THIS PROSPECTUS RELATES TO THE
REGISTRATION STATEMENT ON FORM S-3
(NO. 333-01365) OF EATON CORPORATION
AND IS FILED PURSUANT TO RULE 424(B)(3)
PROSPECTUS
EATON CORPORATION
1,271 Common Shares
This Prospectus relates to 1,271 Common Shares, $.50 par value per share
(the "Shares"), of Eaton Corporation, an Ohio corporation ("Eaton" or
the "Company"), which are owned by certain participants (the "Selling
Shareholders") in the Incentive Compensation Deferral Plan adopted by the
shareholders of the Company at its annual meeting on April 26, 1995 (the
"Plan"). See "The Selling Shareholders." The Shares may be offered
for sale from time to time by the Selling Shareholders in open market
ordinary brokerage transactions on the New York Stock Exchange, the Chicago
Stock Exchange, the Pacific Stock Exchange or the London Stock Exchange at
market prices prevailing at the time of sale, or in private transactions at
negotiated prices. Whether or not any such sales will be made, and the timing
and amount of any sale, is within the sole discretion of the Selling
Shareholders. The Company will not receive any of the proceeds from the sale
of the Shares. See "Plan of Distribution."
The Shares have been acquired by the Selling Shareholders from the
Company pursuant to the Plan.
Eaton Common Shares are listed on the New York Stock Exchange. On
February 27, 1996 the average of the high and low prices of Eaton Common
Shares on the New York Stock Exchange was $58.50.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is March 14, 1996
<PAGE>
No person is authorized to give any information or to make any
representations, other than those contained or incorporated by reference
in this Prospectus in connection with the offering contemplated hereby,
and, if given or made, such information or representations must not be
relied upon as having been authorized by the Company or the Selling
Shareholders. This Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the securities offered hereby
to any person to whom it is unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any sale hereunder shall,
under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that the
information contained or incorporated by reference herein is correct as
of any time subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy material and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy material and other information concerning the Company and
the Registration Statement (as defined herein) can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549-1004, and
at the following Regional Offices of the Commission: Midwest Regional
Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511
and Northeast Regional Office, 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549-1004, at prescribed rates. Such reports, proxy
material and other information concerning the Company and the Registration
Statement can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, the Chicago Stock
Exchange, 440 South LaSalle Street, Chicago, Illinois 60605 and the Pacific
Stock Exchange, 301 Pine Street, San Francisco, California 94104.
This Prospectus constitutes part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities
Act of 1933, as amended (the "Securities Act"). As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information
contained in the Registration Statement. Statements contained in this
Prospectus or in any document incorporated by reference in this Prospectus
are summaries that are not necessarily complete and, in each instance,
reference is made to the copy of such document as filed. Each such statement
is qualified in its entirety by such reference. The Registration Statement,
including exhibits and schedules thereto, and documents or information
incorporated by reference may be inspected without charge at the offices of
the Commission, and copies of such materials may be obtained therefrom at
prescribed rates.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 1-1396) are hereby incorporated by reference into this Prospectus:
1. Annual Report on Form 10-K for the year ended December 31, 1994,
including Form 10-K/A amending such Annual Report on Form 10-K.
2. Definitive proxy statement dated March 17, 1995, concerning the
Company's Annual Meeting of Shareholders held on April 26, 1995.
3. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1995, June 30, 1995 and September 30, 1995.
4. Form 11-K Annual Report dated June 23, 1995, relating to the Eaton
Corporation Share Purchase and Investment Plan, for the year ended
December 30, 1994.
5. Form 11-K Annual Report dated June 23, 1995, relating to the Eaton
Corporation Savings Plan for Certain Cutler-Hammer Represented
Employees, for the year ended December 31, 1994.
6. Form 11-K Annual Report dated October 10, 1995, relating to the
Lectron Products, Inc. Retirement Savings Plan, for the year ended
December 31, 1994.
7. Current Reports on Form 8-K dated June 28, 1995 and dated June 5,
1995.
8. Form 8-A dated July 5, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior
to the termination of the offering of the Shares shall be deemed to be
incorporated by reference in this Prospectus and to be a part of this
Prospectus from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for all purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as
so modified and superseded, to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person to whom
a copy of this Prospectus is delivered, upon the written or oral request of
such person, a copy of any or all of the documents incorporated herein by
reference (not including the exhibits to such documents, unless such exhibits
are specifically incorporated by reference in such documents).
Requests for such copies should be directed to Eaton Corporation,
Shareholder Relations, Eaton Center, 1111 Superior Avenue, Cleveland, Ohio
44114-2584 (telephone (216) 523-4350).
THE COMPANY
The Company is a global manufacturer of highly engineered products which
serve vehicle, industrial, construction, commercial and aerospace markets.
Principal products include truck transmissions and axles, engine components,
hydraulic products, electrical power distribution and control equipment,
ion implanters and a wide variety of controls.
The Company's principal executive office is located at Eaton Center,
1111 Superior Avenue, Cleveland, Ohio 44114-2584 and its telephone number is
(216) 523-5000. As used in this Prospectus, the term "Company" means Eaton
Corporation and its consolidated subsidiaries, unless the context otherwise
requires.
EARNINGS REPORT
On January 22, 1996, the Company announced record sales, earnings and
earnings per share for the fourth quarter and the full year of 1995. Net
income for the full year reached $399 million, or $5.13 per share, on sales
of $6.8 billion. These results compare with 1994 net income of $333 million,
or $4.40 per share, on sales of $6.1 billion.
Net income for the fourth quarter of 1995 reached $90 million, or $1.16
per share, on sales of $1.7 billion. Comparable results for the fourth
quarter of 1994 were $89 million, or $1.15 per share, on sales of $1.6 billion.
THE SELLING SHAREHOLDERS
On April 26, 1995, the Company's shareholders approved the Plan, which
enables participants to defer receipt of awards earned under incentive
compensation plans ("Incentive Compensation Plan(s)") as Short-Term
Compensation, Variable Term Compensation or Retirement Compensation as
defined under the Plan.
Retirement Compensation is that portion of incentive compensation
deferred for payment at retirement, at one year following retirement, or
in periodic installments commencing after retirement. Between fifty percent
and one hundred percent, as elected by the participant, of the amount
allocated to Retirement Compensation is credited to Common Share Retirement
Compensation, and the balance is credited to Interest Rate Retirement
Compensation. Common Share Retirement Compensation is converted into a
number of share units based upon the average of the mean prices for Eaton
Common Shares for the twenty trading days of the New York Stock Exchange
during which Eaton Common Shares were traded immediately following the end
of the incentive period in which the incentive compensation to be deferred
was earned. On each Eaton Common Share dividend payment date, dividend
equivalents equal to the actual Eaton Common Share dividends paid are
credited to the share units in the participant's account, and are in turn
converted into share units utilizing the mean Eaton Common Share price on the
dividend payment date. The maximum, cumulative number of share units that
may be allocated to all participants is two million.
Upon payment of Common Share Retirement Compensation in Eaton Common
Shares, the share units standing to the participant's credit shall be
converted to the same number of Eaton Common Shares for distribution to the
participant.
The Selling Shareholders named below have reached Retirement, as defined
under the Plan, and have acquired the Shares from Common Share Retirement
Compensation under the Plan. Mr. Butler elected to receive his Common Share
Retirement Compensation in fifteen annual installments. Mr. Warburton
received his Common Share Retirement Compensation in one payment. The
number of Shares acquired under the Plan by the Selling Shareholders as of
the date hereof is listed below.
Number of
Name Address Shares
William E. Butler 106 Partridge Lane 281
Hunting Valley, Ohio 44022
Arthur J. Warburton 28391 Verde Lane 990
Bonita Springs, Florida 33923
Mr. Butler retired as Chairman of the Board of the Company on
December 31, 1995. Prior to September 1, 1995, he was also Chief Executive
Officer of the Company, a position he had held since January 1992. Prior to
the offering described herein, Mr. Butler owned 276,348 Eaton Common Shares
including 238,734 Eaton Common Shares which may be acquired within 60 days
after January 31, 1996 upon the exercise of outstanding stock options and
8,483.0603 Eaton Common Shares held under the Eaton Corporation Share
Purchase and Investment Plan as of December 31, 1995. After completion of
the offering of the Shares contemplated hereby, Mr. Butler will own 276,067
Eaton Common Shares, subject to the exercise of stock options and any sale
of Eaton Common Shares not offered hereunder.
Mr. Warburton retired as Vice President-Hydraulics Operations on
August 1, 1995, an appointed position which he held since July 1, 1989.
Prior to the offering described herein, Mr. Warburton owned 27,718 Eaton
Common Shares. After completion of the offering of the Shares contemplated
hereby, Mr. Warburton will own 26,728 Eaton Common Shares, subject to any
sales of Eaton Common Shares not offered hereunder.
USE OF PROCEEDS
The Selling Shareholders will offer the Shares as principal for their
own accounts. The Company will receive none of the proceeds of any such
sale.
DESCRIPTION OF EATON COMMON SHARES
The following is a summary of certain of the provisions concerning
Eaton Common Shares contained in the Company's Amended Articles of
Incorporation (the "Articles") and its Amended Regulations (the
"Regulations"), as affected by debt agreements with certain lenders.
Reference is made to such Articles and Regulations, which are exhibits
to the Registration Statement, for a full and complete statement of such
provisions and rights, and the following statements are qualified in their
entirety by such reference.
Authorized Number
The Articles authorize the issuance of up to 300,000,000 Eaton Common
Shares. At the close of business on January 31, 1996, there were 77,618,778
Eaton Common Shares issued and outstanding. The outstanding Eaton Common
Shares are fully paid and non-assessable, and shareholders are not subject
to any liability for calls and assessments. The Company does not have
any current plans to issue any such additional Eaton Common Shares except
in connection with employee benefit plans. The Articles also authorize the
issuance of up to 14,106,394 preferred shares ("Preferred Shares").
Currently, there are no Preferred Shares issued and outstanding.
Dividend Rights
Holders of Eaton Common Shares are entitled to receive such dividends
as may be declared by the Company's Board of Directors, subject to
provisions of law.
Voting Rights
Each Eaton Common Share entitles the holder to one vote, with the
right of cumulative voting in the election of directors, if certain
procedural requirements are met.
Notwithstanding any provision of law requiring the vote of a designated
proportion of the voting power of the Company for any action, the Articles
provide that such action may be taken by the vote of the holders of shares
entitling them to exercise a majority of the voting power of the Company,
except in each case as is otherwise provided in the Articles or Regulations.
The Articles and the Regulations provide for a voting proportion which is
different from that provided by statutory law in order for shareholders to
take action in certain circumstances, including the following:
(1) Two-thirds vote required to fix or change the number of directors.
(2) Two-thirds vote required for removal of directors.
(3) Fifty percent of the outstanding Eaton Common Shares required
to call a special meeting of shareholders.
(4) Two-thirds vote required to amend the Regulations without a
meeting.
(5) Two-thirds vote required to amend the provisions described in
items (1) through (4) above and this provision, unless such
action is recommended by two-thirds of the members of the
Board of Directors.
(6) Two-thirds vote required to approve certain transactions,
such as the sale, exchange, lease, transfer or other
disposition by the Company of all, or substantially all, of
its assets or business, or the consolidation of the Company or
its merger into another corporation, or certain other mergers
and majority share acquisitions.
(7) Two-thirds vote required to amend the provisions described in
item (6), or this provision.
The requirement of a two-thirds vote in certain circumstances may
have the effect of delaying, deferring, or preventing a change in control of
the Company.
Rights Plan
On June 28, 1995, the Board of Directors of the Company declared a
dividend of one preferred share purchase right (a "Right") for each outstanding
Eaton Common Share. The dividend was paid on July 12, 1995 (the "Record
Date") to the shareholders of record on that date. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Society National Bank, as Rights Agent (the "Rights
Agent"). The Rights are designed to protect the Company from unfair takeovers.
Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series C Preferred Shares, without
par value (the "Series C Preferred Shares"), of the Company at a price of
$250 per one one-hundredth of a Series C Preferred Share (the "Purchase
Price"), subject to adjustment.
If the Company is acquired in a merger or other business combination
or 50% or more of its consolidated assets or earning power are sold after a
person or group has become an Acquiring Person (as defined below), each
holder of a Right will thereafter have the right to receive, upon exercise,
that number of shares of common stock of the acquiring company which then
will have a market value of two times the exercise price of the Right.
If any person or group of affiliated or associated persons becomes
an Acquiring Person, each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Eaton Common
Shares having a market value of two times the exercise price of the Right.
Until the Distribution Date (as defined below), the Rights will be
evidenced, with respect to any of the Eaton Common Share certificates
outstanding as of the Record Date, by such Eaton Common Share certificate
with a copy of a Summary of Rights attached thereto. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Eaton Common Shares, and transfer of
those certificates will also constitute transfer of those Rights.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Eaton Common Shares as of the close of business on
the Distribution Date and such separate Right Certificates alone will
thereafter evidence the Rights.
The "Distribution Date" is the earlier of:
(i) 10 days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person")
have acquired beneficial ownership of 20% or more of the outstanding
Eaton Common Shares; or
(ii) 10 business days (or such later date as may be determined
by action of the Board of Directors before any person or group
becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange
offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding
Eaton Common Shares.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on July 12, 2005 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, as described below.
The Purchase Price, and the number of Series C Preferred Shares or
other securities or property issuable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution, in the event of:
(i) a stock dividend on, or a subdivision, combination or
reclassification of, the Series C Preferred Shares,
(ii) the grant to holders of the Series C Preferred Shares of
certain rights to subscribe for or purchase Series C Preferred
Shares at a price, or securities convertible into Series C Preferred
Shares with a conversion price, less than the then-current market
price of the Series C Preferred Shares, or
(iii) the distribution to holders of the Series C Preferred
Shares of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings
or dividends payable in Preferred Shares) or of subscription rights
or warrants (other than those referred to above).
The number of outstanding Rights is also subject to adjustment upon
certain occurrences prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional Series C Preferred Shares will be
issued (other than fractions which are integral multiples of one one-
hundredth of a Series C Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts) and in lieu thereof, an
adjustment in cash will be made based on the market price of the Series C
Preferred Shares on the last trading day prior to the date of exercise.
Series C Preferred Shares purchasable upon exercise of the Rights
will not be redeemable. Each Series C Preferred Share will be entitled to
a minimum preferential quarterly dividend payment of $1 per share but will be
entitled to an aggregate dividend of 100 times the dividend declared per
Common Share. In the event of liquidation, the holders of the Series C
Preferred Shares will be entitled to a minimum preferential liquidation
payment of $100 per share but will be entitled to an aggregate payment of
100 times the payment made per Eaton Common Share. Each Series C Preferred
Share will have 1 vote, voting together with the Eaton Common Shares.
Finally, in the event of any merger, consolidation or other transaction
in which Eaton Common Shares are exchanged, each Series C Preferred Share
will be entitled to receive 100 times the amount received per Eaton Common
Share. The dividend and liquidation rights and rights upon a merger,
consolidation or other transaction are protected by customary antidilution
provisions.
The value of the one one-hundredth interest in a Series C Preferred
Share purchasable upon exercise of each Right should, because of the nature
of the Series C Preferred Shares' dividend and liquidation rights,
approximate the value of one Eaton Common Share.
At any time after any person or group becomes an Acquiring Person,
and prior to the acquisition by that person or group of 50% or more of the
outstanding Eaton Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by the Acquiring Person, which
will have become void), in whole or in part, at an exchange ratio of one
Eaton Common Share, or one one-hundredth of a Series C Preferred Share (or
of a share of a class or series of the Company's preferred shares having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
At any time prior to any person or group becoming an Acquiring
Person, the Board of Directors of the Company may redeem all the Rights
at a price of $.01 per Right (the "Redemption Price"). The redemption may be
made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish. Immediately upon
any redemption, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, including an
amendment to lower the 20% threshold described above to not less than the
greater of (i) the sum of .001% and the largest percentage of the outstanding
Eaton Common Shares then known to the Company to be beneficially owned by
any person or group of affiliated or associated persons and (ii) 10%,
except that after any person or group becomes an Acquiring Person no such
amendment may adversely affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The foregoing description of the Rights Agreement does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is an exhibit to the Registration Statement.
Liquidation Rights
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, after the payment or provision
for payment of the debts and other liabilities of the Company and the
preferential amounts to which holders of the Company's Preferred Shares are
entitled (if any such Preferred Shares are then outstanding), the holders of
the Eaton Common Shares are entitled to share pro rata in the assets of the
Company remaining for distribution to shareholders.
Miscellaneous Rights, Listing and Transfer Agent
The Eaton Common Shares have no pre-emptive or conversion rights
and there are no redemption or sinking fund provisions applicable thereto.
The outstanding Eaton Common Shares are listed on the New York,
Chicago, Pacific and London Stock Exchanges.
KeyCorp Shareholder Services, Inc., headquartered in Cleveland,
Ohio, is the transfer agent and registrar for the Eaton Common Shares.
Classification of Board of Directors
The Board of Directors of the Company is divided into three
approximately equal classes, having staggered terms of office of three
years each. The effect of a classified Board of Directors, where cumulative
voting is in effect, is to require the votes of more shares to elect one or
more members of the Board of Directors than would be required if the Board of
Directors were not classified. Additionally, the effect of a classified
Board of Directors may be to make it more difficult to acquire control of
the Company.
Certain Ohio Statutes
Various laws may affect the legal or practical ability of
shareholders to dispose of shares of the Company. Such laws include
the Ohio statutory provisions described below.
Chapter 1704 of the Ohio Revised Code prohibits an interested
shareholder (defined as a beneficial owner, directly or indirectly, of
ten percent (10%) or more of the voting power of any issuing public Ohio
corporation) or any affiliate or associate of an interested shareholder (as
defined in Section 1704.01 of the Ohio Revised Code) from engaging in certain
transactions with the corporation during the three-year period after the
interested shareholder's share acquisition date. The prohibited transactions
include mergers, consolidations, majority share acquisitions, certain asset
sales, loans, certain sales of shares, dissolution, and certain
reclassifications, recapitalizations, or other transactions that would
increase the proportion of shares held by the interested shareholder.
After expiration of the three-year period, the corporation may participate
in such a transaction with an interested shareholder only if, among other
things, (i) the transaction receives the approval of the holders of two-
thirds of all the voting shares and the approval of the holders of a majority
of the disinterested voting shares (shares not held by the interested
shareholder) or (ii) the transaction meets certain criteria designed to
ensure that the remaining shareholders receive fair consideration for their
shares. The prohibitions do not apply if, before the interested shareholder
becomes an interested shareholder, the board of directors of the corporation
approves either the interested shareholder's acquisition of shares or the
otherwise prohibited transaction. The restrictions also do not apply if a
person inadvertently becomes an interested shareholder or was an interested
shareholder prior to the adoption of the statute on April 11, 1990, unless,
subject to certain exceptions, the interested shareholder increases his, her
or its proportionate share interest on or after April 11, 1990.
Pursuant to Ohio Revised Code Section 1707.043, a public corporation
formed in Ohio may recover profits that a shareholder makes from the sale of
the corporation's securities within eighteen (18) months after making a
proposal to acquire control or publicly disclosing the possibility of a
proposal to acquire control. The corporation may not, however, recover from
a person who proves in a court of competent jurisdiction either (i) that
his, her or its sole purpose in making the proposal was to succeed in
acquiring control of the corporation and there were reasonable grounds to
believe that such person would acquire control of the corporation or (ii)
such person's purpose was not to increase any profit or decrease any loss in
the stock and the proposal did not have a material effect on the market price
or trading volume of the stock. Also, before the corporation may obtain any
recovery, the aggregate amount of the profit realized by such person must
exceed $250,000. Any shareholder may bring an action on behalf of the
corporation if a corporation fails or refuses to bring an action to recover
these profits within sixty (60) days of a written request. The party
bringing such an action may recover his, her or its attorneys' fees if the
court having jurisdiction over such action orders recovery of any profits.
The Company is also subject to Ohio's Control Share Acquisition Act
(Ohio Revised Code Section 1701.831). The Control Share Acquisition Act
provides that, with certain exceptions, a person may acquire beneficial
ownership of shares in certain ranges (one-fifth or more but less than one-
third, one-third or more but less than a majority, or a majority or more) of
the voting power of the outstanding shares of an Ohio corporation meeting
certain criteria, which the Company meets, only if such person has submitted
an "acquiring person statement" and the proposed acquisition has been
approved by the vote of a majority of the shares of the corporation represented
at a special meeting called for such purpose and by a majority of such shares
of the corporation excluding "interested shares," as defined in Section
1701.01 of the Ohio Revised Code.
PLAN OF DISTRIBUTION
The purpose of this Prospectus is to permit the Selling Shareholders
to offer for sale or to sell the Shares at such time and at such prices as
they, in their sole discretion, choose. The Company will not receive any
proceeds from these sales.
The distribution, if any, of Shares by the Selling Shareholders
may be effected from time to time in one or more transactions (which may
include block transactions) on the open market in ordinary brokerage
transactions on the New York Stock Exchange, the Chicago Stock Exchange, the
Pacific Stock Exchange, or the London Stock Exchange (on each of which the
Eaton Common Shares are listed), in privately negotiated transactions, or in
a combination of such methods of sale, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
prices otherwise negotiated. The Selling Shareholders may effect such
transactions by selling Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Shareholders and/or
the purchasers of Shares for whom such broker-dealers may act as agent.
The Selling Shareholders and any broker-dealers that participate in the
distribution of the Shares, as well as any purchasers of such Shares, may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act and any commission received by them and any profit on the
resale of Shares sold by them may be deemed to be underwriting discounts
and commissions.
One or more supplemental prospectuses will be filed pursuant to
Rule 424 under the Securities Act to describe any material arrangement
for the resale of the Shares, if and when such arrangements are entered
into by the Selling Shareholders and any broker-dealers that participate in the
distribution of the Shares.
To the extent necessary to comply with certain state securities
laws, if applicable, the Selling Shareholders have advised the Company that the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the Shares may not be
offered for sale or sold unless the Shares have been registered or qualified
for sale in such states or an exemption from registration or qualification
is available and complied with.
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by
G. L. Gherlein, Executive Vice President and General Counsel of the Company.
Mr. Gherlein is paid a salary by the Company and participates in various
employee benefit plans offered to officers of the Company generally.
EXPERTS
The consolidated financial statements of the Company and its
subsidiaries appearing in the Company's Annual Report on Form 10-K for the
year ended December 31, 1994, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements
are incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
