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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 2, 2000
EATON CORPORATION
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(Exact name of registrant as specified in its charter)
Ohio 1-1396 34-0196300
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
Eaton Center
Cleveland, Ohio 44114
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(Address of principal Zip Code
executive offices)
(216) 523-5000
------------------
Registrant's telephone number,
including area code
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Item 5. Other Events.
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On February 2, 2000, Eaton Corporation (the "Company") entered into a
Distribution Agreement(the "Distribution Agreement") with Goldman, Sachs & Co.,
Chase Securities Inc., J.P. Morgan Securities Inc. and Salomon Smith Barney
Inc.(the "Agents"). Pursuant to the Distribution Agreement, the Company has
appointed each Agent as an agent of the Company for the purpose of soliciting
and receiving offers to purchase up to $800,000,000 of the Company's medium-term
notes, subject to the terms and conditions set forth in the Distribution
Agreement. In addition, under the Distribution Agreement, the Company has the
right to sell medium-term notes directly on its own behalf, and the Company may
determine to sell medium-term notes directly to an Agent as principal.
The medium-term notes are registered pursuant to a Registration
Statement on Form S-3 (File No. 333-74355), filed by the Company with the
Securities and Exchange Commission ("Commission") on March 12, 1999, and made
effective on May 26, 1999. Information concerning the medium-term notes and
related matters is set forth in the Prospectus dated November 10, 1999 and the
Prospectus Supplement dated February 2, 2000 filed with the Commission pursuant
to Rule 424(b) under the Securities Act of 1933 on February 3, 2000.
Reference is made to the Distribution Agreement filed as Exhibit 1(b)
hereto, the Form of Medium-Term Note (Fixed Rate) filed as Exhibit 4(i) hereto,
Form of Medium-Term Note (Floating Rate) filed as Exhibit 4(j) hereto, Form of
Medium-Term Note (Single Indexed Note-Fixed Rate) filed as Exhibit 4(k) hereto,
Form of Medium-Term Note (Single Indexed Note-Floating Rate) filed as Exhibit
4(l) hereto, the opinion of Shearman & Sterling filed as Exhibit 8 hereto and
the Consent of Shearman & Sterling (Exhibit 23(d)contained in their opinion set
forth in Exhibit 8 hereto).
Item 7. Financial Statements and Exhibits.
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(c) Exhibits
1(b) Distribution Agreement
4(i) Form of Medium-Term Note (Fixed Rate)
4(j) Form of Medium-Term Note (Floating Rate)
4(k) Form of Medium-Term Note (Single Indexed Note-Fixed Rate)
4(l) Form of Medium-Term Note (Single Indexed Note-Floating Rate)
8 Opinion of Shearman & Sterling
23(d) Consent of Shearman & Sterling contained in their opinion filed as
Exhibit 8
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EATON CORPORATION
By /s/ J.R. Horst
--------------------------
J.R. Horst
Vice President and
General Counsel
DATE: February 3, 2000
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Current Report on Form 8-K
Eaton Corporation
EXHIBIT INDEX
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Exhibit Description
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Exhibit
Number Description
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1(b) Distribution Agreement
4(i) Form of Medium-Term Note (Fixed Rate)
4(j) Form of Medium-Term Note (Floating Rate)
4(k) Form of Medium-Term Note (Single Indexed Note-Fixed Rate)
4(l) Form of Medium-Term Note (Single Indexed Note-Floating Rate)
8 Opinion of Shearman & Sterling
23(d) Consent of Shearman & Sterling contained in their opinion filed as
Exhibit 8
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EXHIBIT 1(b)
Eaton Corporation
$800,000,000
Medium-Term Notes
Distribution Agreement
February 2, 2000
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Eaton Corporation, an Ohio corporation (the "Company"), proposes to
issue and sell from time to time its Medium-Term Notes (the "Securities") in an
aggregate amount up to the amount of debt securities registered under the
Registration Statement (as defined in Section 1(a) hereof), together with such
amount of the Company's debt securities subsequently registered under the
Securities Act of 1933, as amended (the "Act"), as the Company shall, by notice
to the Agents, make subject to this Agreement, but reduced by the aggregate
amount of debt securities so registered to be or that have been sold otherwise
than pursuant to this Agreement or any Terms Agreement and agrees with each of
you (individually, an "Agent", and collectively, the "Agents") as set forth in
this Agreement.
Subject to the terms and conditions stated herein and to the
reservation by the Company of the right to sell Securities directly on its own
behalf, the Company hereby (i) appoints each Agent as an agent of the Company
for the purpose of soliciting and receiving offers to purchase Securities from
the Company pursuant to Section 2(a) hereof and (ii) agrees that, except as
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otherwise contemplated herein, whenever it determines to sell Securities
directly to any Agent as principal, it will enter into a separate agreement
(each a "Terms Agreement"), substantially in the form of Annex I hereto,
relating to such sale in accordance with Section 2(b) hereof. This Distribution
Agreement shall not be construed to create either an obligation on the part of
the Company to sell any Securities or an obligation of any of the Agents to
purchase Securities as principal.
The Securities will be issued as senior securities under an indenture,
dated as of April 1, 1994 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as Trustee (the "Trustee"). The Securities shall have the
maturity ranges, interest rates, redemption provisions, if any, and other terms
set forth in the Prospectus referred to below as it may be amended or
supplemented from time to time. The Securities will be issued, and the terms and
rights thereof established, from time to time by the Company in accordance with
the Indenture.
1. The Company represents and warrants to, and agrees with, each Agent
that:
(a) A registration statement (No. 333-74355), including a
prospectus, relating to debt securities, preferred shares, common
shares and warrants of the Company has been filed with the Securities
and Exchange Commission ("Commission") and has become effective. The
various parts of such registration statement, including all exhibits
thereto and the documents incorporated by reference in the prospectus
contained in the registration statement at the time such part of the
registration statement became effective, but excluding Form T-1, each
as amended at the time such part of the registration statement became
effective, are hereinafter collectively referred to as the
"Registration Statement", and the prospectus included in such
Registration Statement (including, if applicable, any prospectus
supplement) relating to the Securities, including all documents
incorporated therein by reference pursuant to the applicable form under
the Act, as from time to time amended or supplemented by the filing of
documents pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or as otherwise amended or supplemented pursuant
to the Act or by any supplement that sets forth the terms of a
particular issue of the Securities (a "pricing supplement") are herein
referred to collectively as the "Prospectus", except that if any
revised prospectus shall be provided to the Agents by the Company for
use in connection with the offering of Securities which is not required
to be filed by the Company pursuant to Rule 424(b) of the regulations
of the Act, the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to the Agents
for such use; the Registration Statement has been declared effective by
the Commission and no stop order suspending the effectiveness of such
Registration Statement has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission;
(b) The documents incorporated by reference in the
Registration Statement and the Prospectus, when they became effective
or were filed with the Commission, as the case may be, conformed in all
material respects to the requirements of the Act or the
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Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder; none of such documents 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; and any further documents so filed and
incorporated by reference in the Prospectus, or any further amendment
or supplement thereto, when such documents become effective or are
filed with the Commission, as the case may be, will conform in all
material respects to the requirements of the Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
(c) The Registration Statement and the Prospectus conform, and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished (i) to the Company by the Trustee
in its Form T-1 (Statement of Eligibility of Trustee) filed with the
Registration Statement or (ii) in writing to the Company by any Agent
expressly for use in the Registration Statement or Prospectus to relate
to a particular issuance of Securities;
(d) Except as described in (or incorporated by reference in)
the Registration Statement and the Prospectus, there has not been any
material adverse change in, or any adverse development which materially
affects, the business, properties, financial condition, results of
operations or prospects of the Company and its subsidiaries (as defined
in Rule 1.02(x) of Regulation S-X) (each a "Subsidiary" and,
collectively, the "Subsidiaries") taken as a whole from the dates as of
which information is given in the Registration Statement and the
Prospectus; and, since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change in the capital stock of the Company or long-term debt
of the Company and its Subsidiaries taken as a whole;
(e) The Company and Aeroquip-Vickers, Inc., Eaton MDH Company,
Inc., Eaton MDH Limited Partnership (the "Partnership"), Cutler Hammer,
Inc. and Cutler Hammer de Puerto Rico Inc. (each a "Significant
Subsidiary", which together, as of the date hereof, constitute all of
the significant subsidiaries (as defined in Rule 1.02(w) of Regulation
S-X) of the Company) have each (except the Partnership, which is
covered in paragraph 1(f) hereof) been duly incorporated, are validly
existing and in good standing
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under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership
of property or the conduct of their respective businesses requires such
qualification (except where the failure to so qualify would not have a
material adverse effect upon the Company and its Subsidiaries taken as
a whole), and have power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are
engaged. All of the issued and outstanding stock of each Significant
Subsidiary has been duly authorized and validly issued and is fully
paid and nonassessable. The Company owns all of the issued and
outstanding shares of each Significant Subsidiary, directly or through
one or more Subsidiaries, except to the extent of shares owned of
record by directors for the purpose of qualification as such, free and
clear of any pledges, liens, encumbrances, claims or equities;
(f) The Partnership, a Delaware limited partnership, has been
duly formed and is validly existing under the Delaware Revised Uniform
Limited Partnership Act, one or both of the partners of the Partnership
is duly qualified to do business in all jurisdictions in which the
Partnership's ownership of property or the conduct of the Partnership's
business requires such qualification (except where the failure to so
qualify would not have a material adverse effect upon the business,
properties, financial condition, results of operations or prospects of
the Company and its Subsidiaries taken as a whole), and the Partnership
has all power and authority necessary to own its properties and conduct
the business in which it is engaged;
(g) The Company has authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been validly authorized and issued and are fully paid and
non-assessable;
(h) The Indenture, including any amendments and supplements
thereto, pursuant to which the Securities will be issued, conforms with
the requirements of the Trust Indenture Act;
(i) The execution, delivery and performance by the Company of
this Agreement and any Terms Agreement and compliance by the Company
with the provisions contained herein, in the Securities and in the
Indenture will not (i) conflict with, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the
respective assets of the Company or any of its Subsidiaries pursuant to
the terms of, or constitute a default under, any material agreement,
indenture or instrument, or (ii) result in a violation of the articles
or certificate of incorporation or regulations, as amended, of the
Company or any of its Significant Subsidiaries or any law, order, rule
or regulation of any court or governmental agency having jurisdiction
over the Company, any of its Significant Subsidiaries or their
respective properties; and, except as required by the Act, the Trust
Indenture Act, the Exchange Act and applicable state securities laws or
foreign laws, no consent, authorization or order of, or filing or
registration with, any
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court or governmental agency is required for the issuance and
sale of the Securities or the execution, delivery and performance of
this Agreement and the Indenture;
(j) (i) The Indenture has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery by the Trustee, constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights generally, and except as enforcement
thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law),
and except further as enforcement thereof may be limited by
requirements that a claim with respect to any debt securities issued
under the Indenture that are payable in a foreign or composite currency
(or a foreign or composite currency judgment in respect of such claim)
be converted into U.S. dollars at a rate of exchange prevailing on a
date determined pursuant to applicable law or by governmental authority
to limit, delay or prohibit the making of payments outside the United
States; (ii) the Securities have been duly authorized and, when
executed by the Company and completed and authenticated by the Trustee
or the authentication agent in accordance with the Indenture, and
delivered against payment thereof pursuant to this Agreement and any
Terms Agreement, will be validly issued and outstanding, and will
constitute legally binding obligations of the Company entitled to the
benefits of the Indenture, except as enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law), and except further as enforcement thereof may be
limited by requirements that a claim with respect to any Securities
payable in a foreign or composite currency (or a foreign or composite
currency judgment in respect of such claim) be converted into U.S.
dollars at a rate of exchange prevailing on a date determined pursuant
to applicable law or by governmental authority to limit, delay or
prohibit the making of payments outside the United States and (iii) the
Securities and the Indenture will conform in all material respects to
the descriptions thereof contained in the Prospectus;
(k) Neither the Company nor any of its Subsidiaries is in
violation of its articles or certificate of incorporation or
regulations or bylaws or in default under any agreement, indenture or
instrument, the effect of which violation or default would be material
to the Company and its Subsidiaries taken as a whole;
(l) The statements set forth in the Prospectus under the
captions "Description of Debt Securities" and "Description of Notes",
insofar as they purport to constitute a summary of the terms of the
Securities, under the caption "United States Taxation", and
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under the caption "Plan of Distribution", insofar as they purport to
describe the provisions of the laws and documents referred to therein,
are accurate summaries of such provisions;
(m) Except as described in (or incorporated by reference in)
the Prospectus, there is no material litigation or governmental
proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries which is reasonably
expected by the Company to result in any material adverse change in the
business, properties, financial condition, results of operations or
prospects of the Company and its Subsidiaries taken as a whole or which
is required to be disclosed in (or incorporated by reference in) the
Registration Statement;
(n) The Company is not, and immediately upon giving effect to
each offering and sale of the Securities will not be, an "investment
company", as such term is defined in the United States Investment
Company act of 1940, as amended (the "Investment Company Act");
(o) Immediately after any sale of Securities by the Company
hereunder or under any Terms Agreement, the aggregate amount of
Securities which shall have been issued and sold by the Company
hereunder or under any Terms Agreement and of any debt securities of
the Company (other than such Securities) that shall have been issued
and sold pursuant to the Registration Statement will not exceed the
amount of debt securities registered under the Registration Statement;
(p) Ernst & Young LLP, whose report appears in the Company's
most recent Annual Report on Form 10-K or 10-K/A which is incorporated
by reference in the Registration Statement and the Prospectus and who
have examined certain financial statements of the Company and its
Subsidiaries, are independent public accountants as required by the Act
and the rules and regulations thereunder (the "Rules and Regulations");
(q) The Company has (i) initiated a review of its operations
and those of its Subsidiaries and any third parties with which the
Company or any of its subsidiaries has a material relationship to
evaluate the extent to which the business or operations of the Company
or any of its Subsidiaries will be affected by the Year 2000 Problem,
(ii) developed a plan for addressing the Year 2000 Problem and (iii) is
implementing that plan. As a result of those actions, nothing has come
to the attention of the Company which would cause the Company to
believe, and the Company does not believe, that the Year 2000 Problem
will have a material adverse effect upon the business, properties,
financial condition, results of operations or prospects of the Company
and its Subsidiaries, taken as a whole. The "Year 2000 Problem" as used
herein means any significant risk that computer hardware or software
used in the receipt, transmission, processing, manipulation, storage,
retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in
the case of
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dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000. The disclosure contained in the Prospectus
with respect to the Year 2000 Problem is accurate, complete and fair in
all material respects;
(r) The financial statements filed as part of, or incorporated
by reference in, the Registration Statement or included in, or
incorporated by reference in, any preliminary prospectus or the
Prospectus present, or (in the case of any amendment or supplement to
any such document, or any material incorporated by reference in any
such document, filed with the Commission after the date as of which
this representation is being made) will present, at all times during
the period specified in Section 4(c) hereof, fairly, the financial
condition and results of operations of the entities purported to be
shown thereby, at the dates and for the periods indicated, and have
been and (in the case of any amendment or supplement to any such
document, or any material incorporated by reference in any such
document, filed with the Commission after the date as of which this
representation is being made) will be, at all times during the period
specified in Section 4(c) hereof, prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the periods involved, except as otherwise disclosed in such financial
statements;
(s) The unaudited pro forma financial information, if any,
filed as a part of, or incorporated by reference in, the Registration
Statement or included in, or incorporated by reference in, any
preliminary prospectus or the Prospectus (i) present fairly, or (in the
case of any amendment or supplement to any such document, or any
material incorporated by reference in any such document, filed with the
Commission after the date as of which this representation is made) will
present fairly, at all times during the period specified in Section
4(c) hereof, on the basis set forth in any such document, the
information set forth therein; (ii) has been prepared in accordance
with the Rules and Regulations and the guidelines of the Commission
with respect to pro forma financial information; and (iii) has been
properly compiled on the pro forma bases set forth therein, the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein; and
(t) This Agreement has been duly authorized, executed and
delivered by the Company.
2. (a) On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth, each
of the Agents hereby severally and not jointly agrees, as agent of the Company,
to use its reasonable best efforts to solicit and receive offers to purchase the
Securities from the Company upon the terms and conditions set forth in the
Prospectus as amended or supplemented from time to time. So long as this
Agreement shall remain in effect with respect to any Agent, the Company shall
not, without the
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consent of such Agent, solicit or accept offers to purchase, or sell, any debt
securities with a maturity at the time of original issuance of more than 9
months from the date of issue except pursuant to this Agreement, any Terms
Agreement, or except an offering exempt from registration under the Act or
except in connection with a firm commitment underwriting pursuant to an
underwriting agreement that does not provide for a continuous offering of
medium-term debt securities. However, the Company reserves the right to sell,
and may solicit and accept offers to purchase, Securities directly on its own
behalf in transactions with persons other than broker-dealers, and, in the case
of any such sale not resulting from a solicitation made by any Agent, no
commission will be payable with respect to such sale. These provisions shall not
limit Section 4(f) hereof or any similar provision included in any Terms
Agreement. For purposes of a particular sale of Securities, upon notifying the
Agents, the Company may appoint other persons as agents for the purpose of
soliciting purchases of such Securities from the Company by others; provided,
however, that in the event that the Company so appoints one or more other
persons, the Company and such person or persons shall execute a counterpart to
this Agreement relating to such particular sale, whereupon from and after the
date of such execution, the term "Agent" shall for purposes of such particular
sale include such person or persons and such person or persons shall be subject
to the terms and conditions stated herein.
Procedural details relating to the issue and delivery of
Securities, the solicitation of offers to purchase Securities and the payment in
each case therefor shall be as set forth in the Administrative Procedure
attached hereto as Annex II as it may be amended from time to time by written
agreement between the Agents and the Company (the "Administrative Procedure").
The provisions of the Administrative Procedure shall apply to all transactions
contemplated hereunder other than those made pursuant to a Terms Agreement. Each
Agent and the Company agree to perform the respective duties and obligations
specifically provided to be performed by each of them in the Administrative
Procedure. The Company will furnish to the Trustee a copy of the Administrative
Procedure as from time to time in effect.
The Company reserves the right, in its sole discretion, to
instruct the Agents to suspend at any time, for any period of time or
permanently, the solicitation of offers to purchase the Securities. As soon as
practicable, but in any event not later than one business day in The City of New
York, after receipt of notice from the Company, the Agents will suspend
solicitation of offers to purchase Securities from the Company until such time
as the Company has advised the Agents that such solicitation may be resumed.
During such period, the Company shall not be required to comply with the
provisions of Sections 4(a), 4(h), 4(i), 4(j) and 4(k). Upon advising the Agents
that such solicitation may be resumed, however, if the Registration Statement or
Prospectus has been amended or supplemented during the period of suspension
(other than by an amendment or supplement providing solely for a change in the
interest rates, redemption provisions, amortization schedules or maturities
offered on the Securities or for a change the Agents deem to be immaterial), the
Company shall simultaneously provide the documents required to be delivered by
Sections 4(a), 4(h), 4(i), 4(j) and 4(k), and the Agents shall have no
obligation to solicit offers to purchase the Securities until such documents
have been received by the Agents. In addition, any failure by the Company to
comply with its obligations hereunder,
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including without limitation its obligations to deliver the documents required
by Sections 4(h), 4(i), 4(j) and 4(k), shall automatically terminate the Agents'
obligations hereunder, including without limitation its obligations to solicit
offers to purchase the Securities hereunder as agent or to purchase Securities
hereunder as principal.
The Company agrees to pay each Agent a commission, at the time
of settlement of any sale of a Security by the Company as a result of a
solicitation made by such Agent, in an amount equal to the following applicable
percentage of the principal amount of such Security sold (or such greater amount
agreed upon by the parties to the subject transaction):
<TABLE>
<CAPTION>
Commission
(percentage of aggregate
principal amount
Range of Maturities of Securities sold)
------------------- -------------------
<S> <C>
From 9 months to less than 1 year .125%
From 1 year to less than 18 months .150%
From 18 months to less than 2 years .200%
From 2 years to less than 3 years .250%
From 3 years to less than 4 years .350%
From 4 years to less than 5 years .450%
From 5 years to less than 6 years .500%
From 6 years to less than 7 years .550%
From 7 years to less than 10 years .600%
From 10 years to less than 15 years .625%
From 15 years to less than 20 years .700%
From 20 years to 30 years .750%
</TABLE>
(b) Each sale of Securities to any Agent as principal shall be
made in accordance with the terms of this Agreement and (unless the Company and
such Agent shall otherwise agree) a Terms Agreement which will provide for the
sale of such Securities to, and the purchase thereof by, such Agent; a Terms
Agreement may also specify certain provisions relating to the reoffering of such
Securities by such Agent; the commitment of any Agent to purchase Securities as
principal, whether pursuant to any Terms Agreement or otherwise, 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 specify the principal amount of Securities
to be purchased by any Agent pursuant thereto, the price to be paid to the
Company for such Securities, any provisions relating to rights of, and default
by, underwriters acting together with such Agent in the reoffering of the
Securities and the time and date and place of delivery of and payment for such
Securities; and such Terms Agreement shall also specify any requirements for
opinions of counsel, accountants' letters and officers' certificates pursuant to
Section 4 hereof. Each Agent proposes to offer Securities purchased by it as
principal for sale at prevailing market prices or prices related thereto
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at the time of sale, which may be equal to, greater than or less than the price
at which such Securities are purchased by such Agent from the Company.
For each sale of Securities to an Agent as principal that is
not made pursuant to a Terms Agreement, the procedural details relating to the
issue and delivery of such Securities and payment therefor shall be as set forth
in the Administrative Procedure. For each such sale of Securities to an Agent as
principal that is not made pursuant to a Terms Agreement, the Company agrees to
pay such Agent a commission (or grant an equivalent discount) as provided in
Section 2(a) hereof and in accordance with the schedule set forth therein.
Each time and date of delivery of and payment for Securities
to be purchased by an Agent as principal, whether set forth in a Terms Agreement
or in accordance with the Administrative Procedure, is referred to herein as a
"Time of Delivery".
(c) Each Agent agrees, with respect to any Security
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 Security in, or to residents of, the country issuing such currency, except
as permitted by applicable law; provided that for purposes of this Section 2(c),
each of the members of the European Monetary Union is deemed to be a country
issuing the euro.
3. The documents required to be delivered pursuant to Section
6 hereof on the Commencement Date (as defined below) shall be delivered to the
Agents at the offices of Shearman & Sterling, 599 Lexington Avenue, New York,
New York, at 11:00 a.m., New York City time, on the date of this Agreement,
which date and time of such delivery may be postponed by agreement between the
Agents and the Company but in no event shall be later than the day prior to the
date on which solicitation of offers to purchase Securities is commenced or on
which any Terms Agreement is executed (such time and date being referred to
herein as the "Commencement Date").
4. The Company covenants and agrees with each Agent:
(a) (i) Except as otherwise provided in this subsection or
Section 2(a) of this Agreement, the Company will (A) give counsel for
the Agents notice of its intention to file (I) any additional
registration statement with respect to the registration of additional
Securities to be distributed pursuant to this Agreement or (II) any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus, whether by the filing of documents pursuant to the
Act, the Exchange Act or otherwise;
(ii) to furnish counsel for the Agents with copies of any
document referred to in clause (i) above proposed to be filed a
reasonable time in advance of filing;
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<PAGE> 11
(iii) to make available to the Agents copies of documents so
filed promptly upon the filing thereof;
(iv) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities;
(v) to advise the Agents (A) of the institution by the
Commission of any stop order proceedings in respect of the Registration
Statement or of any part thereof, (B) when any post-effective amendment
to the Registration Statement relating to or covering the Securities
becomes effective, (C) of any request or proposed request by the
Commission for (I) an amendment or supplement to the Registration
Statement (insofar as the amendment or supplement relates to or covers
the Securities), the Prospectus or any document incorporated by
reference in any of the foregoing or (II) any additional information
relating to the Registration Statement or the Prospectus and (D) of
receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threat of any proceeding for that
purpose; and
(vi) in the event of the issuance of any stop order or of any
such order preventing or suspending the use of any such Prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal.
Notwithstanding (i), (ii) and (iii) of this subsection, except
as set forth below, the Company shall not be required to give any Agent
(directly or through counsel) notice of its intention to file, to
furnish any Agent (directly or through counsel) a copy of in advance of
filing, or to make available to any Agent (directly or through counsel)
upon filing (A) Quarterly Reports on Form 10-Q, any Current Report on
Form 8-K relating solely to the inclusion of additional financial
information (including a press release containing such information) or
any filings pursuant to Section 14 of the Exchange Act, provided
however, that the Company promptly notifies the Agents and counsel to
the Agents of such filings with the Commission, and provided further
that, if any such document is to be filed in order that the Prospectus
does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein
not misleading in light of the circumstances then existing, then the
Company shall give immediate notice (prior to the filing of any such
document) to each Agent to cease solicitations of offers to purchase
the Securities in its capacity as agent and to cease sales of any
Securities an Agent may then own as principal pursuant to a Terms
Agreement; (B) any pricing supplement to the Prospectus in connection
with a sale of the Securities (except that a pricing supplement shall
be provided to the Agent who solicits the sale or purchase of or who
purchases as principal the Securities to which such pricing supplement
relates); (C) any amendment or supplement to the Prospectus that
relates
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<PAGE> 12
exclusively to an offering of debt securities other than the
Securities; or (D) any Current Report on Form 8-K filed solely for the
purpose of incorporating an exhibit by reference into a registration
statement, except that the Company shall make available to each Agent
any such Current Report on Form 8-K promptly after the filing thereof;
(b) Promptly from time to time to take such action as such
Agent may reasonably request to qualify the Securities for offering and
sale under the securities laws of such jurisdictions as such Agent may
reasonably request and to comply with such laws so as to permit the
continuance of sales and dealings therein for as long as may be
necessary to complete the distribution or sale of the Securities;
provided, however, that in connection therewith the Company shall not
be required to qualify as a foreign corporation, become subject to
taxes or file a general consent to service of process in any
jurisdiction;
(c) To make available to the Agents copies of the Registration
Statement and each amendment thereto, with copies of the Prospectus as
each time amended or supplemented, other than any pricing supplement
(except as provided in the Administrative Procedure), in the form in
which it is filed with the Commission pursuant to Rule 424 under the
Act, and with copies of the documents incorporated by reference
therein, all in such quantities as such Agent may reasonably request
from time to time; and, if the delivery of a prospectus is required at
any time in connection with the offering or sale of the Securities
(including Securities purchased from the Company by such Agent as
principal) and if at such time, in the judgment of the Company or in
the reasonable opinion of counsel for the Agents, any event shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an 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 when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such same period to amend
or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the Act, the Exchange Act or the Trust Indenture Act, to notify
such Agent and request such Agent, in its capacity as agent of the
Company, to suspend solicitation of offers to purchase Securities from
the Company (and, if so notified, such Agent shall cease such
solicitations as soon as practicable, but in any event not later than
one business day later); and if the Company shall decide to amend or
supplement the Registration Statement or the Prospectus, to so advise
such Agent promptly by telephone (with confirmation in writing) and to
prepare and cause to be filed promptly with the Commission an amendment
or supplement to the Registration Statement or the Prospectus that will
correct such statement or omission or effect such compliance; provided,
however, that if during such same period such Agent continues to own
Securities purchased from the Company by such Agent as principal or
such Agent is otherwise required to deliver a prospectus in respect of
transactions in the Securities, the
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<PAGE> 13
Company shall promptly prepare and file with the Commission such an
amendment or supplement;
(d) To make generally available to its security holders as
soon as practicable, but in any event not later than eighteen months
after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Act), an earnings statement of the Company and
its Subsidiaries (which need not be audited) complying with Section
11(a) of the Act and the rules and regulations of the Commission
thereunder (including, at the option of the Company, Rule 158);
(e) For two years after the last sale of Securities pursuant
to this Agreement, to make available to the Agents (i) as soon as
publicly available, a copy of each report or definitive proxy statement
of the Company filed with the Commission under the Exchange Act, or
mailed to stockholders and (ii) from time to time, such other publicly
available information concerning the Company as the Agents may
reasonably request;
(f) That, from the date of any Terms Agreement with such Agent
or other agreement by such Agent to purchase Securities as principal
and continuing to and including the later of (i) the termination of the
trading restrictions for the Securities purchased thereunder, as
notified to the Company by such Agent and (ii) the related Time of
Delivery, not to offer, sell, contract to sell or otherwise dispose of
any debt securities of the Company which both mature more than 9 months
after such Time of Delivery and are substantially similar to the
Securities, without the prior written consent of such Agent;
(g) That each acceptance by the Company of an offer to
purchase Securities hereunder (including any purchase by such Agent as
principal not pursuant to a Terms Agreement), and each execution and
delivery by the Company of a Terms Agreement with such Agent, shall be
deemed to be an affirmation to such Agent that the representations and
warranties of the Company contained in or made pursuant to this
Agreement are true and correct as of the date of such acceptance or of
such Terms Agreement, as the case may be, as though made at and as of
such date, and an undertaking that such representations and warranties
will be true and correct as of the settlement date for the Securities
relating to such acceptance or as of the Time of Delivery relating to
such sale, as the case may be, as though made at and as of such date
(except that such representations and warranties shall be deemed to
relate to the Registration Statement and the Prospectus relating to
such Securities);
(h) That reasonably in advance of (i) each time the Company
sells Securities to an Agent as principal pursuant to a Terms Agreement
and such Terms Agreement specifies the delivery of an opinion or
opinions by Shearman & Sterling, counsel to the Agents, as a condition
to the purchase of Securities pursuant to such Terms Agreement, (ii)
each time that a Form 10-K is incorporated by reference into the
Prospectus and (iii) each other time that the Registration Statement or
Prospectus is amended or
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<PAGE> 14
supplemented and one or more Agents reasonably determines, the Company
shall make available to such counsel such papers and information, other
than those documents that the Company is exempt from providing to the
Agents pursuant to Section 4(a) hereof, as they may reasonably request
to enable them to furnish to such Agent the opinion or opinions
referred to in Section 6(b) hereof;
(i) That (i) each time the Registration Statement or the
Prospectus shall be amended or supplemented other than (A) by a pricing
supplement, (B) by an amendment or supplement relating solely to the
interest rates, interest payment dates or maturity dates of the
Securities or the sale of other securities or (C) by an amendment or
supplement (other than by means of incorporation by reference) relating
solely to the inclusion of additional financial information; (ii) each
time a document filed under the Act or the Exchange Act is incorporated
by reference into the Prospectus (other than on Form 8-K relating
solely to the inclusion of additional financial information or on Form
10-Q or a proxy statement filed pursuant to Section 14 of the Exchange
Act); and (iii) each time the Company sells Securities to such Agent as
principal pursuant to a Terms Agreement and such Terms Agreement
specifies the delivery of an opinion under this Section 4(i) as a
condition to the purchase of Securities pursuant to such Terms
Agreement, the Company shall furnish or cause to be furnished forthwith
to such Agent a written opinion of the General Counsel of the Company,
Deputy General Counsel of the Company, Associate General Counsel of the
Company, Senior Counsel of the Company or other counsel for the Company
satisfactory to such Agent, dated the date of such amendment,
supplement, incorporation or Time of Delivery relating to such sale, as
the case may be, in form satisfactory to such Agent, to the effect that
such Agent may rely on the opinion of such counsel referred to in
Section 6(c) hereof which was last furnished to such Agent to the same
extent as though it were dated the date of such letter authorizing
reliance (except that the statements in such last opinion shall be
deemed to relate to the Registration Statement and the Prospectus as
amended and supplemented to such date) or, in lieu of such opinion, an
opinion of the same tenor as the opinion of such counsel referred to in
Section 6(c) hereof but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date.
If counsel for Agents reasonably determines that the information
included in a filing by the Company in a Quarterly Report filed on Form
10-Q or a Current Report filed on Form 8-K is of such importance that a
legal opinion should be delivered to the Agents in conjunction
therewith, such counsel for the Agents shall notify the Company
promptly upon such determination; and the Company will thereupon
deliver to the Agents an opinion of counsel for the Company complying
with this section hereof and covering such matters referred to in
Section 6(c) hereof as such Agent or Agents reasonably request.
(j) That (i) each time the Registration Statement or the
Prospectus shall be amended or supplemented other than (A) by a pricing
supplement or (B) by an amendment or supplement relating solely to the
interest rates, interest payment dates or maturity dates of the
Securities; (ii) each time that a document filed under the Act or the
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<PAGE> 15
Exchange Act is incorporated by reference into the Prospectus, in
either case (i) or (ii) to set forth, among other things, financial
information included in or derived from the Company's consolidated
financial statements or accounting records; and (iii) each time the
Company sells Securities to such Agent as principal pursuant to a Terms
Agreement and such Terms Agreement specifies the delivery of a letter
under this Section 4(j) as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall cause the
independent certified public accountants who have certified the
financial statements of the Company and its Subsidiaries included or
incorporated by reference in the Registration Statement forthwith to
furnish counsel for such Agent a letter, dated the date of such
amendment, supplement, incorporation or Time of Delivery relating to
such sale, as the case may be, in form satisfactory to such Agent, of
the same tenor as the letter referred to in Section 6(d) hereof but
modified to relate to the Registration Statement and the Prospectus as
amended or supplemented to the date of such letter, with such changes
as may be necessary to reflect changes in the financial statements and
other information derived from the accounting records of the Company,
to the extent such financial statements and other information are
available as of a date not more than five business days prior to the
date of such letter; provided, however, that, with respect to any
financial information or other matter, such letter may reconfirm as
true and correct at such date as though made at and as of such date,
rather than repeat, statements with respect to such financial
information or other matter made in the letter referred to in Section
6(d) hereof which was last furnished to such Agent; and
(k) That (i) each time the Registration Statement or the
Prospectus shall be amended or supplemented other than (A) by a pricing
supplement, (B) by an amendment or supplement relating solely to the
interest rates, interest payment dates or maturity dates of the
Securities or the sale of other securities or (C) by an amendment or
supplement (other than by means of incorporation by reference) relating
solely to the inclusion of additional financial information; (ii) each
time a document filed under the Act or the Exchange Act is incorporated
by reference into the Prospectus (other than on Form 8-K relating
solely to the inclusion of additional financial information or a proxy
statement filed pursuant to Section 14 of the Exchange Act); and (iii)
each time the Company sells Securities to such Agent as principal and
the applicable Terms Agreement specifies the delivery of a certificate
under this Section 4(k) as a condition to the purchase of Securities
pursuant to such Terms Agreement, the Company shall furnish or cause to
be furnished forthwith to such Agent a certificate, dated the date of
such supplement, amendment, incorporation or Time of Delivery relating
to such sale, as the case may be, in such form and executed by such
officers of the Company as shall be reasonably satisfactory to such
Agent, to the effect that the statements contained in the certificate
referred to in Section 6(i) hereof which was last furnished to such
Agent are true and correct at such date as though made at and as of
such date (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented
to such date) or, in lieu of such certificate, certificates of the same
15
<PAGE> 16
tenor as the certificates referred to in said Section 6(i) but modified
to relate to the Registration Statement and the Prospectus as amended
and supplemented to such date.
5. The Company covenants and agrees with each Agent that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus, the Prospectus and any pricing
supplements and all other amendments and supplements thereto and the mailing and
delivering of copies thereof to such Agent; (ii) the reasonable fees,
disbursements and expenses of counsel for the Agents in connection with the
establishment of the program contemplated hereby, any opinions to be rendered by
such counsel hereunder and under any Terms Agreement and the transactions
contemplated hereunder and under any Terms Agreement; (iii) the cost of
printing, producing or reproducing this Agreement, any Terms Agreement, any
Indenture, any Blue Sky and legal investment survey, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Securities; (iv) all expenses
in connection with the qualification of the Securities for offering and sale
under state securities laws as provided in Section 4(b) hereof, including the
fees and disbursements of counsel for the Agents in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(v) any fees charged by securities rating services for rating the Securities;
(vi) any filing fees incident to, and the fees and disbursements of counsel for
the Agents in connection with, any required review by the National Association
of Securities Dealers, Inc. of the terms and sale of the Securities; (vii) the
cost of preparing the Securities; (viii) the fees and expenses of any Trustee
and any agent of any Trustee and any transfer or paying agent of the Company and
the fees and disbursements of counsel for any Trustee or such agent in
connection with any Indenture and the Securities; (ix) any advertising expenses
connected with the solicitation of offers to purchase and the sale of the
Securities so long as such advertising expenses have been approved by the
Company; and (x) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section 5. Except as provided in Sections 7 and 8 hereof, each Agent shall pay
all other expenses it incurs.
6. The obligation of any Agent, as agent of the Company, at
any time ("Solicitation Time") to solicit offers to purchase the Securities and
the obligation of any Agent to purchase Securities as principal, pursuant to any
Terms Agreement or otherwise, shall in each case be subject, in such Agent's
discretion, to the condition that all representations and warranties and other
statements of the Company herein (and, in the case of an obligation of an Agent
under a Terms Agreement, in or incorporated by reference in such Terms
Agreement) are true and correct at and as of the Commencement Date and any
applicable date referred to in Section 4(k) hereof that is prior to such
Solicitation Time or Time of Delivery, as the case may be, and, at and as of
such Solicitation Time or Time of Delivery, as the case may be, the condition
that, prior to such Solicitation Time or Time of Delivery, as the case may be,
the Company shall have
16
<PAGE> 17
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) (i) With respect to any Securities sold at or prior to
such Solicitation Time or Time of Delivery, as the case may be, the
Prospectus with respect to such Securities shall have been filed with
the Commission pursuant to Rule 424(b) under the Act within the
applicable time period prescribed for such filing by the rules and
regulations under the Act and in accordance with Section 4(a) hereof;
(ii) no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and (iii)
all requests for additional information on the part of the Commission
shall have been complied with to the reasonable satisfaction of such
Agent;
(b) Shearman & Sterling, counsel to the Agents, shall have
furnished to such Agent (i) such opinion or opinions, dated the
Commencement Date, with respect to the incorporation of the Company,
the validity of the Securities, the Registration Statement, the
Prospectus and the Indentures and other related matters as they are
prepared to opine, and (ii) if and to the extent requested by such
Agent, with respect to each applicable date referred to in Section 4(h)
hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, an opinion or opinions, dated such
applicable date, to the effect that such Agent may rely on the opinion
or opinions which were last furnished to such Agent pursuant to this
Section 6(b) to the same extent as though it or they were dated the
date of such letter authorizing reliance (except that the statements in
such last opinion or opinions shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented
to such date) or, in any case, in lieu of such an opinion or opinions,
an opinion or opinions of the same tenor as the opinion or opinions
referred to in clause (i) but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date;
and in each case the Company shall have made available to such counsel
such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters, and in rendering such opinion,
Shearman & Sterling may rely as to the incorporation of the Company and
all other matters governed by the law of the State of Ohio upon the
opinion of the General Counsel of the Company, Deputy General Counsel
of the Company, Associate General Counsel of the Company, Senior
Counsel of the Company or other counsel for the Company satisfactory to
the Agents referred to below;
(c) The General Counsel of the Company, Deputy General Counsel
of the Company, Associate General Counsel of the Company, Senior
Counsel of the Company or other counsel for the Company satisfactory to
such Agent, shall have furnished to such Agent a written opinion, dated
the Commencement Date and each applicable date referred to in Section
4(i) hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, in form and substance satisfactory to
such Agent, to the effect that:
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<PAGE> 18
(i) The Company and the Significant Subsidiaries
(except the Partnership, which is covered in paragraph (ii)
below) have been duly incorporated and are validly existing
and in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do
business and in good standing as foreign corporations in all
jurisdictions in which their respective ownership of property
or the conduct of their respective businesses requires such
qualification (except where the failure to so qualify would
not have a material adverse effect upon the business,
properties, financial condition, results of operations or
prospects of the Company and its Subsidiaries taken as a
whole), and have all power and authority necessary to own
their respective properties and conduct the businesses in
which they are engaged and, except as may be disclosed in the
Registration Statement and the Prospectus and except to the
extent of shares owned of record by directors for the purpose
of qualifying as such, all outstanding shares of capital stock
of the Significant Subsidiaries are owned by the Company
directly, or indirectly through wholly owned Subsidiaries,
free and clear of any lien, pledge and encumbrance or any
claim of any third party;
(ii) The Partnership has been duly formed and is
validly existing under the Delaware Revised Uniform Limited
Partnership Act, one or both of the partners of the
Partnership is duly qualified to do business in all
jurisdictions in which the Partnership's ownership of property
or the conduct of the Partnership's business requires such
qualification (except where the failure to so qualify would
not have a material adverse effect upon the business,
properties, financial condition, results of operations or
prospects of the Company and its Subsidiaries taken as a
whole), and the Partnership has all power and authority
necessary to own its properties and conduct the business in
which it is engaged;
(iii) The Registration Statement is effective under
the Act, and, to the best knowledge of such counsel, no stop
order suspending its effectiveness has been issued, and no
proceeding for that purpose is pending or, to the knowledge of
such counsel, threatened by the Commission;
(iv) No order directed to any document incorporated
by reference in the Prospectus has been issued and, to the
knowledge of such counsel, no challenge has been made to the
accuracy or adequacy of any such document;
(v) Each document incorporated by reference in the
Registration Statement and the Prospectus (except for the
financial statements, supporting schedules and other financial
data included or incorporated therein, or omitted therefrom,
as to which such counsel need express no opinion), as of the
date it was filed with the Commission, appears on its face to
have been appropriately responsive in all material respects to
the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder;
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<PAGE> 19
(vi) The Registration Statement and the Prospectus
(except for the financial statements, supporting schedules and
other financial data included or incorporated therein, or
omitted therefrom and the Statements of Eligibility of the
Trustee on Form T-1, as to which such counsel need express no
opinion), excluding the documents incorporated by reference
therein, as of their respective effective or issue dates,
appear on their face to have been appropriately responsive in
all material respects to the requirements of the Act and the
Rules and Regulations thereunder and the Trust Indenture Act;
(vii) The statements made in the Prospectus under the
captions "Description of Debt Securities", "Description of
Notes", "Description of Debt Warrants " and "Plan of
Distribution", insofar as they purport to summarize the
provisions of documents or agreements specifically referred to
therein, are accurate summaries of such provisions;
(viii) Such counsel does not know of any litigation
or any governmental proceeding pending or threatened against
the Company or any of its Subsidiaries which is required to be
disclosed in the Prospectus which is not disclosed and
correctly summarized therein;
(ix) Such counsel does not know of any contracts or
other documents which are required to be filed as exhibits to
the Registration Statement by the Act or by the Rules and
Regulations, or which are required to be filed as exhibits to
any document incorporated by reference in the Prospectus by
the Exchange Act or the rules and regulations thereunder,
which have not been filed as exhibits to the Registration
Statement or to such document incorporated by reference in the
Prospectus as permitted by the Rules and Regulations or the
rules and regulations of the Commission under the Exchange
Act;
(x) To the best of such counsel's knowledge, neither
the Company nor any Significant Subsidiary is in violation of
its articles or certificate of incorporation or in default
under any material agreement, indenture or instrument;
(xi) The Company is not, and immediately upon giving
effect to the offering and sale of the Securities will not be,
an "investment company", as such term is defined in the
Investment Company Act of 1940;
(xii) The Indenture has been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery thereof by the Trustee,
constitutes a valid and binding obligation of the Company,
enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other
similar laws affecting
19
<PAGE> 20
enforcement of creditors' rights generally and except further
as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and except further as
enforcement thereof may be limited by requirements that a
claim with respect to any debt securities issued under the
Indenture that are payable in a foreign or composite currency
(or a foreign or composite currency judgment in respect of
such claim) be converted into U.S. dollars at a rate of
exchange prevailing on a date determined pursuant to
applicable law or by governmental authority to limit, delay or
prohibit the making of payments outside the United States;
(xiii) [To be delivered on the Commencement Date
only.] The Securities have been duly authorized by the Company
and, when executed by the Company and completed and
authenticated by the Trustee, or the authenticating agent, in
accordance with the Indenture and delivered against payment
thereof pursuant to this Agreement and any Terms Agreement,
the Securities, in the forms certified by authorized officers
of the Company, will be valid and binding obligations of the
Company, entitled to the benefits provided by the Indenture
and enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other
similar laws affecting enforcement of creditors' rights
generally and except further as enforcement thereof is subject
to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law)
and except further as enforcement thereof may be limited by
requirements that a claim with respect to any debt securities
issued under the Indenture that are payable in a foreign or
composite currency (or a foreign or composite currency
judgment in respect of such claim) be converted into U.S.
dollars at a rate of exchange prevailing on a date determined
pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the
United States;
(xiv) [To be delivered at each Time of Delivery.] The
Securities have been duly authorized, executed and delivered
by the Company, and, assuming the due completion,
authentication and delivery thereof by the Trustee or the
authenticating agent, are valid and binding obligations of the
Company, entitled to the benefits provided by the Indenture
and enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles
of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law) and except further as
enforcement thereof may be limited by requirements that a
claim with respect to any debt securities issued under the
Indenture that are payable in a foreign or composite currency
(or a foreign or
20
<PAGE> 21
composite currency judgment in respect of such claim) be
converted into U.S. dollars at a rate of exchange prevailing
on a date determined pursuant to applicable law or by
governmental authority to limit, delay or prohibit the making
of payments outside the United States;
(xv) The Securities and the Indenture conform in all
material respects to the statements concerning them in the
Registration Statement and the Prospectus; and
(xvi) This Agreement and any applicable Terms
Agreement have been duly authorized, executed and delivered by
the Company; the execution, delivery and performance of this
Agreement and any applicable Terms Agreement and compliance by
the Company with the provisions contained herein, in any
applicable Terms Agreement and in the Securities and the
Indenture will not, in any way that would have a material
adverse effect upon the Company and its Subsidiaries taken as
a whole (a) conflict with, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the
assets of the Company or any of its Subsidiaries pursuant to
the terms of, or constitute a default under, any agreement,
indenture or instrument known to such counsel, or (b) result
in a violation of the articles or certificate of incorporation
of the Company or any Significant Subsidiary or any law,
order, rule or regulation of any court or governmental agency
having jurisdiction over the Company and any of its
Significant Subsidiaries or their property; and no consent,
authorization or order of, or filing or registration with, any
court or governmental agency is required for the execution,
delivery and performance by the Company of this Agreement and
any applicable Terms Agreement, except such as may be required
by the Act, the Trust Indenture Act, the Exchange Act, state
securities laws or foreign laws.
Such counsel shall further state in that opinion that he, or
attorneys over whom he exercises legal supervision, has participated in
the preparation of the Registration Statement and the Prospectus, and
no facts have come to his attention that lead him to believe that (i)
the Registration Statement (except for the financial statements,
supporting schedules or other financial data included or incorporated
therein, or omitted therefrom, as to which he expresses no opinion, and
except for the information furnished by the Trustee in its Form T-1, as
to which he expresses no opinion), 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 (ii) the
Prospectus as amended or supplemented, on the date of such opinion
(except for the financial statements, supporting schedules or other
financial data included or incorporated therein, or omitted therefrom,
as to which he expresses no opinion, and except for the information
furnished by the Trustee in its Form T-1, as to which he expresses no
opinion), contained an untrue statement of a material fact or
21
<PAGE> 22
omitted 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.
Insofar as such opinion relates to or involves matters of law
of any jurisdiction other than Ohio, the opinion may be given in
reliance on an opinion of counsel of that jurisdiction, a copy of which
opinion shall be furnished to each Agent, in which case the opinion
shall state that he believes that each Agent and he are entitled to so
rely;
(d) Not later than 10:00 a.m., New York City time, on the
Commencement Date and on each applicable date referred to in Section
4(j) hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, the independent certified public
accountants who have certified the financial statements of the Company
and its Subsidiaries included or incorporated by reference in the
Registration Statement shall have furnished to such Agent a letter,
dated the Commencement Date or such applicable date, as the case may
be, in form and substance satisfactory to such Agent, to the effect set
forth in Annex III hereto;
(e) (i) Neither the Company nor any of its Subsidiaries shall
have sustained since the date of the latest audited statements included
in the Prospectus as amended or supplemented prior to the date of the
pricing supplement relating to the Securities to be delivered at the
Relevant Time of Delivery any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, other than as set forth or contemplated in the
Prospectus as amended or supplemented prior to the date of the pricing
supplement relating to the Securities to be delivered at the Relevant
Time of Delivery and (ii) since the respective dates as of which
information is given in the Prospectus as amended or supplemented prior
to the date of the pricing supplement relating to the Securities to be
delivered at the Relevant Time of Delivery, there shall not have been
any change in the capital stock or long-term debt of the Company or any
of its Subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of
the Company and its Subsidiaries, taken as a whole, other than as set
forth or contemplated in the Prospectus as amended or supplemented
prior to the date of the pricing supplement relating to the Securities
to be delivered at the Relevant Time of Delivery, the effect of which,
in any such case described in clause (i) or (ii), is reasonably
expected to have a material adverse effect upon the business,
properties, financial condition, results of operations or prospects of
the Company and its Subsidiaries, taken as a whole;
(f) On the date hereof or during the period from the date of
an acceptance of an offer to purchase Securities through the date of
settlement of such sale or during the period from the date of any
applicable Terms Agreement through the date of closing under such Terms
Agreement (i) no downgrading shall have occurred in the rating
22
<PAGE> 23
accorded the Company's debt securities or preferred stock by Fitch IBCA
Investors Service L.P., Moody's Investors Service, Inc. or Standard &
Poor's Ratings Group, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt
securities or preferred stock;
(g) On the date hereof or during the period from the date of
an acceptance of an offer to purchase Securities through the date of
settlement of such sale or during the period from the date of any
applicable Terms Agreement through the date of closing under such Terms
Agreement, there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on
the New York Stock Exchange; (ii) a suspension or material limitation
in trading in the Company's securities on the New York Stock Exchange;
(iii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (iv) in the
reasonable judgment of such Agent makes it impracticable or inadvisable
to proceed with the solicitation of offers to purchase Securities or
the purchase of the Securities from the Company as principal pursuant
to the applicable Terms Agreement or otherwise, as the case may be, on
the terms and in the manner contemplated in the Prospectus;
(h) On the date hereof or during the period from the date of
an acceptance of an offer to purchase Securities through the date of
settlement of such sale or during the period from the date of any
applicable Terms Agreement through the date of closing under such Terms
Agreement, with respect to any Security denominated in a currency other
than the U.S. dollar, or more than one currency or a composite
currency, or any Security the principal or interest of which is indexed
to such currency, currencies or composite currency, there shall not
have occurred a suspension or material limitation in foreign exchange
trading in such currency, currencies or composite currency by a major
international bank, a general moratorium on commercial banking
activities in the country or countries issuing such currency,
currencies or composite currency, the outbreak or escalation of
hostilities involving, the occurrence of any material adverse change in
the existing financial, political or economic conditions of, or the
declaration of war or a national emergency by, the country or countries
issuing such currency, currencies or composite currency or the
imposition or proposal of exchange controls by any governmental
authority in the country or countries issuing such currency, currencies
or composite currency; and
(i) Such Agent shall have received a certificate, dated the
Commencement Date and each applicable date referred to in Section 4(k)
hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, of the President or any Vice-President
and a principal financial or accounting officer of the Company in which
23
<PAGE> 24
such officers, to the best of their knowledge after reasonable
investigation, shall state that the representations and warranties of
the Company in this Agreement are true and correct, that the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the
Commencement Date or such applicable date, as the case may be, that no
stop order suspending the effectiveness of the Registration Statement
or of any part thereof has been issued and no proceedings for that
purpose have been instituted or, to their knowledge, are contemplated
by the Commission and certifying as to the matters in subsections (e)
and (f) of this Section 6 and such other matters as the Agent may
reasonably request.
7. (a) The Company will indemnify and hold harmless each Agent
against any losses, claims, damages or liabilities, joint or several, to which
such Agent may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus or any
other prospectus relating to the Securities, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, 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, and will reimburse such Agent for
any legal or other expenses reasonably incurred by such Agent in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by such Agent, if any, specifically for use therein.
(b) Each Agent, severally and not jointly, will indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus or
any other prospectus relating to the Securities, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Agent, if
any, specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred.
24
<PAGE> 25
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party (absent
material prejudice) of the commencement thereof; but the omission so to notify
the indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under subsection (a) or (b) above. In
case 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 therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and each Agent on the other from the offering of the
Securities to which such loss, claim, damage or liability relates or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and each Agent on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and each Agent on the other shall be deemed to be
in the same proportion as the total net proceeds from the sale of the Securities
to which such loss, claim, damage or liability relates (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by such Agent in respect thereof. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Agents and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Company and each
Agent agree that it would
25
<PAGE> 26
not be just and equitable if contribution pursuant to this subsection (d) were
determined by per capita allocation (even if all Agents were treated as one
entity for such purpose) or by any other method which does not take account of
the equitable contributions referred to above in this subsection (d).
The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Agent shall be required to contribute
any amount in excess of the amount by which the total price at which the
Securities, (to which such loss, claim, damage or liability relates), purchased
by or through it were sold to the public exceeds the amount of any damages which
such Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of each of the Agents under this
subsection (d) to contribute are several in proportion to the respective
purchases made by or through it to which such loss, claim, damage or liability
(or action in respect thereof) relates and are not joint.
(e) The obligations of the Company under this Section 7 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Agent within the meaning of the Act; and the obligations of each Agent under
this Section 7 shall be in addition to any liability which such Agent may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. Each Agent, in soliciting offers to purchase Securities
from the Company and in performing the other obligations of such Agent hereunder
(other than in respect of any purchase by an Agent as principal, pursuant to a
Terms Agreement or otherwise), is acting solely as agent for the Company and not
as principal. Each Agent will make reasonable efforts to assist the Company in
obtaining performance by each purchaser whose offer to purchase Securities from
the Company was solicited by such Agent and has been accepted by the Company,
but such Agent shall not have any liability to the Company in the event such
purchase is not consummated for any reason. If the Company shall default on its
obligation to deliver Securities to a purchaser whose offer it has accepted, the
Company shall (i) hold each Agent harmless against any loss, claim or damage
arising from or as a result of such default by the Company and (ii)
notwithstanding such default, pay to the Agent that solicited such offer any
commission to which it would be entitled in connection with such sale.
9. The respective indemnities, agreements, representations,
warranties and other statements by any Agent and the Company set forth in or
made pursuant to this Agreement
26
<PAGE> 27
shall remain in full force and effect regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Agent or any
controlling person of any Agent, or the Company, or any officer or director or
any controlling person of the Company, and shall survive each delivery of and
payment for any of the Securities.
10. The provisions of this Agreement relating to the
solicitation of offers to purchase Securities from the Company may be suspended
or terminated at any time by the Company as to any Agent or by any Agent as to
such Agent upon the giving of written notice of such suspension or termination
to such Agent or the Company, as the case may be. In the event of such
suspension or termination with respect to any Agent, (i) this Agreement shall
remain in full force and effect with respect to any Agent as to which such
suspension or termination has not occurred; (ii) this Agreement shall remain in
full force and effect with respect to the rights and obligations of any party
which have previously accrued or which relate to Securities which are already
issued, agreed to be issued or the subject of a pending offer at the time of
such suspension or termination; and (iii) in any event, this Agreement shall
remain in full force and effect insofar as the fourth paragraph of Section 2(a),
and Sections 4(c), 4(d), 4(e), 5, 7, 8 and 9 hereof are concerned.
11. Except as otherwise specifically provided herein or in the
Administrative Procedure, all communications hereunder will be in writing and,
if sent to the Agents, will be mailed, delivered or telegraphed and confirmed to
them at their addresses furnished to the Company in writing for the purpose of
communications hereunder or, if sent to the Company, will be mailed, delivered
or telegraphed and confirmed to it at Eaton Center, 1111 Superior Avenue,
Cleveland, Ohio 44114-2584, Attention: Secretary.
12. This Agreement and any Terms Agreement shall be binding
upon, and inure solely to the benefit of, each Agent and the Company, and to the
extent provided in Sections 7, 8 and 9 hereof, the officers and directors of the
Company and any person who controls any Agent or the Company, and their
respective personal representatives, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement or any
Terms Agreement. No purchaser of any of the Securities through or from any Agent
hereunder shall be deemed a successor or assign by reason merely of such
purchase.
13. The term "business day" shall mean any day other than a
Saturday, a Sunday or a day on which commercial banks are required or authorized
to close in The City of New York.
14. THIS AGREEMENT AND ANY TERMS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. This Agreement and any Terms Agreement may be executed by
any one or more of the parties hereto and thereto in any number of counterparts,
each of which shall be an
27
<PAGE> 28
original, but all of such respective counterparts shall together constitute one
and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, whereupon this letter and the
acceptance by you thereof shall constitute a binding agreement between the
Company and you in accordance with its terms.
28
<PAGE> 29
Very truly yours,
EATON CORPORATION
By: /s/ A.T. Dillon
---------------------------------
Name: A.T. Dillon
Title: Executive Vice President--
Chief Financial and
Planning Officer
By: /s/ R.E. Parmenter
--------------------------------
Name: R.E. Parmenter
Title: Vice President and
Treasurer
Accepted in New York, New York,
as of the date hereof:
By: GOLDMAN, SACHS & CO.
By: /s/ Goldman, Sachs & Co.
-------------------------------
(Goldman, Sachs & Co.)
By: CHASE SECURITIES INC.
By: /s/ Chase Securities Inc.
-------------------------------
By: J.P. MORGAN SECURITIES INC.
By: /s/ J.P. Morgan Securities Inc.
-------------------------------
By: SALOMON SMITH BARNEY INC.
By: /s/ Salomon Smith Barney Inc.
-------------------------------
29
<PAGE> 30
ANNEX I
EATON CORPORATION
MEDIUM TERM NOTES
TERMS AGREEMENT
February , 2000
---
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Eaton Corporation, an Ohio corporation (the "Company"), proposes,
subject to the terms and conditions stated herein and in the Distribution
Agreement, dated February ___, 2000 (the "Distribution Agreement"), between the
Company on the one hand and Goldman, Sachs & Co., Chase Securities Inc., J.P.
Morgan Securities Inc. and Salomon Smith Barney Inc. (the "Agents") on the
other, to issue and sell to the Agents 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 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
I-1
<PAGE> 31
of this Terms Agreement. Each of the representations and warranties set forth in
the Distribution Agreement shall be deemed to have been made at and as of the
date of this Terms Agreement, except that each representation and warranty in
Section 1 of the Distribution Agreement which makes reference to the Prospectus
shall be deemed to be a representation and warranty as of the date of the
Distribution Agreement in relation to the Prospectus (as therein defined), and
also a representation and warranty as of the date of this Terms Agreement in
relation to the Prospectus 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 Agents and the Agents 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 two 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.
I-2
<PAGE> 32
EATON CORPORATION
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
Accepted:
By: GOLDMAN, SACHS & CO.
By:
------------------------------
(Goldman, Sachs & Co.)
By: CHASE SECURITIES INC.
By:
------------------------------
By: J.P. MORGAN SECURITIES INC.
By:
------------------------------
By: SALOMON SMITH BARNEY INC.
By:
------------------------------
I-3
<PAGE> 33
SCHEDULE TO ANNEX I
Title of Purchased Securities:
[ %] Medium-Term Notes
Aggregate Principal Amount:
[$.................... or units of other Specified Currency]
[Price to Public:]
Purchase Price by Goldman, Sachs & Co., Chase Securities Inc., J.P. Morgan
Securities Inc. and Salomon Smith Barney Inc.:
__% of the principal amount of the Purchased Securities[, plus accrued
interest from ______ to ______] [and accrued amortization, if any, 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 [[New York] Clearing House] [immediately available] funds]
[By wire transfer to a bank account specified by the Company in [next
day] [immediately available] funds]
Indenture:
[Indenture, dated as of April 1, 1994, between the Company and The
Chase Manhattan Bank, as Trustee]
[Indenture, dated as of ________, between the Company and ________, as
Trustee]
Time of Delivery:
Closing Location for Delivery of Securities:
Maturity:
Interest Rate:
[ %]
Interest Payment Dates:
S-1
<PAGE> 34
[months and dates]
Documents to be Delivered:
The following documents referred to in the Distribution Agreement shall
be delivered as a condition to the Closing:
(1) The opinion or opinions of counsel to the Agents referred to in
Section 4(h).
(2) The opinion of counsel to the Company referred to in Section 4(i).
(3) The accountants' letter referred to in Section 4(j).
(4) The officers' certificate referred to in Section 4(k).
Other Provisions:
S-2
<PAGE> 35
ANNEX II
EATON CORPORATION
MEDIUM TERM NOTES
ADMINISTRATIVE PROCEDURE
This Administrative Procedure relates to the Securities defined in the
Distribution Agreement, dated February 2, 2000 (the "Distribution Agreement"),
between Eaton Corporation, an Ohio corporation (the "Company"), and Goldman,
Sachs & Co., Chase Securities Inc., J.P. Morgan Securities Inc. and Salomon
Smith Barney Inc. (the "Agents"), to which this Administrative Procedure is
attached as Annex II. Defined terms used herein and not defined herein shall
have the meanings given such terms in the Distribution Agreement, the
Prospectus, or the Indenture.
The procedures to be followed with respect to the settlement of sales
of Securities directly by the Company to purchasers solicited by an Agent, as
agent, are set forth below. The terms and settlement details related to a
purchase of Securities by an Agent, as principal, from the Company will be set
forth in a Terms Agreement pursuant to the Distribution Agreement, unless the
Company and such Agent otherwise agree as provided in Section 2(b) of the
Distribution Agreement, in which case the procedures to be followed in respect
of the settlement of such sale will be as set forth below. An Agent, in relation
to a purchase of a Security by a purchaser solicited by such Agent, is referred
to herein as the "Selling Agent" and, in relation to a purchase of a Security by
such Agent as principal other than pursuant to a Terms Agreement, as the
"Purchasing Agent".
The Company will advise each Agent in writing of those persons with
whom such Agent is to communicate regarding offers to purchase Securities and
the related settlement details.
Each Security will be issued only in fully registered form and will be
represented by either a global security (a "Global Security") delivered to the
Trustee, as agent for The Depository Trust Company (the "Depositary") and
recorded in the book-entry system maintained by the Depositary (a "Book-Entry
Security") or a certificate issued in definitive form (a "Certificated
Security") delivered to a person designated by an Agent, as set forth in the
applicable pricing supplement. An owner of a Book-Entry Security will not be
entitled to receive a certificate representing such a Security, except as
provided in the Indenture.
Book-Entry Securities will be issued in accordance with the
Administrative Procedure set forth in Part I hereof, and Certificated Securities
will be issued in accordance with the Administrative Procedure set forth in Part
II hereof.
II-1
<PAGE> 36
PART I: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
In connection with the qualification of the Book-Entry Securities for
eligibility in the book-entry system maintained by the Depositary, the
institution performing the functions of a Trustee (such institution, in its
respective capacities as Trustee, Security Registrar, custodian for the
Depositary and Depositary Participant, being herein called the "Bank") will
perform the custodial, document control and administrative functions described
below, in accordance with its respective obligations under a Letter of
Representation from the Company and the Bank to the Depositary, dated the date
hereof, and a Medium-Term Note Certificate Agreement between the Bank and the
Depositary, dated as of December 2, 1988, (the "Certificate Agreement"), and its
obligations as a participant in the Depositary, including the Depositary's
Same-Day Funds Settlement System ("SDFS").
Posting Rates by the Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Book-Entry Securities that
may be sold as a result of the solicitation of offers by an Agent. The Company
may establish a fixed set of interest rates and maturities for an offering
period ("posting"). If the Company decides to change already posted rates, it
will promptly advise the Agents to suspend solicitation of offers until the new
posted rates have been established with the Agents.
Acceptance of Offers by the Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Book-Entry Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Book-Entry Securities as a
Purchasing Agent. The Company will have the sole right to accept offers to
purchase Book-Entry Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Agent or Purchasing Agent, as the
case may be, of its acceptance or rejection of an offer to purchase Book-Entry
Securities. If the Company accepts an offer to purchase Book-Entry Securities,
it will confirm such acceptance in writing to the Selling Agent or Purchasing
Agent, as the case may be, and the Bank.
Communication of Sale Information to the Company by Agent and Settlement
Procedures:
A. After the acceptance of an offer by the Company, the Selling Agent
or Purchasing Agent, as the case may be, will communicate promptly, but in no
event later than the time set forth under "Settlement Procedure Timetable"
below, the following details of the terms of such offer (the "Sale Information")
to the Company by telephone (confirmed in writing) or by facsimile transmission
or other acceptable written means:
II-2
<PAGE> 37
(1) Principal Amount of Book-Entry Securities to be purchased;
(2) If a Fixed Rate Book-Entry Security, the interest rate and initial
interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the date or dates on which the Exchange Rate will be
determined by the Exchange Rate Agent for such Specified Currency;
(7) Indexed Currency, the Base Rate and the date on which the Exchange
Rate is determined, if applicable;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable Book-Entry Security, such of the following as are
applicable:
(i) Initial Redemption Date,
(ii) Redemption Percentage (% of par), and
(iii) Amount (% of par) that the Redemption Percentage shall
decline (but not below par) on each anniversary of the
Initial Redemption Date;
(12) If a Floating Rate Book-Entry Security, such of the following as
are applicable:
(i) Base Rate,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Date,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates,
II-3
<PAGE> 38
(xi) Regular Record Dates, and
(xii) Calculation Agent;
(13) Denomination of certificates to be delivered at settlement;
(14) Selling Agent or Purchasing Agent; and
(15) Any other information necessary to complete the form of Security.
B. After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, the Company will assign a CUSIP number to
the Global Security representing such Book-Entry Security from a list of CUSIP
numbers previously obtained by the Company and delivered to the Bank by the
Company and will then communicate such Sale Information and CUSIP number to the
Bank by fascimile transmission or other acceptable means. The Company will also
advise the Selling Agent and the Purchasing Agent, as the case may be, of such
CUSIP number.
C. The Bank will enter a pending deposit message through the
Depositary's Participant Terminal System, providing the following settlement
information to the Depositary, and the Depositary shall forward such information
to such Agent and Standard & Poor's Corporation:
(1) The applicable Sale Information;
(2) CUSIP number of the Global Security representing such Book-Entry
Security;
(3) Whether such Global Security will represent any other Book-Entry
Security (to the extent known at such time);
(4) Number of the participant account maintained by the Depositary on
behalf of the Selling Agent or Purchasing Agent, as the case may
be;
(5) The interest payment period; and
(6) Initial Interest Payment Date for such Book-Entry Security, number
of days by which such date succeeds the record date for the
Depositary's purposes and, if calculable at that time, the amount
of interest payable on such Interest Payment Date.
D. The Bank will complete and authenticate the Global Security
previously delivered by the Company representing such Book-Entry Security.
E. The Depositary will credit such Book-Entry Security to the Bank's
participant account at the Depositary.
F. The Bank will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary to (i) debit such
Book-Entry Security to the Bank's participant account and credit such Book-Entry
Security to such Agent's participant account and
II-4
<PAGE> 39
(ii) debit such Agent's settlement account and credit the Bank's settlement
account for an amount equal to the price of such Book-Entry Security less such
Agent's commission. The entry of such a deliver order shall constitute a
representation and warranty by the Bank to the Depositary that (a) the Global
Security representing such Book-Entry Security has been issued and authenticated
and (b) the Bank is holding such Global Security pursuant to the Certificate
Agreement.
G. Such Agent will enter an SDFS deliver order through the
Depositary's Participant Terminal System instructing the Depositary (i) to debit
such Book-Entry Security to such Agent's participant account and credit such
Book-Entry Security to the participant accounts of the Participants with respect
to such Book-Entry Security and (ii) to debit the settlement accounts of such
Participants and credit the settlement account of such Agent for an amount equal
to the price of such Book-Entry Security.
H. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures "F" and "G" herein will be settled in
accordance with SDFS operating procedures in effect on the settlement date.
I. Upon confirmation of receipt of funds, the Bank will transfer to
the account of the Company maintained at The Chase Manhattan Bank, New York, New
York, account no. 910-1-419894 or such other account as the Company may have
previously specified to the Bank, in funds available for immediate use in the
amount transferred to the Bank in accordance with Settlement Procedure "F"
herein.
J. Upon request, the Bank will send to the Company a statement
setting forth the principal amount of Book-Entry Securities outstanding as of
that date under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry Security
to the purchaser either by transmitting to the Participants with respect to such
Book-Entry Security a confirmation order or orders through the Depositary's
institutional delivery system or by mailing a written confirmation to such
purchaser.
L. The Depositary will, at any time, upon request of the Company or
the Bank, promptly furnish to the Company or the Bank a list of the names and
addresses of the Participants for whom the Depositary has credited Book-Entry
Securities.
Preparation of Pricing Supplement:
If the Company accepts an offer to purchase a Book-Entry Security, it
will prepare a pricing supplement reflecting the terms of such Book-Entry
Security and arrange to have delivered to the Selling Agent or Purchasing Agent,
as the case may be, at least ten copies of such pricing supplement, not later
than 5:00 p.m., New York City time, on the Business Day following the Trade Date
(as defined below), or, if the Company and the purchaser agree to settlement on
the Business Day following the date of acceptance of such offer, not later than
II-5
<PAGE> 40
noon, New York City time, on such date. The Company will arrange to have the
pricing supplement filed with the Commission not later than the close of
business of the Commission on the fifth Business Day following the date on which
such pricing supplement is first used. As used herein, the term "Business Day"
shall mean any day other than a Saturday, a Sunday or a day on which commercial
banks are required or authorized to close in The City of New York.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Book-Entry
Security a written confirmation of the sale and delivery and payment
instructions. In addition, the Selling Agent will deliver to such purchaser or
its agent the Prospectus (including the pricing supplement) in relation to such
Book-Entry Security prior to or together with the earlier of the delivery to
such purchaser or its agent of (a) the confirmation of sale or (b) the
Book-Entry Security.
Date of Settlement:
The receipt by the Company of immediately available funds in payment
for a Book-Entry Security and the authentication and issuance of the Global
Security representing such Book-Entry Security shall constitute "settlement"
with respect to such Book-Entry Security. All orders of Book-Entry Securities
solicited by a Selling Agent or made by a Purchasing Agent and accepted by the
Company on a particular date (the "Trade Date") will be settled on a date (the
"Settlement Date") which is the third Business Day after the Trade Date pursuant
to the "Settlement Procedure Timetable" set forth below, unless the Company and
the purchaser agree to settlement on another Business Day, which shall be no
earlier than the next Business Day after the Trade Date.
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by a Selling Agent and
accepted by the Company for settlement on the third Business Day after the Trade
Date, Settlement Procedures "A" through "I" set forth above shall be completed
as soon as possible but not later than the respective times (New York City time)
set forth below:
II-6
<PAGE> 41
<TABLE>
<CAPTION>
SETTLEMENT
PROCEDURE Time
- --------- ----
<S> <C> <C>
A 5:00 p.m. on the Business Day following the Trade Date or 10:00 a.m. on the
second Business Day immediately preceding the Settlement Date,
whichever is earlier
B 12:00 noon on the second Business Day immediately preceding the Settlement
Date
C 2:00 p.m. on the second Business Day immediately preceding the Settlement
Date
D 9:00 a.m. on the Settlement Date
E 10:00 a.m. on the Settlement Date
F-G 2:00 p.m. on the Settlement Date
H 4:45 p.m. on the Settlement Date
I 5:00 p.m. on the Settlement Date
</TABLE>
If the initial interest rate for a Floating Rate Book-Entry Security
has not been determined at the time that Settlement Procedure "A" is completed,
Settlement Procedures "B" and "C" shall be completed as soon as such rate has
been determined but no later than 2:00 p.m. on the second Business Day
immediately preceding the Settlement Date. Settlement Procedure "H" 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 Book-Entry Security is rescheduled or canceled, the
Bank, upon obtaining knowledge thereof, will deliver to the Depositary, through
the Depositary's Participation Terminal System, a 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:
If the Bank fails to enter an SDFS deliver order with respect to a
Book-Entry Security pursuant to Settlement Procedure "F", the Bank may deliver
to the Depositary, through the Depositary's Participant Terminal System, as soon
as practicable a withdrawal message instructing the Depositary to debit such
Book-Entry Security to the Bank's participant account, provided that the Bank's
participant account contains a principal amount of the Global Security
representing such Book-Entry Security 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 Securities represented by a Global Security, the Bank will mark
such Global Security "canceled", make appropriate entries in the Bank's records
and send such canceled Global Security to the Company. The CUSIP number assigned
to such Global Security 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
Securities represented by a Global Security, the Bank will exchange such Global
Security for two Global Securities, one of which
II-7
<PAGE> 42
shall represent such Book-Entry Security or Securities and shall be canceled
immediately after issuance and the other of which shall represent the remaining
Book-Entry Securities previously represented by the surrendered Global Security
and shall bear the CUSIP number of the surrendered Global Security.
If the purchase price for any Book-Entry Security is not timely paid to
the participants with respect to such Book-Entry Security by the beneficial
purchaser thereof (or a person, including an indirect participant in the
Depositary, acting on behalf of such purchaser), such participants and, in turn,
the Agent for such Book-Entry Security may enter delivery orders through the
Depositary's Participant Terminal System debiting such Book-Entry Security to
such participant's account and crediting such Book-Entry Security to such
Agent's account and then debiting such Book-Entry Security to such Agent's
participant account and crediting such Book-Entry Security to the Bank's
participant account and shall notify the Company and the Bank thereof.
Thereafter, the Bank will (i) immediately notify the Company of such order and
the Company shall transfer to such Agent funds available for immediate use in an
amount equal to the price of such Book-Entry Security which was credited to the
account of the Company maintained at the Bank in accordance with Settlement
Procedure I, and (ii) deliver the withdrawal message and take the related
actions described in the preceding paragraph. If such failure shall have
occurred for any reason other than default by the applicable Agent to perform
its obligations hereunder or under the Distribution Agreement, the Company and
such Agent will mutually agree upon an amount of compensation to reimburse such
Agent for the loss of its use of funds during the period when the funds were
credited to the account of the Company; provided however, it is understood that
the parties will, during the course of reaching such mutual agreement, take into
consideration, among other things, any adverse effect (including the magnitude
thereof) on each of the parties as a result of such failure.
Notwithstanding the foregoing, upon any failure to settle with respect
to a Book-Entry Security, 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 Securities to
have been represented by a Global Security, the Bank will provide, in accordance
with Settlement Procedure "D", for the authentication and issuance of a Global
Security representing the other Book-Entry Securities to have been represented
by such Global Security and will make appropriate entries in its records. The
Company will, from time to time, furnish the Bank with a sufficient quantity of
Securities.
PART II: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
Posting Rates by Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Certificated Securities
that may be sold as a result of the solicitation of offers by an Agent. The
Company may establish a fixed set of interest rates and maturities for an
offering period ("posting"). If the Company decides to change already
II-8
<PAGE> 43
posted rates, it will promptly advise the Agents to suspend solicitation of
offers until the new posted rates have been established with the Agents.
Acceptance of Offers by Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Certificated Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Certificated Securities as
a Purchasing Agent. The Company will have the sole right to accept offers to
purchase Certificated Securities and may reject any such offer in whole or in
part.
The Company will promptly notify the Selling Agent or Purchasing Agent,
as the case may be, of its acceptance or rejection of an offer to purchase
Certificated Securities. If the Company accepts an offer to purchase
Certificated Securities, it will confirm such acceptance in writing to the
Selling Agent or Purchasing Agent, as the case may be, and the Bank.
Communication of Sale Information to Company by Agent:
After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate the following details of
the terms of such offer (the "Sale Information") to the Company by telephone
(confirmed in writing) or by facsimile transmission or other acceptable written
means:
(1) Principal Amount of Certificated Securities to be purchased;
(2) If a Fixed Rate Certificated Security, the interest rate and
initial interest payment date;
(3) Trade Date;
(4) Settlement Date;
(5) Maturity Date;
(6) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency;
(7) Indexed Currency, the Base Rate and the date on which the
applicable Exchange is determined, if applicable;
(8) Issue Price;
(9) Selling Agent's commission or Purchasing Agent' discount, as the
case may be;
(10) Net Proceeds to the Company;
(11) If a redeemable Certificated Security, such of the following as
are applicable:
(i) Initial Redemption Date,
(ii) Redemption Percentage (% of par), and
(iii) Amount (% of par) that the Redemption Percentage shall
decline (but not below par) on each anniversary of the
Initial Redemption Date;
II-9
<PAGE> 44
(12) If a Floating Rate Certificated Security, such of the following as
are applicable:
(i) Base Rate
(ii) Index Maturity
(iii) Spread or Spread Multiplier
(iv) Maximum Rate
(v) Minimum Rate
(vi) Initial Interest Rate
(vii) Interest Reset Dates
(viii) Calculation Dates
(ix) Interest Determination Dates
(x) Interest Payment Dates
(xi) Regular Record Dates
(xii) Calculation Agent
(13) Name, address and taxpayer identification numbe of the registered
owner(s);
(14) Denomination of certificates to be delivered at
settlement;
(15) Selling Agent or Purchasing Agent.
(16) Any other information necessary to complete the form of Security.
Preparation of Pricing Supplement by Company:
If the Company accepts an offer to purchase a Certificated Security, it
will prepare a pricing supplement reflecting the terms of such Certificated
Security and arrange to have delivered to the Selling Agent or Purchasing Agent,
as the case may be, at least ten copies of such pricing supplement, not later
than 5:00 p.m., New York City time, on the Business Day following the Trade
Date, or, if the Company and the purchaser agree to settlement on the date of
acceptance of such offer, not later than noon, New York City time, on such date.
The Company will arrange to file the pricing supplement with the Commission not
later than the close of business of the Commission on the fifth Business Day
following the date on which such pricing supplement is first used.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Certificated
Security a written confirmation of the sale and delivery and payment
instructions. In addition, the Selling Agent will deliver to such purchaser or
its agent the Prospectus (including the pricing supplement) in relation to such
Certificated Security prior to or together with the earlier of the delivery to
such purchaser or its agent of (a) the confirmation of sale or (b) the
Certificated Security.
II-10
<PAGE> 45
Date of Settlement:
All offers of Certificated Securities solicited by a Selling Agent or
made by a Purchasing Agent and accepted by the Company will be settled on a date
(the "Settlement Date") which is the third Business Day after the date of
acceptance of such offer, unless the Company and the purchaser agree to
settlement (a) on another Business Day after the acceptance of such offer or (b)
with respect to an offer accepted by the Company prior to 10:00 a.m., New York
City time, on the date of such acceptance.
Instruction from Company to Trustee for Preparation of Certificated Securities:
After receiving the Sale Information from the Selling Agent or
Purchasing Agent, as the case may be, the Company will communicate such Sale
Information to the Bank by facsimile transmission or other acceptable written
means.
The Company will instruct the Bank by facsimile transmission or other
acceptable written means to authenticate and deliver the Certificated Securities
no later than 2:15 p.m., New York City time, on the Settlement Date. Such
instruction will be given by the Company prior to 3:00 p.m., New York City time,
on the Business Day immediately preceding the Settlement Date unless the
Settlement Date is the date of acceptance by the Company of the offer to
purchase Certificated Securities, in which case such instruction will be given
by the Company by 11:00 a.m., New York City time.
Preparation and Delivery of Certificated Securities by Trustee and Receipt of
Payment Therefor:
The Bank will complete each Certificated Security and appropriate
receipts that will serve as the documentary control of the transaction.
In the case of a sale of Certificated Securities to a purchaser
solicited by a Selling Agent, the Bank will, by 2:15 p.m., New York City time,
on the Settlement Date, deliver the Certificated Securities to the Selling Agent
for the benefit of the purchaser of such Certificated Securities against
delivery by the Selling Agent of a receipt therefor. On the Settlement Date, the
Selling Agent will deliver payment for such Certificated Securities in
immediately available funds to the Company in an amount equal to the issue price
of the Certificated Securities less the Selling Agent's commission; provided
that the Selling Agent reserves the right to withhold payment for which it has
not received funds from the purchaser. The Company shall not use any proceeds
advanced by a Selling Agent to acquire securities.
In the case of a sale of Certificated Securities to a Purchasing Agent,
the Bank will, by 2:15 p.m., New York City time, on the Settlement Date, deliver
the Certificated Securities to the Purchasing Agent against receipt therefor. On
the Settlement Date the Purchasing Agent will deliver payment for such
Certificated Securities in immediately available funds to the Company
II-11
<PAGE> 46
in an amount equal to the issue price of the Certificated Securities less the
Purchasing Agent's discount.
Failure of Purchaser to Pay Selling Agent:
If a purchaser (other than a Purchasing Agent) fails to make payment to
the Selling Agent for a Certificated Security, the Selling Agent will promptly
notify the Bank and the Company thereof by telephone (confirmed in writing) or
by facsimile transmission or other acceptable written means. The Selling Agent
will immediately return the Certificated Security to the Bank. Immediately upon
receipt of such Certificated Security by the Bank, the Company will return to
the Selling Agent an amount equal to the amount previously paid to the Company
in respect of such Certificated Security. The Company and the Selling Agent will
mutually agree upon an amount of compensation to reimburse the Selling Agent for
the loss of its use of funds during the period when they were credited to the
account of the Company; provided, however, it is understood that the parties
will, during the course of reaching such mutual agreement, take into
consideration, among other things, any adverse effect (including the magnitude
thereof) on each of the parties as a result of such failure.
The Bank will cancel the Certificated Security in respect of which the
failure occurred, make appropriate entries in its records and, unless otherwise
instructed by the Company, dispose of the Certificated Security in accordance
with its customary procedures.
PART III: BANK NOT TO RISK FUNDS
Nothing herein shall be deemed to require the Bank to risk or expend
its own funds in connection with any payment to the Company or the Agents or any
purchaser, it being understood by all parties that payments made by the Bank to
either the Company or the Agents or any purchaser shall be made only to the
extent that funds are provided to the Bank for such purpose.
II-12
<PAGE> 47
ANNEX III
ACCOUNTANTS' LETTER
Pursuant to Sections 4(j) and 6(d), as the case may be, of the
Distribution Agreement, the Company's independent certified public accountants
shall furnish letters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its Subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) in their opinion, the financial statements and schedules
examined by them and included in the prospectus or prospectuses
contained in the Registration Statement relating to the Securities, as
amended at the date of such letter, comply in form in all material
respects with the applicable accounting requirements of the Act and the
related published Rules and Regulations;
(iii) they have, as indicated in their report or reports
attached to such letter, made a review of any unaudited financial
statements included in such prospectus in accordance with standards
established by the American Institute of Certified Public Accountants;
(iv) on the basis of the review referred to in (iii) above, a
reading of the latest available interim financial statements of the
Company, and inquiries of officials of the Company who have
responsibility for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to believe
that the unaudited financial statements, if any, included in such
Prospectus or prospectuses do not comply in form in all material
respects with the applicable accounting requirements of the Act, the
Exchange Act and the related published Rules and Regulations, or are
not in conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited financial
statements included in such Prospectus;
(v) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in such prospectus or prospectuses (in each case
to the extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
Company and its Subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such records
by analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter;
III-1
<PAGE> 48
(vi) from the date of the latest balance sheet of the Company
and its Subsidiaries included or incorporated by reference in the
Prospectus to a specified date not more than five days from the date of
such letter, there was not any change in the capital stock of the
Company (other than by reason of shares issued pursuant to the
Company's employee or director stock option plans, or stock ownership
plans, stock bonus plans, stock compensation plans or dividend
reinvestment plans or upon conversion of convertible securities or in
connection with acquisitions or distributions previously disclosed to
the Agents), any increase in the long-term debt or short-term debt of
the Company and its consolidated Subsidiaries or any decrease in
consolidated net assets of the Company and its consolidated
Subsidiaries, in each case as compared with amounts shown in such
latest balance sheet, or any decrease in consolidated net sales or the
total or per share amounts of consolidated net income, in each case as
compared with the comparable period in the preceding year, except in
each case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in such
letter or letters; and
(vii) they have read the unaudited pro forma financial
information, if any, contained in the Prospectus, and nothing came to
their attention that caused them to believe that the unaudited pro
forma financial information does not comply in all material respects
with the applicable requirements of Rule 11.02 of Regulation S-X or
that the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of the unaudited pro forma
financial information.
All financial statements and schedules included in material
incorporated by reference into such Prospectus shall be deemed included in such
Prospectus.
All references in this Annex III to the Prospectus shall be
deemed to refer to the Prospectus (including the documents incorporated by
reference therein) as defined in the Distribution Agreement as of the
Commencement Date referred to in Section 6(d) thereof and the Prospectus as
amended or supplemented (including the documents incorporated by reference
therein) as of the date of the amendment, supplement, incorporation or the Time
of Delivery relating to the Terms Agreement requiring the delivery of such
letter under 4(j) thereof.
III-2
<PAGE> 1
Exhibit 4(i)
[FACE OF NOTE]
CUSIP NO.
REGISTERED
PRINCIPAL AMOUNT
No. FX -
EATON CORPORATION
MEDIUM-TERM NOTE
(FIXED RATE)
If the registered owner of this Security (as indicated below)
is The Depository Trust Company (the "Depository") or a nominee of the
Depository, this Security is a Global Security and the following two legends
apply:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL, SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITORY TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO THE
DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH
NOMINEE TO A SUCCESSOR OF THE DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO MATURITY" AND "INITIAL
ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) BELOW WILL BE
COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL
ISSUE DISCOUNT ("OID") RULES.
<PAGE> 2
2
ISSUE PRICE: OPTION TO ELECT REPAYMENT:
[ ] YES [ ] NO
ORIGINAL ISSUE DATE: OPTIONAL REPAYMENT DATE[S]:
STATED MATURITY DATE: MINIMUM DENOMINATION:
[ ] $1,000
[ ] Other:
SPECIFIED CURRENCY: ADDITIONAL AMOUNTS:
United States Dollars:
[ ] YES [ ] NO DEFEASANCE: [ ] YES [ ] NO
Foreign Currency: COVENANT DEFEASANCE: [ ] YES [ ] NO
EXCHANGE RATE AGENT:
TOTAL AMOUNT OF OID:
OPTION TO RECEIVE PAYMENTS IN YIELD TO MATURITY:
SPECIFIED CURRENCY OTHER THAN
U.S. DOLLARS: [ ] YES [ ] NO
INITIAL ACCRUAL PERIOD OID:
INTEREST RATE:
SINKING FUND:
PRINCIPAL FINANCIAL CENTER:
INTEREST PAYMENT DATES IF OTHER THAN
APRIL 15 AND OCTOBER 15:
REGULAR RECORD DATES IF OTHER
THAN APRIL 1 AND OCTOBER 1:
OPTIONAL REDEMPTION: [ ] YES [ ] NO
INITIAL REDEMPTION DATE:
INITIAL REDEMPTION PERCENTAGE:
ANNUAL REDEMPTION PERCENTAGE REDUCTION:
OTHER/DIFFERENT PROVISIONS:
<PAGE> 3
3
EATON CORPORATION, an Ohio corporation (herein referred to as
the "Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
___________________________________, or registered assigns, the principal sum of
___________________________ on the Stated Maturity Date shown above (except to
the extent redeemed or repaid prior to the Stated Maturity Date) and to pay
interest, if any, thereon at the Interest Rate shown above from the Original
Issue Date shown above or from the most recent Interest Payment Date to which
interest, if any, has been paid or duly provided for, semiannually on April 15
and October 15 of each year (unless other Interest Payment Dates are shown on
the face hereof) (each, an "Interest Payment Date") until the principal hereof
is paid or made available for payment and on the Stated Maturity Date, any
Redemption Date or Repayment Date (such terms are together hereinafter referred
to as the "Maturity Date" with respect to the principal repayable on such date);
provided, however, that any payment of principal (or premium, if any) or
interest, if any, to be made on any Interest Payment Date or on the Maturity
Date that is not a Business Day (as defined below) shall be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date or the Maturity Date, as the case may be, and no
additional interest, if any, shall accrue on the amount so payable as a result
of such delayed payment. For purposes of this Security, unless otherwise
specified on the face hereof, "Business Day" means any day that is not a
Saturday or Sunday and that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close in The City of New York; provided, however, that, if the
Specified Currency shown above is a foreign currency, such day is also not a day
on which commercial banks are authorized or required by law, regulation or
executive order to close in the Principal Financial Center (as defined below) of
the country issuing the Specified Currency (or, if the Specified Currency is the
euro, such day is also a day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer (TARGET) System is open). "Principal Financial
Center" means the capital city of the country issuing the Specified Currency
except that with respect to United States dollars, Australian dollars, Canadian
dollars, Deutsche marks, Dutch guilders, South African rand and Swiss francs,
the "Principal Financial Center" shall be The City of New York, Sydney and
(solely in the case of the Specified Currency) Melbourne, Toronto, Frankfurt,
Amsterdam, Johannesburg and Zurich, respectively.
Any interest hereon will accrue from, and including, the
immediately preceding Interest Payment Date in respect of which interest, if
any, has been paid or duly provided for (or from, and including, the Original
Issue Date if no interest has been paid or duly provided for) to, but excluding,
the succeeding Interest Payment Date or the Maturity Date, as the case may be.
The interest, if any, so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture and subject to
certain exceptions described herein (referred to on the reverse hereof), be paid
to the person (the "Holder") in whose name this
<PAGE> 4
4
Security (or one or more Predecessor Securities) is registered at the close of
business on the April 1 or October 1 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date (unless other Regular
Record Dates are specified on the face hereof) (each, a "Regular Record Date");
provided, however, that, if this Security was issued between a Regular Record
Date and the initial Interest Payment Date relating to such Regular Record Date,
interest, if any, for the period beginning on the Original Issue Date and ending
on such initial Interest Payment Date shall be paid on the Interest Payment Date
following the next succeeding Regular Record Date to the Holder hereof on such
next succeeding Regular Record Date; and provided further that interest, if any,
payable on the Maturity Date will be payable to the person to whom the principal
hereof shall be payable. Any such interest not so punctually paid or duly
provided for on any Interest Payment Date other than the Maturity Date
("Defaulted Interest") will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a special record date (the "Special Record Date") for the payment of
such Defaulted Interest to be fixed by the Trustee (referred to on the reverse
hereof), notice whereof shall be given to the Holder of this Security not less
than ten days prior to such Special Record Date, or may be paid at any time in
any other lawful manner, all as more fully provided in the Indenture.
Unless otherwise specified above, all payments in respect of
this Security will be made in U.S. dollars regardless of the Specified Currency
shown above unless the Holder hereof makes the election described below. If the
Specified Currency shown above is other than U.S. dollars, the Exchange Rate
Agent (referred to on the reverse hereof) will arrange to convert any such
amounts so payable in respect hereof into U.S. dollars in the manner described
on the reverse hereof; provided, however, that the Holder hereof may, if so
indicated above, elect to receive all or any specified portion of any payment of
principal, premium, if any, and/or interest, if any, in respect of this Security
in such Specified Currency by delivery of a written request to the corporate
trust office of the Trustee in The City of New York, on or prior to the
applicable Regular Record Date or at least fifteen days prior to the Maturity
Date, as the case may be. Such request may be in writing (mailed or hand
delivered) or by cable, telex or other form of facsimile transmission. The
Holder hereof may elect to receive payment in such Specified Currency for all
principal, premium, if any, and interest payments, if any, and need not file a
separate election for each payment. Such election will remain in effect until
revoked by written notice to the Trustee, but written notice of any such
revocation must be received by the Trustee on or prior to the applicable Regular
Record Date or at least fifteen days prior to the Maturity Date, as the case may
be.
Notwithstanding the foregoing, if the Company determines that
the Specified Currency is not available for making payments in respect hereof
due to the imposition of exchange controls or other circumstances beyond the
Company's control, or is no longer used by the government of the country issuing
such currency or for the settlement of transactions by public institutions of or
within the international banking community, then the Holder hereof may
<PAGE> 5
5
not so elect to receive payments in the Specified Currency and any such
outstanding election shall be automatically suspended, until the Company
determines that the Specified Currency is again available for making such
payments. Any payment made under such circumstances in U.S. dollars where the
required payment is in a Specified Currency will not constitute a default under
the Indenture.
In the event of an official redenomination of the Specified
Currency, the obligations of the Company with respect to payments on this
Security, in all cases, shall be deemed immediately following such
redenomination to provide for payment of that amount of redenominated currency
representing the amount of such obligations immediately before such
redenomination. In no event shall any adjustment be made to any amount payable
hereunder as a result of any change in the value of the Specified Currency shown
above relative to any other currency due solely to fluctuations in exchange
rates.
Until this Security is paid in full or payment therefor in
full is duly provided for, the Company will at all times maintain a Paying Agent
(which Paying Agent may be the Trustee) in The City of New York (which, unless
otherwise specified above, shall be the "Place of Payment"). The Company has
initially appointed The Chase Manhattan Bank, at its office in The City of New
York as Paying Agent.
Unless otherwise shown above, payment of interest on this
Security (other than on the Maturity Date) will be made by check mailed to the
registered address of the Holder hereof as of the Regular Record Date; provided,
however, that, if (i) the Specified Currency is U.S. dollars and this is a
Global Security (as defined on the reverse hereof) or (ii) the Specified
Currency is a Foreign Currency, and the Holder has elected to receive payments
in such Specified Currency as provided for above, such interest payments will be
made by transfer of immediately available funds, but only if appropriate wire
transfer instructions have been received in writing by the Trustee on or prior
to the applicable Regular Record Date. Simultaneously with any election by the
Holder hereof to receive payments in respect hereof in the Specified Currency
(if other than U.S. dollars), such Holder may provide appropriate wire transfer
instructions to the Trustee, and all such payments will be made in immediately
available funds to an account maintained by the payee with a bank, but only if
such bank has appropriate facilities therefor. Unless otherwise specified above,
the principal hereof (and premium, if any) and interest, if any, hereon payable
on the Maturity Date will be paid in immediately available funds upon surrender
of this Security at the office of the Trustee maintained for that purpose in the
Borough of Manhattan, The City of New York (or at such other location as may be
specified above). The Company will pay any administrative costs imposed by banks
in making payments in immediately available funds but, except as otherwise
provided under Additional Amounts above, any tax, assessment or governmental
charge imposed upon payments will be borne by the Holders of the Securities in
respect of which such payments are made.
<PAGE> 6
6
Interest on this Security, if any, will be computed on the
basis of a 360-day year of twelve 30-day months.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its facsimile corporate seal.
EATON CORPORATION
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
[CORPORATE SEAL]
Attest:______________________________
Name:
Title: Secretary
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series
designated therein referred to in the
within-mentioned Indenture
THE CHASE MANHATTAN BANK,
as Trustee
By:________________________________
Authorized Officer
<PAGE> 7
[REVERSE OF NOTE]
EATON CORPORATION
MEDIUM-TERM NOTE
Section 1. General. This Security is one of a duly authorized
issue of securities (herein called the "Securities") of the Company, issued and
to be issued in one or more series under an Indenture, dated as of April 1,
1994, as it may be supplemented from time to time (herein called the
"Indenture"), between the Company and The Chase Manhattan Bank (formerly known
as Chemical Bank), Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture with respect to a series of which this
Security is a part), to which Indenture and all indentures supplemental thereto,
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, limited in aggregate principal amount to
U.S.$800,000,000 (or the equivalent thereof in one or more foreign currencies)
or such other principal amount as shall be provided pursuant to the Indenture.
Section 2. Payments. If the Specified Currency is other than
U.S. dollars and the Holder hereof fails to elect payment in such Specified
Currency in accordance with the procedures set forth on the face hereof, the
amount of U.S. dollar payments to be made in respect hereof will be determined
by the Exchange Rate Agent specified on the face hereof or a successor thereto
(the "Exchange Rate Agent") based on the highest bid quotation in The City of
New York at approximately 11:00 A.M., New York City time, on the second Business
Day preceding the applicable payment date received by the Exchange Rate Agent
from three recognized foreign exchange dealers (one of whom may be the Exchange
Rate Agent) selected by the Exchange Rate Agent and approved by the Company for
the purchase by the quoting dealer of the Specified Currency for U.S. dollars
for settlement on such payment date in the aggregate amount of the Specified
Currency payable to all holders of Securities scheduled to receive U.S. dollar
payments and at which the applicable dealer commits to execute a contract. If
three such bid quotations are not available, payments will be made in the
Specified Currency.
If the Specified Currency is other than U.S. dollars and the
Holder hereof has elected payment in such Specified Currency in accordance with
the procedures set forth on the face hereof and the Specified Currency is not
available due to the imposition of exchange controls or to other circumstances
beyond the Company's control, the Company will be entitled to satisfy its
obligations to the Holder of this Security by making such payment in U.S.
dollars on the basis of the noon buying rate in The City of New York for cable
transfers of such Specified Currency as certified for customs purposes (or, if
not so certified, as otherwise determined) by the Federal Reserve Bank of New
York (the "Market Exchange Rate") as computed by the
<PAGE> 8
2
Exchange Rate Agent on the second Business Day prior to the applicable payment
date or, if the Market Exchange Rate is then not available, on the basis of the
most recently available Market Exchange Rate or as otherwise indicated above.
Any payment made under such circumstances in U.S. dollars where the required
payment is in a Specified Currency will not constitute a default under the
Indenture.
All determinations referred to above made by the Exchange Rate
Agent shall be at its sole discretion (except to the extent expressly provided
that any determination is subject to approval by the Company) and, in the
absence of manifest error, shall be conclusive for all purposes and binding on
the Holder of this Security, and the Exchange Rate Agent shall have no liability
therefor.
All currency exchange costs will be borne by the Company.
References herein to "U.S. dollars" or "U.S. $" or "$" are to
the currency of the United States of America.
Section 3. Redemption. If so specified on the face hereof, the
Company may at its option redeem this Security in whole or from time to time in
part in increments of $1,000 (provided that any remaining principal amount of
this Security shall not be less than the Minimum Denomination specified on the
face hereof) on or after the date designated as the Initial Redemption Date on
the face hereof at 100% of the unpaid principal amount hereof or the portion
thereof redeemed (or, if this Security is a Discount Security, such lesser
amount as is provided for below) multiplied by the Initial Redemption Percentage
specified on the face hereof, together with accrued interest, if any, to the
Redemption Date. Such Initial Redemption Percentage shall decline at each
anniversary of the Initial Redemption Date by an amount equal to the Annual
Redemption Percentage Reduction, if any, specified on the face hereof until the
Redemption Price is 100% of the unpaid principal amount hereof. The Company may
exercise such option by causing the Trustee to mail a notice of such redemption
at least 30 but not more than 60 days prior to the Redemption Date. In the event
of redemption of this Security in part only, a new Security or Securities for
the unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof. If less than all of the Securities with like tenor
and terms to this Security are to be redeemed, the Securities to be redeemed
shall be selected by the Trustee by such method as the Trustee shall deem fair
and appropriate. However, if less than all the Securities of the series with
differing tenor and terms to this Security are to be redeemed, then the Company
in its sole discretion shall select the particular Securities to be redeemed and
shall notify the Trustee in writing thereof at least 45 days prior to the
relevant Redemption Date.
Section 4. Repayment. If so specified on the face hereof, this
Security shall be repayable prior to the Stated Maturity Date at the option of
the Holder on each applicable Optional Repayment Date shown on the face hereof
at a repayment price equal to 100% of the principal amount to be repaid,
together with accrued interest, if any, to the Repayment Date. In
<PAGE> 9
3
order for this Security to be repaid, the Trustee must receive at least 30 but
not more than 45 days prior to an Optional Repayment Date, this Security with
the form attached hereto entitled "Option to Elect Repayment" duly completed.
Any tender of this Security for repayment shall be irrevocable. The repayment
option may be exercised by the Holder of this Security in whole or in part in
increments of $1,000 (provided that any remaining principal amount of this
Security shall not be less than the Minimum Denomination specified on the face
hereof). Upon any partial repayment, this Security shall be canceled and a new
Security or Securities for the remaining principal amount hereof shall be issued
in the name of the Holder of this Security.
Section 5. Discount Securities. If this Security (such a
Security being referred to as a "Discount Security") (a) has been issued at an
Issue Price lower, by more than a de minimis amount (as determined under United
States federal income tax rules applicable to original issue discount
instruments), than the stated redemption price at maturity (as defined below)
hereof and (b) would be considered an original issue discount security for
United States federal income tax purposes, then the amount payable on this
Security in the event of redemption by the Company, repayment at the option of
the Holder or acceleration of the maturity hereof, in lieu of the principal
amount due at the Stated Maturity Date hereof, shall be the Amortized Face
Amount (as defined below) of this Security as of the date of such redemption,
repayment or acceleration. The "Amortized Face Amount" of this Security shall be
the amount equal to the sum of (a) the Issue Price (as set forth on the face
hereof) plus (b) the aggregate of the portions of the original issue discount
(the excess of the amounts considered as part of the "stated redemption price at
maturity" of this Security within the meaning of Section 1273(a)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"), whether denominated as
principal or interest, over the Issue Price of this Security) which shall
theretofore have accrued pursuant to Section 1272 of the Code (without regard to
Section 1272(a)(7) of the Code) from the date of issue of this Security to the
date of determination, minus (c) any amount considered as part of the "stated
redemption price at maturity" of this Security which has been paid on this
Security from the date of issue to the date of determination.
Section 6. Modification and Waivers; Obligation of the Company
Absolute. The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series. Such
amendment may be effected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal
amount of Outstanding Securities of each series affected thereby. The Indenture
also contains provisions permitting the Holders of not less than a majority in
principal amount of the Outstanding Securities of any series, on behalf of the
Holders of all Outstanding Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture. Provisions in the Indenture
also permit the Holders of not less than a majority in principal amount of all
Outstanding Securities of any series to waive on behalf of all of the Holders of
Securities of such series certain past defaults under the Indenture and their
consequences. Any such consent or waiver shall be conclusive and binding upon
the Holder of this Security and
<PAGE> 10
4
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
The Securities are unsecured and rank pari passu with all
other unsecured and unsubordinated indebtedness of the Company.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest, if any, on this Security at the times, place and
rate, and in the Specified Currency herein prescribed, except as set forth in
Section 2 on the reverse hereof.
Section 7. Defeasance and Covenant Defeasance. The Indenture
contains provisions for defeasance at any time of (a) the entire indebtedness of
the Company on this Security and (b) certain restrictive covenants and the
related defaults and Events of Default, upon compliance by the Company with
certain conditions set forth therein, which provisions apply to this Security,
unless otherwise specified on the face hereof.
Section 8. Minimum Denomination. Authorized Denominations.
Unless otherwise provided on the face hereof, this Security is issuable only in
registered form without coupons in denominations of $1,000 or any amount in
excess thereof which is an integral multiple of $1,000. If this Security is
denominated in a Specified Currency other than U.S. dollars or is a Discount
Security, this Security shall be issuable in the denominations set forth on the
face hereof.
Section 9. Registration of Transfer. As provided in the
Indenture and subject to certain limitations herein and therein set forth, the
transfer of this Security is registrable in the Security Register upon surrender
of this Security for registration of transfer at a Place of Payment for the
series of Securities of which this Security forms a part, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of like authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
If the registered owner of this Security is the Depository
(such a Security being referred to as a "Global Security"), and (i) the
Depository is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by the Company within 90 days following
notice to the Company or (ii) an Event of Default occurs, the Company will issue
Securities in certificated form in exchange for this Global Security. In
addition, the Company may at any time, and in its sole discretion, determine not
to have Securities represented by a Global Security and, in such event, will
issue Securities in certificated form in exchange in
<PAGE> 11
5
whole for this Global Security. In any exchange pursuant to this paragraph, the
Company will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of individual Securities of this series in exchange
for this Global Security, will authenticate and deliver individual Securities of
this series in certificated form in an aggregate principal amount equal to the
principal amount of this Global Security in exchange herefor. Securities issued
in exchange for this Global Security pursuant to this paragraph shall be
registered in such names and in such authorized denominations as the Depository,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. None of the Company, the Trustee, any Paying Agent
or the Security Registrar will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in this Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests. For
purposes of the Indenture, this Global Security constitutes a Security issued in
permanent global form. Securities so issued in certificated form will be issued
in denominations of $1,000 (or such other denomination as shall be specified on
the face hereof) or any amount in excess thereof which is an integral multiple
of $1,000 and will be issued in registered form only, without coupons.
As provided in the Indenture and subject to certain
limitations therein and herein set forth, this Security is exchangeable for a
like aggregate principal amount of Securities of this series of different
authorized denominations but otherwise having the same terms and conditions, as
requested by the Holder hereof surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Holder as the owner hereof for all purposes, whether or not this
Security be overdue, and none of the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.
Section 10. Events of Default. If an Event of Default with
respect to the Securities of the series of which this Security forms a part
shall have occurred and be continuing, the principal of this Security may be
declared due and payable in the manner and with the effect provided in the
Indenture.
Section 11. Defined Terms. All terms used in this Security
which are defined in the Indenture and are not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
<PAGE> 12
6
Section 12. Governing Law. Unless otherwise specified on the
face hereof, this Security shall be governed by and construed in accordance with
the law of the State of New York.
<PAGE> 13
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Company to repay this Security (or the portion thereof specified below),
pursuant to its terms, on the "Optional Repayment Date" first occurring after
the date of receipt of this Security as specified below (the "Repayment Date"),
at a Repayment Price equal to 100% of the principal amount thereof, together
with interest thereon accrued to the Repayment Date, to the undersigned at:
___________________________________
___________________________________
(Please Print or Type Name and Address of the Undersigned.)
For this Option to Elect Repayment to be effective, this
Security with the Option to Elect Repayment duly completed must be received at
least 30 but not more than 45 days prior to the Optional Repayment Date (or, if
such Repayment Date is not a Business Day, the next succeeding Business Day) by
the Company at its office or agency in The City of New York, which will be
located initially at the office of the Trustee at 450 West 33rd Street, New
York, New York 10001-2697.
If less than the entire principal amount of this Security is
to be repaid, specify the portion thereof (which shall be $1,000 or an integral
multiple thereof) which is to be repaid:
$___________.
If less than the entire principal amount of the within
Security is to be repaid, specify the denomination(s) of the Security(ies) to be
issued for the unpaid amount ($1,000 or any integral multiple of $1,000;
provided that any remaining principal amount of this Security shall not be less
than the Minimum Denomination): $____.
Dated:_________
_______________
Note: The signature to this Option to Elect Repayment
must correspond with the name as written upon the
face of this Security in every particular without
alteration or enlargement or any change whatsoever.
<PAGE> 14
_____________
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, 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
JT 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)
Additional abbreviations may also be used though not in the above list.
_____________
FOR VALUE RECEIVED, the undersigned
hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
| |
| |
_______________________________________________________________
Please print or type name and address, including zip code of assignee
_______________________________________________________________
the within Security of EATON CORPORATION and all rights thereunder and does
hereby irrevocably constitute and appoint
Attorney
________________________________________________________________________
to transfer the said Security on the books of the within-named Company, with
full power of substitution in the premises.
Dated __________________
SIGNATURE GUARANTEED: _____________________________________
________________________
_________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the face
of the Security in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE> 1
Exhibit 4(j)
[FACE OF NOTE]
CUSIP NO.
REGISTERED
PRINCIPAL AMOUNT
No. FL -
EATON CORPORATION
MEDIUM-TERM NOTE
(FLOATING RATE)
If the registered owner of this Security (as indicated below)
is The Depository Trust Company (the "Depository") or a nominee of the
Depository, this Security is a Global Security and the following two legends
apply:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL, SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITORY TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO THE
DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH
NOMINEE TO A SUCCESSOR OF THE DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO MATURITY" AND "INITIAL
ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) BELOW WILL BE
COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL
ISSUE DISCOUNT ("OID") RULES.
<PAGE> 2
2
<TABLE>
<S> <C>
ISSUE PRICE: OPTION TO ELECT REPAYMENT: [ ] YES [ ] NO
ORIGINAL ISSUE DATE: OPTIONAL REPAYMENT DATE[S]:
STATED MATURITY DATE: OPTIONAL REDEMPTION: [ ] YES [ ] NO
BASE RATE: INITIAL REDEMPTION DATE:
If LIBOR: [ ] LIBOR Telerate
[ ] LIBOR Reuters
[ ] Other INITIAL REDEMPTION PERCENTAGE:
Designated LIBOR Page:
Designated LIBOR Currency:
If CMT Rate,
Designated CMT Telerate Page:
Designated CMT Maturity Index:
INITIAL INTEREST RATE: ANNUAL REDEMPTION PERCENTAGE REDUCTION:
INDEX MATURITY: MINIMUM DENOMINATION:
[ ] $1,000
[ ] Other:
SPREAD (PLUS OR MINUS): SPECIFIED CURRENCY:
United States Dollars:
[ ] YES [ ] NO
SPREAD MULTIPLIER: Foreign Currency:
CALCULATION AGENT: OPTION TO RECEIVE PAYMENTS
IN SPECIFIED CURRENCY
OTHER THAN U.S. DOLLARS:
[ ] YES [ ] NO
CALCULATION DATE: EXCHANGE RATE AGENT;
SINKING FUND: ADDITIONAL AMOUNTS:
MAXIMUM INTEREST RATE: DEFEASANCE: [ ] YES [ ] NO
MINIMUM INTEREST RATE: COVENANT DEFEASANCE: [ ] YES [ ] NO
INTEREST DETERMINATION DATE: OTHER/DIFFERENT PROVISIONS:
INTEREST RESET PERIOD:
INTEREST RESET DATES:
INTEREST PAYMENT PERIOD:
REGULAR RECORD DATES:
INTEREST PAYMENT DATES:
TOTAL AMOUNT OF OID:
INITIAL ACCRUAL PERIOD OID:
YIELD TO MATURITY:
OPTIONAL INTEREST RATE RESET:
[ ] YES [ ] NO
OPTIONAL INTEREST RATE RESET DATES:
</TABLE>
<PAGE> 3
3
EATON CORPORATION, an Ohio corporation (herein referred to as
the "Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
______________, or registered assigns, the principal sum of ___________on the
Stated Maturity Date shown above (except to the extent redeemed or repaid prior
to the Stated Maturity Date) and to pay interest thereon at the Initial Interest
Rate shown above from the Original Issue Date shown above until the first
Interest Reset Date shown above following the Original Issue Date (if the first
Interest Reset Date is later than the Original Issue Date) and thereafter at the
interest rate determined by reference to the Base Rate shown above, plus or
minus the Spread, if any, or multiplied by the Spread Multiplier, if any, shown
above, or adjusted by such other formula, if any, set forth on the face hereof,
until the principal hereof is paid or duly made available for payment. The
Company will pay interest on each Interest Payment Date, if any, specified
above, commencing with the first Interest Payment Date next succeeding the
Original Issue Date, and on the Stated Maturity Date, any Redemption Date or
Repayment Date (each such date being hereinafter referred to as the "Maturity
Date" with respect to the principal repayable on such date); provided, however,
that any payment of principal (or premium, if any) or interest, if any, to be
made on any Interest Payment Date or on the Maturity Date that is not a Business
Day (as defined below) shall be made on the next succeeding Business Day (except
that if the Base Rate specified above is LIBOR, and such day falls in the next
succeeding calendar month, such payment will be made on the next preceding
Business Day) as described on the reverse hereof. For purposes of this Security,
unless otherwise specified on the face hereof, "Business Day" means any day that
is not a Saturday or Sunday and that is neither a legal holiday nor a day on
which commercial banks are authorized or required by law, regulation or
executive order to close in The City of New York; provided, however, that, if
the Specified Currency shown above is a Foreign Currency, such day is also not a
day on which commercial banks are authorized or required by law, regulation or
executive order to close in the Principal Financial Center (as defined below) of
the country issuing the Specified Currency (or, if the Specified Currency is the
euro, such day is also a day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer (TARGET) System is open); provided further
that, with respect to Securities as to which LIBOR is an applicable Base Rate,
such day is also a London Business Day. "London Business Day" means a day on
which commercial banks are open for business (including dealings in the LIBOR
Currency (as defined below)) in London. "Principal Financial Center" means (i)
the capital city of the country issuing the Specified Currency or (ii) the
capital city of the country to which the LIBOR Currency relates, as applicable,
except, in the case of (i) or (ii) above, that with respect to United States
dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch guilders,
Portuguese escudos, South African rand and Swiss francs, the "Principal
Financial Center" shall be The City of New York, Sydney and (solely in the case
of the Specified Currency) Melbourne, Toronto, Frankfurt, Amsterdam, London
(solely in the case of the LIBOR Currency), Johannesburg and Zurich,
respectively.
<PAGE> 4
4
Interest on this Security will accrue from, and including, the
immediately preceding Interest Payment Date to which interest has been paid or
duly provided for (or from, and including, the Original Issue Date if no
interest has been paid or duly provided for) to, but excluding, the applicable
Interest Payment Date or the Maturity Date, as the case may be (each an
"Interest Period"). The interest, if any, so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture and subject to certain exceptions described herein (referred to on the
reverse hereof), be paid to the person (the "Holder") in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the fifteenth day (whether or not a Business Day) next preceding
such Interest Payment Date (a "Regular Record Date"); provided, however, that,
if this Security was issued between a Regular Record Date and the initial
Interest Payment Date relating to such Regular Record Date, interest, if any,
for the period beginning on the Original Issue Date and ending on such initial
Interest Payment Date shall be paid on the Interest Payment Date following the
next succeeding Regular Record Date to the Holder hereof on such Regular Record
Date; and provided further that interest, if any, payable on the Maturity Date
will be payable to the person to whom the principal hereof shall be payable. Any
such interest not so punctually paid or duly provided for on any Interest
Payment Date other than the Maturity Date ("Defaulted Interest") will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a special record date (the
"Special Record Date") for the payment of such Defaulted Interest to be fixed by
the Trustee (referred to on the reverse hereof), notice whereof shall be given
to the Holder of this Security not less than ten days prior to such Special
Record Date, or may be paid at any time in any other lawful manner, all as more
fully provided in the Indenture.
Unless otherwise specified above, all payments in respect of
this Security will be made in U.S. dollars regardless of the Specified Currency
shown above unless the Holder hereof makes the election described below. If the
Specified Currency shown above is other than U.S. dollars, the Exchange Rate
Agent (referred to on the reverse hereof) will arrange to convert any such
amounts so payable in respect hereof into U.S. dollars in the manner described
on the reverse hereof; provided, however, that the Holder hereof may, if so
indicated above, elect to receive all or a specified portion of any payment of
principal, premium, if any, and/or interest , if any, in respect of this
Security in such Specified Currency by delivery of a written request to the
corporate trust office of the Trustee in The City of New York, on or prior to
the applicable Regular Record Date or at least fifteen days prior to the
Maturity Date, as the case may be. Such request may be in writing (mailed or
hand delivered) or by cable, telex or other form of facsimile transmission. The
Holder hereof may elect to receive payment in such Specified Currency for all
principal, any premium, if any, and interest payments, if any, and need not file
a separate election for each payment. Such election will remain in effect until
revoked by written notice to the Trustee, but written notice of any such
revocation must be received by the Trustee on or prior to the Regular Record
Date or at least fifteen days prior to the Maturity Date, as the case may be.
<PAGE> 5
5
Notwithstanding the foregoing, if the Company determines that
the Specified Currency is not available for making payments in respect hereof
due to the imposition of exchange controls or other circumstances beyond the
Company's control, or is no longer used by the government of the country issuing
such currency or for the settlement of transactions by public institutions of or
within the international banking community, then the Holder hereof may not so
elect to receive payments in the Specified Currency and any such outstanding
election shall be automatically suspended, until the Company determines that the
Specified Currency is again available for making such payments. Any payment made
under such circumstances in U.S. dollars where the required payment is in a
Specified Currency will not constitute a default under the Indenture.
In the event of an official redenomination of the Specified
Currency, the obligations of the Company with respect to payments on this
Security shall, in all cases, be deemed immediately following such
redenomination to provide for payment of that amount of redenominated currency
representing the amount of such obligations immediately before such
redenomination. In no event shall any adjustment be made to any amount payable
hereunder as a result of any change in the value of the Specified Currency shown
above relative to any other currency due solely to fluctuations in exchange
rates.
Until this Security is paid in full or payment therefor in
full is duly provided for, the Company will at all times maintain a Paying Agent
(which Paying Agent may be the Trustee) in The City of New York (which, unless
otherwise specified above, shall be the "Place of Payment"). The Company has
initially appointed The Chase Manhattan Bank, at its office in The City of New
York as Paying Agent.
Unless otherwise shown above, payment of interest on this
Security (other than on the Maturity Date) will be made by check mailed to the
registered address of the Holder hereof as of the Regular Record Date; provided,
however, that, if (i) the Specified Currency is U.S. dollars and this is a
Global Security (as defined on the reverse hereof) or (ii) the Specified
Currency is a Foreign Currency and the Holder has elected to receive payments in
such Specified Currency as provided for above, such interest payments will be
made by transfer of immediately available funds, but only if appropriate wire
transfer instructions have been received in writing by the Trustee on or prior
to the applicable Regular Record Date. Simultaneously with any election by the
Holder hereof to receive payments in respect hereof in the Specified Currency
(if other than U.S. dollars), such Holder may provide appropriate wire transfer
instructions to the Trustee, and all such payments will be made in immediately
available funds to an account maintained by the payee with a bank, but only if
such bank has appropriate facilities therefor. Unless otherwise specified above,
the principal hereof (and premium, if any) and interest hereon payable on the
Maturity Date will be paid in immediately available funds upon surrender of this
Security at the office of the Trustee maintained for that purpose in the Borough
of Manhattan, The City of New York (or at such other location as may be
specified above). The Company will pay any administrative costs imposed by banks
in making payments in immediately available funds but,
<PAGE> 6
6
except as otherwise provided under Additional Amounts above, any tax, assessment
or governmental charge imposed upon payments will be borne by the Holders of the
Securities in respect of which such payments are made.
<PAGE> 7
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its facsimile corporate seal.
EATON CORPORATION
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
[CORPORATE SEAL]
Attest:________________________________
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series
designated therein referred to in the
within-mentioned Indenture
THE CHASE MANHATTAN BANK,
as Trustee
By:___________________________________
Authorized Officer
<PAGE> 8
[REVERSE OF NOTE]
EATON CORPORATION
MEDIUM-TERM NOTE
Section 1. General. This Security is one of a duly authorized
issue of securities (herein called the "Securities") of the Company, issued and
to be issued in one or more series under an indenture, dated as of April 1,
1994, as it may be supplemented from time to time (herein called the
"Indenture"), between the Company and The Chase Manhattan Bank (formerly known
as Chemical Bank), Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture with respect to a series of which this
Security is a part), to which Indenture and all indentures supplemental thereto,
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, limited in aggregate principal amount to
U.S.$800,000,000 (or the equivalent thereof in one or more foreign currencies)
or such other principal amount as shall be provided pursuant to the Indenture.
Section 2. Payments. If the Specified Currency is other than
U.S. dollars and the Holder hereof fails to elect payment in such Specified
Currency in accordance with the procedures set forth on the face hereof, the
amount of U.S. dollar payments to be made in respect hereof will be determined
by the Exchange Rate Agent specified on the face hereof or a successor thereto
(the "Exchange Rate Agent") based on the highest bid quotation in The City of
New York at approximately 11:00 A.M., New York City time, on the second Business
Day preceding the applicable payment date received by the Exchange Rate Agent
from three recognized foreign exchange dealers (one of whom may be the Exchange
Rate Agent) selected by the Exchange Rate Agent and approved by the Company for
the purchase by the quoting dealer of the Specified Currency for U.S. dollars
for settlement on such payment date in the aggregate amount of the Specified
Currency payable to all Holders of Securities scheduled to receive U.S. dollar
payments and at which the applicable dealer commits to execute a contract. If
three such bid quotations are not available, payments will be made in the
Specified Currency.
If the Specified Currency is other than U.S. dollars and the
Holder hereof has elected payment in such Specified Currency in accordance with
the procedures set forth on the face hereof and the Specified Currency is not
available due to the imposition of exchange controls or to other circumstances
beyond the Company's control, the Company will be entitled to satisfy its
obligations to the Holder of this Security by making such payment in U.S.
dollars on the basis of the noon buying rate in The City of New York for cable
transfers of such Specified Currency as certified for customs purposes (or, if
not so certified as otherwise determined) by the Federal Reserve Bank of New
York (the "Market Exchange Rate") as computed by the Exchange
<PAGE> 9
2
Rate Agent on the second Business Day prior to the applicable payment date or,
if the Market Exchange Rate is then not available, on the basis of the most
recently available Market Exchange Rate or as otherwise indicated above. Any
payment made under such circumstances in U.S. dollars where the required payment
is in a Specified Currency will not constitute a default under the Indenture.
All determinations referred to above made by the Exchange Rate
Agent shall be at its sole discretion (except to the extent expressly provided
that any determination is subject to approval by the Company) and, in the
absence of manifest error, shall be conclusive for all purposes and binding on
the Holder of this Security and the Exchange Rate Agent shall have no liability
therefor.
All currency exchange costs will be borne by the Company.
Section 3. Interest Rate Calculations. Unless otherwise set
forth on the face hereof, the following provisions of this Section 3 shall apply
to the calculation of interest on this Security. If the first Interest Reset
Date is later than the Original Issue Date, this Security will bear interest
from its Original Issue Date to the first Interest Reset Date at the Initial
Interest Rate set forth on the face hereof. Thereafter, the interest rate hereon
for each Interest Reset Period (as defined below) will be determined by
reference to the Base Rate set forth on the face hereof, as adjusted by the
Spread, the Spread Multiplier or other formula, if any, set forth on the face
hereof.
As set forth on the face hereof, this Security may also have
either or both of the following: (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any Interest Period (as defined below)
("Maximum Interest Rate"); and (ii) a minimum limitation, or floor, on the rate
at which interest may accrue during any Interest Period ("Minimum Interest
Rate"). In addition to any Maximum Interest Rate that may be set forth on the
face hereof, the interest rate on this Security will in no event be higher than
the maximum rate permitted by New York law, as the same may be modified by
United States law of general application.
The rate of interest hereon will be reset daily, weekly,
monthly, quarterly, semiannually or annually or at another interval (each, an
"Interest Reset Period"), as set forth on the face hereof. The date or dates on
which interest will be reset (each, an "Interest Reset Date") will be, if this
Security resets (i) daily, each Business Day; (ii) weekly, the Wednesday of each
week (unless the Base Rate set forth on the face hereof is the Treasury Rate, in
which case the Tuesday of each week (except as provided below)); (iii) monthly,
the third Wednesday of each month; (iv) quarterly, the third Wednesday of each
of the four months set forth on the face hereof; (v) semiannually, the third
Wednesday of each of the two months set forth on the face hereof; and (vi)
annually, the third Wednesday of the month of each year set forth on the face
hereof; provided, however, that (a) if the first Interest Reset Date is later
than the Original Issue Date, the interest rate in effect from the Original
Issue Date to the first Interest Reset Date will be
<PAGE> 10
3
the Initial Interest Rate as set forth on the face hereof and (b) the interest
rate in effect for the ten days immediately prior to the Maturity Date will be
that in effect on the tenth day preceding the Maturity Date. If the Base Rate
set forth on the face hereof is the Treasury Rate and a Treasury auction shall
fall on the Interest Reset Date for this Security, then such Interest Reset Date
shall instead be the first Business Day immediately following such Treasury
auction. If any Interest Reset Date would otherwise be a day that is not a
Business Day, such Interest Reset Date shall be postponed to the next succeeding
Business Day, except that, if the Base Rate set forth on the face hereof is
LIBOR, if such Business Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding Business Day.
The interest payable hereon on each Interest Payment Date and
on the Maturity Date shall be the amount of interest accrued from, and
including, the Original Issue Date or the next preceding Interest Payment Date
in respect of which interest, if any, has been paid or duly provided for, as the
case may be, to, but excluding, the next succeeding Interest Payment Date or the
Maturity Date, as the case may be (each such period, an "Interest Period"). If
the Maturity Date falls on a day which is not a Business Day, the payment of
principal, premium, if any, and interest, if any, with respect to the Maturity
Date will be paid on the next succeeding Business Day with the same force and
effect as if made on the Maturity Date, and no interest shall accrue on the
amount so payable as a result of such delayed payment. If an Interest Payment
Date other than the Maturity Date falls on a day that is not a Business Day,
such Interest Payment Date will be postponed to the next day that is a Business
Day and interest will accrue for the period of such postponement (except if the
Base Rate specified above is LIBOR, and such day falls in the next succeeding
calendar month, such Interest Payment Date will be advanced to the immediately
preceding Business Day), it being understood that, to the extent this sentence
is inconsistent with Section 112 of the Indenture, the provisions of this
sentence shall apply in lieu of such Section.
Accrued interest will be calculated by multiplying the
principal amount hereof by an accrued interest factor. Such accrued interest
factor will be computed by adding the interest factor calculated for each day in
the Interest Period or from the last date from which accrued interest is being
calculated. The interest factor for each such day is computed by dividing the
interest rate applicable on such day by 360, if the Base Rate set forth on the
face hereof is the CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime
Rate or LIBOR (each as described below), or by the actual number of days in the
year, if the Base Rate set forth on the face hereof is the Treasury Rate or the
CMT Rate (each as described below). The interest rate applicable to any day that
is an Interest Reset Date is the interest rate as determined, in accordance with
the procedures hereinafter set forth, with respect to the Interest Determination
Date (as defined below) pertaining to such Interest Reset Date. The interest
rate applicable to any other day is the interest rate for the immediately
preceding Interest Reset Date (or, if none, the Initial Interest Rate, as set
forth on the face hereof).
All percentages resulting from any calculation with respect
hereto will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths
<PAGE> 11
4
of a percentage point rounded upward (e.g., 7.123455% (or 0.07123455) being
rounded to 7.12346% (or 0.0712346) and 7.123454% (or 0.07123454) being rounded
to 7.12345% (or 0.0712345)), and all currency amounts used in or resulting from
such calculation will be rounded to the nearest one-hundredth of a unit (with
five one-thousandths of a unit being rounded upwards).
Interest will be payable on, if this Security resets (i)
daily, weekly or monthly, the third Wednesday of each month; (ii) quarterly, the
third Wednesday of the four months set forth on the face hereof; (iii)
semiannually, the third Wednesday of the two months set forth on the face
hereof; and (iv) annually, the third Wednesday of the month set forth on the
face hereof (each, an "Interest Payment Date"), and in each case, on the
Maturity Date.
If the Base Rate set forth on the face hereof is the CD Rate,
the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate or the Prime
Rate, the "Interest Determination Date" pertaining to an Interest Reset Date for
this Security will be the second Business Day immediately preceding such
Interest Reset Date; if the Base Rate set forth on the face hereof is LIBOR, the
"Interest Determination Date" pertaining to an Interest Reset Date for this
Security will be the second London Business Day immediately preceding such
Interest Reset Date unless the Designated LIBOR Currency is British pounds
sterling, in which case the "Interest Determination Date" will be such Interest
Reset Date; and if the Base Rate set forth on the face hereof is the Treasury
Rate, the "Interest Determination Date" pertaining to an Interest Reset Date for
this Security will be the day of the week in which such Interest Reset Date
falls on which Treasury bills (as defined below) would normally be auctioned.
Treasury bills are usually sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is usually held on the
following Tuesday, except that sometimes such auction may be held on the
preceding Friday. If, as the result of a legal holiday, an auction is so held on
the preceding Friday, such Friday will be the Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week.
Unless otherwise set forth on the face hereof, the
"Calculation Date", where applicable, pertaining to an Interest Determination
Date is the earlier of (i) the tenth calendar day after such Interest
Determination Date or, if any such day is not a Business Day, the next
succeeding Business Day and (ii) the Business Day immediately preceding the
applicable Interest Payment Date or the Maturity Date, as the case may be.
The Company will appoint and enter into an agreement with an
agent (a "Calculation Agent") to calculate the rate of interest on the
Securities of this series which bear interest at a floating rate. Unless
otherwise set forth on the face hereof, The Chase Manhattan Bank will be the
Calculation Agent. At the request of the Holder hereof, the Calculation Agent
will provide the interest rate then in effect and, if determined, the interest
rate that will become effective on the next Interest Reset Date.
<PAGE> 12
5
Subject to applicable provisions of law and except as
specified herein, with respect to each Interest Determination Date, the rate of
interest shall be the rate determined by the Calculation Agent in accordance
with the provisions of the applicable heading below.
Determination of CD Rate. If the Base Rate set forth on the
face hereof is the CD Rate, this Security will bear interest for each Interest
Reset Period at the interest rate calculated with reference to the CD Rate and
the Spread, Spread Multiplier or other formula, if any, set forth on the face
hereof. Unless otherwise set forth on the face hereof, the "CD Rate" means, with
respect to any Interest Determination Date pertaining thereto, the rate on such
date for negotiable certificates of deposit having the Index Maturity set forth
on the face hereof as published in H.15(519) (as defined below), under the
heading "CDs (secondary market)" or, if not yet published by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the CD Rate will be the rate on such Interest Determination Date for
negotiable certificates of deposit having the Index Maturity set forth on the
face hereof as published in H.15 Daily Update (as defined below) or such other
recognized electronic source used for the purpose of displaying such rate, under
the caption "CDs (secondary market)". If by 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Interest Determination Date such rate is
not yet published in H.15(519), H.15 Daily Update or such other recognized
electronic source, the CD Rate on such Interest Determination Date will be
calculated by the Calculation Agent and will be the average of the secondary
market offered rates as of 10:00 A.M., New York City time, on such Interest
Determination Date, of three leading non-bank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent (after consultation with the Company) for negotiable certificates of
deposit of major United States money market banks of the highest credit standing
(in the market for negotiable certificates of deposit) having a remaining
maturity closest to the Index Maturity set forth on the face hereof in a
denomination of U.S. $5,000,000; provided, however, that, if fewer than three
dealers are quoting as mentioned in this sentence, the interest rate for the
period commencing on the Interest Reset Date following such Interest
Determination Date will be the interest rate in effect on such Interest
Determination Date. "H.15(519)" means the weekly statistical release designated
as such, 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.
Determination of Commercial Paper Rate. If the Base Rate set
forth on the face hereof is the Commercial Paper Rate, this Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Commercial Paper Rate and the Spread, Spread Multiplier or
other formula , if any, set forth on the face hereof. Unless otherwise set forth
on the face hereof, the "Commercial Paper Rate" means, with respect to any
Interest Determination Date pertaining thereto, the Money Market Yield
(calculated as described below) of the rate on such date for commercial paper
having the Index Maturity set forth on the face
<PAGE> 13
6
hereof, as such rate shall be published in H.15(519) under the caption
"Commercial Paper -- Nonfinancial" or, if not yet published by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Commercial Paper Rate shall be the Money Market Yield of
the rate on such Interest Determination Date for commercial paper having the
Index Maturity set forth on the face hereof as published in H.15 Daily Update,
or such other recognized electronic source used for the purpose of displaying
such rate, under the caption "Commercial Paper -- Nonfinancial". If by 3:00
P.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date such rate is not yet published in H.15(519), H.15 Daily
Update or such other recognized electronic source, the Commercial Paper Rate on
such Interest Determination Date shall be calculated by the Calculation Agent
and shall be the Money Market Yield of the average of the offered rates as of
11:00 A.M., New York City time, on such Interest Determination Date of three
leading dealers in U.S. dollar commercial paper in The City of New York selected
by the Calculation Agent (after consultation with the Company) for commercial
paper having the Index Maturity set forth on the face hereof placed for an
industrial issuer whose bond rating is "Aa", or the equivalent, from a
nationally recognized securities rating agency; provided, however, that, if
fewer than three dealers are quoting as mentioned in this sentence, the interest
rate for the period commencing on the Interest Reset Date following such
Interest Determination Date will be the interest rate in effect on such Interest
Determination Date.
"Money Market Yield" shall be a yield (expressed as a
percentage) calculated in accordance with the following formula:
MONEY MARKET YIELD = D x 360 x 100
-------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal; and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.
Determination of Federal Funds Rate. If the Base Rate set
forth on the face hereof is the Federal Funds Rate, this Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Federal Funds Rate and the Spread, Spread Multiplier or other
formula, if any, set forth on the face hereof. Unless otherwise set forth on the
face hereof, the "Federal Funds Rate" means, with respect to any Interest
Determination Date pertaining thereto, the rate on such date for federal funds
as published in H.15(519) under the caption "Federal Funds (Effective)" as such
rate is displayed on Telerate on page 120 (or any other page as may replace such
page on such service) ("Telerate Page 120"). If such rate does not appear on
Telerate Page 120 or is not yet published in H.15(519) by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the Federal Funds Rate will be the rate on such Interest Determination
Date as published in H.15 Daily Update, or
<PAGE> 14
7
such other recognized electronic source used for the purpose of displaying such
rate, under the caption "Federal Funds (Effective)". If by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date such rate does not appear on Telerate Page 120 or is not yet published in
H.15(519), H.15 Daily Update or such other recognized electronic source, the
Federal Funds Rate for such Interest Determination Date will be calculated by
the Calculation Agent and will be the average of the rates for the last
transaction in overnight Federal Funds arranged by three leading dealers of
Federal Funds transactions in The City of New York, which dealers have been
selected by the Calculation Agent (after consultation with the Company), as of
9:00 A.M., New York City time, on such Interest Determination Date; provided,
however, that, if fewer than three dealers are quoting as mentioned in this
sentence, the interest rate for the period commencing on the Interest Reset Date
following such Interest Determination Date will be the interest rate in effect
on such Interest Determination Date.
Determination of LIBOR. If the Base Rate set forth on the face
hereof is LIBOR, this Security will bear interest for each Interest Reset Period
at the interest rate calculated with reference to LIBOR and the Spread, Spread
Multiplier or other formula, if any, set forth on the face hereof. Unless
otherwise set forth on the face hereof, "LIBOR" means the rate determined by the
Calculation Agent in accordance with the following provisions:
(i) If "LIBOR Reuters" is specified on the face hereof, LIBOR
will be the average of the offered rates for deposits in the LIBOR
Currency having the Index Maturity set forth on the face hereof on the
applicable Interest Reset Date, as such rates appear on the Designated
LIBOR Page as of 11:00 A.M., London time, on that Interest
Determination Date, if at least two such offered rates appear on the
Designated LIBOR Page.
(ii) If "LIBOR Telerate" is specified on the face hereof,
LIBOR will be the rate for deposits in the LIBOR Currency having the
Index Maturity set forth on the face hereof on the applicable Interest
Reset Date, as such rate appears on the Designated LIBOR Page as of
11:00 A.M., London time, on that Interest Determination Date. If such
rate does not appear, LIBOR for such Interest Determination Date will
be determined as described in (iii) below.
(iii) If the Designated LIBOR Page by its terms provides only
for a single rate, that single rate will be used regardless of whether
the foregoing provisions require more than one rate. With respect to an
Interest Determination Date, if LIBOR Reuters is the applicable method
for determining LIBOR and fewer than two offered rates (or no rate, if
applicable) appear on the Designated LIBOR Page as specified in (i)
above or if LIBOR Telerate is the applicable method for determining
LIBOR and no rate appears on the Designated LIBOR Page as specified in
(ii) above, then LIBOR will be determined on the basis of the offered
rates at which deposits in the LIBOR Currency for the period of the
Index Maturity set forth on the face hereof on the Interest
Determination Date and in a
<PAGE> 15
8
principal amount that is representative of a single transaction in
that market at that time are offered by four major banks in the London
interbank market at approximately 11:00 AM., London time, for the
period commencing on the Interest Reset 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 for deposits in the LIBOR Currency. If
at least two quotations are provided, LIBOR for that Interest
Determination Date will be the average of those quotations. If fewer
than two quotations are provided as mentioned above, LIBOR will be the
average of the rates quoted by three major banks in the Principal
Financial Center selected by the Calculation Agent at approximately
11:00 A.M. in the Principal Financial Center, on the Interest
Determination Date for loans to leading European banks in the LIBOR
Currency having the Index Maturity set forth on the face hereof, for
the period commencing on the Interest Reset Date and in a principal
amount that is representative for a single transaction in the LIBOR
Currency in that market at that time. The Calculation Agent will select
the three banks referred to above. If fewer than three banks selected
by the Calculation Agent are quoting as mentioned above, the interest
rate for the period commencing on the Interest Reset Date following
such Interest Determination Date will be the interest rate in effect on
such Interest Determination Date.
"LIBOR Currency" means the Designated LIBOR Currency specified
on the face hereof as to which LIBOR shall be calculated or, if no such
currency is specified on the face hereof, United States dollars.
"Designated LIBOR Page" means, if "LIBOR Reuters" is specified
on the face hereof, the display on the Reuters Monitor Money Rates
Service (or any successor service) on the page specified on the face
hereof (or any other page as may replace such page on such service) for
the purpose of displaying the London interbank rates of major banks for
the LIBOR Currency; or if "LIBOR Telerate" is specified on the face
hereof or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified on
the face hereof as the method of calculating LIBOR, the display on
Bridge Telerate, Inc. (or any successor service, "Telerate") on the
page specified on the face hereof (or any other page as may replace
such page on such service) for the purpose of displaying the London
interbank rates of major banks for the LIBOR Currency.
Determination of Prime Rate. If the Base Rate set forth on the
face hereof is the Prime Rate, this Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the
Prime Rate and the Spread, Spread Multiplier or other formula, if any, set forth
on the face hereof. Unless otherwise set forth on the face hereof, the "Prime
Rate" means, with respect to any Interest Determination Date pertaining thereto,
the rate on such date as published in H.15(519) under the caption "Bank Prime
Loan" or, if not yet published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the rate on
such Interest Determination Date as published in H.15 Daily Update, or such
<PAGE> 16
9
other recognized electronic source used for the purpose of displaying such rate,
under the caption "Bank Prime Loan."
If the rate is not published in H.15 (519), H.15 Daily Update
or another recognized electronic source 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 the rates of interest publicly announced by each bank that
appears on the Reuters Screen US PRIME1 Page as that bank's prime rate or base
lending rate as in effect for that Interest Determination Date. If at least one
rate but fewer than four rates appear on the Reuters Screen US PRIME1 Page on
the Interest Determination Date, then the Prime Rate will be the average of the
prime rates or base lending rates quoted (on the basis of the actual number of
days in the year divided by a 360-day year) as of the close of business on the
Interest Determination Date by three major money center banks in the City of New
York selected by the Calculation Agent. If the banks selected by the Calculation
Agent are not quoting as mentioned above, the interest rate for the period
commencing on the Interest Reset Date following such Interest Determination Date
will be the interest rate in effect on such Interest Determination Date.
"Reuters Screen US PRIME1 Page" means the display designated
as Page "USPRIME1" on the Reuters Monitor Money Rates Service (or any successor
service, or such other page as may replace the USPRIME1 Page on that service)
for the purpose of displaying prime rates or base lending rates of major United
States banks.
Determination of Treasury Rate. If the Base Rate set forth on
the face hereof is the Treasury Rate, this Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the
Treasury Rate and the Spread, Spread Multiplier or other formula, if any, set
forth on the face hereof. Unless otherwise set forth on the face hereof, the
"Treasury Rate" means, with respect to any Interest Determination Date
pertaining thereto, the rate for the auction of direct obligations of the United
States ("Treasury bills") held on such Interest Determination Date having the
Index Maturity set forth on the face hereof under the caption "INVESTMENT RATE"
on the display on Telerate on page 56 (or any other page as may replace such
page on such service) ("Telerate Page 56") or page 57 (or any other page as may
replace such page on such service) ("Telerate Page 57") by 3:00 P.M., New York
City time, on the Calculation date for that Interest Determination Date.
The following procedures will be followed if the Treasury Rate
cannot be determined as described above:
If the rate is not published by 3:00 P.M., New York City time,
on the Calculation Date, the Treasury Rate will be the Bond Equivalent Yield of
the auction rate of such Treasury bills as published in H.15 Daily Update or
such recognized electronic source used for the purpose of displaying such rate
under the caption "U.S. Government securities/Treasury bills/Auction high."
<PAGE> 17
10
If the rate is not published by 3:00 P.M., New York City time,
on the Calculation Date and cannot be determined as described in the immediately
preceding paragraph, the Treasury Rate will be the Bond Equivalent Yield of the
auction rate of such Treasury bills as otherwise announced by the United States
Department of Treasury.
If the results of the most recent auction of Treasury bills
having the Index Maturity set forth on the face hereof are not published or
announced as described above by 3:00 P.M., New York City time, on the
Calculation Date, or if no auction is held on the Interest Determination Date,
then the Treasury Rate will be the Bond Equivalent Yield on such Interest
Determination Date of Treasury bills having the Index Maturity set forth on the
face hereof as published in H.15(519) under the caption "U.S. Government
securities/Treasury bills/Secondary market" or, if not yet published by 3:00
p.m., New York City time, on the related Calculation Date, the rate on such
Interest Determination Date of such Treasury Bills as published in H.15 Daily
Update, or such other recognized electronic source used for the purpose of
displaying such rate, under the caption "U.S. Government securities/Treasury
bills/Secondary market."
If such rate is not published in H.15 (519), H.15 Daily Update
or another recognized electronic source, then the Calculation Agent will
determine the Treasury Rate to be the Bond Equivalent Yield of the average of
the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on the Interest Determination Date of three leading primary United States
government securities dealers for the issue of Treasury bills with a remaining
maturity closest to the Index Maturity set forth on the face hereof. The
Calculation Agent will select the three dealers referred to above.
If fewer than three dealers are quoting as described above,
the interest rate for the period commencing on the Interest Reset Date following
such Interest Determination Date will be the interest rate in effect on such
Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a
percentage) calculated in accordance with the following formula:
D x N X 100
Bond Equivalent Yield = ---------------
360 - (D x M)
where "D" refers to the applicable per annum rate for Treasury bills quoted on a
bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the applicable Interest Reset Period.
Determination of CMT Rate. If the Base Rate set forth on the
face hereof is the CMT Rate, this Security will bear interest for each Interest
Reset Period at the interest rate calculated with reference to the CMT Rate and
the Spread, Spread Multiplier, or other formula, if any, set forth on the face
hereof. Unless otherwise set forth on the face hereof, the "CMT Rate" means,
with respect to any Interest Determination Date pertaining thereto, the rate
displayed on
<PAGE> 18
11
the Designated CMT Telerate Page (as defined below) under the caption ". . .
Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . .
Mondays Approximately 3:45 P.M.", under the column for the Designated CMT
Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is
7051 or any successor page, the rate on such Interest Determination Date and
(ii) if the Designated CMT Telerate Page is 7052 or any successor page, the rate
for the weekly or the monthly average, as applicable, ended immediately
preceding the week or month in which the related Interest Determination Date
occurs. If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the interest rate for such Interest
Determination Date shall be the rate for the Designated CMT Maturity Index as
published in H.15(519). If such rate is no longer published, or if not published
by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the interest rate for such Interest
Determination Date shall be the rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) as may
then be published by either the Board of Governors of the Federal Reserve System
or the United States Department of the Treasury that the Calculation Agent
determines (with the concurrence of the Company) to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in
H.15(519). If such information is not provided by 3:00 P.M., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, then the
interest rate for such Interest Determination Date shall be calculated by the
Calculation Agent and shall be a yield to maturity, based on the arithmetic
average of the secondary market closing offer side prices as of approximately
3:30 P.M., New York City time, on such Interest Determination Date, reported by
three leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York, for the most recently issued direct
noncallable fixed rate obligations of the United States ("U.S. Treasury Notes")
with an original maturity of approximately the Designated CMT Maturity Index and
a remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. The three Reference Dealers shall be determined by (i) the
selection of five Reference Dealers by the Calculation Agent (after consultation
with the Company) and (ii) the elimination of the Reference Dealers providing
the highest (or, in the event of equality, one of the highest) and the lowest
(or, in the event of equality, one of the lowest) quotations for such Interest
Determination Date. If the Calculation Agent cannot obtain three such U.S.
Treasury Note quotations, the interest rate for such Interest Determination Date
shall be calculated by the Calculation Agent and shall be a yield to maturity
based on the arithmetic average of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on the Interest Determination Date
reported, according to their written records, by three Reference Dealers in The
City of New York, selected in the manner described above, for U.S. Treasury
Notes with an original maturity of the number of years that is the next highest
to the Designated CMT Maturity Index and a remaining term to maturity closest to
the Designated CMT Maturity Index, which has an outstanding balance of at least
$100 million. If only three or four of such Reference Dealers are quoting as
described above, then the interest rate shall be based on the arithmetic average
of the offer side prices so obtained from all such Reference Dealers, without
eliminating the Reference
<PAGE> 19
12
Dealers providing the highest and the lowest of such quotes. If fewer than three
such Reference Dealers are quoting as described above, the interest rate for the
period commencing on the Interest Reset Date following such Interest
Determination Date will be the interest rate in effect on such Interest
Determination Date. If two such U.S. Treasury Notes have remaining terms to
maturity equally close to the Designated CMT Maturity Index, the quotes for the
U.S. Treasury Note with the shorter remaining term to maturity shall be used.
"Designated CMT Telerate Page" means the display on Telerate
on the page set forth on the face hereof (or any other page as may
replace such page on that service for the purpose of displaying
treasury constant maturities as reported in H.15(519)). If no such page
is so specified, the Designated CMT Telerate Page shall be 7052.
"Designated CMT Maturity Index" means the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20
or 30 years) specified on the face hereof with respect to which the CMT
Rate will be calculated. If no such maturity is so specified, the
Designated CMT Maturity Index shall be two years.
References herein to "U.S. dollars" or "U.S. $" or "$" are to
the currency of the United States of America.
Section 4. Redemption. If so specified on the face hereof, the
Company may at its option redeem this Security in whole or from time to time in
part in increments of $1,000 (provided that any remaining principal amount of
this Security shall not be less than the Minimum Denomination specified on the
face hereof) on or after the date designated as the Initial Redemption Date on
the face hereof at 100% of the unpaid principal amount hereof or the portion
thereof redeemed (or, if this Security is a Discount Security, such lesser
amount as is provided for below) multiplied by the Initial Redemption Percentage
specified on the face hereof, together with accrued interest to the Redemption
Date. Such Initial Redemption Percentage shall decline at each anniversary of
the Initial Redemption Date by an amount equal to the Annual Redemption
Percentage Reduction, if any, specified on the face hereof until the Redemption
Price is 100% of the unpaid principal amount hereof. The Company may exercise
such option by causing the Trustee to mail a notice of such redemption at least
30 but not more than 60 days prior to the Redemption Date. In the event of
redemption of this Security in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof. If less than all of the Securities with like tenor and
terms to this Security are to be redeemed, the Securities to be redeemed shall
be selected by the Trustee by such method as the Trustee shall deem fair and
appropriate. However, if less than all the Securities of the series with
differing tenor and terms to this Security are to be redeemed, then the Company
in its sole discretion shall select the particular Securities to be redeemed and
shall notify the Trustee in writing thereof at least 45 days prior to the
relevant Redemption Date.
<PAGE> 20
13
Section 5. Repayment. If so specified on the face hereof, this
Security shall be repayable prior to the Stated Maturity Date at the option of
the Holder on each applicable Optional Repayment Date shown on the face hereof
at a repayment price equal to 100% of the principal amount to be repaid,
together with accrued interest to the Repayment Date. In order for this Security
to be repaid, the Trustee must receive at least 30 but not more than 45 days
prior to an Optional Repayment Date, this Security with the form attached hereto
entitled "Option to Elect Repayment" duly completed. Any tender of this Security
for repayment shall be irrevocable. The repayment option may be exercised by the
Holder of this Security in whole or in part in increments of $1,000 (provided
that any remaining principal amount of this Security shall not be less than the
Minimum Denomination specified on the face hereof). Upon any partial repayment,
this Security shall be canceled and a new Security or Securities for the
remaining principal amount hereof shall be issued in the name of the Holder of
this Security.
Section 6. Discount Securities. If this Security (such
Security being referred to as a "Discount Security") (a) has been issued at an
Issue Price lower, by more than a de minimis amount (as determined under United
States federal income tax rules applicable to original issue discount
instruments), than the stated redemption price at maturity (as defined below)
hereof and (b) would be considered an original issue discount security for
United States federal income tax purposes, then the amount payable on this
Security in the event of redemption by the Company, repayment at the option of
the Holder or acceleration of the maturity hereof, in lieu of the principal
amount due at the Stated Maturity Date hereof, shall be the Amortized Face
Amount (as defined below) of this Security as of the date of such redemption,
repayment or acceleration. The "Amortized Face Amount" of this Security shall be
the amount equal to the sum of (a) the Issue Price (as set forth on the face
hereof) plus (b) the aggregate of the portions of the original issue discount
(the excess of the amounts considered as part of the "stated redemption price at
maturity" of this Security within the meaning of Section 1273(a)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"), whether denominated as
principal or interest, over the Issue Price of this Security) which shall
theretofore have accrued pursuant to Section 1272 of the Code (without regard to
Section 1272(a)(7) of the Code) from the date of issue of this Security to the
date of determination, minus (c) any amount considered as part of the "stated
redemption price at maturity" of this Security which has been paid on this
Security from the date of issue to the date of determination.
Section 7. Modification and Waivers; Obligation of the Company
Absolute. The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series. Such
amendment may be effected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Securities of each series affected thereby. The
Indenture also contains provisions permitting the Holders of not less than a
majority in principal amount of the Outstanding Securities of any series at the
time, on behalf of the Holders of all Outstanding Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture.
Provisions in the
<PAGE> 21
14
Indenture also permit the Holders of not less than a majority in principal
amount of all Outstanding Securities of any series to waive on behalf of all of
the Holders of Securities of such series certain past defaults under the
Indenture and their consequences. Any such consent or waiver shall be conclusive
and binding upon the Holder of this Security and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
The Securities are unsecured and rank pari passu with all
other unsecured and unsubordinated indebtedness of the Company.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the Specified Currency herein prescribed, except as set forth in Section 2 on
the reverse hereof.
Section 8. Defeasance and Covenant Defeasance. The Indenture
contains provisions for defeasance at any time of (a) the entire indebtedness of
the Company on this Security and (b) certain restrictive covenants and the
related defaults and Events of Default, upon compliance by the Company with
certain conditions set forth therein, which provisions apply to this Security,
unless otherwise specified on the face hereof.
Section 9. Minimum Denomination. Unless otherwise provided on
the face hereof, this Security is issuable only in registered form without
coupons in denominations of $1,000 or any amount in excess thereof which is an
integral multiple of $1,000. If this Security is denominated in a Specified
Currency other than U.S. dollars or is a Discount Security, this Security shall
be issuable in the denominations set forth on the face hereof.
Section 10. Registration of Transfer. As provided in the
Indenture and subject to certain limitations herein and therein set forth, the
transfer of this Security is registrable in the Security Register upon surrender
of this Security for registration of transfer at a Place of Payment for the
series of Securities of which this Security is a part, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of like authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
If the registered owner of this Security is the Depository
(such a Security being referred to as a "Global Security") and (i) the
Depository is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by the Company within 90 days following
notice to the Company or (ii) an Event of Default occurs, the Company will
<PAGE> 22
15
issue Securities in certificated form in exchange for this Global Security. In
addition, the Company may at any time, and in its sole discretion, determine not
to have Securities represented by a Global Security and, in such event, will
issue Securities in certificated form in exchange in whole for this Global
Security representing such Security. In any exchange pursuant to this paragraph,
the Company will execute, and the Trustee, upon receipt of a Company Order for
the authentication and delivery of individual Securities of this series in
exchange for this Global Security, will authenticate and deliver individual
Securities of this series in certificated form in an aggregate principal amount
equal to the principal amount of this Global Security in exchange herefor.
Securities issued in exchange for this Global Security pursuant to this
paragraph shall be registered in such names and in such authorized denominations
as the Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. None of the Company, the
Trustee, any Paying Agent or the Security Registrar will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in this Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. For purposes of the Indenture, this Global Security
constitutes a Security issued in permanent global form. Securities so issued in
certificated form will be issued in denominations of $1,000 (or such other
Minimum Denomination specified on the face hereof) or any amount in excess
thereof which is an integral multiple of $1,000 (or such Minimum Denomination)
and will be issued in registered form only, without coupons.
As provided in the Indenture and subject to certain
limitations therein and herein set forth, this Security is exchangeable for a
like aggregate principal amount of Securities of this series of different
authorized denominations but otherwise having the same terms and conditions, as
requested by the Holder hereof surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Holder as the owner hereof for all purposes, whether or not this
Security be overdue, and none of the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.
Section 11. Events of Default. If an Event of Default with
respect to the Securities of the series of which this Security forms a part
shall have occurred and be continuing, the principal of this Security may be
declared due and payable in the manner and with the effect provided in the
Indenture.
<PAGE> 23
16
Section 12. Defined Terms. All terms used in this Security
which are defined in the Indenture and are not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
Section 13. Governing Law. Unless otherwise specified on the
face hereof, this Security shall be governed by and construed in accordance with
the law of the State of New York.
<PAGE> 24
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Company to repay this Security (or the portion thereof specified below),
pursuant to its terms, on the "Optional Repayment Date" first occurring after
the date of receipt of this Security as specified below (the "Repayment Date"),
at a Repayment Price equal to 100% of the principal amount thereof, together
with interest thereon accrued to the Repayment Date, to the undersigned at:
___________________________________
____________________________________
(Please Print or Type Name and Address of the Undersigned.)
For this Option to Elect Repayment to be effective, this
Security with the Option to Elect Repayment duly completed must be received at
least 30 but not more than 45 days prior to the Optional Repayment Date (or, if
such Repayment Date is not a Business Day, the next succeeding Business Day) by
the Company at its office or agency in The City of New York, which will be
located initially at the office of the Trustee at 450 West 33rd Street, New
York, New York 10001-2697.
If less than the entire principal amount of this Security is
to be repaid, specify the portion thereof (which shall be $1,000 or an integral
multiple thereof) which is to be repaid:
$ .
If less than the entire principal amount of this Security is
to be repaid, specify the denomination(s) of the Security(ies) to be issued for
the unpaid amount ($1,000 or any integral multiple of $1,000; provided that any
remaining principal amount of this Security shall not be less than the Minimum
Denomination): $ .
Dated: __________________
____________________________________________________
Note: The signature to this Option to Elect Repayment
must correspond with the name as written upon the
face of this Security in every particular without
alteration or enlargement or any change whatsoever.
<PAGE> 25
_____________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, 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
JT 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)
Additional abbreviations may also be used though not in the above list.
________________
FOR VALUE RECEIVED, the undersigned
hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
| |
| |
|_____________________________________|________________________________________
Please print or type name and address, including zip code of assignee
_______________________________________________________________________________
the within Security of EATON CORPORATION and all rights thereunder and does
hereby irrevocably constitute and appoint
______________________________________________________________________Attorney
to transfer the said Security on the books of the within-named Company, with
full power of substitution in the premises.
Dated _________________
SIGNATURE GUARANTEED: _______________________________________
_________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the Security in every particular, without
alteration or enlargement or any change
whatsoever.
<PAGE> 1
Exhibit 4(k)
[FACE OF NOTE]
CUSIP NO.
REGISTERED FACE AMOUNT
PRINCIPAL AMOUNT
No. FX -
EATON CORPORATION
MEDIUM-TERM NOTE
(SINGLE INDEXED NOTE)
(FIXED RATE)
If the registered owner of this Security (as indicated below)
is The Depository Trust Company (the "Depository") or a nominee of the
Depository, this Security is a Global Security and the following two legends
apply:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL, SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITORY TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO THE
DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH
NOMINEE TO A SUCCESSOR OF THE DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO MATURITY" AND "INITIAL
ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) BELOW WILL BE
COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL
ISSUE DISCOUNT ("OID") RULES.
<PAGE> 2
2
ISSUE PRICE: SINKING FUND:
ORIGINAL ISSUE DATE: OPTION TO ELECT REPAYMENT:
[ ] YES [ ] NO
STATED MATURITY DATE:
SPECIFIED CURRENCY:
United States Dollars: OPTIONAL REPAYMENT DATE[S]:
[ ] YES [ ] NO
Foreign Currency:
MINIMUM DENOMINATIONS:
[ ] $1,000
EXCHANGE RATE AGENT: [ ] Other:
OPTION TO RECEIVE PAYMENTS IN
SPECIFIED CURRENCY OTHER THAN
U.S. DOLLARS: [ ] YES [ ] NO ADDITIONAL AMOUNTS:
INTEREST RATE:
DEFEASANCE: [ ] YES [ ] NO
INDEXED CURRENCY:
United States Dollars: [ ] YES [ ] NO COVENANT DEFEASANCE: [ ] YES [ ] NO
Foreign Currency:
TOTAL AMOUNT OF OID:
PRINCIPAL FINANCIAL CENTER:
BASE EXCHANGE RATE: YIELD TO MATURITY:
DETERMINATION AGENT:
INITIAL ACCRUAL PERIOD OID:
REFERENCE DEALERS:
1. ___
2. ___
3. ___
INTEREST PAYMENT DATES IF OTHER
THAN APRIL 15 AND OCTOBER 15:
REGULAR RECORD DATES IF OTHER
THAN APRIL 1 AND OCTOBER 1:
OPTIONAL REDEMPTION: [ ] YES [ ] NO
INITIAL REDEMPTION DATE:
INITIAL REDEMPTION PERCENTAGE:
ANNUAL REDEMPTION PERCENTAGE REDUCTION:
OTHER/DIFFERENT PROVISIONS:
<PAGE> 3
EATON CORPORATION, an Ohio corporation (herein referred to as
the "Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
____________________, or registered assigns, in the Specified Currency on the
Stated Maturity Date shown above (except to the extent redeemed or repaid prior
to the Stated Maturity Date), the principal sum of _______ (the "Face Amount"),
plus or minus an amount determined by the Determination Agent specified above in
accordance with the formula set forth below, and to pay interest on the Face
Amount as described below and on the reverse hereof.
If the Spot Rate exceeds or equals the Base Exchange Rate, the
principal amount of this Security payable on the Maturity Date (as defined
below) shall equal:
Face Amount + (Face Amount x Spot Rate - Base Exchange Rate)
------------------------------
Base Exchange Rate
If the Base Exchange Rate exceeds the Spot Rate, the principal
amount of this Security payable on the Maturity Date shall equal:
Face Amount - (Face Amount x Base Exchange Rate - Spot Rate)
------------------------------
Base Exchange Rate
; provided, however, that in no event shall such principal amount be less than
zero.
In making the above calculations, the (i) "Base Exchange Rate"
is the exchange rate specified as such above and (ii) "Spot Rate" is the rate at
which the Specified Currency can be exchanged for the Indexed Currency specified
above (such rate stated as units of Indexed Currency per unit of the Specified
Currency) as determined on the second Exchange Rate Day, as defined below, prior
to the Maturity Date (the "Determination Date") by the Determination Agent based
upon the arithmetic mean of the open market spot offer quotations for such
Indexed Currency (spot bid quotations for the Specified Currency) obtained by
the Determination Agent from the Reference Dealers specified above in The City
of New York at 11:00 A.M., New York City time, on the Determination Date, for an
amount of Indexed Currency equal to the Face Amount of this Security multiplied
by the Base Exchange Rate, in terms of the Specified
<PAGE> 4
2
Currency for settlement on the Maturity Date. If such quotations from the
Reference Dealers are not available on the Determination Date due to
circumstances beyond the control of the Company or the Determination Agent, the
Spot Rate will be determined on the basis of the most recently available
quotations from the Reference Dealers. If any of the Reference Dealers shall be
unwilling or unable to provide the requested quotations, the Company may select
other major money center bank or banks in The City of New York, in consultation
with the Determination Agent, to act as Reference Dealer or Dealers in
replacement therefor. In the absence of manifest error, the determination by the
Determination Agent of the Spot Rate and the principal amount of this Security
payable on the Maturity Date shall be final and binding on the Company, the
Trustee (referred to on the reverse hereof) and the Holder (as defined below) of
this Security.
"Exchange Rate Day" means any day which is a Business Day in The City
of New York and, if the Specified Currency or Indexed Currency is any currency
or currency unit other than U.S. dollars, in Principal Financial Center of the
country of such Specified Currency or Indexed Currency.
The Company shall pay interest on the Face Amount hereof at
the Interest Rate shown above from the Original Issue Date shown above or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, semiannually on April 15 and October 15 of each year (unless other
Interest Payment Dates are shown on the face hereof) (each, an "Interest Payment
Date") until the principal hereof is paid or made available for payment and on
the Stated Maturity Date, any Redemption Date or Repayment Date (such terms are
together hereinafter referred to as the "Maturity Date" with respect to the
principal repayable on such date); provided, however, that any payment of
principal (or premium, if any) or interest, if any, to be made on any Interest
Payment Date or on the Maturity Date that is not a Business Day (as defined
below) shall be made on the next succeeding Business Day with the same force and
effect as if made on such Interest Payment Date or the Maturity Date, as the
case may be, and no additional interest shall accrue on the amount so payable as
a result of such delayed payment. For purposes of this Security, unless
otherwise specified on the face hereof, "Business Day" means any day that is not
a Saturday or Sunday and that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close in The City of New York; provided, however, that, if the
Specified Currency shown above is a foreign currency, such day is also not a day
on which commercial banks are authorized or required by law, regulation or
executive order to close in the Principal Financial Center (as defined below) of
the country issuing the Specified Currency (or, if the Specified Currency is the
euro, such day is also a day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer (TARGET) System is open). "Principal Financial
Center" means the capital city of the country issuing the Specified Currency or
the Indexed Currency, as the case may be, except that with respect to United
States dollars, Australian dollars, Canadian dollars, Deutsche marks, Dutch
guilders, South African rand and Swiss francs, the "Principal Financial
<PAGE> 5
3
Center" shall be The City of New York, Sydney and (solely in the case of the
Specified Currency) Melbourne, Toronto, Frankfurt, Amsterdam, Johannesburg and
Zurich, respectively.
Any interest hereon will accrue from, and including, the
immediately preceding Interest Payment Date in respect of which interest, if
any, has been paid or duly provided for (or from, and including, the Original
Issue Date if no interest has been paid or duly provided for) to, but excluding,
the succeeding Interest Payment Date or the Maturity Date, as the case may be.
The interest, if any, so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture and subject to
certain exceptions described herein (referred to on the reverse hereof), be paid
to the person (the "Holder") in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the April 1 or
October 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date (unless other Regular Record Dates are specified on
the face hereof) (each, a "Regular Record Date"); provided, however, that, if
this Security was issued between a Regular Record Date and the initial Interest
Payment Date relating to such Regular Record Date, interest, if any, for the
period beginning on the Original Issue Date and ending on such initial Interest
Payment Date shall be paid on the Interest Payment Date following the next
succeeding Regular Record Date to the Holder hereof on such next succeeding
Regular Record Date; and provided further that interest, if any, payable on the
Maturity Date will be payable to the person to whom the principal hereof shall
be payable. Any such interest not so punctually paid or duly provided for on any
Interest Payment Date other than the Maturity Date ("Defaulted Interest") will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a special
record date (the "Special Record Date") for the payment of such Defaulted
Interest to be fixed by the Trustee (referred to on the reverse hereof), notice
whereof shall be given to the Holder of this Security not less than ten days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner, all as more fully provided in the Indenture.
Unless otherwise specified above, all payments in respect of
this Security will be made in U.S. dollars regardless of the Specified Currency
shown above unless the Holder hereof makes the election described below. If the
Specified Currency shown above is other than U.S. dollars, the Exchange Rate
Agent (referred to on the reverse hereof) will arrange to convert any such
amounts so payable in respect hereof into U.S. dollars in the manner described
on the reverse hereof; provided, however, that the Holder hereof may, if so
indicated above, elect to receive all or a specified portion of any payment of
principal, premium, if any, and/or interest, if any, in respect of this Security
in such Specified Currency by delivery of a written request to the corporate
trust office of the Trustee in The City of New York, on or prior to the
applicable Regular Record Date or at least fifteen days prior to the Maturity
Date, as the case may be. Such request may be in writing (mailed or hand
delivered) or by cable, telex or other form of facsimile transmission. The
Holder hereof may elect to receive payment in such Specified Currency for all
<PAGE> 6
4
principal, premium, if any, and interest payments, if any, and need not file a
separate election for each payment. Such election will remain in effect until
revoked by written notice to the Trustee, but written notice of any such
revocation must be received by the Trustee on or prior to the applicable Regular
Record Date or at least fifteen days prior to the Maturity Date, as the case may
be.
Notwithstanding the foregoing, if the Company determines that
the Specified Currency is not available for making payments in respect hereof
due to the imposition of exchange controls or other circumstances beyond the
Company's control, or is no longer used by the government of the country issuing
such currency or for the settlement of transactions by public institutions of or
within the international banking community, then the Holder hereof may not so
elect to receive payments in the Specified Currency and any such outstanding
election shall be automatically suspended, until the Company determines that the
Specified Currency is again available for making such payments. Any payment made
under such circumstances in U.S. dollars where the required payment is in a
Specified Currency will not constitute a default under the Indenture.
In the event of an official redenomination of the Specified
Currency, the obligations of the Company with respect to payments on this
Security shall be deemed, immediately following such redenomination, to provide
for payment of that amount of redenominated currency representing the amount of
such obligations immediately before such redenomination. Except as set forth
above, in no event shall any adjustment be made to any amount payable hereunder
as a result of any change in the value of the Specified Currency shown above
relative to any other currency due solely to fluctuations in exchange rates.
Until this Security is paid in full or payment therefor in
full is duly provided for, the Company will at all times maintain a Paying Agent
(which Paying Agent may be the Trustee) in The City of New York (which, unless
otherwise specified above, shall be the "Place of Payment"). The Company has
initially appointed The Chase Manhattan Bank, at its office in The City of New
York as Paying Agent.
Unless otherwise shown above, payment of interest on this
Security (other than on the Maturity Date) will be made by check mailed to the
registered address of the Holder hereof as of the Regular Record Date; provided,
however, that, if (i) the Specified Currency is U.S. dollars and this is a
Global Security (as defined on the reverse hereof) or (ii) the Specified
Currency is a Foreign Currency, and the Holder has elected to receive payments
in such Specified Currency as provided for above, such interest payments will be
made by transfer of immediately available funds, but only if appropriate wire
transfer instructions have been received in writing by the Trustee on or prior
to the applicable Regular Record Date. Simultaneously with any election by the
Holder hereof to receive payments in respect hereof in the Specified Currency
(if other than U.S. dollars), such Holder may provide appropriate wire transfer
instructions to the Trustee, and
<PAGE> 7
5
all such payments will be made in immediately available funds to an account
maintained by the payee with a bank, but only if such bank has appropriate
facilities therefor. Unless otherwise specified above, the principal hereof (and
premium, if any) and interest, if any, hereon payable on the Maturity Date will
be paid in immediately available funds upon surrender of this Security at the
office of the Trustee maintained for that purpose in the Borough of Manhattan,
The City of New York (or at such other location as may be specified above). The
Company will pay any administrative costs imposed by banks in making payments in
immediately available funds but, except as otherwise provided under Additional
Amounts above, any tax, assessment or governmental charge imposed upon payments
will be borne by the Holders of the Securities in respect of which such payments
are made.
Interest on this Security, if any, will be computed on the
basis of a 360-day year of twelve 30-day months.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
<PAGE> 8
6
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its facsimile corporate seal.
EATON CORPORATION
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
[CORPORATE SEAL]
Attest:
---------------------------------
Name:
Title: Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series
designated therein referred to in the
within-mentioned Indenture
Dated: THE CHASE MANHATTAN BANK,
as Trustee
By:
---------------------------------
Authorized Officer
<PAGE> 9
[REVERSE OF NOTE]
EATON CORPORATION
MEDIUM-TERM NOTE
Section 1. General. This Security is one of a duly authorized
issue of securities (herein called the "Securities") of the Company, issued and
to be issued in one or more series under an indenture, dated as of April 1,
1994, as it may be supplemented from time to time (herein called the
"Indenture"), between the Company and The Chase Manhattan Bank (formerly known
as Chemical Bank), Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture with respect to a series of which this
Security is a part), to which Indenture and all indentures supplemental thereto,
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, limited in aggregate principal amount to
U.S.$800,000,000 (or the equivalent thereof in one or more foreign currencies)
or such other principal amount as shall be provided pursuant to the Indenture.
Section 2. Payments. If the Specified Currency is other than
U.S. dollars and the Holder hereof fails to elect payment in such Specified
Currency in accordance with the procedures set forth on the face hereof, the
amount of U.S. dollar payments to be made in respect hereof will be determined
by the Exchange Rate Agent specified on the face hereof or a successor thereto
(the "Exchange Rate Agent") based on the highest bid quotation in The City of
New York at approximately 11:00 A.M., New York City time, on the second Business
Day preceding the applicable payment date received by the Exchange Rate Agent
from three recognized foreign exchange dealers (one of whom may be the Exchange
Rate Agent) selected by the Exchange Rate Agent and approved by the Company for
the purchase by the quoting dealer of the Specified Currency for U.S. dollars
for settlement on such payment date in the aggregate amount of the Specified
Currency payable to all holders of Securities scheduled to receive U.S. dollar
payments and at which the applicable dealer commits to execute a contract. If
three such bid quotations are not available, payments will be made in the
Specified Currency.
If the Specified Currency is other than U.S. dollars and the
Holder hereof has elected payment in such Specified Currency in accordance with
the procedures set forth on the face hereof and the Specified Currency is not
available due to the imposition of exchange controls or to other circumstances
beyond the Company's control, the Company will be entitled to satisfy its
obligations to the Holder of this Security by making such payment in U.S.
dollars on the basis of the noon buying rate in The City of New York for cable
transfers of such Specified Currency as certified for customs purposes (or, if
not so certified, as otherwise determined) by
<PAGE> 10
2
the Federal Reserve Bank of New York (the "Market Exchange Rate")as computed by
the Exchange Rate Agent on the second Business Day prior to the applicable
payment date or, if the Market Exchange Rate is then not available, on the basis
of the most recently available Market Exchange Rate or as otherwise indicated
above. Any payment made under such circumstances in U.S. dollars where the
required payment is in a Specified Currency will not constitute a default under
the Indenture.
All determinations referred to above made by the Exchange Rate
Agent shall be at its sole discretion (except to the extent expressly provided
that any determination is subject to approval by the Company) and, in the
absence of manifest error, shall be conclusive for all purposes and binding on
the Holder of this Security, and the Exchange Rate Agent shall have no liability
therefor.
All currency exchange costs will be borne by the Company.
References herein to "U.S. dollars" or "U.S. $" or "$" are to
the currency of the United States of America.
Section 3. Redemption. If so specified on the face hereof, the
Company may at its option redeem this Security in whole or from time to time in
part in increments of $1,000 (provided that any remaining principal amount of
this Security shall not be less than the Minimum Denomination specified on the
face hereof) on or after the date designated as the Initial Redemption Date on
the face hereof at 100% of the unpaid principal amount hereof or the portion
thereof redeemed (or, if this Security is a Discount Security, such lesser
amount as is provided for below) multiplied by the Initial Redemption Percentage
specified on the face hereof, together with accrued interest, if any, to the
Redemption Date. Such Initial Redemption Percentage shall decline at each
anniversary of the Initial Redemption Date by an amount equal to the Annual
Redemption Percentage Reduction, if any, specified on the face hereof until the
Redemption Price is 100% of the unpaid principal amount hereof. The Company may
exercise such option by causing the Trustee to mail a notice of such redemption
at least 30 but not more than 60 days prior to the Redemption Date. In the event
of redemption of this Security in part only, a new Security or Securities for
the unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof. If less than all of the Securities with like tenor
and terms to this Security are to be redeemed, the Securities to be redeemed
shall be selected by the Trustee by such method as the Trustee shall deem fair
and appropriate. However, if less than all the Securities of the series with
differing tenor and terms to this Security are to be redeemed, then the Company
in its sole discretion shall select the particular Securities to be redeemed and
shall notify the Trustee in writing thereof at least 45 days prior to the
relevant Redemption Date.
Section 4. Repayment. If so specified on the face hereof, this
Security shall be repayable prior to the Stated Maturity Date at the option of
the Holder on each applicable
<PAGE> 11
3
Optional Repayment Date shown on the face hereof at a repayment price equal to
100% of the principal amount to be repaid, together with accrued interest, if
any, to the Repayment Date. In order for this Security to be repaid, the Trustee
must receive at least 30 but not more than 45 days prior to an Optional
Repayment Date, this Security with the form attached hereto entitled "Option to
Elect Repayment" duly completed. Any tender of this Security for repayment shall
be irrevocable. The repayment option may be exercised by the Holder of this
Security in whole or in part in increments of $1,000 (provided that any
remaining principal amount of this Security shall not be less than the Minimum
Denomination specified on the face hereof). Upon any partial repayment, this
Security shall be canceled and a new Security or Securities for the remaining
principal amount hereof shall be issued in the name of the Holder of this
Security.
Section 5. Discount Securities. If this Security (such a
Security being referred to as a "Discount Security") (a) has been issued at an
Issue Price lower, by more than a de minimis amount (as determined under United
States federal income tax rules applicable to original issue discount
instruments), than the stated redemption price at maturity (as defined below)
hereof and (b) would be considered an original issue discount security for
United States federal income tax purposes, then the amount payable on this
Security in the event of redemption by the Company, repayment at the option of
the Holder or acceleration of the maturity hereof, in lieu of the principal
amount due at the Stated Maturity Date hereof, shall be the Amortized Face
Amount (as defined below) of this Security as of the date of such redemption,
repayment or acceleration. The "Amortized Face Amount" of this Security shall be
the amount equal to the sum of (a) the Issue Price (as set forth on the face
hereof) plus (b) the aggregate of the portions of the original issue discount
(the excess of the amounts considered as part of the "stated redemption price at
maturity" of this Security within the meaning of Section 1273(a)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"), whether denominated as
principal or interest, over the Issue Price of this Security) which shall
theretofore have accrued pursuant to Section 1272 of the Code (without regard to
Section 1272(a)(7) of the Code) from the date of issue of this Security to the
date of determination, minus (c) any amount considered as part of the "stated
redemption price at maturity" of this Security which has been paid on this
Security from the date of issue to the date of determination.
Section 6. Modification and Waivers; Obligation of the Company
Absolute. The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series. Such
amendment may be effected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
principal
<PAGE> 12
4
amount of Outstanding Securities of each series affected thereby. The Indenture
also contains provisions permitting the Holders of not less than a majority in
principal amount of the Outstanding Securities of any series, on behalf of the
Holders of all Outstanding Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture. Provisions in the Indenture
also permit the Holders of not less than a majority in principal amount of all
Outstanding Securities of any series to waive on behalf of all of the Holders of
Securities of such series certain past defaults under the Indenture and their
consequences. Any such consent or waiver shall be conclusive and binding upon
the Holder of this Security and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
The Securities are unsecured and rank pari passu with all
other unsecured and unsubordinated indebtedness of the Company.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest, if any, on this Security at the times, place and
rate, and in the Specified Currency herein prescribed, except as set forth in
Section 2 on the reverse hereof.
Section 7. Defeasance and Covenant Defeasance. The Indenture
contains provisions for defeasance at any time of (a) the entire indebtedness of
the Company on this Security and (b) certain restrictive covenants and the
related defaults and Events of Default, upon compliance by the Company with
certain conditions set forth therein, which provisions apply to this Security,
unless otherwise specified on the face hereof.
Section 8. Minimum Denomination. Authorized Denominations.
Unless otherwise provided on the face hereof, this Security is issuable only in
registered form without coupons in denominations of $1,000 or any amount in
excess thereof which is an integral multiple of $1,000. If this Security is
denominated in a Specified Currency other than U.S. dollars or is a Discount
Security, this Security shall be issuable in the denominations set forth on the
face hereof.
Section 9. Registration of Transfer. As provided in the
Indenture and subject to certain limitations herein and therein set forth, the
transfer of this Security is registrable in the Security Register upon surrender
of this Security for registration of transfer at a Place of Payment for the
series of Securities of which this Security forms a part, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of like authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
If the registered owner of this Security is the Depository
(such a Security being referred to as a "Global Security"), and (i) the
Depository is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by the Company within
<PAGE> 13
5
90 days following notice to the Company, or (ii) an Event of Default occurs, the
Company will issue Securities in certificated form in exchange for this Global
Security. In addition, the Company may at any time, and in its sole discretion,
determine not to have Securities represented by a Global Security and, in such
event, will issue Securities in certificated form in exchange in whole for this
Global Security. In any exchange pursuant to this paragraph, the Company will
execute, and the Trustee, upon receipt of a Company Order for the authentication
and delivery of individual Securities of this series in exchange for this Global
Security, will authenticate and deliver individual Securities of this series in
certificated form in an aggregate principal amount equal to the principal amount
of this Global Security in exchange herefor. Securities issued in exchange for
this Global Security pursuant to this paragraph shall be registered in such
names and in such authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. None of the Company, the Trustee, any Paying Agent or the
Security Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in this Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests. For purposes of the
Indenture, this Global Security constitutes a Security issued in permanent
global form. Securities so issued in certificated form will be issued in
denominations of $1,000 (or such other denomination as shall be specified on the
face hereof) or any amount in excess thereof which is an integral multiple of
$1,000 and will be issued in registered form only, without coupons.
As provided in the Indenture and subject to certain
limitations therein and herein set forth, this Security is exchangeable for a
like aggregate principal amount of Securities of this series of different
authorized denominations but otherwise having the same terms and conditions, as
requested by the Holder hereof surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Holder as the owner hereof for all purposes, whether or not this
Security be overdue, and none of the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.
Section 10. Events of Default. If an Event of Default with
respect to the Securities of the series of which this Security forms a part
shall have occurred and be continuing, the principal of this Security may be
declared due and payable in the manner and with the effect provided in the
Indenture.
<PAGE> 14
6
Section 11. Defined Terms. All terms used in this Security
which are defined in the Indenture and are not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
Section 12. Governing Law. Unless otherwise specified on the
face hereof, this Security shall be governed by and construed in accordance with
the law of the State of New York.
<PAGE> 15
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Company to repay this Security (or the portion thereof specified below),
pursuant to its terms, on the "Optional Repayment Date" first occurring after
the date of receipt of the within Security as specified below (the "Repayment
Date"), at a Repayment Price equal to 100% of the principal amount thereof,
together with interest thereon accrued to the Repayment Date, to the undersigned
at:
____________________________________
____________________________________
(Please Print or Type Name and Address of the Undersigned.)
For this Option to Elect Repayment to be effective, this
Security with the Option to Elect Repayment duly completed must be received at
least 30 but not more than 45 days prior to the Optional Repayment Date (or, if
such Repayment Date is not a Business Day, the next succeeding Business Day) by
the Company at its office or agency in The City of New York, which will be
located initially at the office of the Trustee at 450 West 33rd Street, New
York, New York 10001-2697.
If less than the entire principal amount of this Security is
to be repaid, specify the portion thereof (which shall be $1,000 or an integral
multiple thereof) which is to be repaid:
$___________.
If less than the entire principal amount of the within
Security is to be repaid, specify the denomination(s) of the Security(ies) to be
issued for the unpaid amount ($1,000 or any integral multiple of $1,000;
provided that any remaining principal amount of this Security shall not be less
than the Minimum Denomination): $____.
Dated:
__________
_______________
Note: The signature to this Option to Elect Repayment
must correspond with the name as written upon the
face of this Security in every particular without
alteration or enlargement or any change whatsoever.
<PAGE> 16
_____________
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, 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
JT 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)
Additional abbreviations may also be used though not in the above list.
_____________
FOR VALUE RECEIVED, the undersigned
hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
| |
| |
______________________________________________________________________________
Please print or type name and address, including zip code of assignee
______________________________________________________________________________
the within Security of EATON CORPORATION and all rights thereunder and does
hereby irrevocably constitute and appoint
Attorney
________________________________________________________________________
to transfer the said Security on the books of the within-named Company,
with full power of substitution in the premises.
Dated
________________________________
SIGNATURE GUARANTEED:
_______________________________________
______________________
_____________________
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the Security in every
particular, without alteration or
enlargement or any change whatsoever.
<PAGE> 1
Exhibit 4(l)
[FACE OF NOTE]
CUSIP NO.
REGISTERED FACE AMOUNT
PRINCIPAL AMOUNT
No. FL -
EATON CORPORATION
MEDIUM-TERM NOTE
(SINGLE INDEXED NOTE)
(FLOATING RATE)
If the registered owner of this Security (as indicated below)
is The Depository Trust Company (the "Depository") or a nominee of the
Depository, this Security is a Global Security and the following two legends
apply:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY, ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL, SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL THIS CERTIFICATE IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITORY TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO THE
DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH
NOMINEE TO A SUCCESSOR OF THE DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO MATURITY" AND "INITIAL
ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) BELOW WILL BE
COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL
ISSUE DISCOUNT ("OID") RULES.
<PAGE> 2
2
<TABLE>
<CAPTION>
<S> <C>
ISSUE PRICE: OPTION TO ELECT REPAYMENT: [ ] YES [ ] NO
ORIGINAL ISSUE DATE: OPTIONAL REPAYMENT DATE[S]:
STATED MATURITY DATE:
INITIAL INTEREST RATE: OPTIONAL REDEMPTION: [ ] YES [ ] NO
BASE RATE: INITIAL REDEMPTION DATE:
If LIBOR: [ ] LIBOR Telerate
[ ] LIBOR Reuters INITIAL REDEMPTION PERCENTAGE:
[ ] Other
Designated LIBOR Page: ANNUAL REDEMPTION PERCENTAGE REDUCTION:
Designated LIBOR Currency:
INDEX MATURITY: MINIMUM DENOMINATIONS:
[ ] $1,000
SPREAD (PLUS OR MINUS): [ ] Other:
SPECIFIED CURRENCY:
SPREAD MULTIPLIER: United States Dollars:
[ ] YES [ ] NO
Foreign Currency:
CALCULATION AGENT:
OPTION TO RECEIVE PAYMENTS
IN SPECIFIED CURRENCY
CALCULATION DATE: OTHER THAN U.S. DOLLARS:
[ ] YES [ ] NO
SINKING FUND: EXCHANGE RATE AGENT:
MAXIMUM INTEREST RATE:
MINIMUM INTEREST RATE:
INTEREST DETERMINATION DATE: ADDITIONAL AMOUNTS:
INTEREST RESET PERIOD: DEFEASANCE: [ ] YES [ ] NO
INTEREST RESET DATES: COVENANT DEFEASANCE: [ ] YES [ ] NO
INTEREST PAYMENT PERIOD: INDEXED CURRENCY:
United States Dollars: [ ] YES [ ] NO
INTEREST PAYMENT DATES:
Foreign Currency:
PRINCIPAL FINANCIAL CENTER
REGULAR RECORD DATES: BASE EXCHANGE RATE:
TOTAL AMOUNT OF OID:
DETERMINATION AGENT:
INITIAL ACCRUAL PERIOD OID:
YIELD TO MATURITY: REFERENCE DEALERS:
1. ___
OTHER/DIFFERENT PROVISIONS: 2. ___
3. ___
</TABLE>
<PAGE> 3
EATON CORPORATION, an Ohio corporation (herein referred to as
the "Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
____________________, or registered assigns, in the Specified Currency on the
Stated Maturity Date shown above (except to the extent redeemed or repaid prior
to the Stated Maturity Date), the principal sum of _______ (the "Face Amount"),
plus or minus an amount determined by the Determination Agent (specified above)
in accordance with the formula set forth below, and to pay interest on the Face
Amount as described below and on the reverse hereof.
If the Spot Rate exceeds or equals the Base Exchange Rate, the
principal amount of this Security payable on the Maturity Date (as defined
below) shall equal:
Face Amount + (Face Amount x Spot Rate - Base Exchange Rate)
------------------------------
Base Exchange Rate
If the Base Exchange Rate exceeds the Spot Rate, the principal
amount of this Security payable on the Maturity Date shall equal:
Face Amount - (Face Amount x Base Exchange Rate - Spot Rate)
------------------------------
Base Exchange Rate
; provided, however, that in no event shall such principal amount be less than
zero.
In making the above calculations, the (i) "Base Exchange Rate"
is the exchange rate specified as such above and (ii) "Spot Rate" is the rate at
which the Specified Currency can be exchanged for the Indexed Currency specified
above (such rate stated as units of Indexed Currency per unit of the Specified
Currency) as determined on the second Exchange Rate Day, as defined below, prior
to the Maturity Date (the "Determination Date") by the Determination Agent based
upon the arithmetic mean of the open market spot offer quotations for such
Indexed Currency (spot bid quotations for the Specified Currency) obtained by
the Determination Agent from the Reference Dealers specified above in The City
of New York at 11:00 A.M., New York City time, on the Determination Date, for an
amount of Indexed Currency equal to the Face Amount of this Security multiplied
by the Base Exchange Rate, in terms of the Specified Currency for settlement on
the Maturity Date. If such quotations from the Reference Dealers are not
available on the Determination Date due to circumstances beyond the control of
the Company or the Determination Agent, the Spot Rate will be determined on the
basis of the most
<PAGE> 4
2
recently available quotations from the Reference Dealers. If any of the
Reference Dealers shall be unwilling or unable to provide the requested
quotations, the Company may select other major money center bank or banks in The
City of New York, in consultation with the Determination Agent, to act as
Reference Dealer or Dealers in replacement therefor. In the absence of manifest
error, the determination by the Determination Agent of the Spot Rate and the
principal amount of this Security payable on the Maturity Date shall be final
and binding on the Company, the Trustee (referred to on the reverse hereof) and
the Holder (as defined below) of this Security.
"Exchange Rate Day" means any day which is a Business Day in The City
of New York and, if the Specified Currency or Indexed Currency is any currency
or currency unit other than U.S. dollars, in the Principal Financial Center of
the country of such Specified Currency or Indexed Currency.
The Company shall pay interest on the Face Amount hereof at
the Interest Rate shown above from the Original Issue Date shown above until the
first Interest Reset Date shown above following the Original Issue Date (if the
first Interest Reset Date is later than the Original Issue Date) and thereafter
at the interest rate determined by reference to the Base Rate shown above, plus
or minus the Spread, if any, or multiplied by the Spread Multiplier, if any,
shown above, or adjusted by such other formula, if any, set forth on the face
hereof, until the principal hereof is paid or made available for payment;
provided, however, that the interest rate in effect for the ten days immediately
prior to the Maturity Date (as defined below) of this Security will be that in
effect on the tenth day preceding such date. The Company will pay interest on
each Interest Payment Date, if any, specified above, commencing with the first
Interest Payment Date next succeeding the Original Issue Date, and on the Stated
Maturity Date, any Redemption Date or Repayment Date (each such date being
hereinafter referred to as the "Maturity Date" with respect to the principal
repayable on such date); provided, however, that any payment of principal (or
premium, if any) or interest, if any, to be made on any Interest Payment Date or
on the Maturity Date that is not a Business Day (as defined below) shall be made
on the next succeeding Business Day (except that if the Base Rate specified
above is LIBOR, and such day falls in the next succeeding calendar month, such
payment will be made on the next preceding Business Day) as described on the
reverse hereof. For purposes of this Security, unless otherwise specified on the
face hereof, "Business Day" means any day that is not a Saturday or Sunday and
that is neither a legal holiday nor a day on which commercial banks are
authorized or required by law, regulation or executive order to close in The
City of New York; provided, however, that, if the Specified Currency shown above
is a Foreign Currency, such day is also not a day on which commercial banks are
authorized or required by law, regulation or executive order to close in the
Principal Financial Center (as defined below) of the country issuing the
Specified Currency (or, if the Specified Currency is the euro, such day is also
a day on which the Trans-European Automated Real-Time Gross Settlement Express
Transfer (TARGET) System is open); provided further that, with respect to
Securities as to which LIBOR is an applicable Base Rate, such day is also a
London Business Day. "London Business Day" means a day on which
<PAGE> 5
3
commercial banks are open for business (including dealings in the LIBOR Currency
(as defined below)) in London. "Principal Financial Center" means (i) the
capital city of the country issuing the Specified Currency or the Indexed
Currency, as the case may be, or (ii) the capital city of the country to which
the LIBOR Currency relates, as applicable, except, in the case of (i) or (ii)
above, that with respect to United States dollars, Australian dollars, Canadian
dollars, Deutsche marks, Dutch guilders, Portuguese escudos, South African rand
and Swiss francs, the "Principal Financial Center" shall be The City of New
York, Sydney and (solely in the case of the Specified Currency) Melbourne,
Toronto, Frankfurt, Amsterdam, London (solely in the case of the LIBOR
Currency), Johannesburg and Zurich, respectively.
Interest on this Security will accrue from, and including, the
immediately preceding Interest Payment Date to which interest has been paid or
duly provided for (or from, and including, the Original Issue Date if no
interest has been paid or duly provided for) to, but excluding, the applicable
Interest Payment Date or the Maturity Date, as the case may be (each, an
"Interest Period"). The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture
and subject to certain exceptions described herein (referred to on the reverse
hereof), be paid to the person (the "Holder") in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on
the fifteenth day (whether or not a Business Day) next preceding such Interest
Payment Date (a "Regular Record Date"); provided, however, that, if this
Security was issued between a Regular Record Date and the initial Interest
Payment Date relating to such Regular Record Date, interest for the period
beginning on the Original Issue Date and ending on such initial Interest Payment
Date shall be paid on the Interest Payment Date following the next succeeding
Regular Record Date to the Holder hereof on such Regular Record Date; and
provided further that interest payable on the Maturity Date will be payable to
the person to whom the principal hereof shall be payable. Any such interest not
so punctually paid or duly provided for on any Interest Payment Date other than
the Maturity Date ("Defaulted Interest") will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a special record date (the "Special Record Date")
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to the Holder of this Security not less than ten days
prior to such Special Record Date, or may be paid at any time in any other
lawful manner, all as more fully provided in the Indenture.
Unless otherwise specified above, all payments in respect of
this Security will be made in U.S. dollars regardless of the Specified Currency
shown above unless the Holder hereof makes the election described below. If the
Specified Currency shown above is other than U.S. dollars, the Exchange Rate
Agent (referred to on the reverse hereof) will arrange to convert any such
amounts so payable in respect hereof into U.S. dollars in the manner described
on the reverse hereof; provided, however, that the Holder hereof may, if so
indicated above, elect to receive all or a specified portion of any payment of
principal, premium, if any, and/or interest, if
<PAGE> 6
4
any, in respect of this Security in such Specified Currency by delivery of a
written request to the corporate trust office of the Trustee in The City of New
York, on or prior to the applicable Regular Record Date or at least fifteen days
prior to the Maturity Date, as the case may be. Such request may be in writing
(mailed or hand delivered) or by cable, telex or other form of facsimile
transmission. The Holder hereof may elect to receive payment in such Specified
Currency for all principal, premium, if any, and interest payments, if any, and
need not file a separate election for each payment. Such election will remain in
effect until revoked by written notice to the Trustee, but written notice of any
such revocation must be received by the Trustee on or prior to the applicable
Regular Record Date or at least fifteen days prior to the Maturity Date, as the
case may be.
Notwithstanding the foregoing, if the Company determines that
the Specified Currency is not available for making payments in respect hereof
due to the imposition of exchange controls or other circumstances beyond the
Company's control, or is no longer used by the government of the country issuing
such currency or for the settlement of transactions by public institutions of or
within the international banking community, then the Holder hereof may not so
elect to receive payments in the Specified Currency and any such outstanding
election shall be automatically suspended, until the Company determines that the
Specified Currency is again available for making such payments. Any payment made
under such circumstances in U.S. dollars where the required payment is in a
Specified Currency will not constitute a default under the Indenture.
In the event of an official redenomination of the Specified
Currency, the obligations of the Company with respect to payments on this
Security shall be deemed, immediately following such redenomination, to provide
for payment of that amount of redenominated currency representing the amount of
such obligations immediately before such redenomination. Except as set forth
above, in no event shall any adjustment be made to any amount payable hereunder
as a result of any change in the value of the Specified Currency shown above
relative to any other currency due solely to fluctuations in exchange rates.
Until this Security is paid in full or payment therefor in
full is duly provided for, the Company will at all times maintain a Paying Agent
(which Paying Agent may be the Trustee) in The City of New York (which, unless
otherwise specified above, shall be the "Place of Payment"). The Company has
initially appointed The Chase Manhattan Bank, at its office in The City of New
York as Paying Agent.
Unless otherwise shown above, payment of interest on this
Security (other than on the Maturity Date) will be made by check mailed to the
registered address of the Holder hereof as of the Regular Record Date; provided,
however, that, if (i) the Specified Currency is U.S. dollars and this is a
Global Security (as defined on the reverse hereof) or (ii) the Specified
Currency is a Foreign Currency, and the Holder has elected to receive payments
in such Specified Currency as
<PAGE> 7
5
provided for above, such interest payments will be made by transfer of
immediately available funds, but only if appropriate wire transfer instructions
have been received in writing by the Trustee on or prior to the applicable
Regular Record Date. Simultaneously with any election by the Holder hereof to
receive payments in respect hereof in the Specified Currency (if other than U.S.
dollars), such Holder may provide appropriate wire transfer instructions to the
Trustee, and all such payments will be made in immediately available funds to an
account maintained by the payee with a bank, but only if such bank has
appropriate facilities therefor. Unless otherwise specified above, the principal
hereof (and premium, if any) and interest hereon payable on the Maturity Date
will be paid in immediately available funds upon surrender of this Security at
the office of the Trustee maintained for that purpose in the Borough of
Manhattan, The City of New York (or at such other location as may be specified
above). The Company will pay any administrative costs imposed by banks in making
payments in immediately available funds but, except as otherwise provided under
Additional Amounts above, any tax, assessment or governmental charge imposed
upon payments will be borne by the Holders of the Securities in respect of which
such payments are made.
Interest on this Security, if any, will be computed on the
basis of a 360-day year of twelve 30-day months.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
SECURITY SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
<PAGE> 8
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its facsimile corporate seal.
EATON CORPORATION
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
[CORPORATE SEAL]
Attest:
-------------------------
Name:
Title: Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the
series designated therein referred to in
the within-mentioned Indenture
Dated: THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------------
Authorized Officer
<PAGE> 9
[REVERSE OF NOTE]
EATON CORPORATION
MEDIUM-TERM NOTE
Section 1. General. This Security is one of a duly authorized
issue of securities (herein called the "Securities") of the Company, issued and
to be issued in one or more series under an indenture, dated as of April 1,
1994, as it may be supplemented from time to time (herein called the
"Indenture"), between the Company and The Chase Manhattan Bank (formerly known
as Chemical Bank), Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture with respect to a series of which this
Security is a part), to which Indenture and all indentures supplemental thereto,
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof limited in aggregate principal amount to
U.S.$800,000,000 (or the equivalent thereof in one or more foreign currencies)
or such other principal amount as shall be provided pursuant to the Indenture.
Section 2. Payments. If the Specified Currency is other than
U.S. dollars and the Holder hereof fails to elect payment in such Specified
Currency in accordance with the procedures set forth on the face hereof, the
amount of U.S. dollar payments to be made in respect hereof will be determined
by the Exchange Rate Agent specified on the face hereof or a successor thereto
(the "Exchange Rate Agent") based on the highest bid quotation in The City of
New York at approximately 11:00 A.M., New York City time, on the second Business
Day preceding the applicable payment date received by the Exchange Rate Agent
from three recognized foreign exchange dealers (one of whom may be the Exchange
Rate Agent) selected by the Exchange Rate Agent and approved by the Company for
the purchase by the quoting dealer of the Specified Currency for U.S. dollars
for settlement on such payment date in the aggregate amount of the Specified
Currency payable to all Holders of Securities scheduled to receive U.S. dollar
payments and at which the applicable dealer commits to execute a contract. If
three such bid quotations are not available, payments will be made in the
Specified Currency.
If the Specified Currency is other than U.S. dollars and the
Holder hereof has elected payment in such Specified Currency in accordance with
the procedures set forth on the face hereof and the Specified Currency is not
available due to the imposition of exchange controls or to other circumstances
beyond the Company's control, the Company will be entitled to satisfy its
obligations to the Holder of this Security by making such payment in U.S.
dollars on the basis of the noon buying rate in The City of New York for cable
transfers of such Specified Currency as certified for customs purposes (or, if
not so certified as otherwise determined) by the Federal Reserve Bank of New
York (the "Market Exchange Rate") as computed by the Exchange Rate Agent on the
second Business Day prior to the applicable payment date or, if the Market
<PAGE> 10
2
Exchange Rate is then not available, on the basis of the most recently available
Market Exchange Rate or as otherwise indicated above. Any payment made under
such circumstances in U.S. dollars where the required payment is in a Specified
Currency will not constitute a default under the Indenture.
All determinations referred to above made by the Exchange Rate
Agent shall be at its sole discretion (except to the extent expressly provided
that any determination is subject to approval by the Company) and, in the
absence of manifest error, shall be conclusive for all purposes and binding on
the Holder of this Security, and the Exchange Rate Agent shall have no liability
therefor.
All currency exchange costs will be borne by the Company.
Section 3. Interest Rate Calculations. Unless otherwise set
forth on the face hereof, the following provisions of this Section 3 shall apply
to the calculation of interest on this Security. If the first Interest Reset
Date is later than the Original Issue Date, this Security will bear interest
from its Original Issue Date to the first Interest Reset Date at the Initial
Interest Rate set forth on the face hereof. Thereafter, the interest rate hereon
for each Interest Reset Period (as defined below) will be determined by
reference to the Base Rate set forth on the face hereof, as adjusted by the
Spread, the Spread Multiplier or other formula, if any, set forth on the face
hereof.
As set forth on the face hereof, this Security may also have
either or both of the following: (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any Interest Period (as defined below)
("Maximum Interest Rate"); and (ii) a minimum limitation, or floor, on the rate
at which interest may accrue during any Interest Period ("Minimum Interest
Rate"). In addition to any Maximum Interest Rate that may be set forth on the
face hereof, the interest rate on this Security will in no event be higher than
the maximum rate permitted by New York law, as the same may be modified by
United States law of general application.
The rate of interest hereon will be reset daily, weekly,
monthly, quarterly, semiannually or annually or at another interval (each, an
"Interest Reset Period"), as set forth on the face hereof. The date or dates on
which interest will be reset (each, an "Interest Reset Date") will be, if this
Security resets (i) daily, each Business Day; (ii) weekly, the Wednesday of each
week (unless the Base Rate set forth on the face hereof is the Treasury Rate, in
which case, the Tuesday of each week (except as provided below)); (iii) monthly,
the third Wednesday of each month; (iv) quarterly, the third Wednesday of each
of the four months set forth on the face hereof; (v) semiannually, the third
Wednesday of each of the two months set forth on the face hereof; and (vi)
annually, the third Wednesday of the month of each year set forth on the face
hereof; provided, however, that (a) if the first Interest Reset Date is later
than the Original Issue
<PAGE> 11
3
Date, the interest rate in effect from the Original Issue Date to the first
Interest Reset Date will be the Initial Interest Rate as set forth on the face
hereof and (b) the interest rate in effect for the ten days immediately prior to
the Maturity Date will be that in effect on the tenth day preceding the Maturity
Date. If the Base Rate set forth on the face hereof is the Treasury Rate and a
Treasury auction shall fall on the Interest Reset Date for this Security, then
such Interest Reset Date shall instead be the first Business Day immediately
following such Treasury auction. If any Interest Reset Date would otherwise be a
day that is not a Business Day, such Interest Reset Date shall be postponed to
the next succeeding Business Day, except that, if the Base Rate set forth on the
face hereof is LIBOR, if such Business Day is in the next succeeding calendar
month, such Interest Reset Date shall be the immediately preceding Business Day.
The interest payable hereon on each Interest Payment Date and
on the Maturity Date shall be the amount of interest accrued from and including
the Original Issue Date or the next preceding Interest Payment Date in respect
of which interest, if any, has been paid or duly provided for, as the case may
be, to, but excluding, the next succeeding Interest Payment Date or the Maturity
Date, as the case may be, (each such period, an "Interest Period"). If the
Maturity Date falls on a day which is not a Business Day, the payment of
principal, premium, if any, and interest, if any, with respect to the Maturity
Date will be paid on the next succeeding Business Day with the same force and
effect as if made on the Maturity Date, and no interest shall accrue on the
amount so payable as a result of such delayed payment. If an Interest Payment
Date other than the Maturity Date falls on a day that is not a Business Day,
such Interest Payment Date will be postponed to the next day that is a Business
Day and interest will accrue for the period of such postponement (except if the
Base Rate specified above is LIBOR, and such day falls in the next succeeding
calendar month, such Interest Payment Date will be advanced to the immediately
preceding Business Day), it being understood that, to the extent this sentence
is inconsistent with Section 112 of the Indenture, the provisions of this
sentence shall apply in lieu of such Section.
Accrued interest will be calculated by multiplying the
principal amount hereof by an accrued interest factor. Such accrued interest
factor will be computed by adding the interest factor calculated for each day in
the Interest Period or from the date from which accrued interest is being
calculated. The interest factor for each such day is computed by dividing the
interest rate applicable on such day by 360, if the Base Rate set forth on the
face hereof is the CD Rate, Commercial Paper Rate, Federal Funds Rate, Prime
Rate or LIBOR (each as described below), or by the actual number of days in the
year, if the Base Rate set forth on the face hereof is the Treasury Rate or the
CMT Rate (each as described below). The interest rate applicable to any day that
is an Interest Reset Date is the interest rate as determined, in accordance with
the procedures hereinafter set forth, with respect to the Interest Determination
Date (as defined below) pertaining to such Interest Reset Date. The interest
rate applicable to any other day is the interest rate for the immediately
preceding Interest Reset Date (or, if none, the Initial Interest Rate, as set
forth on the face hereof).
<PAGE> 12
4
All percentages resulting from any calculation with respect
hereto will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded upward
(e.g., 7.123455% (or 0.07123455) being rounded to 7.123455% (or 0.07123455) and
7.12345% (or 0.0712345) being rounded to 7.12345% (or 0.0712345)), and all
currency amounts used in or resulting from such calculation will be rounded to
the nearest one-hundredth of a unit (with five one-thousandths of a unit being
rounded upwards).
Interest will be payable on, if this Security resets (i)
daily, weekly or monthly, the third Wednesday of each month; (ii) quarterly, the
third Wednesday of the four months set forth on the face hereof; (iii)
semiannually, the third Wednesday of the two months set forth on the face
hereof; and (iv) annually, the third Wednesday of the month set forth on the
face hereof (each, an "Interest Payment Date"), and in each case, on the
Maturity Date.
If the Base Rate set forth on the face hereof is the CD Rate,
the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate or the Prime
Rate, the "Interest Determination Date" pertaining to an Interest Reset Date for
this Security will be the second Business Day immediately preceding such
Interest Reset Date; if the Base Rate set forth on the face hereof is LIBOR, the
"Interest Determination Date" pertaining to an Interest Reset Date for this
Security will be the second London Business Day immediately preceding such
Interest Reset Date unless the Designated LIBOR Currency is British pounds
sterling, in which case the "Interest Determination Date" will be such Interest
Reset Date; and if the Base Rate set forth on the face hereof is the Treasury
Rate, the "Interest Determination Date" pertaining to an Interest Reset Date for
this Security will be the day of the week in which such Interest Reset Date
falls on which Treasury bills (as defined below) would normally be auctioned.
Treasury bills are usually sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is usually held on the
following Tuesday, except that sometimes such auction may be held on the
preceding Friday. If, as the result of a legal holiday, an auction is so held on
the preceding Friday, such Friday will be the Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week.
Unless otherwise set forth on the face hereof, the
"Calculation Date", where applicable, pertaining to an Interest Determination
Date is the earlier of (i) the tenth calendar day after such Interest
Determination Date, or if any such day is not a Business Day, the next
succeeding Business Day and (ii) the Business Day immediately preceding the
applicable Interest Payment Date or the Maturity Date, as the case may be.
The Company will appoint and enter into an agreement with an
agent (a "Calculation Agent") to calculate the rate of interest on the
Securities of this series which bear interest at a floating rate. Unless
otherwise set forth on the face hereof, The Chase Manhattan Bank will be the
Calculation Agent. At the request of the Holder hereof, the Calculation Agent
<PAGE> 13
5
will provide the interest rate then in effect and, if determined, the interest
rate that will become effective on the next Interest Reset Date.
Subject to applicable provisions of law and except as
specified herein, with respect to each Interest Determination Date, the rate of
interest shall be the rate determined by the Calculation Agent in accordance
with the provisions of the applicable heading below.
Determination of CD Rate. If the Base Rate set forth on the
face hereof is the CD Rate, this Security will bear interest for each Interest
Reset Period at the interest rate calculated with reference to the CD Rate and
the Spread, Spread Multiplier or other formula, if any, set forth on the face
hereof. Unless otherwise set forth on the face hereof, the "CD Rate" means, with
respect to any Interest Determination Date pertaining thereto, the rate on such
date for negotiable certificates of deposit having the Index Maturity set forth
on the face hereof as published in H.15(519) (as defined below), under the
heading "CDs (secondary market)" or, if not yet published by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the CD Rate will be the rate on such Interest Determination Date for
negotiable certificates of deposit having the Index Maturity set forth on the
face hereof as published in H.15 Daily Update (as defined below), or such other
recognized electronic source used for the purpose of displaying such rate, under
the caption "CDs (secondary market)". If by 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Interest Determination Date such rate is
not yet published in H.15(519), H.15 Daily Update or such other recognized
electronic source, the CD Rate on such Interest Determination Date will be
calculated by the Calculation Agent and will be the average of the secondary
market offered rates as of 10:00 A.M., New York City time, on such Interest
Determination Date, of three leading non-bank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent (after consultation with the Company) for negotiable certificates of
deposit of major United States money market banks of the highest credit standing
(in the market for negotiable certificates of deposit) having a remaining
maturity closest to the Index Maturity set forth on the face hereof in a
denomination of U.S. $5,000,000; provided, however, that, if fewer than three
dealers are quoting as mentioned in this sentence, the interest rate for the
period commencing on the Interest Reset Date following such Interest
Determination Date will be the interest rate in effect on such Interest
Determination Date. "H.15(519)" means the weekly statistical release designated
as such, 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.
Determination of Commercial Paper Rate. If the Base Rate set
forth on the face hereof is the Commercial Paper Rate, this Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Commercial Paper Rate and the Spread,
<PAGE> 14
6
Spread Multiplier or other formula, if any, set forth on the face hereof. Unless
otherwise set forth on the face hereof, the "Commercial Paper Rate" means, with
respect to any Interest Determination Date pertaining thereto, the Money Market
Yield (calculated as described below) of the rate on such date for commercial
paper having the Index Maturity set forth on the face hereof, as such rate shall
be published in H.15(519) under the caption "Commercial Paper -- Nonfinancial"
or, if not yet published by 3:00 P.M., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, the Commercial Paper Rate
shall be the Money Market Yield of the rate on such Interest Determination Date
for commercial paper having the Index Maturity set forth on the face hereof as
published in H.15 Daily Update, or such other recognized electronic source used
for the purpose of displaying such rate, under the caption "Commercial Paper --
Nonfinancial". If by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date such rate is not yet published in
H.15(519), H.15 Daily Update or such other recognized electronic source, the
Commercial Paper Rate on such Interest Determination Date shall be calculated by
the Calculation Agent and shall be the Money Market Yield of the average of the
offered rates as of 11:00 A.M., New York City time, on such Interest
Determination Date of three leading dealers in U.S. dollar commercial paper in
The City of New York selected by the Calculation Agent (after consultation with
the Company) for commercial paper having the Index Maturity set forth on the
face hereof placed for an industrial issuer whose bond rating is "Aa", or the
equivalent, from a nationally recognized securities rating agency; provided,
however, that, if fewer than three dealers are quoting as mentioned in this
sentence, the interest rate for the period commencing on the Interest Reset Date
following such Interest Determination Date will be the interest rate in effect
on such Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a
percentage) calculated in accordance with the following formula:
MONEY MARKET YIELD = D x 360 x 100
-------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal; and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.
Determination of Federal Funds Rate. If the Base Rate set
forth on the face hereof is the Federal Funds Rate, this Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Federal Funds Rate and the Spread, Spread Multiplier or other
formula, if any, set forth on the face hereof. Unless otherwise set forth on the
face hereof, the "Federal Funds Rate" means, with respect to any Interest
Determination Date pertaining thereto, the rate on such date for federal funds
as published in H.15(519) under the caption "Federal Funds (Effective)" as such
rate is displayed on Telerate Page 120 (or any other
<PAGE> 15
7
page as may replace such page on such service) ("Telerate Page 120"). If such
rate does not appear on Telerate Page 120 or is not yet published in H.15(519)
by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Federal Funds Rate will be the rate on such
Interest Determination Date as published in H.15 Daily Update, or such other
recognized electronic source used for the purpose of displaying such rate, under
the caption "Federal Funds (Effective)". If by 3:00 P.M., New York City time, on
the Calculation Date pertaining to such Interest Determination Date such rate
does not appear on Telerate Page 120 or is not yet published in H.15(519), H.15
Daily Update or such other recognized electronic source, the Federal Funds Rate
for such Interest Determination Date will be calculated by the Calculation Agent
and will be the average of the rates for the last transaction in overnight
Federal Funds arranged by three leading dealers of Federal Funds transactions in
The City of New York, which dealers have been selected by the Calculation Agent
(after consultation with the Company), as of 9:00 A.M., New York City time, on
such Interest Determination Date; provided, however, that, if fewer than three
dealers are quoting as mentioned in this sentence, the interest rate for the
period commencing on the Interest Reset Date following such Interest
Determination Date will be the interest rate in effect on such Interest
Determination Date.
Determination of LIBOR. If the Base Rate set forth on the face
hereof is LIBOR, this Security will bear interest for each Interest Reset Period
at the interest rate calculated with reference to LIBOR and the Spread, Spread
Multiplier or other formula, if any, set forth on the face hereof. Unless
otherwise set forth on the face hereof, "LIBOR" means the rate determined by the
Calculation Agent in accordance with the following provisions:
(i) If "LIBOR Reuters" is specified on the face hereof, LIBOR
will be the average of the offered rates for deposits in the LIBOR
Currency having the Index Maturity set forth on the face hereof on the
applicable Interest Reset Date, as such rates appear on the Designated
LIBOR Page as of 11:00 A.M., London time, on that Interest
Determination Date, if at least two such offered rates appear on the
Designated LIBOR Page.
(ii) If "LIBOR Telerate" is specified on the face hereof,
LIBOR will be the rate for deposits in the LIBOR Currency having the
Index Maturity set forth on the face hereof on the applicable Interest
Reset Date, as such rate appears on the Designated LIBOR Page as of
11:00 A.M., London time, on that Interest Determination Date. If such
rate does not appear, LIBOR for such Interest Determination Date will
be determined as described in (iii) below.
(iii) If the Designated LIBOR Page by its terms provides only
for a single rate, that single rate will be used regardless of whether
the foregoing provisions require more than one rate. With respect to an
Interest Determination Date, if LIBOR Reuters is the applicable method
for determining LIBOR and fewer than two offered rates (or no rate, if
<PAGE> 16
8
applicable) appear on the Designated LIBOR Page as specified in (i)
above or if LIBOR Telerate is the applicable method for determining
LIBOR and no rate appears on the Designated LIBOR Page as specified in
(ii) above, then LIBOR will be determined on the basis of the offered
rates at which deposits in the LIBOR Currency for the period of the
Index Maturity set forth on the face hereof on the Interest
Determination Date and in a principal amount that is representative of
a single transaction in that market at that time are offered by four
major banks in the London interbank market at approximately 11:00 AM.,
London time, for the period commencing on the Interest Reset 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 for deposits in the
LIBOR Currency. If at least two quotations are provided, LIBOR for that
Interest Determination Date will be the average of those quotations. If
fewer than two quotations are provided as mentioned above, LIBOR will
be the average of the rates quoted by three major banks in the
Principal Financial Center selected by the Calculation Agent at
approximately 11:00 A.M. in the Principal Financial Center, on the
Interest Determination Date for loans to leading European banks in the
LIBOR Currency having the Index Maturity set forth on the face hereof,
for the period commencing on the Interest Reset Date and in a principal
amount that is representative for a single transaction in the LIBOR
Currency in that market at that time. The Calculation Agent will select
the three banks referred to above. If fewer than three banks selected
by the Calculation Agent are quoting as mentioned above, the interest
rate for the period commencing on the Interest Reset Date following
such Interest Determination Date will be the interest rate in effect on
such Interest Determination Date.
"LIBOR Currency" means the Designated LIBOR Currency specified
on the face hereof as to which LIBOR shall be calculated or, if no such
currency is specified on the face hereof, United States dollars.
"Designated LIBOR Page" means, if "LIBOR Reuters" is specified
on the face hereof, the display on the Reuters Monitor Money Rates
Service (or any successor service) on the page specified on the face
hereof (or any other page as may replace such page on such service) for
the purpose of displaying the London interbank rates of major banks for
the LIBOR Currency; or if "LIBOR Telerate" is specified on the face
hereof or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified on
the face hereof as the method of calculating LIBOR, the display on
Bridge Telerate, Inc. (or any successor service, "Telerate") on the
page specified on the face hereof (or any other page as may replace
such page on such service) for the purpose of displaying the London
interbank rates of major banks for the LIBOR Currency.
Determination of Prime Rate. If the Base Rate set forth on
the face hereof is the Prime Rate, this Security will bear interest for each
Interest Reset Period at the interest rate
<PAGE> 17
9
calculated with reference to the Prime Rate and the Spread, Spread Multiplier or
other formula, if any, set forth on the face hereof. Unless otherwise set forth
on the face hereof, the "Prime Rate" means, with respect to any Interest
Determination Date pertaining thereto, the rate on such date as published in
H.15(519) under the caption "Bank Prime Loan" or, if not yet published by 3:00
P.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the rate on such Interest Determination Date as published in
H.15 Daily Update, or such other recognized electronic source used for the
purpose of displaying such rate, under the caption "Bank Prime Loan."
If the rate is not published in H.15 (519), H.15 Daily Update
or another recognized electronic source 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 the rates of interest publicly announced by each bank that
appears on the Reuters Screen US PRIME1 Page as that bank's prime rate or base
lending rate as in effect for that Interest Determination Date. If at least one
rate but fewer than four rates appear on the Reuters Screen US PRIME1 Page on
the Interest Determination Date, then the Prime Rate will be the average of the
prime rates or base lending rates quoted (on the basis of the actual number of
days in the year divided by a 360-day year) as of the close of business on the
Interest Determination Date by three major money center banks in the City of New
York selected by the Calculation Agent. If the banks selected by the Calculation
Agent are not quoting as mentioned above, the interest rate for the period
commencing on the Interest Reset Date following such Interest Determination Date
will be the interest rate in effect on such Interest Determination Date.
"Reuters Screen US PRIME1 Page" means the display designated
as Page "USPRIME1" on the Reuters Monitor Money Rates Service (or any successor
service, or such other page as may replace the USPRIME1 Page on that service)
for the purpose of displaying prime rates or base lending rates of major United
States banks.
Determination of Treasury Rate. If the Base Rate set forth on
the face hereof is the Treasury Rate, this Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the
Treasury Rate and the Spread, Spread Multiplier or other formula, if any, set
forth on the face hereof. Unless otherwise set forth on the face hereof, the
"Treasury Rate" means, with respect to any Interest Determination Date
pertaining thereto, the rate for the auction of direct obligations of the United
States ("Treasury bills") held on such Interest Determination Date having the
Index Maturity set forth on the face hereof under the caption "INVESTMENT RATE"
on the display on Telerate on page 56 (or any other page as may replace such
page on such service) ("Telerate Page 56") or page 57 (or any other page as may
replace such page on such service) ("Telerate Page 57") by 3:00 P.M., New York
City time, on the Calculation date for that Interest Determination Date.
<PAGE> 18
10
The following procedures will be followed if the Treasury Rate
cannot be determined as described above:
If the rate is not published by 3:00 P.M., New York City time,
on the Calculation Date, the Treasury Rate will be the Bond Equivalent Yield of
the auction rate of such Treasury bills as published in H.15 Daily Update or
such recognized electronic source used for the purpose of displaying such rate
under the caption "U.S. Government securities/ Treasury bills/Auction high."
If the rate is not published by 3:00 P.M., New York City time,
on the Calculation Date and cannot be determined as described in the immediately
preceding paragraph, the Treasury Rate will be the Bond Equivalent Yield of the
auction rate of such Treasury bills as otherwise announced by the United States
Department of Treasury.
If the results of the most recent auction of Treasury bills
having the Index Maturity set forth on the face hereof are not published or
announced as described above by 3:00 P.M., New York City time, on the
Calculation Date, or if no auction is held on the Interest Determination Date,
then the Treasury Rate will be the Bond Yield Equivalent on such Interest
Determination Date of Treasury bills having the Index Maturity set forth on the
face hereof as published in H.15(519) under the caption "U.S. Government
securities/Treasury bills/Secondary market" or, if not yet published by 3:00
p.m., New York City time, on the related Calculation Date, the rate on such
Interest Determination Date of such Treasury Bills as published in H.15 Daily
Update, or such other recognized electronic source used for the purpose of
displaying such rate, under the caption "U.S. Government securities/Treasury
bills/Secondary market."
If such rate is not published in H.15 (519), H.15 Daily Update
or another recognized electronic source, then the Calculation Agent will
determine the Treasury Rate to be the Bond Yield Equivalent of the average of
the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on the Interest Determination Date of three leading primary United States
government securities dealers for the issue of Treasury bills with a remaining
maturity closest to the Index Maturity set forth on the face hereof. The
Calculation Agent will select the three dealers referred to above.
If fewer than three dealers are quoting as described above,
the interest rate for the period commencing on the Interest Reset Date following
such Interest Determination Date will be the interest rate in effect on such
Interest Determination Date.
<PAGE> 19
11
"Bond Equivalent Yield" means a yield (expressed as a
percentage) calculated in accordance with the following formula:
Bond Equivalent Yield = D x N x 100
---------------
360 - (D x M)
where "D" refers to the applicable per annum rate for Treasury bills quoted on a
bank discount basis, "N" refers to 365 or 366, as the case may be, and "M"
refers to the actual number of days in the applicable Interest Reset Period.
Determination of CMT Rate. If the Base Rate set forth on the
face hereof is the CMT Rate, this Security will bear interest for each Interest
Reset Period at the interest rate calculated with reference to the CMT Rate and
the Spread, Spread Multiplier, or other formula, if any, set forth on the face
hereof. Unless otherwise set forth on the face hereof, the "CMT Rate" means,
with respect to any Interest Determination Date pertaining thereto, the rate
displayed on the Designated CMT Telerate Page (as defined below) under the
caption ". . . Treasury Constant Maturities . . . Federal Reserve Board Release
H.15 . . . Mondays Approximately 3:45 P.M.", under the column for the Designated
CMT Maturity Index (as defined below) for (i) if the Designated CMT Telerate
Page is 7051 or any successor page, the rate on such Interest Determination Date
and (ii) if the Designated CMT Telerate Page is 7052 or any successor page, the
rate for the weekly or the monthly average, as applicable, ended immediately
preceding the week or month in which the related Interest Determination Date
occurs. If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the interest rate for such Interest
Determination Date shall be the rate for the Designated CMT Maturity Index as
published in H.15(519). If such rate is no longer published, or if not published
by 3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, then the interest rate for such Interest
Determination Date shall be the rate for the Designated CMT Maturity Index (or
other United States Treasury rate for the Designated CMT Maturity Index) as may
then be published by either the Board of Governors of the Federal Reserve System
or the United States Department of the Treasury that the Calculation Agent
determines (with the concurrence of the Company) to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and published in
H.15(519). If such information is not provided by 3:00 P.M., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, then the
interest rate for such Interest Determination Date shall be calculated by the
Calculation Agent and shall be a yield to maturity, based on the arithmetic
average of the secondary market closing offer side prices as of approximately
3:30 P.M., New York City time, on such Interest Determination Date, reported by
three leading primary United States government securities dealers (each, a
"Reference Dealer") in The City of New York, for the most recently issued direct
noncallable fixed rate obligations of the United States ("U.S. Treasury Notes")
with an original maturity of approximately the Designated CMT Maturity Index and
a
<PAGE> 20
12
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. The three Reference Dealers shall be determined by (i) the
selection of five Reference Dealers by the Calculation Agent (after consultation
with the Company) and (ii) the elimination of the Reference Dealers providing
the highest (or, in the event of equality, one of the highest) and the lowest
(or, in the event of equality, one of the lowest) quotations for such Interest
Determination Date. If the Calculation Agent cannot obtain three such U.S.
Treasury Note quotations, the interest rate for such Interest Determination Date
shall be calculated by the Calculation Agent and shall be a yield to maturity
based on the arithmetic average of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on the Interest Determination Date
reported, according to their written records, by three Reference Dealers in The
City of New York, selected in the manner described above, for U.S. Treasury
Notes with an original maturity of the number of years that is the next highest
to the Designated CMT Maturity Index and a remaining term to maturity closest to
the Designated CMT Maturity Index, which has an outstanding balance of at least
$100 million. If only three or four of such Reference Dealers are quoting as
described above, then the interest rate shall be based on the arithmetic average
of the offer side prices so obtained from all such Reference Dealers, without
eliminating the Reference Dealers providing the highest and the lowest of such
quotes. If fewer than three such Reference Dealers are quoting as described
above, the interest rate for the period commencing on the Interest Reset Date
following such Interest Determination Date will be the interest rate in effect
on such Interest Determination Date. If two such U.S. Treasury Notes have
remaining terms to maturity equally close to the Designated CMT Maturity Index,
the quotes for the U.S. Treasury Note with the shorter remaining term to
maturity shall be used.
"Designated CMT Telerate Page" means the display on Telerate
on the page set forth on the face hereof (or any other page as may
replace such page on that service for the purpose of displaying
treasury constant maturities as reported in H.15(519)). If no such page
is so specified, the Designated CMT Telerate Page shall be 7052.
"Designated CMT Maturity Index" means the original period to
maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20
or 30 years) specified on the face hereof with respect to which the CMT
Rate will be calculated. If no such maturity is so specified, the
Designated CMT Maturity Index shall be two years.
References herein to "U.S. dollars" or "U.S. $" or "$" are to
the currency of the United States of America.
Section 4. Redemption. If so specified on the face hereof, the
Company may at its option redeem this Security in whole or from time to time in
part in increments of $1,000 (provided that any remaining principal amount of
this Security shall not be less than the Minimum Denomination specified on the
face hereof) on or after the date designated as the Initial Redemption Date on
the face hereof at 100% of the unpaid principal amount hereof or the
<PAGE> 21
13
portion thereof redeemed (or, if this Security is a Discount Security, such
lesser amount as is provided for below) multiplied by the Initial Redemption
Percentage specified on the face hereof, together with accrued interest to the
Redemption Date. Such Initial Redemption Percentage shall decline at each
anniversary of the Initial Redemption Date by an amount equal to the Annual
Redemption Percentage Reduction, if any, specified on the face hereof until the
Redemption Price is 100% of the unpaid principal amount hereof. The Company may
exercise such option by causing the Trustee to mail a notice of such redemption
at least 30 but not more than 60 days prior to the Redemption Date. In the event
of redemption of this Security in part only, a new Security or Securities for
the unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof. If less than all of the Securities with like tenor
and terms to this Security are to be redeemed, the Securities to be redeemed
shall be selected by the Trustee by such method as the Trustee shall deem fair
and appropriate. However, if less than all the Securities of the series with
differing tenor and terms to this Security are to be redeemed then the Company
in its sole discretion shall select the particular Securities to be redeemed and
shall notify the Trustee in writing thereof at least 45 days prior to the
relevant Redemption Date.
Section 5. Repayment. If so specified on the face hereof, this
Security shall be repayable prior to the Stated Maturity Date at the option of
the Holder on each applicable Optional Repayment Date shown on the face hereof
at a repayment price equal to 100% of the principal amount to be repaid,
together with accrued interest to the Repayment Date. In order for this Security
to be repaid, the Trustee must receive at least 30 but not more than 45 days
prior to an Optional Repayment Date, this Security with the form attached hereto
entitled "Option to Elect Repayment" duly completed. Any tender of this Security
for repayment shall be irrevocable. The repayment option may be exercised by the
Holder of this Security in whole or in part in increments of $1,000 (provided
that any remaining principal amount of this Security shall not be less than the
Minimum Denomination specified on the hereof). Upon any partial repayment, this
Security shall be canceled and a new Security or Securities for the remaining
principal amount hereof shall be issued in the name of the Holder of this
Security.
Section 6. Discount Securities. If this Security (such
Security being referred to as a "Discount Security") (a) has been issued at an
Issue Price lower, by more than a de minimis amount (as determined under United
States federal income tax rules applicable to original issue discount
instruments), than the stated redemption price at maturity (as defined below)
hereof and (b) would be considered an original issue discount security for
United States federal income tax purposes, then the amount payable on this
Security in the event of redemption by the Company, repayment at the option of
the Holder or acceleration of the maturity hereof, in lieu of the principal
amount due at the Stated Maturity Date hereof, shall be the Amortized Face
Amount (as defined below) of this Security as of the date of such redemption,
repayment or acceleration. The "Amortized Face Amount" of this Security shall be
the amount equal to the sum of (a) the Issue Price (as set forth on the face
hereof) plus (b) the aggregate of the portions of the original issue discount
(the excess of the amounts considered as part of the "stated redemption price at
<PAGE> 22
14
maturity" of this Security within the meaning of Section 1273(a)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"), whether denominated as
principal or interest, over the Issue Price of this Security) which shall
theretofore have accrued pursuant to Section 1272 of the Code (without regard to
Section 1272(a)(7) of the Code) from the date of issue of this Security to the
date of determination, minus (c) any amount considered as part of the "stated
redemption price at maturity" of this Security which has been paid on this
Security from the date of issue to the date of determination.
Section 7. Modification and Waivers; Obligation of the Company
Absolute. The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series. Such
amendment may be effected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Securities of each series affected thereby. The
Indenture also contains provisions permitting the Holders of not less than a
majority in principal amount of the Outstanding Securities of any series at the
time, on behalf of the Holders of all Outstanding Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture.
Provisions in the Indenture also permit the Holders of not less than a majority
in principal amount of all Outstanding Securities of any series to waive on
behalf of all of the Holders of Securities of such series certain past defaults
under the Indenture and their consequences. Any such consent or waiver shall be
conclusive and binding upon the Holder of this Security and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
The Securities are unsecured and rank pari passu with all
other unsecured and unsubordinated indebtedness of the Company.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the Specified Currency herein prescribed, except as set forth in Section 2 on
the reverse hereof.
Section 8. Defeasance and Covenant Defeasance. The Indenture
contains provisions for defeasance at any time of (a) the entire indebtedness of
the Company on this Security and (b) certain restrictive covenants and the
related defaults and Events of Default, upon compliance by the Company with
certain conditions set forth therein, which provisions apply to this Security,
unless otherwise specified on the face hereof.
<PAGE> 23
15
Section 9. Minimum Denominations. Authorized Denominations.
Unless otherwise provided on the face hereof, this Security is issuable only in
registered form without coupons in denominations of $1,000 or any amount in
excess thereof which is an integral multiple of $1,000. If this Security is
denominated in a Specified Currency other than U.S. dollars or is a Discount
Security, this Security shall be issuable in the denominations set forth on the
face hereof.
Section 10. Registration of Transfer. As provided in the
Indenture and subject to certain limitations herein and therein set forth, the
transfer of this Security is registrable in the Security Register upon surrender
of this Security for registration of transfer at a Place of Payment for the
series of Securities of which this Security forms a part, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of like authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
If the registered owner of this Security is the Depository
(such a Security being referred to as a "Global Security"), and (i) the
Depository is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by the Company within 90 days following
notice to the Company, or (ii) an Event of Default occurs, the Company will
issue Securities in certificated form in exchange for this Global Security. In
addition, the Company may at any time, and in its sole discretion, determine not
to have Securities represented by a Global Security and, in such event, will
issue Securities in certificated form in exchange in whole for this Global
Security representing such Security. In any exchange pursuant to this paragraph,
the Company will execute, and the Trustee, upon receipt of a Company Order for
the authentication and delivery of individual Securities of this series in
exchange for this Global Security, will authenticate and deliver individual
Securities of this series in certificated form in an aggregate principal amount
equal to the principal amount of this Global Security in exchange herefor.
Securities issued in exchange for this Global Security pursuant to this
paragraph shall be registered in such names and in such authorized denominations
as the Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. None of the Company, the
Trustee, any Paying Agent or the Security Registrar will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in this Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. For purposes of the Indenture, this Global Security
constitutes a Security issued in permanent global form. Securities so issued in
certificated form will be issued in denominations of $1,000 (or such other
Minimum Denomination specified on the face hereof) or any amount in excess
thereof which is an integral multiple of $1,000 (or such Minimum Denomination)
and will be issued in registered form only, without coupons.
<PAGE> 24
16
As provided in the Indenture and subject to certain
limitations therein and herein set forth, this Security is exchangeable for a
like aggregate principal amount of Securities of this series of different
authorized denominations but otherwise having the same terms and conditions, as
requested by the Holder hereof surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Holder as the owner hereof for all purposes, whether or not this
Security be overdue, and none of the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.
Section 11. Events of Default. If an Event of Default with
respect to the Securities of the series of which this Security forms a part
shall have occurred and be continuing, the principal of this Security may be
declared due and payable in the manner and with the effect provided in the
Indenture.
Section 12. Defined Terms. All terms used in this Security
which are defined in the Indenture and are not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
Section 13. Governing Law. Unless otherwise specified on the
face hereof, this Security shall be governed by and construed in accordance with
the law of the State of New York.
<PAGE> 25
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Company to repay this Security (or the portion thereof specified below),
pursuant to its terms, on the "Optional Repayment Date" first occurring after
the date of receipt of the within Security as specified below (the "Repayment
Date"), at a Repayment Price equal to 100% of the principal amount thereof,
together with interest thereon accrued to the Repayment Date, to the undersigned
at:
- ----------------------------------
- ----------------------------------
(Please Print or Type Name and Address of the Undersigned.)
For this Option to Elect Repayment to be effective, this
Security with the Option to Elect Repayment duly completed must be received at
least 30 but not more than 45 days prior to the Optional Repayment Date (or, if
such Repayment Date is not a Business Day, the next succeeding Business Day) by
the Company at its office or agency in The City of New York, which will be
located initially at the office of the Trustee at 450 West 33rd Street, New
York, New York 10001-2697.
If less than the entire principal amount of the within
Security is to be repaid, specify the portion thereof (which shall be $1,000 or
an integral multiple thereof) which is to be repaid: $ .
If less than the entire principal amount of this Security is
to be repaid, specify the denomination(s) of the Security(ies) to be issued for
the unpaid amount ($1,000 or any integral multiple of $1,000; provided that any
remaining principal amount of this Security shall not be less than the Minimum
Denomination): $ .
Dated:
----------
---------------------
Note: The signature to this Option to Elect Repayment
must correspond with the name as written upon the
face of the within Security in every particular
without alteration or enlargement or any change
whatsoever.
<PAGE> 26
-------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, 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
JT 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)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned
hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
| |
| |
|_____________________________________|________________________________________
Please print or type name and address, including zip code of assignee
- --------------------------------------------
the within Security of EATON CORPORATION and all rights thereunder and does
hereby irrevocably constitute and appoint
Attorney
- -----------------------------------------------------------------------
to transfer the said Security on the books of the within-named Company, with
full power of substitution in the premises.
Dated
-----------------
SIGNATURE GUARANTEED:
----------------------------------
- -------------------------
-----------------
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the Security in every particular,
without alteration or enlargement or
any change whatsoever.
<PAGE> 1
Exhibit 8
[SHEARMAN & STERLING LETTERHEAD]
February 2, 2000
To the Board of Directors of
Eaton Corporation
Medium Term Notes -- Registration Statement/U.S. Federal Income Tax Opinion
Ladies and Gentlemen:
We are acting as special U.S. federal income tax counsel for
Eaton Corporation (the "Company") in connection with the preparation and filing
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), of a Prospectus Supplement to a
Prospectus, contained in the Company's combined Registration Statement on Form
S-3 and Amendments Nos. 1 and 2 to the Registration Statement No. 333-74355 (the
"Registration Statement"), filed with the Commission on the date hereof. In
connection with this opinion, we have reviewed the Prospectus dated November 10,
1999 and the Prospectus Supplement dated February 2, 2000. The Prospectus
Supplement relates to the offering by the Company of its Medium Term Notes
(the "Notes") in an aggregate principal amount of up to $800,000,000.
Based upon and subject to the foregoing and consideration of
applicable law, we are of the opinion that the discussion in the Prospectus
Supplement under the caption "United States Taxation" accurately describes,
subject to the limitations set forth therein, the material United States federal
income tax consequences of the purchase, ownership and disposition of the Notes.
The foregoing opinion is based upon the Internal Revenue Code of 1986, as
amended, Treasury Regulations (including proposed Regulations and temporary
Regulations) promulgated thereunder, rulings, official pronouncements and
judicial decisions, all as in effect on the date hereof and all of which are
subject to change, possibly with retroactive effect.
We express no opinion as to any tax laws other than the
federal income tax laws of the United States of America.
<PAGE> 2
2
We hereby consent to the use of this opinion as an Exhibit to
the Registration Statement and to the use of our name in the first paragraph
under the caption "United States Taxation" in the Prospectus contained in the
Registration Statement. In giving this consent, we do not thereby concede that
we are within the category of persons whose consent is required by the Act or
the General Rules and Regulations promulgated thereunder.
Very truly yours,
/s/ Shearman & Sterling
