purposes), and if you do not have a special tax
status.

. The discussion does not cover tax consequences that depend upon your
particular tax circumstances. You should consult your tax advisor about
the consequences of holding notes in your particular situation.

. The discussion is based on current law. Changes in the law may change
the tax treatment of the notes.

. The discussion does not cover state, local or foreign law.

. The discussion does not cover every type of note that we might issue. If
we intend to issue a note of a type not described in this summary,
additional tax information will be provided in the pricing supplement
for the note.

. The discussion does not apply to you if you are a non-U.S. holder of
notes and if you (a) own 10% or more of the voting stock of the company,
(b) are a "controlled foreign corporation" with respect to the company,
or (c) are a bank making a loan in the ordinary course of its business.

. We have not requested a ruling from the IRS on the tax consequences of
owning the notes. As a result, the IRS could disagree with portions of
this discussion.

If you are considering buying notes, you should consult your tax advisors
about the tax consequences of holding the notes in your particular situation.

Tax Consequences to U.S. Holders

This section applies to you if you are a "U.S. Holder". A "U.S. Holder" is:

. an individual U.S. citizen or resident alien;

. a corporation, or entity taxable as a corporation, that was created
under U.S. law (Federal or state); or

. an estate or trust whose world-wide income is subject to U.S. Federal
income tax.

If a partnership holds notes, the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the
partnership. Partners of partnerships holding notes should consult their tax
advisors.

Interest. The tax treatment of interest paid on the notes depends upon
whether the interest is "Qualified Stated Interest."

"Qualified Stated Interest" is any interest that meets all the following
conditions:

. It is payable at least once each year.

. It is payable over the entire term of the note.

. It is payable at a single fixed rate or under a single formula.

. The note has a maturity of more than one year from its issue date.

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If any interest on a note is Qualified Stated Interest, then

. If you are a cash method taxpayer (including most individual holders),
you must report that interest in your income when you receive it.

. If you are an accrual method taxpayer, you must report that interest in
your income as it accrues.

. If any interest on a note is not Qualified Stated Interest, it is
subject to the rules for original issue discount ("OID") described
below.

Determining Amount of OID. Notes that have OID are subject to additional tax
rules. The amount of OID on a note is determined as follows:

. The amount of OID on a note is the "'stated redemption price at
maturity" of the note minus the "issue price" of the note. If this
amount is negative, there is no OID.

. The "stated redemption price at maturity" of a note is the total amount
of all principal and interest payments to be made on the note, other
than Qualified Stated Interest. In a typical case where all interest is
Qualified Stated Interest, the stated redemption price at maturity is
the same as the principal amount.

. The "issue price" of a note is the first price at which a substantial
amount of the notes are sold to the public.

. Under a special rule, if the OID determined under the general formula is
very small, it is disregarded and not treated as OID. This disregarded
OID is called "de minimis OID". If all the interest on a note is
Qualified Stated Interest and the note does not provide for payment of
any other amounts prior to maturity, this rule applies if the amount of
OID is less than the following items multiplied together: (a) .25% (1/4
of 1%), (b) the number of full years from the issue date to the maturity
date of the note, and (c) the principal amount.

Accrual of OID Into Income. If a note has OID, the following consequences
arise:

. A holder must include the total amount of OID as ordinary income over
the life of the note.

. All holders of notes, even those on the cash method of accounting, must
include OID in income as the OID accrues on the notes. This means that
holders are required to report OID income, and in some cases pay tax on
that income, before they receive the cash that corresponds to that
income.

. OID accrues on a note on a "constant yield" method. This method takes
into account the compounding of interest. Under this method, the accrual
of OID on a note, combined with the inclusion into income of any
Qualified Stated Interest on the note, will result in the holder being
taxable at approximately a constant percentage of the unrecovered
investment in the note.

. The accruals of OID on a note will generally be less in the early years
and more in the later years.

. If any of the interest paid on the note is not Qualified Stated
Interest, that interest is taxed solely as OID. It is not separately
taxed when it is paid to the holder.

. Your tax basis in the note is initially your cost. It increases by any
OID (not including Qualified Stated Interest) you report as income. It
decreases by any principal payments you receive on the note, and by any
interest payments you receive that are not Qualified Stated Interest.

Notes Subject to Additional Tax Rules. Additional or different tax rules
apply to several types of notes that we may issue.

Short-Term Notes: We may issue notes with a maturity of one year or less.
These are referred to as "short-term notes."

. No interest on these notes is Qualified Stated Interest. Otherwise, the
amount of OID is calculated in the same manner as described above.

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. Certain elections apply to the method of accrual of OID on short-term
notes over the life of the notes.

. Accrual method taxpayers and certain others, such as banks and
securities dealers, must include OID in income as it accrues.

. If you are a cash method taxpayer not subject to the accrual rule
described above, you do not include OID in income until you actually
receive payments on the note. Alternatively, you can elect to include
OID in income as it accrues.

. Two special rules apply if you are a cash method taxpayer and you do not
include OID in income as it accrues. First, if you sell the note or it
is paid at maturity, and you have a taxable gain, then the gain is
ordinary income to the extent of the accrued OID on the note at the time
of the sale that you have not yet taken into income. Second, if you
borrow money (or do not repay outstanding debt) to acquire or hold the
note, then while you hold the note you cannot deduct any interest on the
borrowing that corresponds to accrued OID on the note until you include
the OID in your income.

Floating Rate Notes: Floating rate notes are subject to special OID rules.

. If the interest rate is determined using a single fixed formula based on
objective financial information (which may include a fixed interest rate
for the initial period), all the interest will be Qualified Stated
Interest. The amount of OID (if any), and the method of accrual of OID,
will then be calculated by converting the note's initial floating rate
into a fixed rate and by applying the general OID rules described above.

. If the note has more than one formula for interest rates, it is possible
that the combination of interest rates might create OID. You should
consult your tax advisor concerning the OID accruals on such a note.

Foreign Currency Notes: Special tax rules apply to foreign currency notes:

. If you are a cash method taxpayer, you will be taxed on the U.S. dollar
value of any foreign currency you receive as interest. The dollar value
will be determined as of the date when you receive the payments.

. If you are an accrual method taxpayer, you must report interest income
as it accrues. You can use the average foreign currency exchange rate
during the relevant interest accrual period (or, if that period spans
two taxable years, during the portion of the interest accrual period in
the relevant taxable year). In this case, you will make an adjustment
upon receipt of the foreign currency to reflect actual exchange rates at
that time. Certain alternative elections may also be available.

. Any OID on foreign currency notes will be determined in the relevant
foreign currency. All holders must accrue OID in the same manner that an
accrual basis holder accrues interest income.

. Your initial tax basis in a foreign currency note is the amount of U.S.
dollars you pay for the note (or, if you pay in foreign currency, the
value of that foreign currency on the purchase date). Adjustments are
made to reflect OID and other items as described above.

. If you collect foreign currency upon the maturity of the note, or if you
sell the note for foreign currency, your gain or loss will be based on
the U.S. dollar value of the foreign currency you receive. For a
publicly traded foreign currency note, this value is determined for cash
basis taxpayers on the settlement date for the sale of the note, and for
accrual basis taxpayers on the trade date for the sale (although such
taxpayers can also elect the settlement date). You will then have a tax
basis in the foreign currency equal to the value reported on the sale.

. Any gain or loss on the sale or retirement of a note will be ordinary
income or loss to the extent it arises from currency fluctuations
between your purchase date and sale date. Any gain or loss on the sale
of foreign currency will also be ordinary income or loss.

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Other Categories of Notes: Additional rules may apply to certain other
categories of notes. The pricing supplement for these notes may describe these
rules. In addition, you should consult your tax advisor in these situations.
These categories of notes include:

. Notes with contingent payments;

. Notes that can be put to the company by the holder before their
maturity;

. Notes that are callable by the company before their maturity, other than
typical calls at a premium;

. Indexed notes with an index tied to currencies; and

. Notes that are extendable at the option of the company or the holder.

Premium and Discount. Additional special rules apply in the following
situations involving discount or premium:

. If you buy a note in the initial offering for more than its stated
redemption price at maturity, the excess amount you pay will be "bond
premium". You can use bond premium to reduce your taxable interest
income over the life of your note.

. Similarly, if a note has OID and you buy it in the initial offering for
more than the issue price, the excess (up to the total amount of OID) is
called "acquisition premium". The amount of OID you are required to
include in income will be reduced by this amount over the life of the
note.

. If you buy a note in the initial offering for less than the initial
offering price to the public, special rules concerning "market discount"
may apply.

Appropriate adjustments to tax basis are made in these situations. Holders
in these situations should consult their tax advisors.

Accrual Election. You can elect to be taxed on the income from the note in a
different manner than described above. Under the election:

. No interest is Qualified Stated Interest.

. You include amounts in income as it economically accrues to you. The
accrual of income is in accordance with the constant yield method, based
on the compounding of interest. The accrual of income takes into account
stated interest, OID (including de minimis OID), market discount, and
premium.

. Your tax basis is increased by all accruals of income and decreased by
all payments you receive on the note.

Sale or Retirement of Notes. On your sale or retirement of your note:

. You will have taxable gain or loss equal to the difference between the
amount received by you and your tax basis in the note. Your tax basis in
the note is your cost, subject to certain adjustments.

. Your gain or loss will generally be capital gain or loss, and will be
long term capital gain or loss if you held the note for more than one
year.

. If (a) you purchased the note with de minimis OID, (b) you did not make
the election to accrue all OID into income, and (c) you receive the
principal amount of the note upon the sale or retirement, then you will
generally have capital gain equal to the amount of the de minimis OID.

. If you sell the note between interest payment dates, a portion of the
amount you receive reflects interest that has accrued on the note but
has not yet been paid by the sale date. That amount is treated as
ordinary interest income and not as sale proceeds.

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. All or part of your gain may be ordinary income rather than capital gain
in certain cases. These cases include sales of short-term notes, notes
with market discount, notes with contingent payments, or foreign
currency notes.

Information Reporting and Backup Withholding. Under the tax rules concerning
information reporting to the IRS:

. Assuming you hold your notes through a broker or other securities
intermediary, the intermediary must provide information to the IRS
concerning interest, OID and retirement proceeds on your notes, unless
an exemption applies.

. Similarly, unless an exemption applies, you must provide the
intermediary with your Taxpayer Identification Number for its use in
reporting information to the IRS. If you are an individual, this is your
social security number. You are also required to comply with other IRS
requirements concerning information reporting.

. If you are subject to these requirements but do not comply, the
intermediary must withhold 31% of all amounts payable to you on the
notes (including principal payments). If the intermediary withholds
payments, you may use the withheld amount as a credit against your
federal income tax liability.

. All individual U.S. Holders are subject to these requirements. Some U.S.
Holders, including all corporations, tax-exempt organizations and
individual retirement accounts, are exempt from these requirements.

Tax Consequences to Non-U.S. Holders

This section applies to you if you are a "Non-U.S. Holder." A "Non-U.S.
Holder" is:

. an individual that is a nonresident alien;

. a corporation organized or created under non-U.S. law; or

. an estate or trust that is not taxable in the U.S. on its worldwide
income.

Withholding Taxes. Generally, payments of principal and interest on the
Notes will not be subject to U.S. withholding taxes.

However, for the exemption from withholding taxes to apply to you, you must
meet one of the following requirements:

. You provide your name, address, and a signed statement that you are the
beneficial owner of the Note and are not a U.S. Holder. This statement
is generally made on Form W-8 or Form W-8BEN.

. You or your agent claim an exemption from withholding tax under an
applicable tax treaty. This claim is generally made on Form 1001 or Form
W-8BEN.

. You or your agent claim an exemption from withholding tax on the ground
that the income is effectively connected with the conduct of a trade or
business in the U.S. This claim is generally made on Form 4224 or Form
W-8ECI.

You should consult your tax advisor about the specific methods for
satisfying these requirements. These procedures will change on January 1, 2001.
In addition, a claim for exemption will not be valid if the person receiving
the applicable form has actual knowledge that the statements on the form are
false.

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Even if you comply with these conditions, withholding tax might arise if the
amount of interest payable on a note is based on the earnings or other
attributes of the company. If this exception applies, additional information
will be provided in the applicable pricing supplement.

Sale or Retirement of Notes. If you sell a note or it is redeemed, you will
not be subject to federal income tax on any gain unless one of the following
applies:

. The gain is connected with a trade or business that you conduct in the
U.S.

. You are an individual, you are present in the U.S. for at least 183 days
during the year in which you dispose of the note, and certain other
conditions are satisfied.

. The gain represents accrued interest or OID, in which case the rules for
interest would apply.

U.S. Trade or Business. If you hold your note in connection with a trade or
business that you are conducting in the U.S.:

. Any interest on the note, and any gain from disposing of the note,
generally will be subject to income tax as if you were a U.S. Holder.

. If you are a corporation, you may be subject to the "branch profits tax"
on your earnings that are connected with your U.S. trade or business,
including earnings from the note. This tax is 30%, but may be reduced or
eliminated by an applicable income tax treaty.

Estate Taxes. If you are an individual, your notes will not be subject to
U.S. estate tax when you die. However, this rule only applies if, at your
death, payments on the notes were not connected to a trade or business that you
were conducting in the U.S.

Information Reporting and Backup Withholding. U.S. rules concerning
information reporting and backup withholding are described above. These rules
apply to Non-U.S. Holders as follows:

. Principal and interest payments you receive will be automatically exempt
from the usual rules if you provide the tax certifications needed to
avoid withholding tax on interest, as described above. The exemption
does not apply if the recipient of the applicable form knows that the
form is false. In addition, interest payments made to you will be
reported to the IRS on Form 1042-S.

. Sale proceeds you receive on a sale of your notes through a broker may
be subject to information reporting and/or backup withholding if you are
not eligible for an exemption. In particular, information reporting and
backup reporting may apply if you use the U.S. office of a broker, and
information reporting (but not backup withholding) may apply if you use
the foreign office of a broker that has certain connections to the U.S.
You should consult your tax advisor concerning information reporting and
backup withholding on a sale.

S-19
<PAGE>

PLAN OF DISTRIBUTION

Under the terms of a distribution agreement, a form of which is attached as
an exhibit to the registration statement, we will offer the notes on a
continuing basis through Credit Suisse First Boston Corporation, Salomon Smith
Barney Inc., and Chase Securities Inc. as our agents, each of which has agreed
to use reasonable efforts to solicit purchases of the notes. Unless the
applicable pricing supplement indicates otherwise, we will pay a commission to
the agents. We will have the sole right to accept offers to purchase notes and
may reject any offer, in whole or in part. Each agent will have the right, in
its discretion reasonably exercised, without notice to us, to reject any offer
to purchase notes received by it, in whole or in part.

We also may sell notes at or above par to any agent, acting as principal,
for a commission of .125% to .750% of the principal amount of each note,
depending on its stated maturity. The notes may be resold at market prices
prevailing at the time of resale, at prices related to those prevailing market
prices, at a fixed offering price or at negotiated prices, as determined by
that agent. We also may sell notes at or above par to any agent or to a group
of underwriters for whom an agent acts as representative. We may do this for a
commission to be agreed at the time of sale, for resale to one or more
investors or purchasers at a fixed offering price or at varying prices
prevailing at the time of resale, at prices related to those prevailing market
prices at the time of the resale or at negotiated prices. Notes purchased by an
agent or by a group of underwriters may be resold to certain securities dealers
for resale to investors or to certain other dealers. Dealers may receive
compensation in the form of commissions from the agents and/or from the
purchasers for whom they may act as agents. Unless the applicable pricing
supplement specifies otherwise, any compensation allowed by any agent to any of
these dealers shall not be in excess of the commission received by that agent
from us. After the initial public offering of notes to be resold to investors
and other purchasers on a fixed public offering price basis, the public
offering price and commission may be changed.

We have reserved the right to sell notes directly on our own behalf. We also
may accept but not solicit offers to purchase notes through additional agents
on substantially the same terms and conditions (including commission rates) as
would apply to purchases of notes under the distribution agreement. In
addition, we have reserved the right to appoint additional agents for the
purpose of soliciting offers to purchase notes. Those additional agents will be
named in the applicable pricing supplement. No commission will be payable on
any notes sold directly by us.

We will pay each agent a commission of .125% to .750% of the principal
amount of each note, depending on its stated maturity, sold through that agent.

The following table summarizes the compensation to be paid to the agents by
us.

<TABLE>
<CAPTION>
Total
---------------------------------
Per Note Minimum Maximum
------------ -------- ----------
<S> <C> <C> <C>
Commissions paid by Ashland.................. .125% - .750% $375,000 $2,250,000
</TABLE>

We estimate that we will incur expenses of $70,000 in connection with this
program.

The agents and any dealers to whom the agents may sell notes may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933. We have
agreed to indemnify the agents against certain liabilities, including civil
liabilities under the Securities Act of 1933, or contribute to payments which
the agents may be required to make in this regard. We have agreed to reimburse
the agents for certain expenses.

Unless the applicable pricing supplement indicates otherwise, you must pay
for notes, other than foreign currency notes in funds immediately available in
New York City. For payment of the purchase price of foreign currency notes, see
"Description of the Notes--Foreign Currency Notes" above.

S-20
<PAGE>

The notes are a new issue of securities with no established trading market
and will not be listed on any securities exchange. No assurance can be given as
to the existence or liquidity of the secondary market for the notes.

The agents may engage in over-allotment, stabilizing transactions and
syndicate covering transactions and may impose penalty bids in accordance with
Regulation M under the Exchange Act. Over-allotment involves syndicate sales in
excess of the offering size, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum. Syndicate
covering transactions involve purchases of the notes in the open market after
the distribution has been completed in order to cover syndicate short
positions. Penalty bids permit the agents to reclaim a selling concession from
a syndicate member when the notes originally sold by that syndicate member are
purchased in a syndicate covering transaction to cover syndicate short
positions. These stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the notes to be higher than it would
otherwise be in the absence of the transactions. These transactions, if
commenced, may be discontinued at any time.

In the ordinary course of their respective businesses, the agents and their
affiliates have engaged, and may in the future engage, in commercial banking
and/or investment banking transactions with us and our affiliates. Citibank,
N.A., the trustee under the indenture, is an affiliate of Salomon Smith Barney
Inc.

LEGAL OPINIONS

Opinions regarding the validity of the notes being offered will be issued
for us by Cravath, Swaine & Moore, New York, New York (who will rely as to
matters of Kentucky law upon the opinion of David L. Hausrath, Esq., our Vice
President and General Counsel), and for the agents by Davis Polk & Wardwell,
New York, New York. In these opinions, certain assumptions will be made
regarding future action required to be taken by us and the trustee in
connection with the issuance and sale of any particular notes, the specific
terms of those notes and other matters which may affect the validity of notes
but which cannot be ascertained on the date of the relevant opinions. Cravath,
Swaine & Moore has in the past represented and continues to represent us in
other matters on a regular basis. Samuel C. Butler is a director of ours and a
partner in the law firm of Cravath, Swaine & Moore and owns beneficially 69,793
shares of our common stock (includes common stock units held in our deferred
compensation plan). David L. Hausrath owns beneficially 25,625 shares of our
common stock (includes common stock units held in our deferred compensation
plan).

S-21
<PAGE>

GLOSSARY

Set forth below are definitions of some of the terms used in this prospectus
supplement and not defined in the attached prospectus.

"business day" means any day, other than a Saturday or Sunday, that meets
each of the following applicable requirements. The day is:

(a) not a day on which banking institutions are authorized or required
by law or regulation to be closed in New York City;

(b) with respect to foreign currency notes (other than foreign currency
notes denominated in euro only), not a day on which banking institutions
are authorized or required by law or regulation to be closed in the
principal financial center in the country of the specified currency;

(c) with respect to foreign currency notes denominated in euro, any date
on which the Trans-European Automated Real-Time Gross Settlement Express
Transfer (TARGET) System is open; and

(d) with respect to LIBOR notes, a London banking day.

"calculation agent" means the agent appointed by us to calculate interest
rates for floating rate notes. Unless the pricing supplement specifies
otherwise, the calculation agent will be Citibank, N.A.

"calculation date" means, with respect to any interest determination date,
the date on which the calculation agent is to calculate an interest rate for a
floating rate note. Unless the pricing supplement specifies otherwise, the
calculation date relating to an interest determination date for a floating rate
note will be the first to occur of (a) the tenth calendar day after that
interest determination date, or, if that day is not a business day, the next
succeeding business day or (b) the business day preceding the applicable
interest payment date or maturity of that note, as the case may be. However,
LIBOR will be calculated on the LIBOR rate interest determination date.

"designated LIBOR page" means (a) if "LIBOR Reuters" is specified in the
applicable pricing supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in that pricing
supplement (or any other page as may replace that page on that service) for the
purpose of displaying the London interbank rates of major banks for the
applicable index currency, or (b) if "LIBOR Telerate" is specified in the
applicable pricing supplement as the method for calculating LIBOR, the display
on the Dow Jones Telerate Service (or any successor service) on the page
specified in that pricing supplement (or any other page as may replace that
page on that service) for the purpose of displaying the London interbank rates
of major banks for the applicable index currency.

"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates", or any successor publication, published by the Board
of Governors of the Federal Reserve System.

"H.15 Daily Update" means the daily update of H.15(519), available through
the world wide web site of the Board of Governors of the Federal Reserve System
at http://www.bog.frb.fed.us/releases/h15/update, or any successor site or
publication.

"index currency" means the currency or composite currency specified in the
applicable pricing supplement as to which LIBOR will be calculated. If no
currency or composite currency of this kind is specified in the applicable
pricing supplement, the index currency will be U.S. dollars.

"index maturity" means, for a floating rate note, the period to maturity of
the instrument or obligation on which the interest rate quotation is based, as
set forth in the pricing supplement.

"initial interest rate" means the rate at which a floating rate note will
bear interest from and including its issue date to but excluding the first
interest reset date, as indicated in the applicable pricing supplement.

S-22
<PAGE>

"interest determination date" means the date as of which the interest rate
for a floating rate note is to be calculated, to be effective as of the
following interest reset date and calculated on the related calculation date.
However, LIBOR will be calculated on the LIBOR rate interest determination
date. The interest determination date relating to an interest reset date for a
commercial paper rate note, for a prime rate note, for a Federal funds rate
note and for a CD rate note will be the second business day preceding that
interest reset date. The interest determination date relating to an interest
reset date for a LIBOR note will be the second London banking day preceding
that interest reset date. The interest determination date relating to an
interest reset date for a Treasury rate note will be the day of the week during
which that interest reset date falls on which Treasury bills of the index
maturity designated in the pricing supplement would normally be auctioned.
Treasury bills are usually sold at auction on the Monday of each week, unless
that day is a legal holiday, in which case the auction is usually held on the
following Tuesday or may be held on the preceding Friday. If, as the result of
a legal holiday, an auction is so held on the preceding Friday, that Friday
will be the Treasury interest rate determination date pertaining to the
interest reset date occurring in the following week.

"interest payment date" means the date on which payment of interest on a
note (other than payment at maturity) is to be made. Unless the applicable
pricing supplement indicates otherwise, the interest payment dates for the
fixed rate notes will be February 15 and August 15 of each year and at
maturity. Unless the applicable pricing supplement indicates otherwise and
except as provided below, the interest payment dates for any floating rate note
will be:

(a) in the case of floating rate notes that reset weekly, on the third
Wednesday of March, June, September and December of each year;

(b) in the case of floating rate notes that reset daily or monthly, on
the third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year (as indicated in the pricing
supplement);

(c) in the case of floating rate notes that reset quarterly, on the
third Wednesday of March, June, September and December of each year, in the
case of floating rate notes that reset semi-annually, on the third
Wednesday of the two months of each year specified in the pricing
supplement;

(d) in the case of floating rate notes that reset annually, on the third
Wednesday of the month specified in the pricing supplement; and

(e) in each case, at maturity.

If an interest payment date for any fixed rate note falls on a day that
is not a business day for that note, the interest payment for that note
will be made on the following business day for that note, and no interest
on that payment will accrue from and after that interest payment date. If
an interest payment date (other than an interest payment date at maturity)
for any floating rate note would otherwise be a day that is not a business
day for that note, that interest payment date will be postponed to the next
business day for that note, and interest will continue to accrue (except
that, for a LIBOR note, if that business day is in the following calendar
month, that interest payment date will be the preceding business day for
that LIBOR note).

"interest reset date" means the date on which a floating rate note will
begin to bear interest at the interest rate determined as of any interest
determination date. Unless the pricing supplement specifies otherwise, the
interest reset dates will be:

(a) in the case of floating rate notes that reset daily, each business
day;

(b) in the case of floating rate notes (other than Treasury rate notes)
that reset weekly, the Wednesday of each week;

(d) in the case of floating rate notes that reset monthly, the third
Wednesday of each month;

S-23
<PAGE>

(e) in the case of floating rate notes that reset quarterly, the third
Wednesday of March, June, September and December of each year;

(f) in the case of floating rate notes that reset semi-annually, the
third Wednesday of each of two months of each year specified in the pricing
supplement; and

(g) in the case of floating rate notes that reset annually, the third
Wednesday of one month of each year specified in the pricing supplement.

If any interest reset date for any floating rate note would otherwise be a day
that is not a business day for that floating rate note, that interest reset
date will be postponed to the next business day for that floating rate note
(except that, for a LIBOR note, if that business day is in the following
calendar month, that interest reset date will be the preceding business day for
that LIBOR note). If a Treasury bill auction (as described in the definition of
"interest determination date") falls on any day that would otherwise be an
interest reset date for a Treasury rate note, then that interest reset date
will instead be the first business day following that auction date.

"London banking day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.

"market exchange rate" for any specified currency means the noon buying rate
in New York City for cable transfers for that specified currency as certified
for customs purposes by (or if not certified, as otherwise determined by) the
Federal Reserve Bank of New York.

"maturity" means the date on which the principal of a note becomes due,
whether at stated maturity, upon redemption or otherwise. If the maturity of
any note falls on a day that is not a business day, the payment of principal,
premium, if any, and interest for that note will be made on the following
business day, and no interest on that payment will accrue from and after that
maturity.

"maximum interest rate" means, for any floating rate note, a maximum
numerical interest rate limitation, or ceiling, on the rate at which interest
may accrue on that during any interest period.

"minimum interest rate" means, for any floating rate note, a minimum
numerical interest rate limitation, or floor, on the rate at which interest may
accrue on that during any interest period.

"money market yield" means a yield (expressed as a percentage rounded to the
next higher one hundred thousandth of a percentage point) calculated in
accordance with the following formula:

D X 360
money market yield = ------------- X 100
360 - (D X M)

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

"paying agent" means the agent appointed by us to make payments of
principal, premium, if any, and interest on the notes. Unless the pricing
supplement specifies otherwise, the paying agent will be Citibank, N.A.

"principal financial center" means the capital city of the country issuing
the index currency, except that with respect to United States dollars,
Australian dollars, Deutsche marks, Dutch guilders, Italian lire and Swiss
francs, the principal financial center will be New York City, Sydney,
Frankfurt, Amsterdam, Milan and Zurich, respectively.

"regular record date" means the date on which a note must be held in order
for the holder to receive an interest payment on the next interest payment
date. Unless the pricing supplement specifies otherwise, the regular record
date for any interest payment date with respect to any floating rate note will
be the fifteenth day

S-24
<PAGE>

(whether or not a business day) prior to that interest payment date. The
regular record dates for the fixed rate notes will be the February 1 and August
1 next preceding the February 15 and August 15 interest payment dates.

"Reuters Screen USPRIME1 Page" means the display on the Reuters Monitor
Money Rates Service (or any successor service) on the "USPRIME1" page (or any
other page as may replace the USPRIME1 page on such service) for the purpose of
displaying prime rates or base lending rates of major U.S. banks.

"spread" means the number of basis points, if any, to be added to the
commercial paper rate, the prime rate, LIBOR, the Treasury rate, the Federal
funds rate, the CD rate or any other interest rate index in effect at various
times for a note, which amount will be set forth in the pricing supplement.

"spread multiplier" means the percentage by which the commercial paper rate,
the prime rate, LIBOR, the Treasury rate, the Federal funds rate, the CD rate
or any other interest rate index in effect at various times for a note is to be
multiplied, which percentage will be set forth in the pricing supplement.

S-25
<PAGE>

SUBJECT TO COMPLETION, DATED MAY 12, 2000
PROSPECTUS

$600,000,000

Ashland Inc.

Debt Securities

Preferred Stock

Depositary Shares

Common Stock

Warrants

--------

We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.

The date of this prospectus is , 2000.
<PAGE>

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

TABLE OF CONTENTS

<TABLE>
<S> <C>
Summary........................... 1
Ashland Inc....................... 5
Use of Proceeds................... 5
Description of Debt Securities.... 5
Description of Preferred Stock.... 18
Description of Depositary Shares.. 21
</TABLE>
<TABLE>
<S> <C>
Description of Common Stock............................................ 23
Description of Securities Warrants..................................... 24
Plan of Distribution................................................... 25
Legal Matters.......................................................... 26
Experts................................................................ 26
</TABLE>

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

1
<PAGE>

SUMMARY

This summary highlights selected information from this document and may not
contain all the information that is important to you. To understand the terms
of our securities, you should carefully read this document with the attached
prospectus supplement which together give the specific terms of the securities
we are offering. You should also read the documents we have referred to you in
"Where You Can Find More Information About Ashland" on page 3 for information
on our company and our financial statements.

Ashland Inc.

Our businesses are grouped into five industry segments: APAC, Ashland
Distribution, Ashland Specialty Chemical, Valvoline, and Refining and
Marketing.

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

Ashland Distribution distributes industrial chemicals, solvents,
ingredients, thermoplastics and resins, fiberglass materials and fine
ingredients in North America and plastics in Europe.

Ashland Specialty Chemical manufactures and sells a wide variety of
performance chemicals, resins, products and services and certain
petrochemicals.

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

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

The Securities We May Offer

This prospectus is part of a registration statement (No. 333- . ) that we
filed with the SEC utilizing a "shelf" registration process. Under this shelf
process, we may offer from time to time up to $600,000,000 of any of the
following securities, either separately or in units: debt securities, preferred
stock, depositary shares, common stock and warrants. This prospectus provides
you with a general description of the securities we may offer. Each time we
offer securities, we will provide you with a prospectus supplement that will
describe the specific amounts, prices and terms of the securities being
offered. The prospectus supplement may also add, update or change information
contained in this prospectus.

Debt Securities

We may offer unsecured general obligations of our company, which may be
senior or subordinated. The senior securities and the subordinated securities
are together referred to in this prospectus as the "debt securities". The
subordinated securities will be entitled to payment only after payment on our
superior indebtedness (as described below).

1
<PAGE>

Unless the applicable prospectus supplement states otherwise, senior
securities will be issued under an indenture dated as of August 15, 1989, as
amended and restated as of August 15, 1990, between us and Citibank, N.A., as
trustee. The subordinated securities will be issued under an indenture between
us and a commercial bank to be selected, as trustee. We have summarized certain
general features of the debt securities from the indentures. We encourage you
to read the indentures (which are exhibits to the registration statement) and
our recent periodic and current reports that we file with the SEC. Directions
on how you can get copies of these reports are provided on page 3.

General Indenture Provisions that Apply to Senior and Subordinated Securities

. Neither indenture limits the amount of debt that we may issue or
provides holders any protection should there be a highly leveraged
transaction, recapitalization or restructuring involving our company.

. The indentures provide that holders of two-thirds of the total principal
amount of outstanding debt securities of any series may vote to change
certain of our obligations or certain of your rights concerning the debt
securities of that series. However, to change the amount or timing of
principal, interest or other payments under the debt securities every
holder in the series must consent.

. If an event of default (as described below) occurs with respect to any
series of debt securities, the trustee or holder of 25% of the
outstanding principal amount of that series may declare the principal
amount of the series immediately payable. However, holders of a majority
of the principal amount may rescind this action except where a payment
default or a breach of certain covenants has occurred.

. If we satisfy certain conditions in either indenture, we may discharge
that indenture at any time by depositing with the trustee sufficient
funds or government obligations to pay when due the debt securities
outstanding under that indenture.

Events of Default. The indentures provide that the following are events of
default:

. Interest not paid for 30 days after due date.

. Principal or premium not paid when due.

. Sinking fund payment not paid for 30 days after due date.

. Covenant breach continuing for 60 days after notice.

. Occurrence of certain bankruptcy or insolvency events.

. Occurrence of any other event of default specified in the prospectus
supplement.

General Indenture Provisions that Apply Only to Senior Securities

. The indenture relating to the senior securities limits our ability and
the ability of any subsidiary of ours to assume or guarantee
indebtedness secured by mortgages, liens or other encumbrances upon our
or our subsidiary's property unless the senior securities will be
equally and ratably secured with that indebtedness.

. The indenture relating to the senior securities limits our ability and
the ability of any subsidiary of ours to sell or transfer property to a
lender or investor, which then, either directly or indirectly, leases
the property back to us or the subsidiary for a time period over three
years.

. The indenture relating to the senior securities states that we may not
merge or consolidate with another company or sell all or substantially
all of our assets to another company unless certain

2
<PAGE>

conditions are met. If these events occur, the other company will be
required to assume our responsibilities relating to the debt securities,
and we will be released from all liabilities and obligations.

General Indenture Provisions that Apply Only to Subordinated Securities

The subordinated securities will be subordinated to all "superior
indebtedness", which includes all indebtedness for money borrowed by us, except
indebtedness that is stated to be not superior to, or to have the same rank as,
the subordinated securities.

Preferred Stock and Depositary Shares

We may issue our preferred stock, without par value, in one or more series.
We will determine the dividend, voting, conversion and other rights of the
series being offered and the terms and conditions relating to its offering and
sale at the time of the offer and sale. We may also issue fractional shares of
preferred stock that will be represented by depositary shares and depositary
receipts.

Common Stock

We may issue our common stock, par value $1.00 per share. Holders of common
stock are entitled to receive dividends when declared by our board of directors
(subject to rights of preferred stockholders). Each holder of common stock is
entitled to one vote per share. The holders of common stock have cumulative
voting rights but no preemptive, redemption or conversion rights.

Warrants

We may issue warrants for the purchase of debt securities, preferred stock
or common stock. We may issue warrants independently or together with other
securities.

RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS

The following table sets forth the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends for Ashland:

<TABLE>
<CAPTION>
Six
Months
Fiscal Year Ended Ended
September 30, March 31,
------------------------ ---------
1995 1996 1997 1998 1999 1999 2000
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges......... * 1.90 2.42 2.32 3.67 2.52 1.79
Ratio of earnings to combined fixed charges
and preferred stock dividends............. ** 1.66 2.24 2.32 3.67 2.52 1.79
</TABLE>
* Fixed charges exceeded earnings (as defined) by $3 million.
** Combined fixed charges and preferred stock dividends exceeded earnings (as
defined) by $22 million.

The above ratios are computed on a total enterprise basis including our
consolidated subsidiaries, plus our share of significant affiliates accounted
for on the equity method that are 50% or greater owned or whose indebtedness
has been directly or indirectly guaranteed by us. Earnings consist of income
from continuing operations before income taxes, adjusted to exclude fixed
charges (excluding capitalized interest) and undistributed earnings of equity
method affiliates excluded from the total enterprise. Fixed charges consist of
interest incurred on indebtedness, the portion of operating lease rentals
deemed representative of the interest factor and the amortization of debt
expense.

3
<PAGE>

Where You Can Find More Information About Ashland

We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to the public at the SEC's web site at http://www.sec.gov.

The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus, and
later information filed with the SEC will update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 until our offering is completed:

(a) Annual Report on Form 10-K for the year ended September 30, 1999;

(b) Amended Annual Report on Form 10-K/A for the year ended September
30, 1999.

(d) Current Reports on Form 8-K filed on October 6, 1999, October 12,
1999, January 24, 2000, February 24, 2000, March 16, 2000, and March 27,
2000;

(e) The description of our common stock, par value $1.00 per share, set
forth in the registration statement on Form 10, as amended in its entirety
by the Form 8 filed with the SEC on May 1, 1983;

(f) The description of our rights to purchase Series A Participating
Cumulative Preferred Stock, set forth in the registration statement on Form
8-A dated May 16, 1996; and

(g) The description of a cumulative preferred stock, without par value,
set forth in the registration statement on Form 8-A, as amended by
Amendment No. 1 to the registration statement, filed with the SEC on April
30, 1993.

You may request a copy of these filings, at no cost, by writing to or
telephoning us at the following address (or by visiting our website at
http://www.ashland.com):

Office of the Secretary
Ashland Inc.
50 E. RiverCenter Boulevard
P.O. Box 391
Covington, KY 41012-0391
(859) 815-3333

You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized
no one to provide you with different information. We are not making an offer
of these securities in any state where the offer is not permitted. You should
not assume that the information in this prospectus or the prospectus
supplement is accurate as of any date other than the date on the front of the
document.

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ASHLAND INC.

Our businesses are grouped into five industry segments: APAC, Ashland
Distribution, Ashland Specialty Chemical, Valvoline, Refining and Marketing.

Ashland Distribution distributes industrial chemicals, solvents,
ingredients, thermoplastics and resins, fiberglass materials and fine
ingredients in North America and plastics in Europe.

Ashland Specialty Chemical manufactures and sells a wide variety of
performance chemicals, resins, products and services and certain
petrochemicals.

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

We are a Kentucky corporation, organized on October 22, 1936, with our
principal executive offices located at 50 E. RiverCenter Boulevard, Covington,
Kentucky 41012 (Mailing Address: 50 E. RiverCenter Boulevard, P.O. Box 391,
Covington, Kentucky 41012-0391) (Telephone: (859) 815-3333).

USE OF PROCEEDS

We will use the net proceeds we receive from the sale of the securities
offered by this prospectus and the accompanying prospectus supplement for
general corporate purposes, unless we specify otherwise in the applicable
prospectus supplement. General corporate purposes may include additions to
working capital, capital expenditures, stock redemption, repayment of debt or
the financing of possible acquisitions.

DESCRIPTION OF DEBT SECURITIES

The following description sets forth the general terms and provisions that
could apply to the debt securities. Each prospectus supplement will state the
particular terms that actually will apply to the debt securities included in
the supplement.

The debt securities will be either our senior debt securities or our
subordinated debt securities. Unless the applicable prospectus supplement
states otherwise, senior securities will be issued under an indenture dated as
of August 15, 1989, as amended and restated as of August 15, 1990, between us
and Citibank, N.A., as trustee. Under the indenture between us and Citibank,
N.A., as trustee, we have issued to date an aggregate of $1.7 billion of senior
securities. Subordinated securities will be issued under an indenture between
us and a commercial bank to be selected, as trustee. The senior indenture and
the subordinated indenture are together called the "indentures".

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The following summary of certain provisions of the indentures is not
complete. You should refer to the applicable provisions of the following
documents for more detailed information:

. the senior indenture, which is incorporated by reference to Exhibit 4(a)
to Registration Statement No. 33-39359, filed with the SEC on March 11,
1991, and

. the subordinated indenture, which is incorporated by reference to
Exhibit 4.3 to Registration Statement No. 33-57011, filed with the SEC
on December 22, 1994.

Some of the capitalized terms used in the following discussion are defined
in the indentures, and their definitions are incorporated by reference into
this prospectus.

General

Neither indenture limits the aggregate principal amount of debt securities
that we may issue under that indenture. The debt securities may be issued in
one or more series as we may authorize at various times. All debt securities
will be unsecured. The senior securities will have the same rank as all of our
other unsecured and unsubordinated debt. The subordinated securities will be
subordinated to superior indebtedness as described in the "Subordinated
Securities" section below. The senior securities and subordinated securities
may be combined into one series or offered separately. The prospectus
supplement relating to the particular series of debt securities being offered
will specify the amounts, prices and terms of those debt securities. These
terms may include:

. the title and the limit on the aggregate principal amount of the debt
securities;

. the date or dates on which the debt securities will mature;

. any annual rate or rates (which may be fixed or variable), or the method
of determining any rate or rates, at which the debt securities will bear
interest;

. the currency or currencies or units of two or more currencies in which
the debt securities are denominated and principal and interest may be
payable, and for which the debt securities may be purchased, which may
be in United States dollars, a foreign currency or currencies or units
of two or more foreign currencies;

. whether such debt securities are to be senior securities or subordinated
securities;

. any redemption or sinking fund terms;

. any event of default or covenant with respect to the debt securities of
a particular series, if not set forth in this prospectus;

. whether the debt securities will be issued as registered securities or
as bearer securities;

. whether the debt securities are to be issued in whole or in part in the
form of one or more global securities and the depositary for the global
security or securities; and

. any other terms of the series, which will not conflict with the terms of
applicable indenture.

Principal, any premium and any interest will be payable and the debt
securities will be transferable at the corporate trust office of the
appropriate trustee, unless we specify otherwise in the accompanying prospectus
supplement. At our option, however, payment of interest may be made by check
mailed to the registered holders of the debt securities at their registered
addresses.

We will issue the debt securities in fully registered form without coupons
unless the applicable prospectus supplement provides for an issuance to be in
bearer form with or without coupons. Unless we specify otherwise in the
applicable prospectus supplement, we will issue debt securities denominated in
U.S. dollars in

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denominations of $1,000 or multiples of $1,000 for registered securities and in
denominations of $5,000 or multiples of $5,000 for bearer securities. No
service charge will be made for any transfer or exchange of debt securities,
but we may require payment beforehand of any related taxes or other
governmental charges. Debt securities may also be issued pursuant to the
indentures in transactions exempt from the registration requirements of the
Securities Act of 1933. Those debt securities will not be considered in
determining the aggregate amount of securities issued under the registration
statement.

We will describe special Federal income tax and other considerations
relating to debt securities denominated in foreign currencies or units of two
or more foreign currencies in the applicable prospectus supplement.

Unless we specify otherwise in the applicable prospectus supplement, the
covenants contained in the indentures and the debt securities will not provide
special protection to holders of debt securities if we enter into a highly
leveraged transaction, recapitalization or restructuring.

Exchange, Registration and Transfer

Registered securities of any series that are not global securities will be
exchangeable for other registered securities of the same series and of like
aggregate principal amount and tenor in different authorized denominations. In
addition, if debt securities of any series are issuable as both registered
securities and bearer securities, the holder may choose, upon written request,
and subject to the terms of the applicable indenture, to exchange bearer
securities and the appropriate related coupons of that series into registered
securities of the same series of any authorized denominations and of like
aggregate principal amount and tenor. Bearer securities with attached coupons
surrendered in exchange for registered securities between a regular record date
or a special record date and the relevant date for interest payment shall be
surrendered without the coupon relating to the interest payment date. Interest
will not be payable with respect to the registered security issued in exchange
for that bearer security. That interest will be payable only to the holder of
the coupon when due in accordance with the terms of the applicable indenture.
Bearer securities will not be issued in exchange for registered securities.

You may present debt securities for exchange as provided above. In addition,
you may present registered securities for registration of transfer, together
with a duly executed form of transfer, at the office of the security registrar
or at the office of any transfer agent designated by us for that purpose with
respect to any series of debt securities and referred to in the applicable
prospectus supplement. This may be done without service charge and upon payment
of any taxes and other governmental charges as described in the applicable
indenture. The security registrar or the transfer agent will effect the
transfer or exchange upon being satisfied with the documents of title and
identity of the person making the request. We have appointed the applicable
trustee as security registrar for the applicable indenture. If a prospectus
supplement refers to any transfer agents (in addition to the security
registrar) initially designated by us with respect to any series of debt
securities, we may at any time rescind the designation of any such transfer
agent or approve a change in the location through which such transfer agent
acts. However, if debt securities of a series are issuable solely as registered
securities, we will be required to maintain a transfer agent in each place of
payment for such series, and if debt securities of a series are issuable as
bearer securities, we will be required to maintain (in addition to the security
registrar) a transfer agent in a place of payment for such series located in
Europe. We may at any time designate additional transfer agents with respect to
any series of debt securities.

In the event of any redemption in part, we will not be required to:

. issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before any selection of debt securities of that series to be redeemed
and ending at the close of business on:

. if debt securities of the series are issuable only as registered
securities, the day of mailing of the relevant notice of redemption;

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<PAGE>

. if debt securities of the series are issuable only as bearer
securities, the day of the first publication of the relevant notice
of redemption; or

. if debt securities of the series are issuable as registered
securities and bearer securities and there is no publication of the
relevant notice of redemption, the day of mailing of the relevant
notice of redemption, or the date of such publication, if
applicable;

. register the transfer of or exchange any registered security, or portion
thereof, called for redemption, except the unredeemed portion of any
registered security being redeemed in part; or

. exchange any bearer security called for redemption, except to exchange
such bearer security for a registered security of that series and like
tenor which is immediately surrendered for redemption.

For a discussion of restriction on the exchange, registration and transfer
of global securities, see "Global Securities" below.

Payment and Paying Agents

Unless we specify otherwise in the applicable prospectus supplement, payment
of principal, any premium and interest on bearer securities will be payable, in
accordance with any applicable laws and regulations, at the offices of those
paying agents outside the U.S. that we may designate at various times. We will
make interest payments on bearer securities and the attached coupons on any
interest payment date only against surrender of the coupon relating to that
interest payment date. No payment with respect to any bearer security will be
made at any of our offices or agencies in the U.S., by check mailed to any U.S.
address or by transfer to an account maintained with a bank located in the U.S.
However, if (but only if) payment in U.S. dollars of the full amount of
principal, any premium and interest on bearer securities denominated and
payable in U.S. dollars at all offices or agencies outside the U.S. is illegal
or effectively precluded by exchange controls or other similar restrictions,
then those payments will be made at the office of our paying agent in the
Borough of Manhattan, The City of New York.

Unless we specify otherwise in the applicable prospectus supplement, payment
of principal, any premium and any interest on registered securities will be
made at the office of the paying agent or paying agents that we designate at
various times. However, at our option, we may make interest payments by check
mailed to the address, as it appears in the security register, of the person
entitled to the payments. Unless we specify otherwise in the applicable
prospectus supplement, we will make payment of any installment of interest on
registered securities to the person in whose name that registered security is
registered at the close of business on the regular record date for such
interest.

Unless we specify otherwise in the applicable prospectus supplement, the
Corporate Trust Office of the trustee in the Borough of Manhattan, The City of
New York, will be designated:

. as our sole paying agent for payments with respect to debt securities
that are issuable solely as registered securities; and

. as our paying agent in the Borough of Manhattan, The City of New York,
for payments with respect to debt securities (subject to the limitation
described above in the case of bearer securities) that are issuable
solely as bearer securities or as both registered securities and bearer
securities. We will name any paying agents outside the U.S. and any
other paying agents in the U.S. initially designated by us for the debt
securities in the applicable prospectus supplement. We may at any time
designate additional paying agents or rescind the designation of any
paying agent or approve a change in the office through which any paying
agent acts. However, if debt securities of a series are issuable solely
as registered securities, we will be required to maintain a paying agent
in each place of payment for that series. If debt securities of a series
are issuable as bearer securities, we will be required to maintain

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<PAGE>

. a paying agent in the Borough of Manhattan, The City of New York, (a)
for payments with respect to any registered securities of the series and
(b) for payments with respect to bearer securities of the series in the
circumstance described above, but not otherwise; and

. a paying agent in a place of payment located outside the U.S. where debt
securities of that series and any attached coupons may be presented and
surrendered for payment. However, if the debt securities of that series
are listed on the London Stock Exchange, the Luxembourg Stock Exchange
or any other stock exchange located outside the U.S. and if the stock
exchange requires it, we will maintain a paying agent in London or
Luxembourg or any other required city located outside the U.S. for those
debt securities.

All moneys we pay to a paying agent for the payment of principal, any
premium or interest on any debt security or coupon that remains unclaimed at
the end of two years after becoming due and payable will be repaid to us. After
that time, the holder of the debt security or coupon will look only to us for
payments out of those repaid amounts.

Global Securities

The debt securities of a series may be issued in whole or in part in the
form of one or more global certificates that we will deposit with a depositary
identified in the applicable prospectus supplement. Global securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for the individual
debt securities it represents, a global security may not be transferred except
as a whole:

. by the applicable depositary to a nominee of the depositary,

. by any nominee to the depositary itself or another nominee, or

. by the depositary or any nominee to a successor depositary or any
nominee of the successor.

We will describe the specific terms of the depositary arrangement with
respect to a series of debt securities in the applicable prospectus supplement.
We anticipate that the following provisions will generally apply to depositary
arrangements.

When we issue a global security in registered form, the depositary for the
global security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual debt
securities represented by that global security to the accounts of persons that
have accounts with the depositary ("participants"). Those accounts will be
designated by the dealers, underwriters or agents with respect to the
underlying debt securities or by us if those debt securities are offered and
sold directly by us. Ownership of beneficial interests in a global security
will be limited to participants or persons that may hold interests through
participants. For interests of participants, ownership of beneficial interests
in the global security will be shown on records maintained by the applicable
depositary or its nominee. For interests of persons other than participants,
that ownership information will be shown on the records of participants.
Transfer of that ownership will be effected only through those records. The
laws of some states require that certain purchasers of securities take physical
delivery of securities in definitive form. These limits and laws may impair our
ability to transfer beneficial interests in a global security.

As long as the depositary for a global security, or its nominee, is the
registered owner of that global security, the depositary or nominee will be
considered the sole owner or holder of the debt securities represented by the
global security for all purposes under the applicable indenture. Except as
provided below, owners of beneficial interests in a global security:

. will not be entitled to have any of the underlying debt securities
registered in their names,

. will not receive or be entitled to receive physical delivery of any of
the underlying debt securities in definitive form, and

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<PAGE>

. will not be considered the owners or holders under the indenture
relating to those debt securities.

Payments of principal of, any premium and any interest on individual debt
securities represented by a global security registered in the name of a
depositary or its nominee will be made to the depositary or its nominee as the
registered owner of the global security representing such debt securities. None
of we, the trustee for the debt securities, any paying agent nor the registrar
for the debt securities will be responsible for any aspect of the records
relating to or payments made by the depositary or any participants on account
of beneficial interests of the global security.

We expect that the depositary or its nominee, upon receipt of any payment of
principal, any premium or interest relating to a permanent global security
representing any series of debt securities, immediately will credit
participants' accounts with the payments. Those payments will be credited in
amounts proportional to the respective beneficial interests of the participants
in the principal amount of the global security as shown on the records of the
depositary or its nominee. We also expect that payments by participants to
owners of beneficial interests in the global security held through those
participants will be governed by standing instructions and customary practices.
This is not the case with securities held for the accounts of customers in
bearer form or registered in "street name". Those payments will be the sole
responsibility of those participants.

If the depositary for a series of debt securities is at any time unwilling,
unable or ineligible to continue as depositary and we do not appoint a
successor depositary within 90 days, we will issue individual debt securities
of that series in exchange for the global security or securities representing
that series. In addition, we may at any time in our sole discretion determine
not to have any debt securities of a series represented by one or more global
securities. In that event, we will issue individual debt securities of that
series in exchange for the global security or securities. Further, if we
specify, an owner of a beneficial interest in a global security may, on terms
acceptable to us, the trustee and the applicable depositary, receive individual
debt securities of that series in exchange for those beneficial interests. The
foregoing is subject to any limitations described in the applicable prospectus
supplement. In any such instance, the owner of the beneficial interest will be
entitled to physical delivery of individual debt securities equal in principal
amount to the beneficial interest and to have the debt securities registered in
its name. Those individual debt securities will be issued in denominations,
unless we specify otherwise, of $1,000 or integral multiples of $1,000.

If we specify in an applicable prospectus supplement, all or any portion of
the debt securities of a series that are issuable as bearer securities
initially will be represented by one or more temporary global securities, with
or without interest coupons. These temporary global securities will be
deposited with a common depositary in London for Morgan Guaranty Trust Company
of New York, Brussels Office, as operator of the Euroclear System and
Clearstream Banking (formerly known as Cedel Bank) for credit to the respective
accounts of the beneficial owners of those debt securities or to other accounts
as they may direct. On and after the exchange date determined as provided in
the temporary global security and described in the applicable prospectus
supplement, each temporary global security will be exchangeable for definitive
debt securities in bearer form, registered form, or definitive global form or
any combination of these. No bearer security including one in definitive global
bearer form delivered in exchange for a portion of a temporary global security
will be mailed or otherwise delivered to any location in the U.S. in connection
with this exchange.

Unless we specify otherwise in the applicable prospectus supplement, we or
our agent must receive a certificate signed by Euroclear or Clearstream prior
to the delivery of a definitive bearer security. We must also receive this
signed certificate prior to the actual payment of interest on the applicable
portion of the temporary global security payable before delivery of a
definitive debt security. The certificate must be based on statements provided
to Euroclear or Clearstream by its member organizations. The certificate must
be dated on the earlier of the date of the first actual payment of interest on
the debt security or the date of delivery of the debt security in definitive
form, and must state that on that date the debt security is owned by:

. a person that is not a U.S. person and is not a financial institution
holding the obligation for purposes of resale during the restricted
period;

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. a U.S. person that is either (a) the foreign branch of a U.S. financial
institution purchasing for its own account or for resale during the
restricted period or (b) a U.S. person who acquired its interest through
the foreign branch of a U.S. financial institution and who holds the
obligation through such financial institution on the date of
certification. In either case (a) or (b), the U.S. financial institution
must provide a certificate stating that it agrees to comply with the
requirements and regulations of Section 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986, as amended unless it has provided a valid
blanket certificate stating the same; or

. a financial institution holding for purposes of resale during the
restricted period. That financial institution must certify in addition
that it has not acquired the obligation for purposes of resale directly
or indirectly to a U.S. person or to a person within the United States
or its possessions.

As used in this paragraph, the term "restricted period" means (a) the period
from the closing date until 40 days thereafter or (b) any time if the
obligation is held as part of an unsold allotment or subscription.

Each of Euroclear and Clearstream will in these circumstances credit the
interest received by it to the accounts of the beneficial owners of the
temporary global security or to other accounts as they may direct.

The beneficial owner of a debt security underlying a definitive global
security in bearer form may exchange its interest in that definitive global
security for a definitive bearer security or securities, or a definitive
registered security or securities of any authorized denomination. The
beneficial owner must give at least 30 days' written notice of the exchange
through either Euroclear or Clearstream. No individual definitive bearer
security will be delivered in or to the U.S.

Senior Securities--Certain Restrictive Covenants

Limitations on Liens. Unless we specify otherwise in the applicable
prospectus supplement, neither we nor any domestic subsidiary of ours will
issue, assume or guarantee any debt secured by a mortgage, lien, pledge or
other encumbrance upon real or personal property of ours or of our domestic
subsidiary that is located in the continental U.S. without providing that the
senior securities will be secured equally and ratably or prior to the debt.
However, this provision shall not apply to the following:

. Mortgages existing on the date of the senior indenture;

. Mortgages affecting property of a corporation existing at the time it
becomes a domestic subsidiary of ours or at the time it is merged into
or consolidated with us or a domestic subsidiary of ours;

. Mortgages on property (a) existing at the time of the property's
acquisition, (b) to secure payment of all or part of the property's
purchase price, (c) to secure debt incurred prior to, at the time of or
within 24 months after the property's acquisition for the purpose of
financing all or part of the property's purchase price or (d) assumed or
incurred in connection with the property's acquisition;

. Mortgages on property to secure all or part of the cost of repairing,
altering, constructing, improving, exploring, drilling or developing the
property, or to secure debt incurred to provide funds for any such
purpose;

. Mortgages on (a) pipelines, gathering systems, pumping or compressor
stations, pipeline storage facilities or other related facilities, (b)
tank cars, tank trucks, tank vessels, barges, tow boats or other vessels
or boats, drilling barges, drilling platforms, or other movable railway,
automotive, aeronautic or marine facilities, (c) office buildings,
laboratory and research facilities, retail service stations, retail or
wholesale sales facilities, terminals, bulk plants, warehouses or
storage or distribution facilities, (d) manufacturing facilities other
than units for the refining of crude oil, (e) the equipment of any of
the foregoing or (f) any "margin stock" or "margin security" within the
meaning of Regulation U or Regulation G of the Board of Governors of the
Federal Reserve System as amended from time to time;

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. Mortgages on current assets or other personal property (other than
shares of stock or indebtedness of subsidiaries) to secure loans
maturing not more than one year from the date of their creation or to
secure any renewal of those loans for not more than a year at a time;

. Mortgages which secure indebtedness owed by a domestic subsidiary of
ours to us or another domestic subsidiary of ours;

. Mortgages on property of any domestic subsidiary of ours principally
engaged in a financing or leasing business;

. Mortgages upon the oil, gas or other minerals produced or to be produced
or on the related proceeds from properties (other than those which were
acquired and which became productive on or before August 15, 1977) if,
each of those mortgages has been or will be given to secure indebtedness
incurred to pay or to reimburse the cost of drilling or equipping such
property; and

. any extension, renewal or replacement of any mortgage referred to in the
preceding items or of any debt secured by those mortgages if the
original principal amount of debt secured does not exceed the principal
amount of debt secured at the time of the extension, renewal or
replacement. In addition, the extension, renewal or replacement mortgage
will be limited to substantially the same property (plus improvements)
which secured the mortgage.

Notwithstanding anything mentioned above, we and any one or more of our
domestic subsidiaries may issue, assume or guarantee debt secured by mortgages
that would otherwise be subject to the foregoing restrictions in an aggregate
principal amount which, together with the aggregate outstanding principal
amount of all other debt of ours and our domestic subsidiaries that would
otherwise be subject to the foregoing restrictions, does not at any one time
exceed 5% of the stockholders' equity in us and our consolidated subsidiary
companies as shown on our audited consolidated balance sheet contained in our
latest annual report to stockholders.

The following types of transactions, among others, shall not be deemed to
create debt secured by mortgages: (1) the sale or other transfer of oil, gas or
other minerals in place for a period of time until, or in an amount such that,
the transferee will realize from the sale or transfer a specified amount
(however determined) of money or such minerals, or the sale or other transfer
of any other interest in property of the character commonly referred to as an
oil payment or a production payment, and (2) mortgages required by any contract
or statute in order to permit us or a subsidiary of ours to perform any
contract or subcontract made with or at the request of the U.S., any state or
any department, agency or instrumentality of either.

"Debt" is defined to include any notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed.

Limitations on Sale and Lease-Back. Unless we specify otherwise in the
applicable prospectus supplement, neither we nor any domestic subsidiary of
ours will enter into any arrangement with any bank or other lender or investor
to lease to us or a domestic subsidiary of ours for a period of more than three
years any real property located in the continental U.S. To be applicable, we or
a domestic subsidiary of ours must sell or plan to sell or transfer this
property to the lender or investor or to any person or organization to which
funds have been or are to be advanced by the lender or investor on the security
of the leased property. This paragraph does not apply where either: (a) we or
our domestic subsidiary would be entitled to create debt secured by a mortgage
on the property to be leased, without equally and ratably securing the senior
securities, or (b) we, within four months after the effective date of the sale
and lease-back transaction, apply to the retirement of debt of ours maturing by
its terms more than one year after its original creation, an amount equal to
the greater of:

. the net proceeds of the sale of the real property leased pursuant to the
arrangement, or

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. the fair value of the real property leased at the time of entering into
the arrangement as determined by the board of directors of Ashland.

This amount to be applied to the retirement of debt maturing more than one
year after its creation will be reduced by an amount equal to the sum of (a)
the principal amount of debt securities delivered, within four months after the
effective date of the arrangement, to the trustee for retirement and
cancellation and (b) the principal amount of other debt maturing within one
year after its creation voluntarily retired by us within the four-month period.
The latter amount does not include retirements of senior securities and other
debt maturing within one year after its creation related to mandatory sinking
fund or prepayment provisions or by payment at maturity.

Limitation on Consolidations and Mergers. We may not consolidate or merge
with any other person or convey or transfer all or substantially all of our
properties and assets to another person or permit another corporation to merge
into us, unless:

. the successor is a person organized under the laws of the United States
or any state;

. the successor person, if not us, assumes our obligations on the senior
securities and under the senior indenture; and

. certain other conditions are met.

Subordinated Securities

Under the subordinated indenture, payment of the principal, interest and any
premium on the subordinated securities will generally be subordinated in right
of payment to the prior payment in full of all of our superior indebtedness.

"Superior indebtedness" is defined as the principal of, any premium and
accrued and unpaid interest on the following items, whether outstanding on or
created, incurred or assumed after the date of execution of the subordinated
indenture:

. our indebtedness for money borrowed (other than the subordinated
securities);

. guarantees by us of indebtedness for money borrowed of any other person;

. indebtedness evidenced by notes, debentures, bonds or other instruments
of indebtedness for the payment of which we are responsible or liable,
by guarantees or otherwise;

. our obligations under any agreement relating to any interest rate or
currency swap, interest rate cap, interest rate collar, interest rate
future, currency exchange or forward currency transaction or any similar
interest rate or currency hedging transaction, whether outstanding on
the date of the subordinated indenture or created, incurred or assumed
afterward; and

. our obligations under any agreement to lease, or any lease of, any real
or personal property which, in accordance with generally accepted
accounting principles, is classified on our balance sheet as a
liability.

Superior indebtedness shall also be deemed to include modifications,
renewals, extensions and refundings of any of the types of indebtedness,
liability, obligations or guarantee listed above, unless the relevant
instrument provides that such indebtedness, liability, obligation or guarantee,
or such modification, renewal, extension or refunding, is not superior in right
of payment to the subordinated securities. Superior indebtedness shall not,
however, be deemed to include (a) any of our obligations to any subsidiary of
ours and (b) any of our indebtedness, guarantees or obligations of the type set
forth above which is subordinate or junior in ranking in any respect to any of
our other indebtedness, guarantees or obligations.

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No payment by us on account of principal of, any premium or interest on the
subordinated securities, including any sinking fund payments may be made if:

. any default or event of default with respect to any superior
indebtedness occurs and is continuing and

. unless the default or event of default is our failure to pay principal
or interest on any instrument constituting superior indebtedness,
written notice of this default or event of default is given to the
trustee by us or to us and the trustee by the holders or their
representatives of at least 10% in principal amount of any superior
indebtedness.

We may resume payments on the subordinated securities (unless otherwise
prohibited by the related indenture) if (a) the default is cured or waived, or
(b) 120 days pass after the notice is given, if the default is not the subject
of judicial proceedings, unless the default is our failure to pay principal or
interest on any superior indebtedness.

In the event that any subordinated security is declared due and payable
before its specified date, or upon any payment or distribution of assets by us
to creditors upon our dissolution, winding up, liquidation or reorganization,
all principal of, any premium and interest due or to become due on all superior
indebtedness must be paid in full before the holders of subordinated securities
are entitled to receive or take any payment. However, this does not apply to
payments received by the holders of subordinated securities consisting of
shares of stock or subordinated indebtedness provided by a plan of
reorganization or adjustment which does not alter the rights of holders of
superior indebtedness without any holder's consent. Subject to the payment in
full of all superior indebtedness, the holders of the subordinated securities
are to be subrogated to the rights of the holders of superior indebtedness to
receive payments or distribution of our assets applicable to superior
indebtedness until the subordinated securities are paid in full.

By reason of this subordination, in the event of insolvency, our creditors
who are holders of superior indebtedness, as well as certain of our general
creditors, may recover more, ratably, than the holders of the subordinated
securities.

The subordinated indenture will not limit the amount of superior
indebtedness or debt securities which may be issued by us or any of our
subsidiaries.

Modification of the Indentures

Under each indenture our rights and obligations and the rights of the
holders may be modified with the consent of the holders of at least two-thirds
in principal amount of the then outstanding debt securities of each series
affected by the modification. None of the following modifications, however, is
effective against any holder without the consent of the holders of all of the
affected outstanding debt securities:

. changing the maturity, installment or interest rate of any of the debt
securities;

. reducing the principal amount, any premium or the rate of interest of
any of the debt securities;

. changing the currency, currencies or currency unit or units in which any
principal, premium or interest of any of the debt securities is payable;

. changing any of our obligations to maintain an office or agency in the
places and for the purposes required by the indentures;

. impairing any right to take legal action for an overdue payment;

. reducing the percentage required for modifications or waivers of
compliance with the indentures; or

. with certain exceptions, modifying the provisions for the waiver of
certain covenants and defaults and any of the foregoing provisions.

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Any actions we or the trustee may take toward adding to our covenants,
adding events of default or establishing the structure or terms of the debt
securities as permitted by the indentures will not require the approval of any
holder of debt securities. In addition, we or the trustee may cure ambiguities
or inconsistencies in the indentures or make other provisions without the
approval of any holder as long as no holder's interests are materially and
adversely affected.

Waiver of Certain Covenants

The indentures provide that we will not be required to comply with certain
restrictive covenants (including those described above under "Senior
Securities--Certain Restrictive Covenants") if the holders of at least two-
thirds in principal amount of each series of outstanding debt securities
affected waive compliance with the restrictive covenants.

Events of Default, Notice and Waiver

"Event of default" when used in an indenture, will mean any of the following
in relation to a series of debt securities:

. failure to pay interest on any debt security for 30 days after the
interest becomes due;

. failure to pay the principal or any premium on any debt security when
due;

. failure to deposit any sinking fund payment for 30 days after such
payment becomes due;

. failure to perform or breach of any other covenant or warranty in the
indenture that continues for 60 days after our being given notice from
the trustee or the holders of at least 25% in principal amount of the
outstanding debt securities of the series;

. certain events of bankruptcy, insolvency or reorganization of ours; or

. any other event of default provided for debt securities of that series.

If any event of default relating to outstanding debt securities of any
series occurs and is continuing, either the trustee or the holders of at least
than 25% in principal amount of the outstanding debt securities of that series
may declare the principal of all of the outstanding debt securities of such
series to be due and immediately payable.

The indentures provide that the holders of at least a majority in principal
amount of the outstanding debt securities of any series may direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee, or of exercising any trust or power conferred on the trustee, with
respect to the debt securities of that series. The trustee may act in any way
that is consistent with those directions and may decline to act if any of the
directions is contrary to law or to the indentures or would involve the trustee
in personal liability.

The indentures provide that the holders of at least a majority in principal
amount of the outstanding debt securities of any series may on behalf of the
holders of all of the outstanding debt securities of the series waive any past
default (and its consequences) under the indentures relating to the series,
except a default (a) in the payment of the principal of or any premium or
interest on any of the debt securities of the series or (b) with respect to a
covenant or provision of such indentures which, under the terms of such
indentures, cannot be modified or amended without the consent of the holders of
all of the outstanding debt securities of the series affected.

The indentures contain provisions entitling the trustee, subject to the duty
of the trustee during an event of default to act with the required standard of
care, to be indemnified by the holders of the debt securities of the relevant
series before proceeding to exercise any right or power under the indentures at
the request of those holders.

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The indentures require the trustee to, within 90 days after the occurrence
of a default known to it with respect to any series of outstanding debt
securities, give the holders of that series notice of the default if uncured
and unwaived. However, the trustee may withhold this notice if it in good faith
determines that the withholding of this notice is in the interest of those
holders. However, the trustee may not withhold this notice in the case of a
default in payment of principal, premium, interest or sinking fund installment
with respect to any debt securities of the series. The above notice shall not
be given until at least 30 days after the occurrence of a default in the
performance of or a breach of a covenant or warranty in the applicable
indenture other than a covenant to make payment. The term "default" for the
purpose of this provision means any event that is, or after notice or lapse of
time, or both, would become, an event of default with respect to the debt
securities of that series.

Each indenture requires us to file annually with the trustee a certificate,
executed by one of our officers, indicating whether the officer has knowledge
of any default under the indenture.

Meetings

The indentures contain provisions for convening meetings of the holders of
debt securities of a series if debt securities of that series are issuable as
bearer securities. A meeting may be called at any time by the trustee. If the
trustee fails to call a meeting within 21 days after receipt of a request from
us or the holders of at least 10% in principal amount of the outstanding debt
securities of a series, we or the holders may call a meeting upon notice given
in accordance with the provisions described in "Notices" below. Persons
entitled to vote a majority in principal amount of the outstanding debt
securities of a series shall constitute a quorum at a meeting of the holders of
debt securities of the series. However, if any action is to be taken at the
meeting with respect to a consent or waiver which is required to be given by
the holders of at least two-thirds in principal amount of the outstanding debt
securities of a series, the persons entitled to vote two-thirds in principal
amount of the outstanding debt securities of the series will constitute a
quorum. In the absence of a quorum, a meeting called by us or the trustee shall
be adjourned for a period of at least 10 days, and in the absence of a quorum
at the adjourned meeting, the meeting shall be further adjourned for a period
of at least 10 days. Any resolution with respect to any action which may be
made, given or taken by the holders of a specified percentage in principal
amount of outstanding debt securities of a series may be adopted at a properly
reconvened meeting or adjourned meeting at which a quorum is present by the
affirmative vote of the holders of the specified percentage in principal amount
of the outstanding debt securities of that series. Any resolution passed or
decision taken at any meeting of holders of debt securities of any series duly
held in accordance with the indentures will be binding on all holders of debt
securities of that series and the related coupons. With respect to any consent,
waiver or other action which the indentures expressly provide may be given by
the holders of the specified percentage of outstanding debt securities of any
series affected (acting as one class), only the principal amount of outstanding
debt securities of any series represented at a meeting or adjourned meeting
duly reconvened at which a quorum is present as described above and voting in
favor of the action will be counted for purposes of calculating the aggregate
principal amount of outstanding debt securities of all series affected favoring
the action.

Notices

Except as otherwise provided in the applicable prospectus supplement,
notices to holders of bearer securities will be given by publication at least
once in a daily newspaper in New York City and London and in any other cities
specified in the bearer securities. For holders of bearer securities, notices
will also be mailed to those persons whose names and addresses were previously
filed with the trustee within the last two years under the indentures, within
the time prescribed for the giving of that information. Notices to holders of
registered securities will be sent by mail to the addresses of those holders as
they appear in the security register.

Title

Title to any bearer securities (including bearer securities in temporary or
definitive global bearer form) and any related coupons will pass by delivery.
We, the appropriate trustee and any agent of us or the trustee may

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treat the bearer of any bearer security and the bearer of any coupon and
registered owner of any registered security as the absolute owner (whether or
not such security or coupon is overdue and notwithstanding any notice to the
contrary) for the purpose of making payment and for all other purposes.

Replacement of Securities and Coupons

We will replace any mutilated debt security and any debt security with a
mutilated coupon at the expense of the holder upon surrender of the mutilated
debt security or debt security with a mutilated coupon to the appropriate
trustee. We will replace debt securities or coupons that are destroyed, stolen
or lost at the expense of the holder upon delivery to the appropriate trustee
of evidence of the destruction, loss or theft of the debt securities or coupons
satisfactory to us and to the trustee. In the case of any coupon which is
destroyed, stolen or lost, that coupon will be replaced upon surrender to the
appropriate trustee of the debt security with all related coupons not
destroyed, stolen or lost by issuance of a new debt security in exchange for
the debt security to which that coupon relates. In the case of a destroyed,
lost or stolen debt security or coupon, an indemnity satisfactory to the
appropriate trustee and us may be required at the expense of the holder of the
debt security or coupon before a replacement debt security will be issued.

Defeasance

The indentures contain a provision that, if made applicable to any series of
debt securities, permits us to elect (a) to defease and be discharged from all
of our obligations (subject to limited exceptions) with respect to any series
of debt securities then outstanding, which we refer to below as "legal
defeasance", or (b) to be released from our obligations under certain
restrictive covenants (including those described above under "Senior
Securities--Certain Restrictive Covenants"), which we refer to below as
"covenant defeasance". To make either of the above elections, we must

. deposit in trust with the trustee (a) in the case of debt securities and
coupons denominated in U.S. dollars, U.S. government obligations and (b)
in the case of debt securities and coupons denominated in a foreign
currency, foreign government securities, which through the payment of
principal and interest in accordance with their terms will provide
sufficient money, U.S. government obligations and/or foreign government
obligations as necessary, without reinvestment, to repay in full those
debt securities; and

. deliver to the trustee an opinion of counsel that holders of the debt
securities will not recognize income, gain or loss for Federal income
tax purposes as a result of the deposit and related defeasance and will
be subject to Federal income tax in the same amount, in the same manner
and at the same times as would have been the case if such deposit and
related defeasance had not occurred (in the case of legal defeasance
only, such opinion of counsel to be based on a ruling of the Internal
Revenue Service or other change in applicable Federal income tax law.)

Certain Rights to Require Purchase of Securities by Ashland Upon Unapproved
Change in Control and Decline in Debt Rating

In the event that (a) there occurs any change in control (as defined below)
of Ashland and (b) the prevailing rating of any series of the debt securities
issued under the indentures on a date within 90 days following public notice of
the change in control is less than the rating on a specified earlier date by
the equivalent of at least one full rating category the following will apply.
Each holder of debt securities of that series will have the right, at the
holder's option, to require us to purchase all or any part of the holder's debt
securities on the repurchase date that is 100 days after the later of (1)
public notice of the change in control and (2) the rating decline, at 100% of
the principal amount on the repurchase date, plus accrued and unpaid interest
to the repurchase date. However, if the rating decline applies to less than all
series of the debt securities, the repurchase rights described above will apply
only to those series with respect to which there has been a rating decline.

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On or before the twenty-eighth day after the later of public notice of the
change in control and the decrease in the rating of the debt securities, we are
obligated to mail or cause to be mailed to all holders of record of the debt
securities a notice regarding the change in control, the decrease in the rating
of the debt securities and the repurchase right. The notice shall state the
date by which the repurchase right must be exercised, the applicable price for
the debt securities and the procedure which the holder must follow to exercise
this right. We shall cause a copy of such notice to be published in a newspaper
of general circulation in the Borough of Manhattan, The City of New York. To
exercise this right, the holder of a debt security must deliver on or before
the tenth day before the repurchase date written notice to us (or an agent
designated by us for that purpose) of the holder's exercise of the right,
together with the debt security with respect to which the right is being
exercised, duly endorsed for transfer. We will comply with Rules 13e-4 and 14e-
1 under the Securities Exchange Act of 1934 and any other applicable securities
laws in connection with any repurchase of debt securities.

As used in this prospectus, a "change in control" will be deemed to have
occurred when

. a "person" or "group" within the meaning of Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934 becomes the "beneficial owner",
as defined in Rule 13d-3 under the Act, of more than 50% of our
outstanding voting stock, other than through a transaction consummated
with the prior approval of the board of directors of Ashland, or

. during any period of two consecutive years, individuals who at the
beginning of that period and certain directors elected subsequently who
constitute the board of directors of Ashland cease for any reason to
constitute a majority of the directors then in office. Additional
directors who will be counted toward the majority include any director
whose election by the board of directors of Ashland or whose nomination
for election by our shareholders was approved by a vote of at least two-
thirds of the directors then still in office who either were directors
at the beginning of the two-year period or whose election or nomination
for election was previously approved.

In considering whether to approve a transaction which might otherwise
constitute a change in control, the board of directors of Ashland will be
required to consider the interests of our stockholders, employees and other
creditors which may not necessarily be consistent with the interests of holders
of debt securities. In considering whether to pursue a transaction which might
otherwise constitute a change in control, a potential acquiror will be required
to consider that, to the extent the repurchase right becomes exercisable and is
exercised by holders of debt securities of any series, sufficient funds must be
made available to make payment to these holders. We cannot presently predict
the source of those funds, but expect that the source would be determined in
the context of the overall consideration of this type of transaction.

Governing Law

The indentures, the debt securities and the coupons will be governed by, and
construed in accordance with, the laws of the State of New York.

The Trustee

Citibank, N.A. is trustee under the senior indenture and one other indenture
under which unsecured debt obligations of ours are outstanding. The trustee has
other customary banking relationships with us and our affiliates.

DESCRIPTION OF PREFERRED STOCK

General. Our Second Restated Articles of Incorporation, as amended,
authorize the board of directors of Ashland, without further shareholder
action, to provide for the issuance of up to 30,000,000 shares of preferred
stock, in one or more series, and to fix the designations, terms, and relative
rights and preferences, including

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the dividend rate, voting rights, conversion rights, redemption and sinking
fund provisions and liquidation values of each of these series. We may amend
from time to time our restated articles to increase the number of authorized
shares of preferred stock. Any amendment like this would require the approval
of the holders of two-thirds of the outstanding shares of all series of
preferred stock voting together as a single class without regard to series. As
of the date of this prospectus, we have no preferred stock outstanding. We have
500,000 shares designated as Series A Participating Cumulative Preferred Stock
reserved for issuance upon exercise of rights under the rights agreement
described below under "Preferred Stock Purchase Rights".

The particular terms of any series of preferred stock being offered by us
under this shelf registration will be described in the prospectus supplement
relating to that series of preferred stock. Those terms may include:

. the title and liquidation preference per share of the preferred stock
and the number of shares offered;

. the purchase price of the preferred stock;

. the dividend rate (or method of calculation), the dates on which
dividends will be paid and the date from which dividends will begin to
accumulate;

. any redemption or sinking fund provisions of the preferred stock;

. any conversion provisions of the preferred stock;

. the voting rights, if any, of the preferred stock; and

. any additional dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions of the
preferred stock.

If the terms of any series of preferred stock being offered differ from the
terms set forth in this prospectus, those terms will also be disclosed in the
prospectus supplement relating to that series of preferred stock. The summary
in this prospectus is not complete. You should refer to the articles of
amendment to the restated articles establishing a particular series of
preferred stock which will be filed with the Secretary of State of the
Commonwealth of Kentucky and the SEC in connection with the offering of the
preferred stock.

The preferred stock will, when issued, be fully paid and nonassessable.

Dividend Rights. The preferred stock will be preferred over the common stock
as to payment of dividends. Before any dividends or distributions (other than
dividends or distributions payable in common stock) on the common stock shall
be declared and set apart for payment or paid, the holders of shares of each
series of preferred stock will be entitled to receive dividends when, as and if
declared by the board of directors of Ashland. We will pay those dividends
either in cash, shares of common stock or preferred stock or otherwise, at the
rate and on the date or dates set forth in the prospectus supplement. With
respect to each series of preferred stock, the dividends on each share of the
series will be cumulative from the date of issue of the share unless some other
date is set forth in the prospectus supplement relating to the series. Accruals
of dividends will not bear interest.

Rights Upon Liquidation. The preferred stock will be preferred over the
common stock as to assets so that the holders of each series of preferred stock
will be entitled to be paid, upon our voluntary or involuntary liquidation,
dissolution or winding up and before any distribution is made to the holders of
common stock, the amount set forth in the applicable prospectus supplement.
However, in this case the holders of preferred stock will not be entitled to
any other or further payment. If upon any liquidation, dissolution or winding
up our net assets are insufficient to permit the payment in full of the
respective amounts to which the holders of all outstanding preferred stock are
entitled, our entire remaining net assets will be distributed among the holders
of each series of preferred stock in amounts proportional to the full amounts
to which the holders of each series are entitled.

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Redemption. All shares of any series of preferred stock will be redeemable
to the extent set forth in the prospectus supplement relating to the series.
All shares of any series of preferred stock will be convertible into shares of
common stock or into shares of any other series of preferred stock to the
extent set forth in the applicable prospectus supplement.

Voting Rights. Except as indicated in the prospectus supplement, the holders
of preferred stock shall be entitled to one vote for each share of preferred
stock held by them on all matters properly presented to shareholders. The
holders of common stock and the holders of all series of preferred stock will
vote together as one class.

Preferred Stock Purchase Rights. On May 16, 1996, we entered into a rights
agreement with Harris Trust and Savings Bank, as rights agent, which is a
shareholder rights plan providing for a dividend of one preferred stock
purchase right for each outstanding share of our common stock. We issued the
dividend to shareholders of record on the date of the adoption of the rights
agreement, and holders of shares of common stock issued since that date are
issued rights with their shares. The rights trade automatically with shares of
common stock and become exercisable only under certain circumstances as
described below. The rights are designed to protect the interests of Ashland
and our shareholders against coercive takeover tactics. The purpose of the
rights is to encourage potential acquirors to negotiate with the board of
directors of Ashland prior to attempting a takeover and to provide the board
with leverage in negotiating on behalf of all shareholders the terms of any
proposed takeover. The rights may have certain anti-takeover effects. The
rights should not, however, interfere with any merger or other business
combination approved by the board of directors of Ashland.

Until a right is exercised, the holder of a right will have no rights as an
Ashland shareholder, including, without limitation, the right to vote or to
receive dividends. Upon becoming exercisable, each right will entitle its
holder to purchase from us one one-thousandth of a share of Series A
Participating Cumulative Preferred Stock, without par value, at a purchase
price of $140 per right, subject to adjustment. In general, the rights will not
be exercisable until the earlier of (a) any time that we learn that a person or
group or an affiliate or associate of the person or group has acquired, or has
obtained the right to acquire, beneficial ownership of 15% or more of our
outstanding common stock, unless provisions preventing accidental triggering of
the rights apply and (b) the close of business on the date, if any, designated
by the board of directors of Ashland following the commencement of, or first
public disclosure of an intent to commence, a tender or exchange offer for 15%
or more of our outstanding common stock. Below we refer to the earlier of those
dates as the "distribution date" and the person or group acquiring at least 15%
of our common stock as an "acquiring person". You should assume that any of the
following provisions that refers to an acquiring person applies to any
associate or affiliate of the acquiring person as well.

In the event that, following the distribution date, we are acquired in a
merger or other business combination by a publicly traded acquiring person, or
50% or more of our assets or assets representing 50% or more of our revenues or
cash flow are sold, leased, exchanged or transferred in another manner to a
publicly traded acquiring person, each right will entitle its holder to
purchase, for the purchase price, that number of common shares of the
corporation which at the time of the transaction would have a market value of
twice the purchase price. In the event we are acquired in a merger or other
business combination by a non-publicly traded acquiring person, or 50% or more
of our assets or assets representing 50% or more of our revenues or cash flow
are sold, leased, exchanged or otherwise transferred to a non-publicly traded
acquiring person, each right will entitle its holder to purchase, for the
purchase price, at the holder's option:

. that number of shares of the surviving corporation (including us, if we
are the surviving corporation) in the transaction with the entity which
at the time of the transaction would have a book value of twice the
purchase price,

. that number of shares of the entity which at the time of the transaction
would have a book value of twice the purchase price or

. if the entity has an affiliate which has publicly traded common shares,
that number of common shares of the affiliate which at the time of the
transaction would have a market value of twice the purchase price.

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Any rights that are at any time beneficially owned by an acquiring person
will be null and void and nontransferable, and any holder of such right,
including any purported transferee or subsequent holder, will be unable to
exercise or transfer the right.

The rights will expire at the close of business on May 16, 2006, unless
redeemed before that time. At any time prior to the earlier of (a) the time a
person or group becomes an acquiring person and (b) the expiration date, the
board of directors of Ashland may redeem the rights in whole, but not in part,
at a price of $.01 per right. This amount is subject to adjustment as provided
in the rights agreement.

The preceding summary is not complete and is not intended to give full
effect to provisions of statutory or common law. You should refer to the
applicable provisions of the rights agreement and the form of right
certificate, which are incorporated by reference to Exhibits 4(a) and 4(c),
respectively, to our Form 8-A, filed with the SEC on May 16, 1996, into Exhibit
4.5 to the registration statement.

Certain Provisions of Ashland's Restated Articles. In the event of a
proposed merger or tender offer, proxy contest or other attempt to gain control
of us and not approved by the board of directors of Ashland, it would be
possible for the board of directors of Ashland to authorize the issuance of one
or more series of preferred stock with voting rights or other rights and
preferences which would impede the success of the proposed merger, tender
offer, proxy contest or other attempt to gain control of us. This authority may
be limited by applicable law, the restated articles and the applicable rules of
the stock exchanges upon which the common stock is listed. The consent of the
holders of common stock would not be required for any issuance of preferred
stock like this.

The restated articles incorporate in substance certain provisions of the
Kentucky Business Corporation Act to require certain approvals as a condition
to mergers and certain other business combinations involving us and the 10%
shareholder unless (a) the transaction is approved by a majority of our
continuing directors or (b) certain minimum price and procedural requirements
are met. Those approvals include the approval of the holders of at least 80% of
our voting stock, plus two-thirds of the voting stock other than voting stock
owned by a 10% shareholder. In addition, the Kentucky Business Corporation Act
includes a standstill provision which precludes a business combination from
occurring with a 10% shareholder, notwithstanding any vote of shareholders or
price paid, for a period of five years after the date that 10% shareholder
becomes a 10% shareholder, unless a majority of our independent directors
approves the combination before that date.

The restated articles also provide that

. the board of directors of Ashland is classified into three classes,

. a director may be removed from office without cause only by the
affirmative vote of the holders of at least 80% of the voting power of
our then outstanding voting stock,

. the board of directors of Ashland may adopt by-laws concerning the
conduct of, and matters considered at, meetings of shareholders,
including special meetings,

. the by-laws and certain provisions of the restated articles may be
amended only by the affirmative vote of the holders of at least 80% of
the voting power of our then outstanding voting stock and

. the by-laws may be adopted or amended by the board of directors of
Ashland. However, the by-laws adopted in this fashion may be amended or
repealed by affirmative vote of the holders of at least 80% of the
voting power of our then outstanding voting stock.

DESCRIPTION OF DEPOSITARY SHARES

General. We may, at our option, elect to offer fractional shares of
preferred stock, rather than full shares of preferred stock. If we exercise
this option, we will issue to the public receipts for depositary shares, and
each of these depositary shares will represent a fraction (to be set forth in
the applicable prospectus supplement) of a share of a particular series of
preferred stock.

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The shares of any series of preferred stock underlying the depositary shares
will be deposited under a deposit agreement between us and a bank or trust
company selected by us. The depositary will have its principal office in the
United States and a combined capital and surplus of at least $50,000,000.
Subject to the terms of the deposit agreement, each owner of a depositary share
will be entitled, in proportion to the applicable fraction of a share of
preferred stock underlying that depositary share, to all the rights and
preferences of the preferred stock underlying that depositary share. Those
rights include dividend, voting, redemption and liquidation rights.

The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock underlying
the depositary shares, in accordance with the terms of the offering. Copies of
the forms of deposit agreement and depositary receipt will be filed as exhibits
to the registration statement. The following summary of the deposit agreement,
the depositary shares and the depositary receipts is not complete. You should
refer to the forms of the deposit agreement and depositary receipts that will
be filed with the SEC in connection with the offering of the specific
depositary shares.

Pending the preparation of definitive engraved depositary receipts, the
depositary may, upon our written order, issue temporary depositary receipts
substantially identical to the definitive depositary receipts but not in
definitive form. These temporary depositary receipts entitle their holders to
all the rights of definitive depositary receipts which are to be prepared
without unreasonable delay. Temporary depositary receipts will then be
exchangeable for definitive depositary receipts at our expense.

Dividends and Other Distributions. The depositary will distribute all cash
dividends or other cash distributions received with respect to the preferred
stock to the record holders of depositary shares relating to the preferred
stock in proportion to the number of depositary shares owned by those holders.

If there is a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
that are entitled to receive the distribution, unless the depositary determines
that it is not feasible to make the distribution. If this occurs, the
depositary may, with our approval, sell the property and distribute the net
proceeds from the sale to the applicable holders.

Redemption of Depositary Shares. If a series of preferred stock represented
by depositary shares is subject to redemption, the depositary shares will be
redeemed from the proceeds received by the depositary resulting from the
redemption, in whole or in part, of that series of preferred stock held by the
depositary. The redemption price per depositary share will be equal to the
applicable fraction of the redemption price per share payable with respect to
that series of the preferred stock. Whenever we redeem shares of preferred
stock that are held by the depositary, the depositary will redeem, as of the
same redemption date, the number of depositary shares representing the shares
of preferred stock so redeemed. If fewer than all the depositary shares are to
be redeemed, the depositary shares to be redeemed will be selected by lot or
pro rata as may be determined by the depositary.

Voting the Preferred Stock. Upon receipt of notice of any meeting at which
the holders of the preferred stock are entitled to vote, the depositary will
mail the information contained in the notice to the record holders of the
depositary shares underlying the preferred stock. Each record holder of the
depositary shares on the record date (which will be the same date as the record
date for the preferred stock) will be entitled to instruct the depositary as to
the exercise of the voting rights pertaining to the amount of the preferred
stock represented by such holder's depositary shares. The depositary will then
try, as far as practicable, to vote the number of shares of preferred stock
underlying those depositary shares in accordance with such instructions, and we
will agree to take all actions which may be deemed necessary by the depositary
to enable the depositary to do so. The depositary will not vote the shares of
preferred stock to the extent it does not receive specific instructions from
the holders of depositary shares underlying the preferred stock.

22
<PAGE>

Amendment and Termination of the Depositary Agreement. The form of
depositary receipt evidencing the depositary shares and any provision of the
deposit agreement may at any time be amended by agreement between us and the
depositary. However, any amendment which materially and adversely alters the
rights of the holders of depositary shares will not be effective unless the
amendment has been approved by the holders of at least a majority of the
depositary shares then outstanding. The deposit agreement may be terminated by
us or by the depositary only if (a) all outstanding depositary shares have been
redeemed or (b) there has been a final distribution of the underlying preferred
stock in connection with our liquidation, dissolution or winding up and the
preferred stock has been distributed to the holders of depositary receipts.

Charges of Depositary. We will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. We will also pay charges of the depositary in connection with the
initial deposit of the preferred stock and any redemption of the preferred
stock. Holders of depositary receipts will pay other transfer and other taxes
and governmental charges and those other charges, including a fee for the
withdrawal of shares of preferred stock upon surrender of depositary receipts,
as are expressly provided in the deposit agreement to be for their accounts.

Miscellaneous. The depositary will forward to holders of depositary receipts
all reports and communications from us that we deliver to the depositary and
that we are required to furnish to the holders of the preferred stock.

Neither we nor the depositary will be liable if either of us is prevented or
delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agreement. Our obligations and those
of the depositary will be limited to performance in good faith of our
respective duties under the deposit agreement. Neither we nor they will be
obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or preferred stock unless satisfactory indemnity is
furnished. We and the depositary may rely upon written advice of counsel or
accountants, or upon information provided by persons presenting preferred stock
for deposit, holders of depositary receipts or other persons believed to be
competent and on documents believed to be genuine.

Resignation and Removal of Depositary. The depositary may resign at any time
by delivering notice to us of its election to resign. We may remove the
depositary at any time. Any resignation or removal will take effect upon the
appointment of a successor depositary and its acceptance of the appointment.
The successor depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.

DESCRIPTION OF COMMON STOCK

As of the date of this prospectus, we are authorized to issue up to
300,000,000 shares of common stock. As of April 30, 2000, we had 70,574,938
shares of common stock issued and had reserved 12,749,550 additional shares of
common stock for issuance under our various stock and compensation incentive
plans.

The following summary is not complete and is not intended to give full
effect to provisions of statutory or common law. You should refer to the
applicable provisions of the following documents:

. the restated articles, which are incorporated by reference to Exhibit 3
to our Form 10-Q for the quarter ended December 31, 1997, and

. the by-laws, as amended, which are incorporated by reference to Exhibit
3.2 to our Form 10-Q for the quarter ended December 31, 1999.

Dividends. The holders of common stock are entitled to receive dividends
when, as and if declared by the board of directors of Ashland, out of funds
legally available for their payment subject to the rights of holders of the
preferred stock subject to the rights of holders of preferred stock.

23
<PAGE>

Voting Rights. The holders of common stock are entitled to one vote per
share on all matters submitted to a vote of shareholders. The holders of common
stock also possess cumulative voting rights. Under cumulative voting, a
shareholder may multiply the number of shares owned by the number of directors
to be elected and either cast this total number of votes for any one nominee or
distribute the total number of votes, in any proportion, among as many nominees
as the shareholder desires.

Rights Upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share equally in any of our assets available for distribution after
the payment in full of all debts and distributions and after the holders of all
series of outstanding preferred stock have received their liquidation
preferences in full.

Miscellaneous. The outstanding shares of common stock are fully paid and
nonassessable. The holders of common stock are not entitled to preemptive or
redemption rights. Shares of common stock are not convertible into shares of
any other class of capital stock. Harris Trust and Savings Bank, Chicago,
Illinois, is the transfer agent and registrar for the common stock.

DESCRIPTION OF SECURITIES WARRANTS

We may issue securities warrants for the purchase of debt securities,
preferred stock or common stock. Securities warrants may be issued
independently or together with debt securities, preferred stock or common stock
and may be attached to or separate from any offered securities. Each series of
securities warrants will be issued under a separate warrant agreement to be
entered into between us and a bank or trust company, as warrant agent. The
securities warrant agent will act solely as our agent in connection with the
securities warrants and will not assume any obligation or relationship of
agency or trust for or with any registered holders of securities warrants or
beneficial owners of securities warrants. This summary of some provisions of
the securities warrants is not complete. You should refer to the securities
warrant agreement, including the forms of securities warrant certificate
representing the securities warrants, relating to the specific securities
warrants being offered for the complete terms of the securities warrant
agreement and the securities warrants. That securities warrant agreement,
together with the terms of securities warrant certificate and securities
warrants, will be filed with the SEC in connection with the offering of the
specific securities warrants.

The particular terms of any issue of securities warrants will be described
in the prospectus supplement relating to the issue. Those terms may include:

. the designation, aggregate principal amount, currencies, denominations
and terms of the series of debt securities purchasable upon exercise of
securities warrants to purchase debt securities and the price at which
the debt securities may be purchased upon exercise;

. the designation, number of shares, stated value and terms (including,
without limitation, liquidation, dividend, conversion and voting rights)
of the series of preferred stock purchasable upon exercise of securities
warrants to purchase shares of preferred stock and the price at which
such number of shares of preferred stock of such series may be purchased
upon such exercise;

. the number of shares of common stock purchasable upon the exercise of
securities warrants to purchase shares of common stock and the price at
which such number of shares of common stock may be purchased upon such
exercise;

. the date on which the right to exercise the securities warrants will
commence and the date on which the right will expire;

. United States Federal income tax consequences applicable to the
securities warrants; and

. any other terms of the securities warrants.

24
<PAGE>

Securities warrants for the purchase of preferred stock and common stock
will be offered and exercisable for U.S. dollars only. Securities warrants will
be issued in registered form only. The exercise price for securities warrants
will be subject to adjustment in accordance with the applicable prospectus
supplement.

Each securities warrant will entitle its holder to purchase the principal
amount of debt securities or the number of shares of preferred stock or common
stock at the exercise price set forth in, or calculable as set forth in, the
applicable prospectus supplement. The exercise price may be adjusted upon the
occurrence of certain events as set forth in the prospectus supplement. After
the close of business on the expiration date, unexercised securities warrants
will become void. We will specify the place or places where, and the manner in
which, securities warrants may be exercised in the applicable prospectus
supplement.

Prior to the exercise of any securities warrants to purchase debt
securities, preferred stock or common stock, holders of the securities warrants
will not have any of the rights of holders of the debt securities, preferred
stock or common stock purchasable upon exercise, including:

. in the case of securities warrants for the purchase of debt securities,
the right to receive payments of principal of, any premium or interest
on the debt securities purchasable upon exercise or to enforce covenants
in the applicable indenture; or

. in the case of securities warrants for the purchase of preferred stock
or common stock, the right to vote or to receive any payments of
dividends on the preferred stock or common stock purchasable upon
exercise.

PLAN OF DISTRIBUTION

We may sell the debt securities, preferred stock, depositary shares, common
stock or securities warrants (together referred to as the "offered securities")
(a) through underwriters or dealers; (b) directly to one or a limited number of
institutional purchasers; or (c) through agents. This prospectus or the
applicable prospectus supplement will set forth the terms of the offering of
any offered securities, including the name or names of any underwriters,
dealers or agents, the price of the offered securities and the net proceeds to
us from such sale, any underwriting commissions or other items constituting
underwriters' compensation.

If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. The offered securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or directly by one
or more investment banking firms or others, as designated. Unless otherwise set
forth in the applicable prospectus supplement, the obligations of the
underwriters or agents to purchase the offered securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all the offered securities if any are purchased. Any initial public offering
price and any underwriting commissions or other items constituting
underwriters' compensation may be changed from time to time.

If a dealer is utilized in the sale of any offered securities, we will sell
those offered securities to the dealer, as principal. The dealer may then
resell the offered securities to the public at varying prices to be determined
by the dealer at the time of resale.

We may sell offered securities directly to one or more institutional
purchasers, or through agents at a fixed price or prices, which may be changed,
or at varying prices determined at time of sale. Unless otherwise indicated in
the prospectus supplement, any agent will be acting on a best efforts basis for
the period of its appointment.

If an applicable prospectus supplement indicates, we will authorize agents,
underwriters or dealers to solicit offers by certain specified institutions to
purchase offered securities from us at the public offering price

25
<PAGE>

set forth in the prospectus supplement under delayed delivery contracts
providing for payment and delivery on a specified date in the future. These
contracts will be subject only to those conditions set forth in the prospectus
supplement, and the prospectus supplement will set forth the commission payable
for solicitation of the contracts.

Under agreements entered into with us, agents and underwriters who
participate in the distribution of the offered securities may be entitled to
indemnification by us against certain civil liabilities, including liabilities
under the Securities Act of 1933, or to contribution with respect to payments
which the agents or underwriters may be required to make. Agents and
underwriters may be customers of, engage in transactions with or perform
services for us in the ordinary course of business.

LEGAL MATTERS

The validity of the issuance of the offered securities will be passed upon
for us by Cravath, Swaine & Moore, New York, New York, who will rely as to
matters of Kentucky law upon the opinion of David L. Hausrath, Esq., our Vice
President and General Counsel. Cravath, Swaine & Moore has in the past
represented and continues to represent us in other matters on a regular basis.
Samuel C. Butler is a director of ours and a partner in the law firm of
Cravath, Swaine & Moore and owns beneficially 69,793 shares of our common stock
(includes common stock units held in our deferred compensation plan). David L.
Hausrath owns beneficially 25,625 shares of our common stock (includes common
stock units held in our deferred compensation plan).

EXPERTS

The consolidated financial statements and schedule of Ashland Inc.
incorporated by reference or included in Ashland Inc.'s Annual Report (Form 10-
K) for the year ended September 30, 1999, and the consolidated financial
statements and schedule of Arch Coal, Inc. included in Ashland Inc.'s Annual
Report Amendment No. 1 (Form 10K/A) for the year ended September 30, 1999, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon included therein and incorporated herein by reference. Such
consolidated financial statements and schedules have been incorporated herein
by reference in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing. The consolidated financial
statements of MAP, included in Ashland Inc.'s Annual Report Amendment No. 1
(Form 10K/A) for the year ended September 30, 1999, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements have been incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

26
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:

<TABLE>
<S> <C>
Filing Fee for Registration Statement.............................. $ 66,396
Legal Fees and Expenses............................................ 75,000
Accounting Fees and Expenses....................................... 30,000
Trustee's Fees and Expenses........................................ 25,000
Printing and Engraving Fees........................................ 25,000
Miscellaneous...................................................... 15,000
--------
Total............................................................ $236,396
========
</TABLE>

All of the above amounts, other than the Commission filing fee, are
estimates only.

Item 15. Indemnification of Directors and Officers.

Sections 271B.8-500 through 580 of the Kentucky Business Corporation Act
contain detailed provisions for indemnification of directors and officers of
Kentucky corporations against judgments, penalties, fines, settlements and
reasonable expenses in connection with litigation. Under Kentucky law, the
provisions of a company's articles and by-laws may govern the indemnification
of officers and directors in lieu of the indemnification provided for by
statute. The Registrant has elected to indemnify its officers and directors
pursuant to its Restated Articles, its By-laws and by contract rather than to
have such indemnification governed by the statutory provisions.

Article X of the Restated Articles permits, but does not require, the
Registrant to indemnify its directors, officers and employees to the fullest
extent permitted by law. The Registrant's By-laws require indemnification of
officers and employees of the Registrant and its subsidiaries under certain
circumstances. The Registrant has entered into indemnification contracts with
each of its directors that require indemnification to the fullest extent
permitted by law, subject to certain exceptions and limitations.

The Registrant has purchased insurance which insures (subject to certain
terms and conditions, exclusions and deductibles) the Registrant against
certain costs which it might be required to pay by way of indemnification to
its directors or officers under its Restated Articles or By-laws,
indemnification agreements or otherwise and protects individual directors and
officers from certain losses for which they might not be indemnified by the
Registrant. In addition, the Registrant has purchased insurance which provides
liability coverage (subject to certain terms and conditions, exclusions and
deductibles) for amounts which the Registrant, or the fiduciaries under its
employee benefit plans, which may include its directors, officers and
employees, might be required to pay as a result of a breach of fiduciary duty.

Item 16. Exhibits.

The following Exhibits are filed as part of this Registration Statement:

<TABLE>
<C> <S>
**1.1 --Form of Underwriting Agreement.

*1.2 --Form of Distribution Agreement.

3.1 --Second Restated Articles of Incorporation of the Company, as amended
effective January 30, 1998 (incorporated by reference to Exhibit 3.2
to Registrant's Form 10-Q for the quarter ended December 31, 1997).

3.2 --By-laws of the Company, as amended effective January 26, 2000
(incorporated by reference to Exhibit 3 to Registrant's Form 10-Q for
the quarter ended December 31, 1999).
</TABLE>

II-1
<PAGE>

<TABLE>
<C> <S>
4.1 --Indenture, dated as of August 15, 1989 as amended and restated as of
August 15, 1990 between the Company and Citibank, N.A., as Trustee
(incorporated by reference to Exhibit 4(a) to Registration Statement
No. 33-39359, filed with the Commission on March 11, 1991).

4.2 --Form of Senior Security (incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-39359, filed with the Commission on
March 11, 1991).

4.3 --Form of Indenture for Subordinated Securities (incorporated by
reference to Exhibit 4.3 to Registration Statement No. 33-57011, filed
with the Commission on December 22, 1994).

4.4 --Form of Subordinated Security (incorporated by reference to Exhibit
4.4 to Registration Statement No. 33-57011, filed with the Commission
on December 22, 1994).

4.5 --Rights Agreement dated as of May 16, 1996, between the Company and
Harris Trust and Savings Bank, together with Form of Right
Certificate, as amended (incorporated by reference to Exhibits 4(a)
and 4(c), respectively, to Registrant's Form 8-A, filed with the
Commission on May 16, 1996).

**4.6 --Form of Warrant Agreement for Debt Securities.

**4.7 --Form of Warrant Certificate for Debt Securities.

**4.8 --Form of Warrant Agreement for Preferred Stock.

**4.9 --Form of Warrant Certificate for Preferred Stock.

**4.10 --Form of Warrant Agreement for Common Stock.

**4.11 --Form of Warrant Certificate for Common Stock.

**4.12 --Form of Deposit Agreement for Depositary Shares.

**4.13 --Form of Depositary Receipt.

*4.14 --Form of Certificate of Common Stock, par value $1.00 per share, of
the Company.

4.15 --Form of Debt Securities (Certificated Medium-Term Note, Series H,
Fixed Rate) (incorporated by reference to Exhibit 4.15 to Post-
Effective Amendment No. 2 to Registration Statement No. 33-57011,
filed with the Commission on December 18, 1996).

4.16 --Form of Debt Securities (Certificated Medium-Term Note, Series H,
Floating Rate)
(incorporated by reference to Exhibit 4.16 to Amendment No. 1 to
Registration Statement No. 333-70651, filed with the Commission on
January 21, 1999).

4.17 --Form of Debt Securities (Book-Entry Medium-Term Note, Series H, Fixed
Rate) (incorporated by reference to Exhibit 4.17 to Post-Effective
Amendment No. 2 to Registration Statement No. 33-57011, filed with the
Commission on December 18, 1996).

4.18 --Form of Debt Securities (Book-Entry Medium-Term Note, Series H,
Floating Rate). (incorporated by reference to Exhibit 4.18 to
Amendment No. 1 to Registration Statement No. 333-70651, filed with
the Commission on January 21, 1999).

*5 --Opinion of David L. Hausrath, Esq.

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

*23.1 --Consent of Ernst & Young LLP.

*23.2 --Consent of PricewaterhouseCoopers LLP.

*23.3 --Consent of David L. Hausrath, Esq. (included as part of Exhibit 5).

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

*25 --Form T-1 Statement of Eligibility and Qualification of Trustee under
the Trust Indenture Act of 1939 for Citibank, N.A.
</TABLE>
- ---------------------
* Filed herewith.
** To be filed.

II-2
<PAGE>

Item 17. Undertakings.

(A) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement and

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.

Provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(B) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(C) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy, as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

II-3
<PAGE>

(D) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(E) The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all the requirements
for filing on Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Covington, Commonwealth of Kentucky, on May 12, 2000.

Ashland Inc.,

/s/ David L. Hausrath
By: _________________________________
David L. Hausrath
Vice President and General
Counsel

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities
indicated on the 12th day of May, 2000.

<TABLE>
<CAPTION>
Signature Title
--------- -----

<S> <C>
* Chairman of the Board and Chief Executive
___________________________________________ Officer (Principal Executive Officer)
Paul W. Chellgren

* Senior Vice President and Chief Financial
___________________________________________ Officer (Principal Financial Officer)
J. Marvin Quin

* Administrative Vice President and
___________________________________________ Controller (Principal Accounting Officer)
Kenneth L. Aulen

* Director
___________________________________________
Samuel C. Butler

* Director
___________________________________________
Frank C. Carlucci

* Director
___________________________________________
Ernest H. Drew

* Director
___________________________________________
James B. Farley

* Director
___________________________________________
Bernadine P. Healy

* Director
___________________________________________
Mannie L. Jackson

* Director
___________________________________________
Patrick F. Noonan
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
Signature Title
--------- -----

<S> <C>
* Director
___________________________________________
Jane C. Pfeiffer

* Director
___________________________________________
William L. Rouse, Jr.

* Director
___________________________________________
Theodore M. Solso

/s/ David L. Hausrath
*By: ______________________________________
David L. Hausrath
Attorney-in-fact
</TABLE>
- ---------------------
* Original powers of attorney authorizing, Paul W. Chellgren, David L. Hausrath
and Linda L. Foss and each of them to sign the Registration Statement and
amendments thereto on behalf of the above-mentioned directors and officers of
the Registrant have been filed with the Commission as Exhibit 24 to the
Registration Statement.

II-6
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
**1.1 --Form of Underwriting Agreement.

*1.2 --Form of Distribution Agreement.

3.1 --Second Restated Articles of Incorporation of the Company, as
amended effective January 30, 1998 (incorporated by reference to
Exhibit 3.2 to Registrant's Form 10-Q for the quarter ended
December 31, 1997).

3.2 --By-laws of the Company, as amended effective January 26, 2000
(incorporated by reference to Exhibit 3 to Registrant's Form 10-Q
for the quarter ended December 31, 1999).

4.1 --Indenture, dated as of August 15, 1989 as amended and restated
as of August 15, 1990 between the Company and Citibank, N.A., as
Trustee (incorporated by reference to Exhibit 4(a) to
Registration Statement No. 33-39359, filed with the Commission on
March 11, 1991).

4.2 --Form of Senior Security (incorporated by reference to Exhibit
4(a) to Registration Statement No. 33-39359, filed with the
Commission on March 11, 1991).

4.3 --Form of Indenture for Subordinated Securities (incorporated by
reference to Exhibit 4.3 to Registration Statement No. 33-57011,
filed with the Commission on December 22, 1994).

4.4 --Form of Subordinated Security (incorporated by reference to
Exhibit 4.4 to Registration Statement No. 33-57011, filed with
the Commission on December 22, 1994).

4.5 --Rights Agreement dated as of May 16, 1996, between the Company
and Harris Trust and Savings Bank, together with Form of Right
Certificate, as amended (incorporated by reference to Exhibits
4(a) and 4(c), respectively, to Registrant's Form 8-A, filed with
the Commission on May 16, 1996).

**4.6 --Form of Warrant Agreement for Debt Securities.

**4.7 --Form of Warrant Certificate for Debt Securities.

**4.8 --Form of Warrant Agreement for Preferred Stock.

**4.9 --Form of Warrant Certificate for Preferred Stock.

**4.10 --Form of Warrant Agreement for Common Stock.

**4.11 --Form of Warrant Certificate for Common Stock.

**4.12 --Form of Deposit Agreement for Depositary Shares.

**4.13 --Form of Depositary Receipt.

*4.14 --Form of Certificate of Common Stock, par value $1.00 per share,
of the Company.

4.15 --Form of Debt Securities (Certificated Medium-Term Note, Series
H, Fixed Rate) (incorporated by reference to Exhibit 4.15 to
Post-Effective Amendment No. 2 to Registration Statement No. 33-
57011, filed with the Commission on December 18, 1996).

4.16 --Form of Debt Securities (Certificated Medium-Term Note, Series
H, Floating Rate) (incorporated by reference to Exhibit 4.16 to
Amendment No. 1 to Registration Statement No. 333-70651, filed
with the commission on January 21, 1999).

4.17 --Form of Debt Securities (Book-Entry Medium-Term Note, Series H,
Fixed Rate) (incorporated by reference to Exhibit 4.17 to Post-
Effective Amendment No. 2 to Registration Statement No. 33-57011,
filed with the Commission on December 18, 1996).

*5 --Opinion of David L. Hausrath, Esq.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
*12 --Computation of Ratios of Earnings to Fixed Charges and Earnings
to Combined Fixed Charges and Preferred Stock Dividends.

*23.1 --Consent of Ernst & Young LLP.

*23.2 --Consent of PricewaterhouseCoopers LLP.

*23.3 --Consent of David L. Hausrath, Esq. (included as part of Exhibit
5).
*24 --Power of Attorney, including resolutions of the Board of
Directors.
*25 --Form T-1 Statement of Eligibility and Qualification of Trustee
under the Trust Indenture Act of 1939 for Citibank, N.A.
</TABLE>
- ---------------------
* Filed herewith.
** To be filed.

<PAGE>

Exhibit 1.2

U.S. $300,000,000
MULTIPLE CURRENCY
MEDIUM-TERM NOTES, SERIES J
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE

ASHLAND INC.
DISTRIBUTION AGREEMENT

May __, 2000
New York, New York

Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629

Salomon Smith Barney Inc.
388 Greenwich Street
New York, N.Y. 10013

Chase Securities Inc.
270 Park Avenue
New York, N.Y. 10017

Ladies and Gentlemen:

Ashland Inc., a Kentucky corporation (the "Company"), confirms its
agreement with you with respect to the issue and sale by the Company of up to
$300,000,000 aggregate principal amount of its Medium-Term Notes, Series J, Due
Nine Months or More from Date of Issue (the "Notes"). The Notes will have the
interest rates, maturities, redemption provisions and other terms as set forth
in a pricing supplement ("Pricing Supplement") to the Prospectus referred to
below. The Notes will be issued under an Indenture dated as of August 15, 1989,
as amended and restated as of August 15, 1990 (the "Indenture"), between the
Company and Citibank, N.A., as trustee (the "Trustee"). The Notes will be
issued, and the terms thereof established, in accordance with the Indenture and,
in the case of Notes sold pursuant to Section 1(a), the Medium-Term Notes
Administrative Procedures attached hereto as Annex A (the "Procedures"). For the
purposes of this Agreement, the term "Agents" shall refer to any or all of you
(and any other person appointed by the Company in accordance with Section 1(a))
acting solely in the capacity as agent for the Company pursuant to Section 1(a)
and not as principal, the term "Purchasers" shall refer to any or all of you
acting solely as principal pursuant to Section 1(g) and not as agent, the term
"you" shall
<PAGE>

refer to you acting in both such capacities or in either such capacity and the
term "Closing Date" shall mean the date of delivery of any Notes sold hereunder,
whether to purchasers solicited by you as agents or to you as principal. The
term "Terms Agreement" is defined in Section 1(g). Other terms are defined in
Section 3.

1. Appointment of Agent; Solicitation by the Agent of Offers to Purchase;
Sales of Notes to a Purchaser. (a) Subject to the terms and conditions set forth
herein, the Company hereby appoints the Agents to act as its agents for the
purpose of soliciting offers to purchase all or part of the Notes from the
Company upon the terms set forth in the Prospectus, as amended or supplemented
from time to time, and in the Procedures. The Company shall have the right to
appoint additional persons to act as its agents for such purposes upon three
days prior notice to the Agents then acting hereunder so long as any such
additional persons become parties to this Agreement upon the same terms and
conditions as shall then be applicable to such Agents. So long as this Agreement
shall remain in effect with respect to any Agents, the Company shall not,
without the consent of such Agents, solicit offers to purchase Notes otherwise
than through one of such Agents, except as contemplated by Section 1(g) hereof
and except that nothing contained herein shall be construed to prevent the
Company from selling Notes at any time (x) in a firm commitment underwriting
pursuant to an underwriting agreement which does not provide for a continuous
offering of such Notes or (y) directly to investors other than the Purchasers,
and no commission shall be payable to the Agents with respect to any such sales.
The Company also reserves the right to sell Notes through agents other than
pursuant to this Agreement where offers to purchase are received through such
agents on an unsolicited basis. Settlement of such sales will be on
substantially the same terms and conditions as are contained herein, including
commissions.

(b) On the basis of the representations and warranties set forth herein,
but subject to the terms and conditions set forth herein, each Agent agrees to
use its reasonable efforts, as agent of the Company, to solicit offers to
purchase Notes from the Company upon the terms set forth in the Prospectus, as
amended or supplemented from time to time, and in the Procedures. Subject to the
provisions of Section 1(c) and to the Procedures, offers for the purchase of
Notes may be solicited at such times and in such amounts as each Agent may from
time to time deem advisable.

(c) The Company reserves the right, in its sole discretion, to suspend
solicitation of offers to purchase Notes from the Company at any time for any
period of time or permanently. Upon receipt of at least one business day's prior
notice from the Company, the Agents forthwith will suspend their solicitation of

2
<PAGE>

offers to purchase Notes from the Company until such time as the Company has
advised the Agents that such solicitation may be resumed.

(d) Each Agent will communicate to the Company, orally or in writing, each
offer to purchase Notes from the Company that is received by such Agent as agent
of the Company and that is not rejected by such Agent as provided below. The
Company will have the sole right to accept offers to purchase Notes from the
Company and may reject any such offer, in whole or in part, for any reason. Each
Agent may, without notice to the Company, in its discretion reasonably
exercised, reject any offer to purchase Notes from the Company that is received
by such Agent, in whole or in part, and any such rejection shall not be deemed a
breach of such Agent's agreements contained herein.

(e) The Company agrees to pay each Agent a commission, on the Closing Date
with respect to each sale of Notes by the Company as a result of a solicitation
made by such Agent, in an amount equal to that percentage specified in Schedule
I hereto of the aggregate principal amount of each Note sold by the Company.
Such commission shall be payable as specified in the Procedures. The commission
rates may be amended from time to time by written agreement of the Company and
the Agents. The Terms Agreement may specify any concessions allowed or reallowed
or paid to dealers.

(f) Each of you agrees, with respect to any Note denominated in a currency
other than U.S. dollars, as agent, directly or indirectly, not to solicit offers
to purchase, and as principal under any Terms Agreement or otherwise, directly
or indirectly, not to offer, sell or deliver, such Note in, or to residents of,
the country issuing such currency (or, if such Note is denominated in a
composite currency, in any country issuing a currency comprising a portion of
such composite currency), except as permitted by applicable law.

(g) Subject to the terms and conditions stated herein, whenever the Company
and you determine that the Company shall sell Notes directly to any or all of
you acting as principal (the "Purchaser"), each such sale of Notes shall be made
in accordance with the terms of this Agreement and any supplemental agreement
relating thereto between the Company and the Purchaser. Each such supplemental
agreement (which shall be in the form of Annex B or such other form as may be
agreed upon by the Company and the Purchaser) is herein referred to as a "Terms
Agreement". The Purchaser's commitment to purchase Notes pursuant to any Terms
Agreement shall be deemed to have been made on the basis of the representations
and warranties of the Company herein contained and shall be subject to the terms
and conditions herein set forth. Each Terms Agreement shall describe the Notes
to be purchased by the Purchaser pursuant thereto, specify the maturity and
principal amount of such Notes, the price to be paid to the

3
<PAGE>

Company for such Notes, the rate at which interest will be paid on the Notes,
the Closing Date for such Notes, the place of delivery of the Notes and payment
therefor, the method of payment and any modification of the requirements for the
delivery of the opinions of counsel, the certificates from the Company or its
officers, and the letter from the Company's independent public accountants,
pursuant to Section 7(c). Such Terms Agreement shall also specify the period of
time referred to in Section 5(l). The Terms Agreement may specify the terms upon
which any Agent may resell any Notes to other dealers.

Delivery of the certificates if the Notes are certificated, or entry into
the books of the Depository Trust Company if the Notes are book-entry Notes, for
Notes sold to the Purchaser pursuant to any Terms Agreement shall be made as
agreed to between the Company and the Purchaser as set forth in the respective
Terms Agreement, not later than the Closing Date set forth in such Terms
Agreement, against payment of funds to the Company in the amount due to the
Company for such Notes by the method and in the form set forth in the respective
Terms Agreement.

2. Offering Procedures. The Procedures may be amended only by written
agreement of the Company and the Agents after notice to the Trustee, and, to the
extent any such amendment materially affects the Trustee, with the approval of
the Trustee. The Company and the Agents agree to perform the respective duties
and obligations specifically provided to be performed by them in the Procedures.
The Company will furnish to the Trustee a copy of the Procedures as from time to
time in effect.

3. Registration Statement and Prospectus. The Company has filed with the
Securities and Exchange Commission (the "Commission"), pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations adopted by the Commission thereunder (the "Rules"), a
registration statement on Form S-3 (No. 333-________) (the "Registration
Statement") relating to $600,000,000 aggregate principal amount of securities,
including debt securities (the "Securities") of the Company registered under the
Securities Act. The Company has filed or will file with the Commission pursuant
to the applicable paragraph of Rule 424(b) under the Securities Act, a
supplement to the form of prospectus included in the Registration Statement
relating to the Notes and the plan of distribution thereof (the "Prospectus
Supplement"). In connection with the sale of the Notes, the Company proposes to
file with the Commission pursuant to the applicable paragraph of Rule 424(b)
under the Securities Act further supplements to the Prospectus Supplement
specifying the interest rates, maturity dates, redemption provisions and other
similar terms of the Notes sold pursuant hereto or the offering thereof. The
Indenture has been qualified under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture

4
<PAGE>

Act"). The term "Effective Date" shall mean each date that the Registration
Statement and any post-effective amendment thereto became effective. "Basic
Prospectus" shall mean the form of basic prospectus dated May __, 2000 relating
to the Securities contained in the Registration Statement. The term "Prospectus"
means the Basic Prospectus as supplemented by the Prospectus Supplement. Any
reference herein to the Registration Statement, the Basic Prospectus, the
Prospectus Supplement or the Prospectus includes the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 (the "Incorporated Documents")
which were or will be filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), on or before the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus, the Prospectus
Supplement or the Prospectus, as the case may be, and any reference herein to
"amend", "amendment" or "supplement" with respect to the Registration Statement,
the Basic Prospectus, the Prospectus Supplement or the Prospectus includes the
Incorporated Documents filed under the Exchange Act after the Effective Date of
the Registration Statement or the issue date of the Basic Prospectus, the
Prospectus Supplement or the Prospectus, as the case may be.

The Company confirms that you are authorized to distribute the Prospectus
and any amendments or supplements thereto.

4. Representations and Warranties. The Company represents and warrants to
you as follows:

(a) The Company meets the requirements for the use of Form S-3 under the
Securities Act. The Registration Statement meets the requirements set forth in
Rule 415(a)(1)(x) of the Rules and complies in all other material respects with
Rule 415 of the Rules.

(b) As of the date hereof, when any amendment to the Registration Statement
becomes effective, when any document incorporated by reference in the
Registration Statement is filed with the Commission, when any amendment or
supplement to the Prospectus is filed with the Commission pursuant to Rule 424
of the Rules, as of the date of any Terms Agreement and on any Closing Date, (i)
the Registration Statement, as amended as of any such time, the Prospectus, as
amended or supplemented as of any such time, and the Incorporated Documents will
comply in all material respects with the applicable requirements of the
Securities Act and the Rules, and the Exchange Act and the Trust Indenture Act
and the respective published rules and regulations adopted by the Commission
thereunder, (ii) the Registration Statement, as amended as of any such time, did
not or will not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading, and (iii) the Prospectus, as supplemented
as of

5
<PAGE>

any such time, will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
except that this representation and warranty does not apply to (x) statements or
omissions made in reliance on and in conformity with information relating to you
furnished in writing to the Company by you expressly for use in the Registration
Statement, the Prospectus or any amendment or supplement thereto or (y) that
part of the Registration Statement consisting of the Statement of Eligibility
and Qualification on Form T-1 of the Trustee under the Trust Indenture Act,
except statements or omissions in such Statement made in reliance upon
information furnished in writing to the Trustee by or on behalf of the Company
for use therein.

5. Agreements. (a) Prior to the termination of the offering of the Notes
under this Agreement, the Company will not file any amendment or supplement to
the Registration Statement or the Prospectus (except for a supplement relating
to an offering of Securities other than the Notes and filings with the
Commission pursuant to the Exchange Act) unless a copy thereof has been
submitted to you a reasonable period of time before its filing and you have not
reasonably objected thereto within a reasonable period of time after receiving
such copy. Subject to the foregoing sentence, the Company will cause each
amendment or supplement to the Prospectus to be filed with the Commission as
required pursuant to the applicable paragraph of Rule 424(b) of the Rules or, in
the case of any document to be incorporated therein by reference, to be filed
with the Commission as required pursuant to the Exchange Act, within the time
period prescribed.

(b) The Company will advise you promptly (i) when each amendment or
supplement to the Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) of the Rules or, in the case of any document incorporated therein
by reference, when such document shall have been filed with the Commission
pursuant to the Exchange Act, (ii) when, prior to the termination of the
offering of the Notes, any amendment to the Registration Statement shall have
been filed or become effective, (iii) of the initiation or threatening of any
proceedings for, or receipt by the Company of any notice with respect to, the
suspension of the qualification of the Notes for sale in any jurisdiction or the
issuance of any order by the Commission suspending the effectiveness of the
Registration Statement, and (iv) of the receipt by the Company or any
representative or attorney of the Company of any other communication from the
Commission relating to the Registration Statement, the Prospectus or any
amendment or supplement thereto or to the transactions contemplated by this
Agreement. The Company will use reasonable efforts to prevent the issuance of an
order suspending the effectiveness of the Registration Statement and, if any
such order is issued, to obtain its lifting as soon as possible.

6
<PAGE>

(c) The Company will deliver to you, without charge, three signed copies of
the Registration Statement and each post-effective amendment thereto (including
all exhibits filed with any such document) and as many conformed copies of the
Registration Statement and each such amendment (excluding exhibits) and the
Indenture as you may reasonably request.

(d) During any Marketing Time, when a prospectus is required by law to be
delivered by you, the Company will deliver, without charge, to you, at such
office or offices as you may designate, as many copies of the Prospectus or any
amendment or supplement thereto as you may reasonably request, and, if any event
occurs during such period as a result of which the Prospectus, as then amended
or supplemented, would include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
during such period it is necessary to amend the Registration Statement or to
amend or supplement the Prospectus to comply with the Securities Act or the
Rules or the Exchange Act or the published rules and regulations adopted by the
Commission thereunder, the Company promptly will (y) notify you to suspend
solicitation of offers to purchase Notes from the Company and (z) prepare and
file with the Commission, subject to Section 5(a), and deliver, without charge,
to you, an amendment or supplement which will correct such statement or omission
or effect such compliance, and supply any supplemented Prospectus to you in such
quantities as you may reasonably request. "Marketing Time" means any time when
(i) no suspension of solicitation of offers to purchase Notes pursuant to
Section 1(c) shall be in effect, (ii) you shall own any Notes with the intention
of reselling them or (iii) the Company has accepted an offer to purchase Notes
but the related settlement has not occurred.

(e) The Company will make generally available to its security holders as
soon as practicable, but in any event not later than 15 months after (i) the
Effective Date of the Registration Statement, (ii) the Effective Date of each
post-effective amendment to the Registration Statement, and (iii) the date of
each filing by the Company with the Commission of an Annual Report on Form 10-K
that is incorporated by reference in the Registration Statement, an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 of the Rules.

(f) The Company will take such actions as you may reasonably designate in
order to qualify the Notes for offer and sale under the securities or "blue sky"
laws of such jurisdictions as you designate, will maintain such qualification in
effect for so long as may be required for the distribution of the Notes and will
arrange for the determination of the legality of the Notes for purchase by
institutional investors.

7
<PAGE>

(g) During the term of this Agreement, the Company will supply to you
copies of such financial statements and other periodic and special reports as
the Company may from time to time distribute generally to the holders of any
class of its capital stock and of each annual or other report it is required to
file with the Commission. The Company shall furnish to you such information,
documents, certificates of officers of the Company and opinions of counsel for
the Company relating to the business, operations and affairs of the Company, the
Registration Statement, the Prospectus, and any amendments thereof or
supplements thereto, the Indenture, the Notes, this Agreement, the Procedures
and the performance by the Company and you of its and your respective
obligations hereunder and thereunder as you may from time to time and at any
time prior to the termination of this Agreement reasonably request.

(h) The Company will, whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, (i) pay, or reimburse
if paid by you, all costs and expenses incident to the performance of the
obligations of the Company under this Agreement, including costs and expenses
relating to (A) the preparation, printing and filing of the Registration
Statement and exhibits thereto, the Prospectus, all amendments and supplements
to the Registration Statement and the Prospectus, and the printing or other
reproduction of the Indenture and this Agreement, (B) the authorization and
issuance of the Notes, the preparation and delivery of certificates for the
Notes, and the fees charged in connection with the maintenance of a book-entry
system for the Notes, (C) the registration or qualification of the Notes for
offer and sale under the securities or "blue sky" laws of the jurisdictions
referred to in paragraph (f) of this Section 5 and the determination of the
legality of the Notes for investment, including the reasonable fees and
disbursements of counsel for you in that connection, and the preparation and
printing of preliminary and supplemental "blue sky" memoranda and legal
investment memoranda, (D) the furnishing (including costs of shipping and
mailing) to you of copies of the Prospectus, and all amendments or supplements
to the Prospectus, and of all other documents, reports and other information
required by this Section to be so furnished, (E) all transfer taxes, if any,
with respect to the sale and delivery of the Notes by the Company, (F) the fees
and expenses of the Trustee, and (G) the fees charged by rating agencies in
connection with any rating of the Notes, (ii) reimburse you on a quarterly basis
for all reasonable out-of-pocket expenses (including advertising expenses)
incurred by you with the advance approval of the Company, and (iii) reimburse
the reasonable fees and disbursements of counsel for you incurred in connection
with this Agreement.

(i) During any Marketing Time, each time that either of the Registration
Statement or the Prospectus is amended or supplemented (other than by an
amendment or supplement (x) relating to any offering of Securities other than
the

8
<PAGE>

Notes, (y) providing solely for the specification of or a change in the maturity
dates, the interest rates, the issuance prices or other similar terms of any
Notes sold pursuant hereto or (z) resulting from the filing by the Company of a
Current Report on Form 8-K (or any similar successor form), unless in the case
of clause (z) above, in your reasonable judgment, such Current Report is of such
a nature that a certificate should be furnished), including by the filing of any
document incorporated therein by reference, the Company will deliver or cause to
be delivered forthwith to you a certificate of the Company, signed by the
Chairman of the Board, the President, or any Senior or Administrative Vice
President or any Vice President and the principal financial or accounting
officer of the Company, dated the date of the effectiveness of such amendment or
the date of filing of such supplement, in form reasonably satisfactory to you,
to the effect that the statements contained in the certificate that was last
furnished to you pursuant to either Section 6(c) or this paragraph (i) are true
and correct at the time of the effectiveness of such amendment or the filing of
such supplement as though made at and as of such time (except that (i) the last
day of the fiscal quarter for which financial statements of the Company were
last filed with the Commission shall be substituted for the corresponding date
in such certificate and (ii) such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended or supplemented to the time
of the effectiveness of such amendment or the filing of such supplement) or, in
lieu of such certificate, a certificate of the same tenor as the certificate
referred to in Section 6(c) but modified to relate to the last day of the fiscal
quarter for which financial statements of the Company were last filed with the
Commission and to the Registration Statement and the Prospectus as amended or
supplemented to the time of the effectiveness of such amendment or the filing of
such supplement.

(j) During any Marketing Time, each time that either of the Registration
Statement or the Prospectus is amended or supplemented (other than by an
amendment or supplement (x) relating to any offering of Securities other than
the Notes, (y) providing solely for the specifications of or a change in the
maturity dates, the interest rates, the issuance prices or other similar terms
of any Notes sold pursuant hereto, or (z) resulting from the filing by the
Company of a Quarterly Report on Form 10-Q or a Current Report on Form 8-K (or
any similar successor forms), unless, in the case of clause (z) above, in your
reasonable judgment, such Quarterly or Current Report is of such a nature that
an opinion of counsel should be furnished), including by the filing of any
document incorporated therein by reference, the Company will furnish or cause to
be furnished forthwith to you a written opinion of counsel for the Company
reasonably satisfactory to you, dated the date of the effectiveness of such
amendment or date of filing of such supplement, in form reasonably satisfactory
to you, of the same tenor as the opinion referred to in Section 6(d) but
modified to relate to the Registration Statement and the Prospectus as amended
or

9
<PAGE>

supplemented to the time of the effectiveness of such amendment or the filing of
such supplement or, in lieu of such opinion, counsel last furnishing such an
opinion to you may furnish you with a letter to the effect that you may rely on
such counsel's last opinion to the same extent as though it were dated the date
of such letter authorizing reliance (except that statements in such counsel's
last opinion will be deemed to relate to the Registration Statement and the
Prospectus as amended or supplemented to the time of the effectiveness of such
amendment or the filing of such supplement).

(k) During any Marketing Time, each time that either of the Registration
Statement or the Prospectus is amended or supplemented to set forth amended or
supplemental financial information (other than by an amendment or supplement
resulting from the filing by the Company of a Quarterly Report on Form 10-Q or a
Current Report on Form 8-K (or any similar successor forms), unless, in your
reasonable judgment, such Quarterly Report or Current Report is of such a nature
that a letter from the Company's independent public accountants should be
furnished), the Company will cause its independent public accountants forthwith
to furnish a letter, dated the date of the effectiveness of such amendment or
the date of filing of such supplement, in form satisfactory to you, of the same
tenor as the letter referred to in Section 6(f) with such changes as may be
necessary to reflect the amended and supplemental financial information included
or incorporated by reference in the Registration Statement and the Prospectus,
as amended or supplemented to the date of such letter, provided that if either
of the Registration Statement or the Prospectus is amended or supplemented
solely to include or incorporate by reference financial information as of and
for a fiscal quarter and you shall have reasonably requested that such a letter
be furnished, the Company's independent public accountants may limit the scope
of such letter, which shall be satisfactory in form to you, to the unaudited
financial statements, the related "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and any other information of an
accounting, financial or statistical nature included in such amendment or
supplement.

(l) During the period, if any, specified in any Terms Agreement, the
Company shall not, without the prior consent of the Purchaser, issue or announce
the proposed issuance of any of its debt securities, including Notes, with terms
substantially similar to the Notes being purchased pursuant to such Terms
Agreement.

(m) Each acceptance by the Company of an offer for the purchase of Notes
shall be deemed to be an affirmation that its representations and warranties
contained in this Agreement are true and correct at the time of such acceptance
and a covenant that such representations and warranties will be true and correct
at the time of delivery to the purchaser of the Notes relating to such
acceptance as

10
<PAGE>

though made at and as of each such time, it being understood that such
representations and warranties shall relate to the Registration Statement and
the Prospectus as amended or supplemented at each such time. Each such
acceptance by the Company of an offer for the purchase of Notes shall be deemed
to constitute an additional representation, warranty and agreement by the
Company that, as of the settlement date for the sale of such Notes, after giving
effect to the issuance of such Notes, of any other Notes to be issued on or
prior to such settlement date and of any other Securities, which have been
issued and sold by the Company will not exceed the amount of Securities
registered pursuant to the Registration Statement.

6. Conditions of the Agents' Obligations. The obligations of the Agents to
solicit offers to purchase Notes from the Company are subject to the accuracy of
the representations and warranties of the Company in this Agreement on the date
of this Agreement, when any amendment to the Registration Statement becomes
effective, when any document incorporated by reference in the Registration
Statement is filed with the Commission, when any amendment or supplement to the
Prospectus is filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) of the Rules, the date of each solicitation of an offer to purchase
Notes from the Company and on each Closing Date, to performance by the Company
of its obligations under this Agreement and to each of the following additional
conditions:

(a) If filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Prospectus, and any such supplement, shall have
been filed in the manner and within the time period required by Rule 424(b); and
no order suspending the effectiveness of the Registration Statement, as amended
from time to time, may be in effect and no proceedings for such purpose may be
pending before or threatened by the Commission, and any requests for additional
information on the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) must be complied with to the
reasonable satisfaction of the Agents.

(b) Since the date of the most recent financial statements included or
incorporated by reference in the Prospectus, (i) there must not have been any
material adverse change or decrease (of the type indicated in paragraphs (ii)(B)
or (ii)(C) of Annex D to this Agreement) specified in the most recent letter of
the type referred to in Section 5(k) or in paragraph (f) of this Section 6, (ii)
there must not have been any material adverse change in the general affairs,
prospects, management, business, properties, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated by the Prospectus, as amended or supplemented at the
time of

11
<PAGE>

acceptance by the Company of any offer to purchase the Notes, (iii) the Company
and its subsidiaries taken as a whole must not have sustained any material loss
or interference with their business or properties from fire, explosion,
earthquake, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental action,
order or decree not described in the Prospectus, as then amended or supplemented
at the time of acceptance by the Company of any offer to purchase the Notes, and
(iv) there must not have been any downgrading in the rating of any of the
Company's long-term debt securities by Standard & Poor's ("S&P") or Moody's
Investors Service ("Moody's") or any public announcement that either S & P or
Moody's has under surveillance or review its rating of the Company's long-term
debt securities (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading of such
rating), if, in the judgment of the Agents, any such development referred to in
clause (i), (ii), (iii) or (iv) makes it impracticable or inadvisable to proceed
with the soliciting of offers to purchase Notes from the Company as contemplated
by the Prospectus, as then amended or supplemented.

(c) The Company shall have furnished to the Agents on the date of this
Agreement a certificate of the Company, signed by the Chairman of the Board, the
President, or any Senior or Administrative Vice President or any Vice President
and the principal financial or accounting officer of the Company, dated such
date, certifying that the signers have carefully examined the Registration
Statement, the Prospectus, the Indenture and this Agreement, and, to the best of
their knowledge, after reasonable investigation, (i) the representations and
warranties of the Company in this Agreement are accurate on and as of the date
of such certificate and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied as a
condition to the obligation of the Agents to solicit offers to purchase the
Notes, (ii) there has not been any material adverse change in the general
affairs, prospects, management, business, properties, financial condition or
results of operations of the Company and its subsidiaries taken as a whole,
whether or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus, as amended or
supplemented as of the date of such certificate, and (iii) no actions to suspend
the effectiveness of the Registration Statement, as amended as of the date of
such certificate, or to prohibit the sale of the Notes have been taken or
threatened by the Commission.

(d) The Agents shall have received on the date of this Agreement from the
General Counsel of the Company and Cravath, Swaine & Moore, special counsel to
the Company, opinions or letters dated such date substantially in the forms set
forth in Annex C-1, Annex C-2-A and Annex C-2-B to this Agreement.

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<PAGE>

(e) The Agents shall have received on the date of this Agreement from Davis
Polk & Wardwell, their counsel, an opinion dated such date with respect to the
Company, the Notes, the Indenture, the Registration Statement, the Prospectus,
this Agreement and the form and sufficiency of all proceedings taken in
connection with the sale and delivery of the Notes. Such opinion and proceedings
shall be satisfactory in all respects to the Agents. The Company must have
furnished to such counsel such documents as they may reasonably request for the
purpose of enabling them to render such opinion.

(f) The Agents shall have received, at the date of this Agreement, a signed
letter from Ernst & Young LLP substantially in the form of Annex D to this
Agreement.

All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement will comply with this Agreement only if they are in
form and scope reasonably satisfactory to the Agents and their counsel.

If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Agents and their counsel,
this Agreement and all obligations of the Agents hereunder may be canceled at
any time by the Agents. Notice of such cancellation shall be given to the
Company in writing or by telephone or telegraph confirmed in writing. The
documents required to be delivered by this Section 6 shall be delivered at the
offices of Davis Polk & Wardwell, counsel for the Agents, at 450 Lexington
Avenue, New York, New York, on the date of this Agreement.

7. Conditions to the Obligations of the Purchaser. The obligations of the
Purchaser to purchase any Notes from the Company are subject to the accuracy, on
the Closing Date for such Notes, of the representations and warranties of the
Company in this Agreement, to performance by the Company of its obligations
under this Agreement and to each of the following additional conditions:

(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.

13
<PAGE>

have been any material adverse change in the general affairs, prospects,
management, business, properties, financial condition or results of operations
of the Company and its subsidiaries taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth in or
contemplated by the Prospectus, as amended or supplemented at the date of
execution of the Terms Agreement relating to such Notes, (iii) the Company and
its subsidiaries taken as a whole must not have sustained any material loss or
interference with their business or properties from fire, explosion, earthquake,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order or
decree not described in the Prospectus, as amended or supplemented at the date
of execution of the Terms Agreement relating to such Notes, and (iv) there must
not have been any downgrading in the rating of any of the Company's long-term
debt securities by S&P or Moody's or any public announcement that either S & P
or Moody's has under surveillance or review its rating of the Company's
long-term debt securities (other than an announcement with positive implications
of a possible upgrading, and no implication of a possible downgrading of such
rating), if, in the judgment of the Purchaser, any such development referred to
in clause (i), (ii), (iii) or (iv) makes it impracticable or inadvisable to
consummate the sale and delivery of the Notes to the Purchaser as contemplated
by the Prospectus, as then amended or supplemented.

(c) If specified by any related Terms Agreement and except to the extent
modified by such Terms Agreement, the Purchaser shall have received (i) a
certificate of the Company, dated as of such Closing Date, to the effect set
forth in Section 6(c), (ii) the opinions or letters of the General Counsel of
the Company and Cravath, Swaine & Moore, special counsel to the Company, each
dated as of such Closing Date, to the effect set forth in Section 6(d), (iii)
the opinion of Davis Polk & Wardwell, counsel for the Purchaser, dated as of
such Closing Date, to the effect set forth in Section 6(e), and (iv) a letter of
Ernst & Young LLP, independent accountants for the Company, dated as of such
Closing Date, to the effect set forth in Section 6(f).

(d) Prior to the Closing Date, the Company shall have furnished to the
Purchaser such further information, certificates and documents as the Purchaser
may reasonably request.

If any of the conditions specified in this Section 7 shall not have been
fulfilled when and as provided in this Agreement and any Terms Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement or such Terms Agreement shall not be reasonably satisfactory in form
and substance to the Purchaser and its counsel, such Terms Agreement and all
obligations of the Purchaser thereunder and with respect to the Notes subject

14
<PAGE>

thereto may be canceled at, or at any time prior to, the respective Closing Date
by the Purchaser. Notice of such cancellation shall be given to the Company in
writing or by telephone or telegraph confirmed in writing.

8. Right of Person Who Agreed to Purchase to Refuse to Purchase. The
Company agrees that any person who has agreed to purchase and pay for any Note
pursuant to a solicitation by the Agents, shall have the right to refuse to
purchase such Note if, at the Closing Date therefor, any condition set forth in
Section 6(a) and (b) shall not be satisfied.

9. Indemnification. (a) The Company will indemnify and hold harmless each
of you and each person, if any, who controls any of you within the meaning of
Section 15 of the Securities Act against any and all losses, claims, damages and
liabilities, joint or several (including any investigation, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they, or any of them, may become subject under the Securities Act, the Exchange
Act or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided that the Company will not be liable to such Agent, Purchaser or
controlling person thereof to the extent that such loss, claim, damage or
liability arises out of or is based upon an untrue statement or omission or
alleged untrue statement or omission (i) made in reliance upon and in conformity
with information relating to such Agent or Purchaser furnished in writing to the
Company by such Agent or Purchaser expressly for use in the document or (ii) in
a preliminary prospectus if the Prospectus, as amended or supplemented as of the
time of the confirmation of the sale to such person, corrected the untrue
statement or omission or alleged untrue statement or omission which is the basis
of the loss, claim, damage or liability for which indemnification is sought and
a copy of the Prospectus, as so amended (but excluding any documents
incorporated therein by reference), was not sent or given to such person at or
before the confirmation of the sale to such person in any case where such
delivery is required by the Securities Act, unless such failure to deliver the
Prospectus, as so amended, was a result of noncompliance by the Company with
Section 5(d). This indemnity agreement will be in addition to any liability that
the Company might otherwise have.

(b) Each of you, severally and not jointly, will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the

15
<PAGE>

meaning of Section 15 of the Securities Act, each director of the Company and
each officer of the Company who signs the Registration Statement to the same
extent as the foregoing indemnity from the Company to each of you, but only
insofar as losses, claims, damages or liabilities arise from the sale of Notes
by the Company to any person as a result of a solicitation by such Agent or any
sale by any Purchaser and are based upon any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto
in reliance upon and in conformity with information relating to such Agent or
Purchaser furnished in writing to the Company by such Agent or Purchaser
expressly for use in the document, unless such Agent or Purchaser has notified
the Company in writing that such information should no longer be used therein,
it being understood and agreed that the following information has been furnished
by each of you: (i) the second, fifth, sixth, seventh and eighth sentences of
the second paragraph of text under the caption "Plan of Distribution" in the
Prospectus Supplement relating to the terms of the offering by you and (ii) the
tenth paragraph of text under the caption "Plan of Distribution" in the
Prospectus Supplement relating to stabilization and over-allotment activities.
In addition, Salomon Smith Barney Inc. has furnished to the Company the
information contained in the eleventh paragraph of text under the caption "Plan
of Distribution" in the Prospectus Supplement relating to Citibank, N.A. This
indemnity agreement will be in addition to any liability that you might
otherwise have.

(c) Any party that proposes to assert the right to be indemnified under
this Section 9 will, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section 9, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission to so notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party
otherwise than under this Section 9. If any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel who shall be reasonably
satisfactory to the indemnified party, and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense, the
indemnifying party will not be liable to the indemnified party for any legal or
other expenses except as provided below and except for the reasonable costs of
investigation subsequently incurred by the indemnified party in connection with
the defense. The indemnified party will have the right to employ its own counsel
in any such action, but the fees and expenses of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded that there may be legal defenses
available to it or other indemnified parties which are different from or in
addition to those available to the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (3) the indemnifying party has not in
fact employed counsel reasonably satisfactory to such indemnified party to
assume the defense of such action within a reasonable time after receiving
notice of the commencement of the action, in each of which cases the reasonable
fees and
16
<PAGE>

expenses of such counsel will be at the expense of the indemnifying party or
parties and all such fees and expenses will be reimbursed promptly as they are
incurred. An indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent or, in connection with any
proceeding or related proceedings in the same jurisdiction, for the fees and
expenses of more than one separate counsel for all indemnified parties.

10. Contribution. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Section 9 is
applicable in accordance with its terms but for any reason is held by a tribunal
to be unavailable from the Company or any of you, the Company and each of you,
severally and not jointly, will contribute to the aggregate losses, claims,
damages and liabilities (including any investigation, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action or any claims asserted, but after deducting any contribution received
by the Company from persons other than any of you, such as persons who control
the Company within the meaning of the Securities Act, officers of the Company
who signed the Registration Statement and directors of the Company, who may also
be liable for contribution) to which the Company and you may be subject in such
proportion so that each Agent or Purchaser is responsible for that portion
represented by the percentage that the aggregate commissions received by such
Agent or Purchaser pursuant to Section 1 bears to the aggregate principal amount
of Notes sold by the Company which are the subject of the action and the Company
is responsible for the balance; provided that (i) no Agent or Purchaser will be
responsible for any amount in excess of the aggregate commissions received by
such Agent or Purchaser pursuant to Section 1 in respect of the Notes which are
the subject of the action and (ii) no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 10, any person who
controls a party to this Agreement within the meaning of the Securities Act will
have the same rights to contribution as that party, and each officer of the
Company who signed the Registration Statement and each director of the Company
will have the same rights to contribution as the Company, subject in each case
to clauses (i) and (ii) of this Section 10. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action against
such party in respect of which a claim for contribution may be made under this
Section 10, notify such party or parties from whom contribution may be sought,
but the omission so to notify will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
otherwise than under this Section 10. No party will be liable for contribution
with respect to any action or claim settled without its written consent.

17
<PAGE>

11. Termination. (a) Upon three days written notice, this Agreement may be
terminated for any reason at any time by the Company as to any or all of you, or
may be terminated for any reason at any time by any or all of you as to those of
you giving such notice. In the event of any such termination, no party giving
such notice shall have any liability to the other party or parties hereto,
except as provided in Sections 1(e), 5(h), 9, 10 and 12.

(b) Each Terms Agreement shall be subject to termination in the absolute
discretion of the Purchaser, by notice given to the Company prior to delivery of
any payment for Notes to be purchased thereunder, if prior to such time (1)
trading in any securities of the Company is suspended by the Commission, by an
exchange that lists such securities of the Company, or by the National
Association of Securities Dealers Automated Quotation National Market System,
(2) additional material governmental restrictions, not in force on the date of
this Agreement, have been imposed upon trading in securities generally or
minimum or maximum prices have been generally established on the New York Stock
Exchange or on the American Stock Exchange, or trading in securities generally
has been suspended on any such Exchange or a general banking moratorium has been
established by Federal or New York authorities, or (3) any outbreak or material
escalation of hostilities or other calamity or crisis occurs the effect of which
is such as to make it impracticable to market such Notes.

12. Miscellaneous. The reimbursement, indemnification and contribution
agreements in Sections 1(e), 5(h), 9, 10 and 11 and the representations and
other agreements of the Company and you in this Agreement will remain in full
force and effect until the sixth anniversary of the date of termination of this
Agreement as to any party regardless of any termination of this Agreement or any
investigation made by or on behalf of you, the Company or any controlling person
and will survive delivery of and payment for the Notes.

This Agreement is for the benefit of you and the Company and their
respective successors and, to the extent expressed in this Agreement, for the
benefit of persons controlling you or the Company, and directors and officers of
the Company, and their respective successors, and no other person, partnership,
association or corporation shall acquire or have any right under or by virtue of
this Agreement.

All notices and communications under this Agreement will be in writing,
effective only on receipt and mailed or delivered, by messenger, facsimile
transmission or otherwise, addressed to the parties as follows: if to the Agents
or the Purchaser, to Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, attention of Helena M. Wilner, Salomon Smith
Barney Inc., 388 Greenwich Street, New York, New York 10013, Attention

18
<PAGE>

of Martha D. Bailey, and Chase Securities Inc., 270 Park Avenue, 8th floor, New
York, N.Y. 10017, attention: Medium-Term Note Department, and if to the Company,
to Ashland Inc., 500 Diederich Boulevard, Russell, Kentucky 41169, attention of
the Treasurer, except that legal notices will be sent to the attention of the
General Counsel at 50 E. RiverCenter Boulevard, Covington, Kentucky 41012.

This Agreement may be signed in multiple counterparts that taken as a whole
constitute one agreement.

This Agreement will be governed by and construed in accordance with the
laws of the State of New York.

Please confirm that the foregoing correctly sets forth the agreement
between us.

Very truly yours,

ASHLAND INC.

By:_________________________________
Title:

Confirmed:

CREDIT SUISSE FIRST BOSTON CORPORATION

By ____________________________
Title:

SALOMON SMITH BARNEY INC.

By ____________________________
Title:

CHASE SECURITIES INC.

By ____________________________
Title:

19
<PAGE>

ANNEX A

Medium-Term Note Administrative Procedures
May __, 2000

The Medium-Term Notes, Series J, due Nine Months or More from their issue
date (the "Notes") are to be offered on a continuing basis by Ashland Inc. (the
"Company"). Credit Suisse First Boston Corporation, Salomon Smith Barney Inc.
and Chase Securities Inc., as agents (individually, an "Agent" and collectively,
the "Agents"), have each agreed to use reasonable efforts to solicit offers to
purchase the Notes. None of the Agents will be obligated to purchase Notes for
their own accounts. The Notes are being sold pursuant to a Distribution
Agreement, dated May __, 2000 (the "Distribution Agreement"), among the Company
and the Agents, and will be issued pursuant to an Indenture, dated as of August
15, 1989, as amended and restated as of August 15, 1990 (the "Indenture"),
between the Company and Citibank, N.A., as trustee (the "Trustee"). The Notes
will rank equally with all other unsecured and unsubordinated indebtedness of
the Company and will have been registered with the Securities and Exchange
Commission (the "Commission"). The Notes may be denominated in U.S. dollars, or
in such foreign currencies or currency units as may be designated by the
Company. The Notes are to be offered in an aggregate principal amount of up to
U.S.$300,000,000 (or the equivalent thereof if any of the Notes is denominated
in foreign currency or currency units).

Administrative and record-keeping responsibilities will be handled for the
Company by its Treasury and Finance Department. The Company will advise the
Agents in writing of those persons handling administrative responsibilities with
whom the Agents are to communicate regarding offers to purchase Notes and the
details of their delivery. Administrative procedures and certain terms of the
offering are explained below. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned thereto in the Distribution
Agreement, the Prospectus or the Indenture.

Certain Terms of the Offering

Notes will be issued only in fully registered form and will be represented
by either a global certificate (a "Global Certificate") delivered to Citibank,
N.A., as custodian for The Depository Trust Company (the "Depositary"), with
ownership of beneficial interests in such Global Certificates recorded in the
book-entry system maintained by the Depositary (a "Book-Entry Note") or a
certificate (a "Definitive Certificate") delivered to a person designated by an
Agent.

A-1
<PAGE>

Citibank, N.A., in addition to acting as Trustee, will act as Exchange Rate
Agent, Paying Agent, Calculation Agent and Security Registrar for the Company,
in each case, under the Indenture (in any of the foregoing capacities, as
applicable, "Citibank").

Part I contains provisions common to Book-Entry and Certificated Notes.
Part II contains provisions specific to Certificated Notes and Part III contains
provisions specific to Book-Entry Notes. To the extent the procedures set forth
below conflict with the provisions of the Notes, the Indenture or the
Distribution Agreement, the terms and provisions of the Notes, the Indenture and
the Distribution Agreement shall prevail. Unless otherwise defined herein, terms
defined in the Indenture or the Notes shall be used herein as therein defined.

PART I: GENERAL

Price to Public

Each Note will be issued at or above par.

Denominations

The minimum denomination of the Notes will be $1,000 and in denominations
of integral multiples of $1,000 in excess thereof.

Issue Date

Each Note will be dated the date of its authentication. Each Note will also
bear an original issue date (the "Issue Date") which, with respect to any Note
(or portion thereof), shall mean the date of its original issuance and shall be
specified therein. The Issue Date shall remain the same for all Notes
subsequently issued upon transfer, exchange or substitution of a Note,
regardless of their dates of authentication.

Maturities

Each Note will mature on a Business Day, selected by the purchaser and
agreed to by the Company, which will be at least nine months after the Issue
Date. Each Floating Rate Note (as defined below) will mature on an Interest
Payment Date (as defined below) for such Note.

A-2
<PAGE>

Interest Payment

Each interest bearing Note will bear interest from and including its Issue
Date, or in the case of Notes issued upon transfer or exchange, from the most
recent Interest Payment Date to which interest has been paid or provided for, to
but excluding the relevant Interest Payment Date or the maturity date of such
Note. Interest payments, if any, will be the amount of interest accrued from and
including the next preceding Interest Payment Date in respect of which interest
has been paid or duly provided for, or from and including the date of issue, if
no interest has been paid with respect to such Note, to but excluding the
applicable Interest Payment Date. Each Note will bear interest (i) in the case
of Notes bearing interest at a Fixed Rate (the "Fixed Rate Notes"), at the
annual rate stated on the face thereof, payable semi-annually in arrears on
February 15 and August 15 unless otherwise specified in the related pricing
supplement to the Prospectus Supplement (the "Pricing Supplement") (each an
"Interest Payment Date" with respect to such Fixed Rate Note) and at maturity
and (ii) in the case of Notes bearing interest at a rate or rates determined by
reference to an interest rate formula (the "Floating Rate Notes"), at a rate
determined pursuant to the formula stated on the face thereof, payable in
arrears on such dates as are specified therein and in the Pricing Supplement
(each such date an "Interest Payment Date" with respect to such Floating Rate
Note). In addition, a Floating Rate Note may bear interest at the lowest or
highest or average of two or more interest rate formulae. Interest (including
payments for partial periods) will be calculated and paid (a) in the case of
Fixed Rate Notes, on the basis of a 360-day year of twelve 30-day months, (b) in
the case of Floating Rate Notes whose interest formula is based on the Treasury
Rate or the Prime Rate, on the basis of the actual number of days in the year
divided by 365 or 366, as the case may be, and (c) in the case of Floating Rate
Notes whose interest formula is based on the Commercial Paper Rate, the LIBOR
Rate, the Federal Funds Rate, or on the CD Rate, on the basis of the actual
number of days in the year divided by 360. Interest will be payable (a) in the
case of Fixed Rate Notes, to the person in whose name the Note is registered at
the close of business on the February 1 or August 1 (the Regular Record Dates
with respect to Fixed Rate Notes) next preceding the Interest Payment Date,
unless otherwise specified in the Pricing Supplement, and (b) in the case of
Floating Rate Notes, to the person in whose name the Note is registered at the
close of business on the dates established on the Issue Date and set forth in
each such Note and in the applicable Pricing Supplement (the Regular Record
Dates with respect to Floating Rate Notes); provided, however, that interest
payable on a maturity date will be payable to the person to whom principal shall
be payable. Unless otherwise set forth in the applicable Prospectus Supplement,
the first payment of interest on any Note originally issued between a Regular
Record Date and an Interest Payment Date will be made on the Interest Payment
Date following the next succeeding Regular Record Date. With respect to Fixed
Rate Notes, each

A-3
<PAGE>

payment of interest shall include interest accrued to but excluding the date of
such payment. For special provisions relating to Floating Rate Notes, see the
section entitled "Description of the Notes" in the Prospectus Supplement
relating to the Notes, dated May __, 2000, attached hereto and hereinafter
referred to as the "Prospectus Supplement". Except in the case of Book-Entry
Notes, all interest payments (excluding interest payments made at maturity) will
be made by check mailed to the person entitled thereto as provided above. All
interest payments on any Book-Entry Note will be made to the Depositary, or its
nominee, as Noteholder thereof, in accordance with arrangements then in effect
between the Trustee and the Depositary.

Trustee and Citibank Not to Risk Funds

Nothing herein shall be deemed to require the Trustee or Citibank to risk
or expend its own funds in connection with any payment to the Company, or the
Agents, or the Depositary, or any Noteholder, it being understood by all parties
that payments made by the Trustee or Citibank to either the Company, or the
Agents, or the Depositary, or any Noteholder shall be made only to the extent
that funds are provided to the Trustee for such purpose.

Advertising Costs

The Company will determine with the Agents the amount of advertising that
may be appropriate in offering the Notes. Advertising expenses approved in
advance by the Company will be paid by the Company.

Business Day

"Business Day" means any day, other than a Saturday or Sunday, that meets
each of the following applicable requirements: the day is (a) not a day on which
banking institutions are authorized or required by law or regulation to be
closed in The City of New York, (b) if the Note is denominated in a Specified
Currency other than the euro or United States dollars, not a day on which
banking institutions are authorized or required by law or regulation to close in
the principal financial center of the country of the Specified Currency, (c) if
the Note is denominated in euro, any day on which the Trans-European Automated
Real- Time Gross Settlement Express Transfer (TARGET) System is open, and (d)
with respect to LIBOR Notes, a London Banking Day. "London Banking Day" means
any day on which dealings in deposits in United States dollars are transacted in
the London interbank market.

A-4
<PAGE>

Procedures for Establishing the Terms of the Notes

The Company and the Agents will discuss from time to time the Issue Date,
maturity date, interest rates, and other provisions of the Notes that may be
sold as a result of the solicitation of offers by the Agents. If the Company
decides to post rates and a decision has been reached to change interest rates,
the Company will promptly notify each Agent. Each Agent will forthwith suspend
solicitation of purchases. At that time, the Agents will recommend and the
Company will establish rates to be so "posted". Following establishment of
posted rates and prior to the filing or mailing described in the following
sentence, the Agents may only record indications of interest in purchasing Notes
at the posted rates. If the Company accepts an offer at the posted rates, it
will prepare a Pricing Supplement reflecting the terms of such offer and will
arrange to have such Pricing Supplement electronically filed with the Commission
in accordance with the applicable paragraph of Rule 424(b) under the Act and
Rule 101(a) of Regulation S-T, and will supply at least 10 copies of the Pricing
Supplement to the Agent who presented such offer (the "Presenting Agent"). No
settlements may occur prior to such mailing or filing and the Agents will not,
prior to such mailing or filing, mail confirmations to customers who have
offered to purchase Notes at the posted rates. The Company will not offer Notes
denominated in a foreign currency unless it has received confirmation from the
Trustee that the Trustee will be able to perform its duties in respect of such
Notes, and that the Trustee has had sufficient time to make the necessary
arrangements.

Outdated Pricing Supplements and copies of the Prospectus to which they are
attached (other than those retained for files) will be destroyed.

Suspension of Solicitation; Amendment or Supplement

As provided in the Distribution Agreement, the Company may suspend
solicitation of purchases at any time and, upon receipt of at least one Business
Day's prior notice from the Company, the Agents will each forthwith suspend
solicitation until such time as the Company has advised them that solicitation
of purchases may be resumed.

If the Agents receive the notice from the Company contemplated by Section
5(b) of the Distribution Agreement, they will promptly suspend solicitation and
will only resume solicitation as provided in the Distribution Agreement. If the
Company decides to amend or supplement the Registration Statement or the
Prospectus relating to the Notes, it will promptly advise each Agent and will
furnish each Agent with the proposed amendment or supplement in accordance with
the terms of the Distribution Agreement. The Company will promptly file or mail
to the Commission for filing such amendment or

A-5
<PAGE>

supplement, provide the Agents with copies of any such amendment or supplement,
confirm to the Agents that such amendment or supplement has been filed with the
Commission and advise the Agents that solicitation may be resumed.

Any such suspension shall not affect the Company's obligations under the
Distribution Agreement; and in the event that at the time the Company suspends
solicitation of purchases there shall be any offers already accepted by the
Company outstanding for settlement, the Company will have the sole
responsibility for fulfilling such obligations. The Company will in addition
promptly advise the Agents and the Trustee if such offers are not to be settled
and if copies of the Prospectus as in effect at the time of the suspension may
not be delivered in connection with the settlement of such offers.

Acceptance of Offers

Each Agent will promptly advise the Company, orally or in writing, of each
reasonable offer to purchase Notes received by it, other than those rejected by
such Agent. Each Agent may, in its discretion reasonably exercised, without
notice to the Company, reject any offer received by it, in whole or in part. The
Company will have the sole right to accept offers to purchase Notes and may
reject any such offer, in whole or in part. If the Company rejects an offer, the
Company will promptly notify the Agent involved.

Delivery of Prospectus

A copy of the Prospectus as most recently amended or supplemented on the
date of delivery thereof (except as provided below) must be delivered to a
purchaser prior to or together with the earlier of the delivery of (i) the
written confirmation provided for above, and (ii) any Note purchased by such
purchaser. The Company shall ensure that the Presenting Agent receives copies of
the Prospectus and each amendment or supplement thereto (including appropriate
pricing supplements) in such quantities and within such time limits as will
enable the Presenting Agent to deliver such confirmation or Note to a purchaser
as contemplated by these procedures and in compliance with the preceding
sentence. If, since the date of acceptance of a purchaser's offer, the
Prospectus shall have been supplemented solely to reflect any sale of Notes on
terms different from those agreed to between the Company and such purchaser or a
change in posted rates not applicable to such purchaser, such purchaser shall
not receive the Prospectus as supplemented by such new supplement, but shall
receive the Prospectus as supplemented to reflect the terms of the Notes being
purchased by such purchaser and otherwise as most recently amended or
supplemented on the date of delivery of the Prospectus.

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Determination of Settlement Date

All offers accepted by the Company will be settled no later than the third
Business Day next succeeding the date of acceptance unless otherwise agreed by
any purchaser and the Company. The settlement date shall be specified upon
receipt of an offer.

PART II: CERTIFICATED NOTES

Settlement Date

The Company will instruct, by telecopy or other acceptable means, the
Trustee to authenticate and deliver the Notes no later than 2:15 P.M., New York
City time, on the settlement date. Such instructions will be given by the
Company no later than 3:00 P.M., New York City time, on the Business Day prior
to the settlement date unless the settlement date is the date of acceptance by
the Company of the offer to purchase the Notes, in which case such instructions
will be given by the Company by 10:00 A.M., New York City time.

Details for Settlement

For each offer accepted by the Company, the Presenting Agent shall
communicate to the Company's Treasury and Finance Department by telephone,
facsimile transmission or other acceptable means the following information (the
"Purchase Information"):

1. Exact name in which the Note or Notes are to be registered ("registered
owner").

2. Exact address of registered owner and, if different, the address for
payment of principal and interest.

3. Taxpayer identification number of registered owner.

4. Principal amount of each Note in authorized denominations to be
delivered to registered owner.

5. Currency or currency unit of such principal amount.

6. The issue price, interest rate, if fixed or, if floating, the initial
interest rate, the interest rate basis, the spread or spread multiplier, the
maximum or minimum interest rates, if any, the index maturity, the Interest
Reset Dates and the

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Interest Payment Dates (as such terms are defined in the Prospectus Supplement)
of each Note, and all other items necessary to complete each Note.

7. Maturity date.

8. Issue date.

9. Settlement date.

10. Presenting Agent's commission (to be paid by the Company upon
settlement).

11. Terms of redemption and Redemption Date, if any.

12. Net proceeds to the Company.

The Issue Date of, and the settlement date for, Notes will be the same.
Before accepting any offer to purchase Notes to be settled in less than three
Business Days, the Company shall verify that the Trustee will have adequate time
to prepare and authenticate the Notes.

After receiving the details for each offer from the Presenting Agent, the
Company will, after recording the details and any necessary calculations,
communicate the Purchase Information by facsimile transmission or other
acceptable means, to the Trustee. The Company will identify in writing to the
Trustee officers of the Company who are authorized to provide such details for
each such offer to the Trustee.

Settlement; Note Deliveries and Cash Payment

Upon the receipt of appropriate documentation and instructions from the
Company, the Trustee will cause the Notes to be prepared and authenticated.

The Trustee will deliver the Notes, in accordance with instructions from
the Company, to the Presenting Agent, as the Company's agent, for the benefit of
the purchaser. The Presenting Agent shall make payment in immediately available
funds directly to the account of the Company in an amount equal to the face
amount of the Notes.

The Presenting Agent, as the Company's agent, will deliver the Notes (with
the written confirmation provided for above) to the purchaser thereof against
payment by such purchaser in immediately available funds. Delivery of any

A-8
<PAGE>

confirmation or Note will be made in compliance with "Delivery of Prospectus"
above.

Fails

In the event that a purchaser shall fail to accept delivery of and make
payment for a Note on the settlement date, the Presenting Agent will notify the
Trustee and the Company, by telephone or other acceptable means. If the Note has
been delivered to the Presenting Agent, as the Company's agent, the Presenting
Agent shall return such Note to the Trustee. If funds have been advanced for the
purchase of such Note, the Trustee will, immediately upon receipt of such Note,
confirm receipt to the Company and the Company shall refund the payment
previously made by the Presenting Agent in immediately available funds. Such
payments will be made on the settlement date, if possible, and in any event not
later than the Business Day following the settlement date. If such fail shall
have occurred for any reason other than the failure of the Presenting Agent to
provide the Purchase Information to the Company or to provide a confirmation to
the purchaser, the Company will reimburse the Presenting Agent on an equitable
basis for its loss of the use of funds during the period when they were credited
to the account of the Company.

Immediately upon receipt of the Note in respect of which the fail occurred,
the Trustee will cause the Security Registrar to make appropriate entries to
reflect the fact that the Note was never issued and will destroy the Note.

Payment of Interest

On the fifth Business Day immediately preceding each Interest Payment Date,
the Trustee will furnish the Company with the total amount of the interest
payments to be paid on the Certificated Notes on such Interest Payment Date. The
Trustee will provide monthly to the Company's Treasury and Finance Department a
list of the principal and interest to be paid on Certificated Notes maturing in
the next succeeding month, to the extent then known. The Trustee will assume
responsibility for withholding taxes on interest paid as required by law.

Maturity

Upon presentation of each Certificated Note at maturity the Trustee (or any
duly appointed Paying Agent) will pay the principal amount thereof, together
with accrued interest due at maturity out of immediately available funds
provided by the Company. Such payment shall be made in immediately available
funds to the holder of the Note, provided that the Note is presented to the
Trustee (or any such Paying Agent) in time for the Trustee (or such Paying
Agent) to make

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<PAGE>

payments in such funds in accordance with its normal procedures. The Company
will provide the Trustee (and any such Paying Agent) with funds available for
immediate use for such purpose. Notes presented at maturity will be canceled by
the Trustee as provided in the Indenture.

Authenticity of Signatures

The Company will cause the Trustee to furnish the Agents from time to time
with the specimen signatures of each of the Trustee's officers, employees or
agents who have been authorized by the Trustee to authenticate Notes, but the
Agents will have no obligation or liability to the Company or the Trustee in
respect of the authenticity of the signature of any officer, employee or agent
of the Company or the Trustee on any Note.

PART III: BOOK-ENTRY NOTES

An owner of a Book-Entry Note will not be entitled to receive a certificate
representing such Note. In connection with the qualification of the Book-Entry
Notes for eligibility in the book-entry system maintained by the Depositary,
Citibank will perform the custodial, document control and administrative
functions described below, in accordance with its respective obligations under a
Letter of Representations (the "Letter of Representations") from the Company and
Citibank to the Depositary and a Medium-Term Note Certificate Agreement (the
"Certificate Agreement") between Citibank and the Depositary, and its
obligations as a participant in the Depositary, including the Depositary's
Same-Day Funds Settlement system ("SDFS").

Issuance

On any date of settlement (as defined under "settlement" below) for one or
more Book-Entry Notes, the Company will issue a Global Certificate or
Certificates in fully registered form without coupons representing in each case
not in excess of $400,000,000 principal amount of all of such Book-Entry Notes
that have the same interest rate, Stated Maturity and terms. Each Global
Certificate will be dated and issued as of the date of its authentication by
Citibank as Trustee. No Global Certificate will represent any Certificated Note.

Identification Numbers

The Company will arrange, on or prior to the commencement of a program for
the offering of Book-Entry Notes, with the CUSIP Service Bureau of Standard &
Poor's (the "CUSIP Service Bureau") for the reservation of a series of CUSIP
numbers (including tranche numbers), consisting of approximately 900 CUSIP

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<PAGE>

numbers relating to Global Certificates representing the Book-Entry Notes. The
Company will obtain from the CUSIP Service Bureau a written list of such series
of reserved CUSIP numbers and will deliver such list to Citibank and the
Depositary. Citibank will assign CUSIP numbers to Global Certificates as
described below under Settlement Procedure "B". The Depositary will notify the
CUSIP Service Bureau periodically of the CUSIP numbers that the Company has
assigned to Global Certificates. Citibank will notify the Company at any time
when fewer than 100 of the reserved CUSIP numbers remain unassigned to Global
Certificates, and if it deems it necessary, the Company will reserve additional
CUSIP numbers for assignment to Global Certificates representing Book-Entry
Notes. Upon obtaining such additional CUSIP numbers, the Company shall deliver a
list thereof to Citibank and the Depositary.

Registration

Each Global Certificate will be registered in the name of Cede & Co., as
nominee for the Depositary, on the Securities Register maintained under the
Indenture governing such Global Certificate. The beneficial owner of a
Book-Entry Note (or one or more indirect participants in the Depositary
designated by such owner) will designate one or more participants in the
Depositary (with respect to such Note, the "Participants") to act as agent or
agents for such owner in connection with the book-entry system maintained by the
Depositary, and the Depositary will record in book-entry form, in accordance
with instructions provided by such Participants, a credit balance with respect
to such Note in the account of such Participants. The ownership interest of such
beneficial owner in such Note will be recorded through the records of such
Participants or through the separate records of such Participants and one or
more indirect participants in the Depositary. So long as Cede & Co. is the
registered owner of a Global Certificate, the Depositary will be considered the
sole owner and holder of the Book-Entry Notes represented by such Global
Certificate for all purposes under the Indenture.

Transfers

Transfers of a Book-Entry Note will be accomplished by book entries made by
the Depositary and, in turn, by Participants (and in certain cases, one or more
indirect participants in the Depositary) acting on behalf of beneficial
transferors and transferees of such Note.

Consolidation and Exchange

Citibank may deliver to the Depositary and the CUSIP Service Bureau at any
time a written notice of consolidation specifying (i) the CUSIP numbers of

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<PAGE>

two or more Outstanding Global Certificates that represent Book-Entry Notes
having the same interest rate, Stated Maturity and tenor and for which interest
has been paid to the same date, (ii) a date, occurring at least thirty days
after such written notice is delivered and at least thirty days before the next
Interest Payment Date for such Book-Entry Notes, on which such Global
Certificates shall be exchanged for a single replacement Global Certificate and
(iii) a new CUSIP number, obtained from the Company, to be assigned to such
replacement Global Certificate. Upon receipt of such a notice, the Depositary
will send to its participants (including Citibank) a written reorganization
notice to the effect that such exchange will occur on such date. Prior to the
specified exchange date, Citibank will deliver to the CUSIP Service Bureau a
written notice setting forth such exchange date and the new CUSIP number and
stating that, as of such exchange date, the CUSIP numbers of the Global
Certificates to be exchanged will no longer be valid. On the specified exchange
date, Citibank will exchange such Global Certificates for a single Global
Certificate bearing the new CUSIP number and new Issue Date, which shall be the
most recent Interest Payment Date to which interest has been paid or duly
provided for on the predecessor Global Certificates, and the CUSIP numbers of
the exchanged Global Certificates will, in accordance with CUSIP Service Bureau
procedures, be canceled and not immediately reassigned. Notwithstanding the
foregoing, if the Global Certificates to be exchanged exceed $400,000,000 in
aggregate principal amount, one Global Certificate will be authenticated and
issued to represent each $400,000,000 of principal amount of the exchanged
Global Certificates and an additional Global Certificate will be authenticated
and issued to represent any remaining principal amount of such Global
Certificates (see "Denominations" below).

Denominations

Book-Entry Notes will be issued in principal amounts of $1,000 or any
amount in excess thereof that is an integral multiple of $1,000. Global
Certificates will be denominated in principal amounts not in excess of
$400,000,000. If one or more Book-Entry Notes having an aggregate principal
amount in excess of $400,000,000 would, but for the preceding sentence, be
represented by a single Global Certificate, then one Global Certificate will be
issued to represent $400,000,000 principal amount of such Book-Entry Note or
Notes and an additional Global Certificate will be issued to represent any
remaining principal amount of such Book-Entry Note or Notes. In such a case,
each of the Global Certificates representing such Book-Entry Note or Notes shall
be assigned the same CUSIP number.

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<PAGE>

Interest

Standard & Poor's will use the information received in the pending deposit
message described under Settlement Procedure "C" below in order to include the
amount of any interest payable and certain other information regarding the
related Global Security in the appropriate weekly bond report published by
Standard & Poor's.

Payments of Principal and Interest

Payments of Interest Only. Promptly after each Regular Record Date,
Citibank will deliver to the Company and the Depositary a written notice
specifying by CUSIP number the amount of interest to be paid on each Global
Certificate on the following Interest Payment Date (other than an Interest
Payment Date coinciding with Maturity) and the total of such amounts. The
Depositary will confirm the amount payable on each Global Certificate on such
Interest Payment Date by reference to the daily bond reports published by
Standard & Poor's. The Company will pay to Citibank, as Paying Agent, the total
amount of interest due on such Interest Payment Date (other than at Maturity),
and Citibank will pay such amount to the Depositary at the times and in the
manner set forth below under "Manner of Payment".

Payments at Maturity. On or about the first Business Day of each month,
Citibank will deliver to the Company, the Depositary and the Trustee a written
list of principal and interest to be paid on each Global Certificate maturing in
the following month. The Company, Citibank and the Depositary will confirm the
amounts of such principal and interest payments with respect to each such Global
Certificate on or about the fifth Business Day preceding the Maturity of such
Global Certificate. The Company will pay to Citibank as the Paying Agent, the
principal amount of such Global Certificate, together with interest due at such
Maturity and Citibank will pay such amount to the Depositary at the times and in
the manner set forth below under "Manner of Payment".

Promptly after payment to the Depositary of the principal and interest due
at the Maturity of such Global Certificate, Citibank will cancel such Global
Certificate and deliver it to the Company. Citibank will from time to time, on
request by the Trustee, deliver to the Trustee a written statement indicating
the total principal amount of outstanding Global Certificates for which it
serves as Trustee as of the immediately preceding Business Day.

Manner of Payment. The total amount of any principal and/or interest due on
Global Certificates on any Interest Payment Date or at Maturity shall be paid by
the Company to Citibank in funds available for use by Citibank as of 9:30

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<PAGE>

A.M. (New York City time) on such date. The Company will make such payment on
such Global Certificates by instructing Citibank to withdraw funds from an
account maintained by the Company at Citibank, N.A. The Company will confirm
such instruction in writing to Citibank. Citibank will forward to the Company an
appropriate debit advice. Prior to 10:00 A.M. (New York City time) on such date
or as soon as possible thereafter, Citibank will make such payments to the
Depositary in same day funds in accordance with the payment provisions contained
in the Letter of Representations. The Depositary will allocate such payments to
its Participants in accordance with its existing operating procedures. NONE OF
THE COMPANY, THE TRUSTEE NOR CITIBANK SHALL HAVE ANY RESPONSIBILITY OR LIABILITY
FOR THE PAYMENT BY THE DEPOSITARY TO SUCH PARTICIPANTS OF THE PRINCIPAL OF AND
INTEREST ON THE BOOK-ENTRY NOTES.

Withholding Taxes. The amount of any taxes required under applicable law to
be withheld from any interest payment on a Book-Entry Note will be determined
and withheld by the Participant, indirect participant in the Depositary or other
Person responsible for forwarding payments and materials directly to the
beneficial owner of such Note.

Settlement

The receipt by the Company of immediately available funds in payment for a
Book-Entry Note and the authentication and issuance of the Global Certificate
representing such Note shall constitute "settlement" with respect to such
Book-Entry Note. All orders accepted by the Company will be settled on the next
Business Day pursuant to the timetable for settlement set forth below unless the
Company and the purchaser agree to settlement on a later date.

Settlement Procedures

Settlement Procedures with regard to each Global Certificate sold by the
Company through an Agent, as agent, shall be as follows:

A. Such Agent will advise the Company by telephone of the Purchase
Information with respect to each Book-Entry Note which will be represented by
the Global Certificate which is to be issued.

B. The Company will advise Citibank writing or electronic transmission of
the information set forth in Settlement Procedure "A" above and the name of such
Agent. Each such communication by the Company shall constitute a representation
and warranty by the Company to Citibank, the Trustee and each Agent that (i)
such Global Certificate is then, and at the time of issuance

A-14
<PAGE>

and sale thereof will be, duly authorized for issuance and sale by the Company,
(ii) such Global Certificate will conform with the terms of the Indenture
pursuant to which such Global Certificate is issued and (iii) upon
authentication and delivery of such Global Certificate, the aggregate principal
amount of all Notes issued will not exceed $300,000,000 (except for Book-Entry
Notes represented by Global Certificates authenticated and delivered in exchange
for or in lieu of Global Certificates pursuant to Section 304, 305, 306 or 906
of the Indenture and except for Certificated Notes authenticated and delivered
upon registration of, transfer of, in exchange for, or in lieu of Certificated
Notes pursuant to any such Section).

C. Citibank will assign a CUSIP number to such Global Certificate and
advise the Company by telephone of such CUSIP number. Citibank will enter a
pending deposit message through the Depositary's Participant Terminal System,
providing the following settlement information to the Depositary (which will
provide such information to Standard & Poor's), such Agent, and, upon request,
the Trustee under the Indenture pursuant to which each Book-Entry Note which is
represented by the Global Certificate which is to be issued:

1. The information set forth in Settlement Procedure "A".

2. Initial Interest Payment Date for such Book-Entry Note, number of days
by which such date succeeds the related Regular Record Date (which, in the case
of Floating Rate Notes which reset daily or weekly, shall be the date 5 calendar
days immediately preceding the applicable Interest Payment Date, and in the case
of all other Notes shall be the Regular Record Date as defined in the Note) and
amount of interest payable on such Interest Payment Date.

3. CUSIP number of the Global Certificate representing such Book-Entry
Note.

4. Whether such Global Certificate will represent any other Book-Entry Note
(to the extent known at such time).

D. The Trustee will complete the first page of the preprinted note, the
form of which was previously approved by the Company, the Agents and the
Trustee.

E. The Trustee will authenticate the Global Certificate.

F. The Depositary will credit each Book-Entry Note represented by the
Global Certificate to be issued to Citibank's participant account at the
Depositary.

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<PAGE>

G. Citibank will enter an SDFS deliver order through the Depositary's
Participant Terminal System, with respect to each Book-Entry Note represented by
the Global Certificate to be issued, instructing the Depositary to (i) debit
such Book-Entry Note to Citibank's participant account and credit such
Book-Entry Note to such Agent's participant account and (ii) debit such Agent's
settlement account and credit Citibank's settlement account for an amount equal
to the price of such Book-Entry Note less such Agent's commission. The entry of
such a deliver order shall constitute a representation and warranty by Citibank
to the Depositary that (i) the Global Certificate representing such Book-Entry
Note has been issued and authenticated and (ii) Citibank is holding such Global
Certificate pursuant to the Certificate Agreement.

H. The Agent will enter an SDFS deliver order through the Depositary's
Participant Terminal System, with respect to each Book-Entry Note represented by
the Global Certificate to be issued, instructing the Depositary (i) to debit
such Book-Entry Note to such Agent's participant account and credit such
Book-Entry Note to the participant account of the Participant with respect to
such Book-Entry Note and (ii) to debit the settlement account of such
Participant and credit the settlement account of such Agent for an amount equal
to the price of such Book-Entry Note.

I. Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures "G" and "H" will be settled in accordance with SDFS Paying
Agent Operating Procedures (as defined in the Letter of Representations) in
effect on the settlement date.

J. Citibank will credit to an account of the Company maintained at
Citibank, N.A., funds available for immediate use in the amount transferred to
Citibank in accordance with Settlement Procedure "G".

K. Citibank, N.A., as custodian for the Depositary, will hold the Global
Certificate pursuant to the Certificate Agreement. Periodically, Citibank will
send to the Company a statement setting forth the principal amount of Book-Entry
Notes and Global Certificates outstanding as of that date under the Indenture
and setting forth a brief description of any sales of which the Company has
advised Citibank but which have not yet been settled.

L. Such Agent will deliver to the purchaser a copy of the most recent
Prospectus applicable to the Notes with or prior to any written offer of Notes
and the confirmation and payment by the purchaser of the Note.

Such Agent will confirm the purchase of each Book-Entry Note to the
purchaser either by transmitting to the Participant with respect to such
Book-Entry

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<PAGE>

Note a confirmation order or orders through the Depositary's institutional
delivery system or by mailing a written confirmation to such purchaser.

Settlement Procedures Timetable

For orders of Book-Entry Notes solicited by an Agent, as agent, and
accepted by the Company for settlement on the first Business Day after the sale
date, Settlement Procedures "A" through "L" set forth above shall be completed
as soon as possible but not later than the respective times (New York City time)
set forth below:

Settlement
Procedure Time
--------- ----

A-B 11:00 A.M. on the sale date

C 2:00 P.M. on the sale date

D 3:00 P.M. on day before settlement date

E 9:00 A.M. on settlement date

F 10:00 A.M. on settlement date

G-H 2:00 P.M. on settlement date

I 4:45 P.M. on settlement date

J-L 5:00 P.M. on settlement date

If a sale is to be settled more than one Business Day after the sale date,
Settlement Procedures "A", "B" and "C" shall be completed as soon as practicable
but no later than 11:00 A.M. and 2:00 P.M., as the case may be, on the first
Business Day after the sale date. In connection with a sale which is to be
settled more than one Business Day after the sale date, if the initial interest
rate for a Floating Rate Note is not known at the time that Settlement Procedure
"A" is completed, Settlement Procedures "B" and "C" shall be completed as soon
as such rates have been determined, but no later than 11:00 a.m. and 2:00 p.m.,
respectively, on the second Business Day before the Settlement Date. Settlement
Procedure "I" is subject to extension in accordance with any extension of
Fedwire closing deadlines and in the other events specified in the SDFS
operating procedures in effect on the settlement date.

If settlement of a Note is rescheduled or canceled, Citibank will deliver
to the Depositary, through the Depositary's Participant Terminal System, a

A-17
<PAGE>

cancellation message to such effect by no later than 2:00 p.m. on the Business
Day immediately preceding the scheduled settlement date.

Failure to Settle

Prior to Citibank's entry of an SDFS deliver order with respect to a
Book-Entry Note pursuant to Settlement Procedure "G", Citibank, upon written
request of the Company, shall deliver through the Depositary's Participant
Terminal System, as soon as practicable, but not later than 2:00 p.m. on any
Business Day, a withdrawal message instructing the Depositary to debit such
Book-Entry Note to Citibank's participant account. The Depositary will process
the withdrawal message, provided that Citibank's participant account contains a
principal amount of the Global Certificate representing such Book-Entry Note
that is at least equal to the principal amount to be debited. If a withdrawal
message is processed with respect to all the Book-Entry Notes represented by a
Global Certificate, Citibank will mark such Global Certificate "Canceled", make
appropriate entries in Citibank's records and send such canceled Global
Certificate to the Company. The CUSIP number assigned to such Global Certificate
shall, in accordance with CUSIP Service Bureau procedures, be canceled and not
immediately reassigned. If a withdrawal message is processed with respect to one
or more, but not all, of the Book-Entry Notes represented by a Global
Certificate, Citibank will exchange such Global Certificate for two Global
Certificates, one of which shall represent such Book-Entry Note or Notes and
shall be canceled immediately after issuance and the other of which shall
represent the other Book-Entry Notes previously represented by the surrendered
Global Certificate and shall bear the CUSIP number of the surrendered Global
Certificate.

If the purchase price for any Book-Entry Note is not timely paid to the
Participant with respect to such Note by the beneficial purchaser thereof (or a
Person, including an indirect participant in the Depositary, acting on behalf of
such purchaser), such Participant and, in turn, the Agent for such Note may
enter a deliver order through the Depositary's Participant Terminal System
debiting such Note to such Agent's participant account and crediting such Note
free to the participant account of Citibank and shall notify Citibank and the
Company thereof. Thereafter, Citibank (i) will immediately notify the Company
thereof, once Citibank has confirmed that such Note has been credited to its
participant account, and the Company shall immediately transfer by Fedwire (in
immediately available funds) to such Agent an amount equal to the price of such
Note which was previously transferred to the account of the Company maintained
at Citibank, N.A. in accordance with Settlement Procedure and (ii) Citibank will
deliver the withdrawal message and take the related actions described in the
preceding paragraph. The Agent will not be entitled to any commission with
respect to any

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Note which the purchaser does not accept and make payment for. Such debits and
credits will be made on the Settlement Date, if possible, and in any event not
later than 5:00 p.m. on the following Business Day. If such failure shall have
occurred for any reason other than failure by the applicable Agent to perform
its obligations hereunder or under the Distribution Agreement, the Company will
reimburse such Agent on an equitable basis for its loss of the use of funds
during the period when the funds were credited to the account of the Company.

Notwithstanding the foregoing, upon any failure to settle with respect to a
Book-Entry Note, the Depositary may take any actions in accordance with its SDFS
operating procedures then in effect. In the event of a failure to settle with
respect to one or more, but not all, of the Book-Entry Notes to have been
represented by a Global Certificate, Citibank will provide, in accordance with
Settlement Procedures "D" and "E", for the authentication and issuance of a
Global Certificate representing the other Book-Entry Notes to have been
represented by such Global Certificate and will make appropriate entries in its
records.

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<PAGE>

ANNEX B

Ashland Inc.

Terms Agreement

_________, 200__

Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629

Salomon Smith Barney Inc.
388 Greenwich Street
New York, N.Y. 10013

Chase Securities Inc.
270 Park Avenue
New York, N.Y. 10017

Ladies and Gentlemen:

Ashland Inc. (the "Company") proposes, subject to the terms and conditions
stated herein and in the Distribution Agreement, dated May __, 2000 (the
"Distribution Agreement"), between the Company on the one hand and Credit Suisse
First Boston Corporation, Salomon Smith Barney Inc. and Chase Securities Inc.
(the "Purchasers") on the other, to issue and sell to one or more of Credit
Suisse First Boston Corporation, Salomon Smith Barney Inc. and Chase Securities
Inc. the securities specified in the Schedule hereto (the "Purchased
Securities"). Each of the provisions of the Distribution Agreement not
specifically related to the solicitation by the Agents, as the agents of the
Company, of offers to purchase Securities is incorporated herein by reference in
its entirety, and shall be deemed to be part of this Terms Agreement to the same
extent as if such provisions had been set forth in full herein. Nothing
contained herein or in the Distribution Agreement shall make any party hereto an
agent of the Company or make such party subject to the provisions therein
relating to the solicitation of offers to purchase securities from the Company,
solely by virtue of its execution of this Terms Agreement. Each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Terms Agreement,

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<PAGE>

except that each representation and warranty in Section 4 of the Distribution
Agreement which makes reference to the Prospectus shall be deemed to be a
representation and warranty as of the date of this Terms Agreement in relation
to the Prospectus as amended and supplemented to relate to the Purchased
Securities.

An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.

Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees to
issue and sell to the Purchasers and the Purchasers agree to purchase from the
Company the Purchased Securities, at the time and place, in the principal amount
and at the purchase price set forth in the Schedule hereto.

If the foregoing is in accordance with your understanding, please sign and
return to us the counterparts hereof, and upon acceptance hereof by you this
letter and such acceptance hereof, including those provisions of the
Distribution Agreement incorporated herein by reference, shall constitute a
binding agreement between you and the Company.

ASHLAND INC.

By__________________________________
Title:
Accepted:

[CREDIT SUISSE FIRST BOSTON CORPORATION

By _____________________________
Title:]

[SALOMON SMITH BARNEY INC.

By _____________________________
Title:]

[CHASE SECURITIES INC.

By _____________________________
Title:]

B-2
<PAGE>

SCHEDULE TO ANNEX B

Title of Purchased Securities:

[__%] Medium-Term Notes

Aggregate Principal Amount:

$_____________

[Price to Public:]

Purchase Price by [Name of Purchaser]:

% of the principal amount of the Purchased Securities, plus accrued
interest from to

Method of and Specified Funds for Payment of Purchase Price:

[By certified or official bank check or checks, payable to the order of the
Company, in [immediately available] funds]

[By wire transfer to a bank account specified by the Company in
[immediately available] funds]

Time of Delivery:

Closing Location:

Maturity:

Interest Rate:
[ %]

Interest Payment Dates:

[months and dates]

Other Provisions:

B-3
<PAGE>

Documents to be Delivered:

The following documents referred to in the Distribution Agreement shall be
delivered as a condition to the Closing:

[(1) The officers' certificate referred to in Section 6(c).]

[(2) The opinions referred to in Section 6(d).]

[(3) The opinion referred to in Section 6(e).]

[(4) The accountants' letter referred to in Section 6(f).]

B-4
<PAGE>

ANNEX C-1

FORM OF OPINION OF GENERAL COUNSEL OF ASHLAND INC.

[DATE]

Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629

Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Chase Securities Inc.
270 Park Avenue
New York, N.Y. 10017

Ladies and Gentlemen:

Re: Distribution Agreement by and between
Credit Suisse First Boston Corporation, Salomon Smith Barney
Inc., Chase Securities Inc., and Ashland Inc.

I am Vice President and General Counsel of Ashland Inc., a Kentucky
corporation ("Ashland"), and as such I have acted as counsel for Ashland in
connection with the execution and delivery of a Distribution Agreement dated
May __, 2000 (the "Distribution Agreement") between you and Ashland, providing
for the issue and sale by Ashland of up to $300,000,000 aggregate principal
amount of its Medium-Term Notes, Series J, Due Nine Months or More from Date of
Issue (the "Notes"), to be issued pursuant to the Indenture dated as of August
15, 1989, as amended and restated as of August 15, 1990, (the "Indenture"),
between Ashland and Citibank, N.A., as Trustee.

In that connection, I have examined originals, or copies certified or
otherwise identified to my satisfaction, of such documents, corporate records
and other instruments as I have deemed necessary or appropriate for the purpose
of this opinion, including (a) the Second Restated Articles of Incorporation of
Ashland, as amended; (b) the By-laws of Ashland, as amended; (c) the
Registration Statement on Form S-3 (File No. 333-______), (the "Registration
Statement"), relating to $600,000,000 aggregate principal amount of securities
of Ashland registered under the Securities Act of 1933, as amended (the "Act");
(d)

C-1-1
<PAGE>

the prospectus dated May __, 2000 included in the Registration Statement and the
prospectus supplement dated May __, 2000 (such prospectus together with such
prospectus supplement (including all material incorporated by reference therein)
as supplemented or amended to the date hereof being hereinafter collectively
called the "Final Prospectus"); (e) the Distribution Agreement; (f) the
Indenture; (g) the form of the Notes; and (h) resolutions adopted by the Board
of Directors of the Company on __________________.

Based upon the foregoing, I am of the opinion that:

(a) Ashland has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Kentucky with
full corporate power and authority to own its properties and conduct its
business as described in the Final Prospectus [, and is duly qualified to do
business as a foreign corporation under the laws of each jurisdiction which
requires such qualification wherein it owns or leases material properties or
conducts material business except for any jurisdiction wherein failure to be so
qualified would not have a material adverse effect on the business, financial
condition or results of operations of Ashland and its subsidiaries, taken as a
whole.]1

(b) Ashland's authorized equity capitalization is as set forth or
incorporated by reference in the Final Prospectus.

(c) The Indenture has been duly authorized, executed and delivered by
Ashland, and constitutes a legal, valid and binding instrument enforceable
against Ashland in accordance with its terms (subject to applicable bankruptcy,
reorganization, fraudulent transfers, insolvency, moratorium or other laws
relating to and affecting creditors' rights generally from time to time in
effect). The enforceability of Ashland's obligations is also subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

(d) The Notes have been duly authorized and, when the terms of any Notes
have been established in accordance with the Indenture and have been executed,
authenticated, issued and delivered against payment therefor in accordance with
the provisions of the Indenture, will constitute legal, valid and binding
obligations of Ashland enforceable against Ashland in accordance with their
terms (subject to applicable bankruptcy, reorganization, fraudulent transfer,

- ---------------------
1 Language in brackets to be included only in opinion dated the date of the
Distribution Agreement.

C-1-2
<PAGE>

insolvency, moratorium or other laws relating to and affecting creditors' rights
generally from time to time in effect) and will be entitled to the benefits of
the Indenture. The enforceability of Ashland's obligations is also subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

(e) To the best knowledge of the undersigned (i) there is no pending or
threatened action, suit or proceeding before any court or governmental agency,
authority or body or any arbitrator involving Ashland or any of its
subsidiaries, the probable outcome of which would have a material adverse effect
on the financial condition of Ashland and its subsidiaries taken as a whole and
which is not adequately disclosed in the Final Prospectus; (ii) there is no
franchise, contract or other document of a character required to be described in
the Registration Statement, as amended, or the Final Prospectus or to be filed
as an exhibit to the Registration Statement, as amended, which is not described
or filed as required; and (iii) the statements included or incorporated in the
Registration Statement, as amended, and the Final Prospectus describing any
legal proceedings or contracts or agreements relating to Ashland fairly
summarize such matters in accordance with the rules under the Act.

(f) The Registration Statement, as amended, has become effective under the
Act; to the best knowledge of the undersigned, no stop order suspending the
effectiveness of the Registration Statement, as amended, has been issued, no
proceedings for that purpose have been instituted or threatened, and the
undersigned has no reason to believe that any part of the Registration
Statement, as amended, (other than the Form T-1 and the financial statements
including the notes thereto and related schedules and other financial and
statistical data included therein or incorporated therein by reference, as to
which the undersigned expresses no opinion), when such part became effective or
was incorporated by reference into such Registration Statement, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading or that
the Final Prospectus (other than the financial statements, including the notes
thereto and related schedules and other financial and statistical data included
therein or incorporated therein by reference, as to which the undersigned
expresses no belief), includes any untrue statement of a material fact or omits
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.

(g) The Distribution Agreement has been duly authorized, executed and
delivered by Ashland.

C-1-3
<PAGE>

(h) To the best knowledge of the undersigned, no consent, approval,
authorization or order of any court or governmental agency or body is required,
insofar as the same may be applicable to Ashland, for the consummation of the
transactions contemplated in the Distribution Agreement, except such as have
been obtained under the Act and the Trust Indenture Act and such as may be
required under the blue sky laws of any jurisdiction in connection with the sale
of the Notes.

(i) Neither the issue and sale of the Notes, nor the consummation of any
other of the transactions contemplated in the Distribution Agreement nor the
fulfillment of the terms thereof will conflict with, result in a material breach
of, or constitute a material default under the Second Restated Articles of
Incorporation or By-laws of Ashland, each as amended, or the terms of any
indenture or other agreement or instrument known to the undersigned and to which
Ashland or any of its subsidiaries is a party or bound, or any order or
regulation known to the undersigned to be applicable to Ashland or any of its
subsidiaries of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over Ashland or any of its subsidiaries.

(j) No holders of securities of Ashland have rights to the registration of
such securities under the Registration Statement.

As to certain of the matters referred to in Paragraph (c), Paragraph (d),
Paragraph (e), Paragraph (f) and Paragraph (h) in the foregoing opinion, I have
relied upon the opinion or letter of Cravath, Swaine & Moore dated the date
hereof, a copy of which opinion or letter is attached hereto and the undersigned
believes that you and the undersigned are justified in relying on such opinion
or letter.

I am not a member of the bar of any states other than the Commonwealth of
Kentucky and the State of West Virginia and, accordingly, do not purport to be
an expert on matters of law outside of such jurisdictions. I have, however,
reviewed such of the laws of other jurisdictions as I have deemed necessary and
relevant regarding the matters referred to above which are governed by such law
and have no reason to believe that the opinions stated herein are not correct.

Very truly yours,

Attachment

C-1-4
<PAGE>

ANNEX C-2-A

FORM OF OPINION OF
CRAVATH, SWAINE & MOORE

[DATE]

Ashland Inc.
Medium-Term Notes

Ladies and Gentlemen:

We have acted as counsel for Ashland Inc., a Kentucky corporation (the
"Company"), in connection with the execution and delivery of a Distribution
Agreement dated May __, 2000 (the "Distribution Agreement"), between you and the
Company, providing for the issue and sale by the Company of up to $300,000,000
aggregate principal amount of its Medium-Term Notes, Series J, Due Nine Months
or More from Date of Issue (the "Notes"), to be issued pursuant to the Indenture
dated as of August 15, 1989, as amended and restated as of August 15, 1990 (the
"Indenture"), between the Company and Citibank, N.A., as Trustee.

In that connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary or appropriate for the purpose
of this opinion, including (a) the Second Restated Articles of Incorporation of
the Company, as amended; (b) the By-laws of the Company, as amended; (c) the
Registration Statement on Form S-3 (No. 333-______) filed with the Securities
and Exchange Commission (the "Commission"), on May __, 2000 (such Registration
Statement, as amended, being hereinafter referred to as the "Registration
Statement"), for registration of $600,000,000 aggregate principal amount of
securities of the Company, to be issued from time to time by the Company, which
Registration Statement also constituted Post-Effective Amendment No. 4 to the
Company's Registration Statement No. 33-57011 with respect to an additional
$117,189,000 aggregate principal amount of securities, under the Securities Act
of 1933, as amended (the "Securities Act") and Post-Effective Amendment No. 1
to the Company's Registration Statement No. 333-70651 with respect to an
additional $231,311,000 aggregate principal amount of securities, (d) the
Prospectus dated March 10, 1999, filed with the Commission pursuant to Rule
424(b) of the General Rules and Regulations under the Securities Act (together
with the documents incorporated by reference, the "Base Prospectus"), (e) the
Prospectus Supplement dated the date hereof (the "Prospectus Supplement"), filed
with the Commission pursuant to Rule 424(b) of the General Rules and Regulations
under the Securities Act (the Base Prospectus, as supplemented by the Prospectus
Supplement being hereinafter collectively

C-2-A-1
<PAGE>

called the "Final Prospectus"); (f) the Distribution Agreement; (g) the
Indenture; (h) the form of the Notes; and (i) certain resolutions adopted by the
Board of Directors of the Company on _________. We have also relied upon advice
from the Commission that the Registration Statement was declared effective on
May __, 2000.

Based on the foregoing, we are of opinion as follows:

(a) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Kentucky,
with full corporate power and authority to own its properties and conduct its
business as described in the Final Prospectus.

(b) The Company's authorized equity capitalization is as set forth or
incorporated by reference in the Final Prospectus and the Notes conform to the
description thereof contained in the Final Prospectus.

(c) Assuming that the Indenture has been duly authorized, executed and
delivered by the Company, the Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended, and constitutes a legal, valid and binding
instrument enforceable against the Company in accordance with its terms (subject
to applicable bankruptcy, reorganization, fraudulent transfer, insolvency,
moratorium and other laws affecting creditors' rights generally from time to
time in effect). The enforceability of the Company's obligations is also subject
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

(d) Assuming that the Notes have been duly authorized, when the terms of
any Notes have been established in accordance with the Indenture and when such
Notes have been executed, authenticated, issued and delivered against payment
therefor in accordance with the provisions of the Indenture and pursuant to the
Distribution Agreement, the Notes will constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms (subject to applicable bankruptcy, reorganization, fraudulent
transfer, insolvency, moratorium and other laws affecting creditors' rights
generally from time to time in effect) and will be entitled to the benefits of
the Indenture. The enforceability of the Company's obligations is also subject
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

(e) Neither the issue and sale of the Notes nor the consummation of any
other of the transactions contemplated in the Distribution Agreement nor the
fulfillment of the terms thereof will conflict with, result in a material breach
of, or

C-2-A-2
<PAGE>

constitute a material default under, the Second Restated Articles of
Incorporation or By-laws of the Company.

(f) To our knowledge, no consent, approval, authorization or order of any
court or governmental agency or body is required, insofar as the same may be
applicable to the Company, for the consummation of the transactions contemplated
in the Distribution Agreement except such as have been obtained under the
Securities Act.

We are admitted to the Bar of the State of New York and express no opinion
as to the laws of any jurisdiction other than the State of New York and United
States of America. To the extent that our opinions herein are based upon matters
governed by the law of the Commonwealth of Kentucky, we have assumed without
independent investigation, the correctness of, and take no responsibility for,
the opinion dated today of David L. Hausrath, Esq., Vice President and General
Counsel of the Company.

We are furnishing this letter to you, as Agents, solely for your benefit.
Except, as set forth in the following paragraph, this letter may not be relied
upon by any other person or for any other purpose or use, circulated, quoted or
otherwise referred to for any other purpose. David L. Hausrath, Esq. and
Citibank, N.A., as Trustee, are each entitled to rely on this letter as fully as
if this letter had been addressed to them directly.

Very truly yours,

Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629

Salomon Smith Barney Inc.
388 Greenwich Street
New York, NY 10013

Chase Securities Inc.
270 Park Avenue
New York, NY 10017

C-2-A-3
<PAGE>

ANNEX C-2-B
[date]

Ashland Inc.
Medium-Term Notes

Ladies and Gentlemen:

We have acted as counsel for Ashland Inc., a Kentucky corporation (the
"Company"), in connection with the execution and delivery of a Distribution
Agreement dated May __, 2000, between you and the Company, providing for the
issue and sale by the Company of up to $300,000,000 aggregate principal amount
of its Medium-Term Notes, Series J, Due Nine Months or More from Date of Issue,
to be issued pursuant to the Indenture dated as of August 15, 1989, as amended
and restated as of August 15, 1990, between the Company and Citibank, N.A., as
Trustee.

In that capacity, we participated in conferences with certain officers of,
and with the accountants for, the Company concerning the preparation of (a) the
Registration Statement on Form S-3 (Registration No. 333-______) filed with the
Securities and Exchange Commission (the "Commission") on May __, 2000 (such
Registration Statement, as amended, being hereinafter called the "Registration
Statement"), for registration of $600,000,000 aggregate principal amount of
securities of the Company, to be issued from time to time by the Company, which
Registration Statement also constituted Post-Effective Amendment No. 4 to the
Company's Registration Statement No. 33-57011 with respect to an additional
$117,189,000 aggregate principal amount of securities and Post-Effective
Amendment No. 1 to the Company's Registration Statement No. 333-70651 with
respect to an additional $231,311,000 aggregate principal amount of Securities,
under the Securities Act of 1933, as amended (the "Securities Act"); (b) the
Prospectus dated May __, 2000, filed with the Commission pursuant to Rule 424(b)
of the General Rules and Regulations under the Securities Act (together with the
documents incorporated therein by reference, the "Base Prospectus"); and (c) the
Prospectus Supplement dated the date hereof (the "Prospectus Supplement"), filed
with the Commission pursuant to Rule 424(b) of the General Rules and Regulations
under the Securities Act (the Base Prospectus as supplemented by the Prospectus
Supplement being hereinafter called the "Final Prospectus"). Certain of the
documents incorporated by reference in the Registration Statement and Final
Prospectus were prepared and filed by the Company without our participation.

C-2-B-1
<PAGE>

Although we have made certain inquiries and investigations in connection
with the preparation of the Registration Statement and the Final Prospectus, the
limitations inherent in the role of outside counsel are such that we cannot and
do not assume responsibility for the accuracy or completeness of the statements
made in the Registration Statement and Final Prospectus, except insofar as such
statements relate to us and except to the extent set forth in paragraph (b) of
our opinion to you dated the date hereof. Subject to the foregoing, we hereby
advise you that our work in connection with this matter did not disclose any
information that gave us reason to believe that: (i) the Registration Statement,
at the time the Registration Statement became effective, or the Final Prospectus
and each amendment or supplement thereto as of the date hereof (in each case
except the financial statements and other information of an accounting or
financial nature included therein and the Statement of Eligibility (Form T-1)
included as an exhibit to the Registration Statement, as to which we do not
express any view) was not appropriately responsive in all material respects to
the requirements of the Securities Act and the applicable rules and regulations
of the Commission thereunder, or (ii) the Registration Statement, at the time
the Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the Final
Prospectus or any amendment or supplement thereto, at the date hereof, includes
an untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (in each case except
for the financial statements and other information of an accounting or financial
nature included therein and the Statement of Eligibility (Form T-1) included as
an exhibit to the Registration Statement, as to which we do not express any
view).

We are furnishing this letter to you, as Agents, solely for your benefit.
Except as set forth in the following paragraph, this letter may not be relied
upon by any other person or for any other purpose or used, circulated, quoted or
otherwise referred to for any other purpose.

David L. Hausrath, Esq. and Citibank, N.A., as Trustee, are each entitled
to rely on this letter as fully as if this letter had been addressed to them
directly.

Very truly yours,

Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629

C-2-B-2
<PAGE>

Salomon Smith Barney Inc.
388 Greenwich Street
New York, NY 10013

Chase Securities Inc.
270 Park Avenue
New York, NY 10017

C-2-B-3
<PAGE>

ANNEX D
Accountants' Comfort Letter

Upon execution of the Distribution Agreement and, to the extent provided in
Section 7 of the Distribution Agreement, at each Closing Date, Ernst & Young LLP
shall furnish to the Agents or Purchaser, as the case may be, a letter or
letters (which may refer to letters previously delivered to the Agents or
Purchaser, as the case may be), dated as of the date of the Distribution
Agreement or such Closing Date, as the case may be, in form and substance
satisfactory to the Agents or the Purchaser, as the case may be, confirming that
they are independent accountants within the meaning of the Securities Act and
the applicable published rules and regulations thereunder and stating in effect
that:

(i) in their opinion the consolidated financial statements audited by them
and incorporated by reference in the Registration Statements and the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act and the Exchange Act and the related
published rules and regulations;

(ii) on the basis of a reading of the latest available interim consolidated
financial statements of the Company, carrying out certain specified procedures
(but not an audit in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect to the
comments set forth in such letter, inquiries of officials of the Company
responsible for financial and accounting matters and other specified procedures,
nothing came to their attention that caused them to believe that:

(A) the unaudited consolidated financial statements, if any, included
or incorporated in the Registration Statements and the Prospectus do not
comply as to form in all material respects with the applicable accounting
requirements and with the published rules and regulations of the Commission
with respect to financial statements included or incorporated in quarterly
reports on Form 10-Q under the Exchange Act, or are not in conformity with
generally accepted accounting principles applied on a basis consistent with
that of the audited financial statements included or incorporated in the
Registration Statement and the Prospectus, except for the accounting
changes discussed in the notes thereto;

(B) with respect to the period subsequent to the date of the most
recent financial statements included or incorporated in the Registration
Statements or Prospectus, (i) at the date of the latest available
consolidated balance sheet read by such accountants or (ii) at a subsequent
specified date not more than five days prior to the date of the letter,
there was any decrease in the working

D-1
<PAGE>

capital (but only with respect to the date referred to in the foregoing
clause (i)), any change in capital stock of the Company (except pursuant to
existing stock option, bonus or other similar plans or conversion of
debentures or preferred stock) or increase in long-term debt and debt due
within one year, or decrease in the common stockholders' equity of the
Company and its consolidated subsidiaries (except such changes, increases
or decreases which the Prospectus (directly or by incorporation) discloses
have occurred or may occur) as compared with the amounts shown on the most
recent consolidated balance sheet included or incorporated in the
Registration Statements and the Prospectus;

(C) for the period from the closing date of the most recent
consolidated balance sheet included or incorporated in the Registration
Statements and the Prospectus to the closing date of the latest available
consolidated income statement read by such accountants there were any
decreases, as compared with the corresponding period in the previous year,
in consolidated sales and operating revenues or consolidated net income
except for changes or decreases which the Prospectus (directly or by
incorporation) discloses have occurred or may occur, or which are described
in such letter; or

(D) unaudited pro forma consolidated condensed financial statements,
if any, included or incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable accounting
requirements of the Securities Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements;

(iii) they have performed certain other specified procedures as a result of
which they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the Company and its
subsidiaries) set forth in the Registration Statements and the Prospectus and in
Exhibit 12 to the Registration Statements, including the information included or
incorporated in Items 1, 6 and 7 of the Company's Annual Report on Form 10-K,
incorporated in the Registration Statements and the Prospectus, and the
information included in the "Management's Discussion and Analysis" included or
incorporated in the Company's quarterly reports on Form 10-Q, incorporated in
the Registration Statements and the Prospectus, agrees with the accounting
records of the Company and its subsidiaries excluding any questions of legal
interpretation; and

(iv) they have made a review of any unaudited financial statements included
in the Registration Statement in accordance with standards established by the

D-2
<PAGE>

American Institute of Certified Public Accountants, as indicated in their report
or reports, if any, attached to such letter.
<PAGE>

SCHEDULE I
----------
Agent's Commissions
-------------------

Commission
(percent of
principal amount
Maturity of Note of Note)
---------------- ----------------

Maturity
--------

9 months to less than 12 months .125%

12 months to less than 18 months .150

18 months to less than 24 months .200

24 months to less than 30 months .250

30 months to less than 3 years .300

3 years to less than 4 years .350

4 years to less than 5 years .450

5 years to less than 7 years .500

7 years to less than 10 years .550

10 years to less than 20 years .600

20 years or more .750

<PAGE>

Exhibit 4.14

[GRAPHIC] [GRAPHIC] [GRAPHIC]

COMMON STOCK COMMON STOCK

INCORPORATED UNDER THE LAWS ASHLAND INC. THIS CERTIFICATE IS TRANSFERABLE
OF THE COMMONWEALTH OF KENTUCKY IN THE CITY OF NEW YORK OR
CHICAGO, ILLINOIS

CUSIP 044204 10 5
SEE REVERSE FOR CERTAIN DEFINITIONS

This Certifies that is the owner of

FULLY-PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $1.00 EACH OF THE
COMMON STOCK

of Ashland Inc. transferable by the holder hereof in person or by duly
authorized attorney upon surrender to the Company of this certificate
properly endorsed. The voting power, designation, preference, and relative,
participating, optional or other special rights and qualifications,
limitations, or restrictions thereof, granted to or imposed upon the shares of
each class, are set forth in the Company's Second Restated Articles of
Incorporation, as amended. This certificate is not valid unless countersigned
by the Transfer Agent and registered by the Registrar.

Witness the seal of the Company and signatures of its duly authorized officers.

DATED

/s/ Richard Thomas /s/ Paul W. Chellgren
SECRETARY CHAIRMAN OF THE BOARD

[SEAL]

COUNTERSIGNED AND REGISTERED
HARRIS TRUST AND SAVINGS BANK
TRANSFER AGENT
AND REGISTRAR

AUTHORIZED SIGNATURE
<PAGE>

ASHLAND INC.

ASHLAND INC. WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO
REQUESTS, A PRINTED COPY OF THE PORTION OF THE COMPANY'S SECOND RESTATED
ARTICLES OF INCORPORATION, AS AMENDED, AND OTHER DOCUMENTS SHOWING THE
DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS APPLICABLE TO EACH
CLASS OF SHARES AND THE VARIATIONS IN RIGHTS, PREFERENCES AND LIMITATIONS
DETERMINED FOR EACH SERIES AND THE AUTHORITY OF THE BOARD OF DIRECTORS TO
DETERMINE VARIATIONS FOR FUTURE SERIES. SUCH REQUEST MAY BE MADE TO THE
SECRETARY OF THE COMPANY OR TO THE TRANSFER AGENT.

This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement dated as of May 16, 1996, as it may be
amended from time to time (the "Rights Agreement"), between Ashland Inc. (the
"Company") and Harris Trust and Savings Bank, as Rights Agent (the "Rights
Agent"), the terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be evidenced by
this certificate. The Rights Agent will mail to the holder of this certificate a
copy of the Rights Agreement without charge after a receipt of a written request
therefor. Rights beneficially owned by Acquiring Persons or their Affiliates or
Associates (as such terms are defined in the Rights Agreement) and by any
subsequent holder of such Rights are null and void and nontransferable.

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JP TEN -- as joint tenants with right of survivorship and not as
tenants in common

UNIF GIFT MIN ACT -- Custodian
--------------------- ------------------
(Cust.) (Minor)
under Uniform Gifts to Minors Act
---------------
(State)

UNIF TRAN MIN ACT -- Custodian
--------------------- ------------------
(Cust.) (Minor)
under Uniform Transfers to Minors Act
-----------
State

Additional abbreviations may also be used though not in the above list.

For value received; hereby sell, assign and transfer unto
-------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------

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

- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

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

- ------------------------------------------------------------------------- Shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
----------------------------------------------

- --------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within named Company
with full power of substitution in the premises.

Dated,
---------------------------------------------------

---------------------------------------------------
AFFIX MEDALLION SIGNATURE
GUARANTEE IMPRINT BELOW
---------------------------------------------------

---------------------------------------------------
NOTICE: THE ABOVE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE
WHATEVER.

THE SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION SUCH AS A SECURITIES
BROKER/DEALER, COMMERCIAL BANK, TRUST COMPANY,
SAVINGS ASSOCIATION OR A CREDIT UNION PARTICIPATING
IN A MEDALLION PROGRAM APPROVED BY THE SECURITIES
TRANSFER ASSOCIATION, INC.

<PAGE>

Exhibit 5

[LETTERHEAD OF ASHLAND INC.]
May 12, 2000

Ashland Inc.
50 E. RiverCenter Boulevard
Covington, KY 41012

Dear Sirs:

As Vice President and General Counsel of Ashland Inc., a Kentucky
corporation (the "Company"), I have examined and am familiar with the Second
Restated Articles of Incorporation of the Company, as amended, and the By-laws
of the Company, as amended. I am also familiar with the corporate proceedings
taken by the Board of Directors to authorize the Registration Statement on Form
S-3 (the "Registration Statement") being filed by the Company on the date hereof
with the Securities and Exchange Commission under the Securities Act of 1933
(the "Securities Act") with respect to $600,000,000 aggregate initial offering
price of unsecured debt securities, which may be either senior or subordinated
debt securities (the "Debt Securities"), shares of cumulative preferred stock,
without par value (the "Preferred Stock"), depositary shares (the "Depositary
Shares"), shares of common stock, par value $1.00 per share (the "Common Stock")
and warrants to purchase Debt Securities, Preferred Stock or Common Stock (the
"Warrants"), for issuance from time to time pursuant to Rule 415 under the
Securities Act.

In connection with the foregoing, I have examined originals, or copies
certified or otherwise identified to my satisfaction, of such documents,
corporate records and other instruments as I have deemed necessary or
appropriate for the purpose of this opinion.

Based upon the foregoing, I am of the opinion that:

1. When the Debt Securities have been duly authorized by appropriate
corporate authorization and executed, authenticated and delivered against
payment therefor, such Debt Securities will be validly issued and will
constitute binding obligations of the Company in accordance with their terms,
subject to applicable bankruptcy, reorganization, moratorium or similar laws
affecting creditors' rights generally from time to time in effect.
<PAGE>

Ashland Inc.
January 15, 1998
Page 2

2. When the Preferred Stock, the Common Stock and the Depositary Shares
have been duly authorized by appropriate corporate authorization and when
issued, such Preferred Stock, Common Stock, and Depositary Shares will be
validly issued, fully paid and nonassessable.

3. When the Warrants have been duly authorized by appropriate corporate
authorization and executed, countersigned and delivered against payment
therefor, such Warrants will be validly issued and will constitute binding
obligations of the Company in accordance with their terms, subject to applicable
bankruptcy, reorganization, moratorium or similar laws affecting creditors'
rights generally from time to time in effect.

I know that I am referred to under the heading "Legal Matters" in the
Registration Statement, and I consent to such use of my name in the Registration
Statement and to the use of this opinion for filing as an exhibit to the
Registration Statement.

Very truly yours,

/S/ David L. Hausrath

David L. Hausrath

<PAGE>

EXHIBIT 12
ASHLAND INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(In millions)

<TABLE>
<CAPTION>
Six Months Ended
Years Ended September 30 March 31
------------------------------------------------------------- -----------------------
1995 1996 1997 1998 1999 1999 2000
---------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS
- --------
Income (loss) from continuing operations $ (2) $ 115 $ 169 $ 178 $ 291 $ 76 $ 65
Income taxes - 71 125 114 193 49 47
Interest expense 153 154 148 133 141 68 96
Interest portion of rental expense 35 44 48 40 35 17 18
Amortization of deferred debt expense 1 1 1 1 1 - 1
Undistributed earnings of
unconsolidated affiliates (1) (3) (6) (62) (11) 4 (20)
Amounts related to significant affiliates*
Earnings (losses) 7 7 7 - - - -
Dividends (1) - - - - - -
---------- ---------- ----------- ---------- ---------- ---------- -----------

$ 192 $ 389 $ 492 $ 404 $ 650 $ 214 $ 207
========== ========== =========== ========== ========== ========== ===========

FIXED CHARGES
- -------------
Interest expense $ 153 $ 154 $ 148 $ 133 $ 141 $ 68 $ 96
Interest portion of rental expense 35 44 48 40 35 17 18
Amortization of deferred debt expense 1 1 1 1 1 - 1
Capitalized interest - - 1 - - - -
Fixed charges of significant affiliates* 6 6 5 - - - -
---------- ---------- ----------- ---------- ---------- ---------- -----------

$ 195 $ 205 $ 203 $ 174 $ 177 $ 85 $ 115
========== ========== =========== ========== ========== ========== ===========

COMBINED FIXED CHARGES AND PREFERRED STOCK
- ------------------------------------------
DIVIDENDS
- ---------
Preferred dividend requirements $ 19 $ 19 $ 9 $ - $ - $ - $ -
Ratio of pretax to net income** 1.04 1.61 1.74 - - - -
---------- ---------- ----------- ---------- ---------- ---------- -----------

Preferred dividends on a pretax basis 19 30 17 - - - -
Fixed charges 195 205 203 174 177 85 115
---------- ---------- ----------- ---------- ---------- ---------- -----------

$ 214 $ 235 $ 220 $ 174 $ 177 $ 85 $ 115
========== ========== =========== ========== ========== ========== ===========

RATIO OF EARNINGS TO
FIXED CHARGES *** 1.90 2.42 2.32 3.67 2.52 1.79

RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
**** 1.66 2.24 2.32 3.67 2.52 1.79
</TABLE>

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

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

*** Fixed charges exceeded earnings (as defined) by $3 million.

**** Combined fixed charges and preferred stock dividends exceeded earnings (as
defined) by $22 million.

<PAGE>

Exhibit 23.1

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus dated May 12, 2000 of
Ashland Inc. and consolidated subsidiaries (Ashland) and to the incorporation
by reference therein (i) of our report dated November 3, 1999, with respect to
the consolidated financial statements and schedule of Ashland, and (ii) of our
reports dated January 21, 2000 and March 14, 2000, with respect to the
consolidated financial statements and schedule, respectively, of Arch Coal,
Inc., included in Ashland's Annual Report on Form 10-K, as amended by Form 10-
K/A, for the year ended September 30, 1999, filed with the Securities and
Exchange Commission.

Cincinnati, Ohio
May 10, 2000

<PAGE>

Exhibit 23.2

Consent of Independent Accountants

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 pertaining to the offering of $600,000,000 of Debt
Securities, Preferred Stock, Depositary Shares, Common Stock and/or Warrants of
Ashland Inc., of our report dated February 8, 2000, relating to the financial
statements of Marathon Ashland Petroleum LLC, which appears in Ashland Inc.'s
Annual Report on Form 10-K/A for the fiscal year ended September 30, 1999. We
also consent to the reference to us under the heading "Experts" in such
Registration Statement.

PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
May 12, 2000

<PAGE>

EXHIBIT 24

POWER OF ATTORNEY
-----------------

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned Directors and
Officers of ASHLAND INC., a Kentucky corporation, which is about to file a
Registration Statement on Form S-3 for the registration of up to $600,000,000 of
common stock, preferred stock, depositary shares, debt securities, warrants to
purchase equity securities or warrants to purchase debt securities or any
combination thereof with the Securities and Exchange Commission under the
provisions of the Securities Exchange Act of 1933, as amended, hereby
constitutes and appoints PAUL W. CHELLGREN, DAVID L. HAUSRATH, and LINDA L. FOSS
and each of them, his or her true and lawful attorneys-in-fact and agents, with
full power to act without the others, to sign and file such Registration
Statement and the exhibits thereto and any and all amendments thereof and any
and all other documents in connection therewith with the Securities and Exchange
Commission, and to do and perform any and all acts and things requisite and
necessary to be done in connection with the foregoing as fully as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.

Dated: March 16, 2000

/S/ Paul W. Chellgren /S/ Bernadine P. Healy
- ------------------------------------- -------------------------------------
Paul W. Chellgren, Chairman of the Bernadine P. Healy, Director
Board and Chief Executive Officer

/S/ J. Marvin Quin /S/ Mannie L. Jackson
- ------------------------------------- -------------------------------------
J. Marvin Quin, Senior Vice President Mannie L. Jackson, Director
and Chief Financial Officer

/S/ Kenneth L. Aulen /S/ Patrick F. Noonan
- ------------------------------------- -------------------------------------
Kenneth L. Aulen, Administrative Patrick F. Noonan, Director
Vice President, Controller and
Principal Accounting Officer

/S/ Samuel C. Butler /S/ Jane C. Pfeiffer
- ------------------------------------- -------------------------------------
Samuel C. Butler, Director Jane C. Pfeiffer, Director

/S/ Frank C. Carlucci /S/ William L. Rouse
- ------------------------------------- -------------------------------------
Frank C. Carlucci, Director William L. Rouse, Jr., Director

/S/ Ernest H. Drew /S/ Theodore L. Solso
- ------------------------------------- -------------------------------------
Ernest H. Drew, Director Theodore L. Solso

/S/ James B. Farley
- -------------------------------------
James B. Farley, Director
<PAGE>

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

The undersigned certifies that he is an Assistant Secretary of ASHLAND INC.
("ASHLAND"), a Kentucky corporation, and that, as such, he is authorized to
execute this Certificate on behalf of ASHLAND and further certifies that
attached is a true and correct copy of an excerpt from the minutes of a meeting
of the Board of Directors of ASHLAND duly called, convened, and held on March
16, 2000 at which a quorum was present and acting throughout.

IN WITNESS WHEREOF, I have signed this Certification this 12th day of May 2000.

/S/ J. Michael Peffer
---------------------------
J. Michael Peffer,
Assistant Secretary
<PAGE>

EXCERPT FROM
ASHLAND INC.
MINUTES OF BOARD OF DIRECTOR'S MEETING
MARCH 16, 2000

UNIVERSAL SHELF OFFERING
------------------------

WHEREAS, on November 5, 1998, the Board of Directors authorized the Corporation
to issue from time to time, securities (the "1998 Securities"), not exceeding
$600,000,000 in the aggregate principal amount or in the aggregate gross sales
proceeds to the Corporation; the 1998 Securities may take the form of common
stock, preferred stock, debt securities, depositary shares, warrants to purchase
equity securities or warrants to purchase debt securities or any combination of
the foregoing;

WHEREAS, pursuant to the November 5, 1998 Board resolutions, the Corporation
filed with the Securities and Exchange Commission (the "Commission") a Form S-3
Registration Statement No. 333-70651 under the Securities Act of 1933, as
amended (the "1933 Act"), as amended by Amendments 1, 2 and 3 registering the
1998 Securities (the "1998 Registration Statement");

WHEREAS, pursuant to the November 5, 1998 Board resolutions, the Corporation has
filed with the Commission: (a) on March 12, 1999, a Prospectus Supplement to the
Form S-3 Registration Statement No. 333-70651 relating to $220,000,000 Series H
Medium Term Notes, Due from 9 Months or More from Date of Issue (which included
the $220,000,000 unissued under the prior Series H Medium-Term Notes and of
which $70,000,000 aggregate principal amount remained to be issued under the
1998 Registration Statement) and (b) on September 3, 1999 a Prospectus
Supplement to the Form S-3 Registration Statement No. 333-70651 relating to
$300,000,000 Series I Medium Term Notes, Due 9 Months or More from Date of Issue
(which included $70,000,000 unissued under the Series H Medium Term Notes and of
which $213,500,000 aggregate principal amount remains to be issued under the
1998 Registration Statement) (the "Series I MTN's");

WHEREAS, the Corporation desires to expand the issuance of the 1998 Securities
by authorizing an additional amount which is sufficient at the time such
increase is implemented to reestablish the aggregate principal amount or the
aggregate gross proceeds thereafter available to the Corporation to an amount
not exceeding $600,000,000 (the "2000 Securities");

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby authorizes
the issuance by the Corporation of the 2000 Securities; provided that: (i) the
total issuance of the previously registered but unissued Series I MTN's, the
remaining undesignated portion of the 1998 Securities and the 2000 Securities
shall not exceed $600,000,000 in aggregate principal amount or in aggregate
gross proceeds to the Corporation (the "Securities"), (ii) equity securities
issued shall comply with the applicable limitation contained in Rule
415(a)(4)(ii) promulgated under the 1933 Act, and (iii) equity securities or
warrants to purchase equity securities of the Corporation shall be issued only
with the prior approval of the Board of Directors;

RESOLVED, that the Chairman of the Board, the President, any Vice President, the
Treasurer and any Assistant Treasurer (the "Authorized Officers") be, and each
of them is, hereby authorized, acting singly, to prepare, execute and file for
and on behalf of the Corporation with
<PAGE>

the Commission, a Registration Statement covering the Securities (the
"Registration Statement"); in connection therewith, to execute and file any and
all amendments to the Registration Statement all in such forms as the Authorized
Officers executing the same may deem necessary or appropriate, their execution
thereof to be the conclusive evidence of such approval;

RESOLVED, that any Authorized Officer be, and each of them is, hereby
authorized, acting singly, to approve the form of any Prospectus or Prospectus
Supplements relating to the Securities registered under the Registration
Statement as may be necessary or appropriate, and to cause any such Prospectus
or Supplement to be filed with the Commission and with such other governmental
agencies as may, in the opinion of the Corporation's counsel, be required or
appropriate;

RESOLVED, that the Authorized Officers be, and each of them is, hereby
authorized, acting singly, to prepare, execute and file with the Commission an
application on Form 8-A for the registration under the Securities Exchange Act
of 1934, as amended, of the Securities; in connection therewith, to execute and
file any and all amendments to such application all in such forms as the
Authorized Officers executing the same may deem necessary or appropriate, their
execution thereof to be the conclusive evidence of such approval;

RESOLVED, the Authorized Officers be, and each of them is, hereby authorized,
acting singly, to approve the following matters relating to debt securities or
warrants to purchase debt securities issuable under the Registration Statement
(the "Debt Securities"): (a) the amount, timing and the general terms of an
offering or offerings of the Debt Securities; (b) all specific terms, conditions
and provisions with respect to such Debt Securities, including without
limitation, title, interest rate, maturity, redemption features, sinking fund
provisions, if any; and (c) all other actions necessary or appropriate in order
to implement such offering or offerings; provided, however, that without
derogating from the binding effect of the above, it is understood that the oral
concurrence by the majority of the members of the Finance Committee of the Board
of Directors with respect to (a) above shall be obtained prior to the issuance
of any Debt Securities other than medium term notes;

RESOLVED, that the Authorized Officers be, and each of them is, hereby
authorized acting singly, to negotiate, execute, acknowledge, deliver and
perform in the name and on behalf of the Corporation, in such number of
counterparts as any of the Authorized Officers shall deem proper, one or more
Underwriting Agreements or Distribution Agreements between the Corporation and
one or more underwriters or agents in connection with the issuance of the
Securities to be sold under the Registration Statement of the Corporation,
having such form and containing such terms and conditions not inconsistent with
these resolutions of the Board;

RESOLVED, that the Corporation may issue and sell the Securities registered
under the Registration Statement under and pursuant to one or more indentures,
including but not limited to the Indenture dated as of August 15, 1989 as
amended and restated as of August 15, 1990 entered into between the Corporation
and Citibank, N.A., or such other indentures that the Corporation may enter into
with a bank or trust company from time to time;

RESOLVED, that the Authorized Officers be, and each of them is, hereby
authorized, acting

-2-
<PAGE>

singly, to make application to the New York Stock Exchange and Chicago Stock
Exchange for the listing thereon of the Securities sold under the Registration
Statement and in connection therewith to execute, in the name and on behalf of
the Corporation, and deliver and file, all such applications, agreements and
other papers as shall be necessary to accomplish such listings;

RESOLVED, that it is desirable and in the best interest of the Corporation that
its securities be qualified or registered for sale in various states; that any
Authorized Officer be, and each of them is, hereby authorized, acting singly, to
determine the states in which appropriate action shall be taken to qualify or
register for issue, offer, sale or trade all or such part of the Securities of
this Corporation as any Authorized Officer may deem advisable; that the
Authorized Officers be, and each of them is, hereby authorized, acting singly,
to perform on behalf of the Corporation any and all acts as they may deem
necessary or advisable in order to comply with the applicable laws of any such
states, and in connection therewith to execute and file all requisite papers and
documents, including, but not limited to, applications, reports, surety bonds,
irrevocable consents and appointments of attorneys for service of process; and
that the execution by any Authorized Officer of any such paper or document or
the doing of any act in connection with the foregoing matters shall conclusively
establish their authority therefor from this Corporation and the approval and
ratification by this Corporation of the papers and documents so executed and the
action so taken;

FURTHER RESOLVED, that the Authorized Officers be, and each of them hereby is,
authorized to take all such further action and to execute all such further
instruments and documents, in the name and on behalf of the Corporation in their
judgment may be necessary, proper or advisable to accomplish the purposes of the
foregoing resolutions.

-3-

<PAGE>

EXHIBIT 25

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------

FORM T-1

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

Check if an application to determine eligibility of a Trustee
pursuant to Section 305 (b)(2) ____

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

CITIBANK, N.A.
(Exact name of trustee as specified in its charter)

13-5266470
(I.R.S. employer
identification no.)

399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)

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

Ashland Inc.
(Exact name of obligor as specified in its charter)

Kentucky 61-0122250
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)

50 E. RiverCenter Boulevard
Covington, KY 41012
(Address of principal executive offices) (Zip Code)

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

Debt Securities
(Title of the indenture securities)
<PAGE>

Item 1. General Information.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority to
which it is subject.

Name Address
---- -------
Comptroller of the Currency Washington, D.C.

Federal Reserve Bank of New York New York, NY
33 Liberty Street
New York, NY

Federal Deposit Insurance Corporation Washington, D.C.

(b) Whether it is authorized to exercise corporate trust powers.

Yes.

Item 2. Affiliations with Obligor.

If the obligor is an affiliate of the trustee, describe each such
affiliation.

None.

Item 16. List of Exhibits.

List below all exhibits filed as a part of this Statement of
Eligibility.

Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as exhibits hereto.

Exhibit 1 - Copy of Articles of Association of the Trustee, as now in
effect. (Exhibit 1 to T-1 to Registration Statement No. 2-79983)

Exhibit 2 - Copy of certificate of authority of the Trustee to
commence business. (Exhibit 2 to T-1 to Registration Statement No.
2-29577).

Exhibit 3 - Copy of authorization of the Trustee to exercise corporate
trust powers. (Exhibit 3 to T-1 to Registration Statement No. 2-55519)

Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1
to Registration Statement No. 33-34988)

Exhibit 5 - Not applicable.

Exhibit 6 - The consent of the Trustee required by Section 321(b) of
the Trust
<PAGE>

Indenture Act of 1939. (Exhibit 6 to T-1 to Registration Statement No.
33-19227.)

Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A.
(as of December 31, 1999 - attached)

Exhibit 8 - Not applicable.

Exhibit 9 - Not applicable.

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

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 3rd day of
May, 2000.

CITIBANK, N.A.

By /s/Nancy Forte
-----------------------
Nancy Forte
Senior Trust Officer
<PAGE>
Charter No. 1461

Comptroller of the Currency
Northeastern District

REPORT OF CONDITION CONSOLIDATING DOMESTIC AND FOREIGN SUBSIDIARIES OF
Citibank, N.A. of New York in the State of New York, at the close of business
on December 31, 1999, published in response to call made by Comptroller of the
Currency, under Title 12, United States Code, Section 161. Charter Number 1461,
Comptroller of the Currency, Northeastern District.

<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
TOTAL LIABILITIES ................................................................................................. $ 306,337,000

EQUITY CAPITAL

Perpetual preferred stock and related surplus ..................................................................... 0
Common stock ...................................................................................................... 751,000
Surplus ........................................................................................................... 9,836,000
Undivided profits and capital reserves ............................................................................ 11,565,000
Net unrealized holding gains (losses) on available-for-sale securities ............................................ 116,000
Accumulated net gains (losses) on cash flow hedges ................................................................ 0
Cumulative foreign currency translation adjustments ............................................................... (706,000)

TOTAL EQUITY CAPITAL .............................................................................................. $ 21,562,000

TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK, AND EQUITY CAPITAL ............................................... $ 327,899,000

Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ................................................................ 10,648,000

Interest-bearing balances ......................................................................................... 12,916,000

Held-to-maturity securities ....................................................................................... 0
Available-for-sale securities ..................................................................................... 40,494,000
Federal funds sold and securities purchased under agreements to resell ............................................ 7,255,000
Loans and lease financing receivables:
Loans and Leases, net of unearned income .......................................................................... $209,214,000
</TABLE>
<PAGE>

2
<TABLE>
<CAPTION>

LESS:
<S> <C>
Allowance for loan and lease losses ............................................................................... 4,647,000
Loans and leases, net of unearned income, allowance, and reserve .................................................. 204,567,000
Trading assets .................................................................................................... 28,321,000
Premises and fixed assets (including capitalized leases) .......................................................... 3,808,000
Other real estate owned ........................................................................................... 365,000
Investments in unconsolidated subsidiaries and associated companies ............................................... 1,212,000
Customers' liability to this bank on acceptances outstanding ...................................................... 1,134,000
Intangible assets ................................................................................................. 4,244,000
Other assets ...................................................................................................... 12,890,000

TOTAL ASSETS ...................................................................................................... $ 327,899,000

LIABILITIES
Deposits:

In domestic offices ............................................................................................... $ 46,525,000
Noninterest-bearing ............................................................................................... 15,373,000
Interest-bearing .................................................................................................. 31,152,000
In foreign offices, Edge and Agreement subsidiaries, and IBFs ..................................................... 188,307,000
Noninterest-bearing ............................................................................................... 12,313,000
Interest-bearing .................................................................................................. 175,994,000
Federal funds purchased and securities sold under agreements to repurchase ........................................ 8,039,000
Demand notes issued to the U.S. Treasury .......................................................................... 0
Trading liabilities ............................................................................................... 196,000
Other borrowed money (includes mortgage indebtedness
and obligations under capitalized leases):
With a remaining maturity of one year or less ..................................................................... 11,978,000
With a remaining maturity of more than one year through three years ............................................... 1,170,000
With a remaining maturity of more than three years ................................................................ 2,827,000
Bank's liability on acceptances executed and outstanding .......................................................... 1,222,000
Subordinated notes and debentures ................................................................................. 6,850,000
Other liabilities ................................................................................................. 13,223,000
</TABLE>

I, Roger W. Trupin, Controller of the above-named bank do hereby declare that
this Report of Condition is true and correct to the best of my knowledge and
belief.
<PAGE>

3
ROGER W. TRUPIN
CONTROLLER

We, the undersigned directors, attest to the correctness of this Report of
Condition. We declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions and
is true and correct.

JOHN S. REED
WILLIAM R. RHODES
PAUL J. COLLINS
DIRECTORS