<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 33-56208
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 11, 1993)
$300,000,000
Eli Lilly and Company
8 3/8% NOTES DUE 2006
------------------------
Interest payable June 1 and December 1
------------------------
THE NOTES WILL NOT BE REDEEMABLE PRIOR TO MATURITY AND WILL NOT BE SUBJECT TO
ANY SINKING FUND. THE NOTES WILL BE REPRESENTED BY A GLOBAL SECURITY
REGISTERED IN THE NAME OF A NOMINEE OF THE DEPOSITORY TRUST COMPANY, AS
DEPOSITARY. BENEFICIAL INTERESTS IN THE NOTES WILL BE SHOWN ON, AND
TRANSFERS THEREOF WILL BE EFFECTED ONLY THROUGH, RECORDS
MAINTAINED BY THE DEPOSITORY (WITH RESPECT TO PARTICIPANTS'
INTERESTS) AND ITS PARTICIPANTS. EXCEPT AS DESCRIBED IN
THE ACCOMPANYING PROSPECTUS,
NOTES IN DEFINITIVE FORM WILL NOT BE ISSUED.
------------------------
APPLICATION HAS BEEN MADE TO LIST THE NOTES ON THE NEW YORK STOCK EXCHANGE.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
PRICE 99.105% AND ACCRUED INTEREST
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
--------- -------------- -------------
<S> <C> <C> <C>
Per Note.................................... 99.105% .675% 98.430%
Total....................................... $297,315,000 $2,025,000 $295,290,000
</TABLE>
- ------------
(1) Plus accrued interest from December 1, 1994.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deduction of expenses payable by the Company estimated at
$50,000.
------------------------
The Notes are offered, subject to prior sale, when, as and if accepted by
the Underwriters and subject to approval of certain legal matters by Davis Polk
& Wardwell, counsel for the Underwriters. It is expected that delivery of the
Notes will be made on or about December 7, 1994 through the book-entry
facilities of The Depository Trust Company, against payment therefor in
immediately available funds.
------------------------
MORGAN STANLEY & CO.
Incorporated
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
November 30, 1994
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY OR OTHER DEBT SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE
NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
------------------
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY STATE TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH STATE.
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AT
ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------
RECENT DEVELOPMENTS
On November 21, 1994, ECO Acquisition Corporation, a wholly-owned
subsidiary of the Company ("ECO"), purchased 42,135,998 shares (approximately
94%) of common stock of McKesson Corporation ("McKesson"). On November 30, 1994,
the Company effected a merger of ECO with and into McKesson, then consisting
solely of its pharmaceutical benefits management business (the "PCS Group"). The
historical financial information of PCS Group and the pro forma financial
information of the Company are set forth in the Company's Current Report on Form
8-K, dated November 23, 1994, as amended on November 29, 1994 on Form 8-K/A,
which is incorporated by reference herein.
Concurrently with the offering of the 8 3/8% Notes Due 2006, the Company is
offering $150,000,000 principal amount of 8 1/8% Notes Due 2001 pursuant to a
separate Prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges for the periods indicated:
<TABLE>
<CAPTION>
PRO FORMA(1)
- ------------------------------
NINE MONTHS YEAR NINE MONTHS
ENDED ENDED ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, -----------------------------------------
1994 1993 1994 1993 1992 1991 1990 1989
- ------------- ------------ ------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
5.3 2.0 17.9 8.0 11.5 21.6 17.8 24.0
</TABLE>
- ---------------
(1) The pro forma ratio of earnings to fixed charges gives effect to the
transactions described above in "Recent Developments" and the incurrence of
approximately $4 billion of short-term indebtedness in the form of
commercial paper used to finance the acquisition of the PCS Group, and the
anticipated refinancing of approximately $800,000,000 of commercial paper
with long-term indebtedness.
The ratio of earnings to fixed charges represents the historical ratio of
the Company and is calculated on a total worldwide basis. The ratio is computed
by dividing the sum of earnings from continuing operations before taxes and
fixed charges excluding capitalized interest by fixed charges. Fixed charges
represent interest expense (including capitalized interest).
USE OF PROCEEDS
The Company intends to use the net proceeds received in connection with the
offering of the Notes to reduce short-term indebtedness in the form of
commercial paper used to finance the acquisition of the PCS Group. The
commercial paper currently bears a weighted average interest rate of 5.65%.
S-2
<PAGE> 3
DESCRIPTION OF THE NOTES
GENERAL
The Notes constitute Securities described in the accompanying Prospectus
and will be issued under the Indenture referred to in the accompanying
Prospectus with Citibank, N.A. as Trustee. The Notes will be unsecured general
obligations of the Company and will rank on a parity with the other unsecured
and unsubordinated indebtedness for borrowed money of the Company. The Notes
will be limited to $300,000,000 aggregate principal amount and will mature on
December 1, 2006. The Notes are not entitled to the benefit of any sinking fund.
The Notes may not be redeemed prior to maturity.
The Notes will bear interest from December 1, 1994, at the rate of interest
stated on the cover page of this Prospectus Supplement. Principal of and
interest on the Notes will be payable at the corporate trust office of Citibank,
N.A., located at 111 Wall Street, New York, New York. Interest will be payable
semi-annually on June 1 and December 1 of each year, beginning June 1, 1995, to
the persons in whose names the Notes (or any predecessor Notes) are registered
at the close of business on May 15 or November 15 preceding such June 1 or
December 1, and may be paid at the option of the Company by checks mailed to
such persons at their registered addresses.
The Notes will have the benefit of certain covenants set forth in the
Indenture relating to limitation on liens and limitation on sale and leaseback
transactions. See "Description of Securities--Certain Covenants" in the
Prospectus.
BOOK-ENTRY SYSTEM
Upon issuance, the Notes will be represented by one or more Global Notes
(the "Book-Entry Notes"). The Global Notes representing Book-Entry Notes will be
deposited with, or on behalf of, The Depository Trust Company, as depositary
(the "Depositary"), and registered in the name of a nominee of the Depositary.
Book-Entry Notes will not be exchangeable at the option of the Holder (as such
term is defined in the Indenture) for certificated Notes and, except under the
circumstances described in the Prospectus under "Description of
Securities--Global Securities," will not otherwise be issuable in definitive
form.
The Depositary has advised the Company and the Underwriters as follows: The
Depositary is a limited-purpose trust company organized under the Banking Law of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of section 17A of the
Securities Exchange Act of 1934, as amended. The Depositary was created to hold
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations, and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
A further description of the Depositary's procedures with respect to Global
Securities representing Book-Entry Notes is set forth in the Prospectus under
"Description of Securities--Global Securities."
DEFEASANCE
The Company at its option (a) will be Discharged (as such term is defined
in the Indenture) from any and all obligations in respect of the Notes (except
for certain obligations to register the transfer or exchange of Notes, replace
stolen, lost or mutilated Notes, maintain paying agencies and hold moneys for
payment in trust) or (b) need not comply with certain restrictive covenants of
the Indenture, in each case after the Company deposits with the Trustee, in
trust, money or U.S. Government Obligations (as such term is defined in the
Indenture) which through the payment of interest thereon and principal thereof
in accordance with their terms will provide money, or a combination of money and
U.S. Government Obligations, in an amount sufficient to pay all the principal
of, and interest on, the Notes on the dates such payments are due in
S-3
<PAGE> 4
accordance with the terms of the Notes. Among the conditions to the Company's
exercising any such option, the Company is required to deliver to the Trustee an
opinion of independent counsel to the effect that the deposit and related
defeasance would not cause the Holders of the Notes to recognize income, gain or
loss for United States Federal income tax purposes and that the Holders will be
subject to United States Federal income tax in the same amounts in the same
manner and at the same times as would have been the case if such deposit and
related defeasance had not occurred.
UNDERWRITERS
Under the terms of and subject to the conditions contained in an
Underwriting Agreement dated the date hereof, the Underwriters named below have
severally agreed to purchase, and the Company has agreed to sell to them,
severally, the respective principal amounts of Notes set forth opposite their
respective names below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
NAME OF NOTES
--------------------------------------------------------- ---------------
<S> <C>
Morgan Stanley & Co. Incorporated........................ $ 100,000,000
Goldman, Sachs & Co...................................... 100,000,000
J.P. Morgan Securities Inc............................... 100,000,000
---------------
Total............................................... $ 300,000,000
===============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the Notes
if any are taken.
The Underwriters initially propose to offer part of the Notes directly to
the public at the public offering price set forth on the cover page hereof and
part to certain dealers at a price that represents a concession not in excess of
.40% of the principal amount of the Notes. Any Underwriter may allow, and such
dealers may reallow, a concession not in excess of .25% of the principal amount
of the Notes to certain other dealers. After the initial offering of the Notes,
the offering price and other selling terms may from time to time be varied by
the Underwriters.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments the Underwriters may be required to make
in respect thereof.
In the ordinary course of their respective businesses the Underwriters or
affiliates of the Underwriters engage and may in the future engage in commercial
banking and investment banking transactions with the Company and affiliates of
the Company.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in the Company's Annual Report (Form 10-K) for the year ended December
31, 1993, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The combined financial statements of PCS Group for each of the three years
in the period ended March 31, 1994 included in the Company's Current Report
(Form 8-K) and incorporated by reference in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such combined
financial statements and report are incorporated herein by reference in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
S-4
<PAGE> 5
PROSPECTUS
$500,000,000.00
Eli Lilly and Company
DEBT SECURITIES
------------------------
Eli Lilly and Company (the "Company" or "Lilly") may offer from time to
time its debt securities (the "Securities") having an aggregate initial offering
price of up to $500,000,000.00 (or the equivalent in foreign currency or
currency units) on terms to be determined at the time of sale. The Securities
may be sold for U.S. dollars, foreign currencies or currency units, and the
principal of, premium, if any, and interest, if any, on the Securities may be
payable in U.S. dollars, foreign currencies or currency units. The Securities
may be issued in one or more series with the same or various maturities at or
above par or with an original issue discount. The Securities may be issued in
registered form ("Registered Securities"), in bearer form, with or without
coupons ("Bearer Securities"), or in the form of one or more global securities
(each a "Global Security"). Bearer Securities will be offered only outside the
United States and its possessions to Non-United States persons or to offices
located outside the United States and its possessions of certain United States
financial institutions or to other qualifying persons in accordance with United
States Treasury Regulation Section 1.163-5(c)(2)(i)(D)(1)(iii). The specific
designation, aggregate principal amount, currency or currency unit in which the
principal, premium, if any, or interest, if any, is payable, authorized
denominations, purchase price, maturity, rate or rates (which may be fixed or
variable) and time of payment of any interest, redemption or repurchase terms,
any listing on a securities exchange and any other specific terms of the
Securities in respect of which this Prospectus is being delivered (the "Offered
Securities") are set forth in the accompanying supplement to this Prospectus
(the "Prospectus Supplement"), together with the terms of offering of the
Offered Securities.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------------------------------
The Securities may be offered through underwriters, agents or dealers, or
directly to purchasers by the Company or subsidiaries of the Company. If an
underwriter, agent or dealer is involved in the offering of any Offered
Securities, the underwriter's discount, agent's commission or dealer's purchase
price will be set forth in, or may be calculated from, the Prospectus
Supplement, and the net proceeds to the Company from such offering will be the
public offering price of the Offered Securities less such discount in the case
of an underwriter, the purchase price of the Offered Securities less such
commission in the case of an agent or the purchase price of the Offered
Securities in the case of a dealer, and less, in each case, the other expenses
of the Company associated with the issuance and distribution of the Offered
Securities. Any such underwriter (or any representative thereof), dealer or
agent may include Morgan Stanley & Co. Incorporated. See "Plan of Distribution"
for possible indemnification arrangements for dealers, underwriters and agents.
------------------------
January 11, 1993
<PAGE> 6
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SECURITIES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549; at the Commission's New York
Regional Office, Room 1400, 7 World Trade Center, New York, New York 10048; and
at its Chicago Regional Office, Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549 at prescribed
rates. Such reports, proxy statements and other information concerning the
Company also can be inspected at the office of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, and at the American Stock
Exchange, 86 Trinity Place, New York, New York 10006.
---------------------
INFORMATION INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1991, and the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1992, June 30, 1992, September 30, 1992, and the Company's
Current Reports on Form 8-K dated October 22, 1992 and November 13, 1992, which
have been filed by the Company with the Commission pursuant to the Exchange Act,
are incorporated herein by reference.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering
of the Securities, shall be deemed to be incorporated in this Prospectus by
reference and to be a part hereof from the respective date of filing of each
such document. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement herein or in any
other subsequently filed document which also is, or is deemed to be,
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents incorporated by reference herein, other than exhibits to such
documents. Requests should be directed to Eli Lilly and Company, Shareholder
Services Department, Lilly Corporate Center, Indianapolis, Indiana 46285,
telephone number (317) 276-2000.
2
<PAGE> 7
THE COMPANY
Eli Lilly and Company was incorporated in 1901 under the laws of Indiana to
succeed to the drug manufacturing business founded in Indianapolis, Indiana, in
1876 by Colonel Eli Lilly. The Company, including its subsidiaries, is engaged
in the discovery, development, manufacture, and sale of products in one industry
segment -- Life Sciences. Products are manufactured or distributed through owned
or leased facilities in the United States, Puerto Rico, and 27 other countries,
in 18 of which the Company owns or has an interest in manufacturing facilities.
Its products are sold in approximately 110 countries. The principal executive
offices of the Company are located at Lilly Corporate Center, Indianapolis,
Indiana 46285, telephone number (317) 276-2000.
USE OF PROCEEDS
Unless otherwise indicated in the Prospectus Supplement, the net proceeds
to be received by the Company from sales of the Securities will be used for
general corporate purposes, which may include working capital, capital
expenditures, stock repurchases, repayment and refinancing of indebtedness, and
acquisitions.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------------------
1992 1991 1990 1989 1988 1987
- -------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
9.7 21.6 17.8 24.0 20.2 10.1
</TABLE>
The ratio of earnings to fixed charges represents the historical ratio of
the Company and is calculated on a total worldwide basis. The ratio is computed
by dividing the sum of earnings from continuing operations before taxes and
fixed charges excluding capitalized interest by fixed charges. Fixed charges
represent interest expense (including capitalized interest).
DESCRIPTION OF SECURITIES
The Securities are to be issued under an Indenture (the "Indenture"),
between the Company and Citibank, N.A., as Trustee (the "Trustee"). The form of
the Indenture, dated as of February 1, 1991, is an exhibit to the Registration
Statement of which this Prospectus is a part. The Indenture incorporates the
Company's Standard Multiple-Series Indenture provisions, a copy of which is an
exhibit to the Registration Statement. The Indenture does not limit the
aggregate principal amount of Securities which may be issued thereunder. The
Company may issue Securities under the Indenture as the Company shall see fit.
The Company may enter into one or more additional indentures providing for the
issuance of Securities with one or more banking institutions organized under the
laws of the United States of America, any state thereof or such foreign
jurisdictions as may be permitted under the Trust Indenture Act of 1939, as
amended, serving as trustee. Reference is made to the Prospectus Supplement for
information regarding the Indenture or any additional indenture under which the
Offered Securities will be issued.
The statements under this heading are subject to the detailed provisions of
the Indenture. Whenever particular provisions of the Indenture or terms defined
therein are referred to, such provisions or definitions are incorporated by
reference herein as a part of the statements made and the statements are
qualified in their entirety by such reference.
General: The Securities will be unsecured general obligations of the
Company and will rank on a parity with the other unsecured and unsubordinated
indebtedness for borrowed money of the Company. The Indenture provides that the
Offered Securities and other unsecured debt securities of the Company, without
limitation as to aggregate principal amount (collectively, the "Indenture
Securities"), may be issued in one or more series, and a single series may be
issued at various times, with different maturity dates and different interest
rates, in each case as authorized from time to time by the Company.
3
<PAGE> 8
One or more series of the Indenture Securities may be issued with the same
or various maturities at par or at a discount. Offered Securities bearing no
interest or interest at a rate which at the time of issuance is below the market
rate ("Original Issue Discount Securities") will be sold at a discount (which
may be substantial) below their stated principal amount. Federal income tax
consequences and other special considerations applicable to any such Original
Issue Discount Securities will be described in the Prospectus Supplement
relating thereto.
If any of the Offered Securities are sold for any foreign currency or
currency unit or if the principal of, premium, if any, or interest, if any, on
any of the Offered Securities is payable in any foreign currency or currency
unit, the restrictions, elections, tax consequences, specific terms and other
information with respect to such issue of Offered Securities and such foreign
currency or currency unit will be set forth in the Prospectus Supplement
relating thereto.
The Prospectus Supplement will state the price or prices (which may be
expressed as a percentage of the aggregate principal amount thereof) at which
the Offered Securities will be sold.
Reference is made to the Prospectus Supplement relating to the Offered
Securities for the following terms thereof:
(1) the specific designation of the Offered Securities;
(2) the aggregate principal amount of the Offered Securities;
(3) the date or dates on which the principal of and premium, if any,
on the Offered Securities shall be payable or the method of determination
thereof;
(4) the rate or rates (which may be fixed or variable) at which the
Offered Securities shall bear interest, if any, or the method by which such
rate or rates shall be determined, the date or dates from which such
interest shall accrue, or the method by which such date or dates shall be
determined, the date or dates on which such interest shall be payable and
the record dates therefor;
(5) if other than in U.S. dollars, the currency or currency unit in
which payment of the principal of, premium, if any, and interest, if any,
on the Offered Securities shall be payable and the Dollar Determination
Agent (as defined in the Indenture), if any;
(6) if the amount of payments of the principal of, premium, if any, or
interest, if any, on the Offered Securities may be determined with
reference to an index, formula or other method based on a currency or
currency unit, or other commodity as permitted, other than that in which
the Offered Securities are stated to be payable, the manner in which such
amounts shall be determined;
(7) if the principal of, premium, if any, or interest, if any, on the
Offered Securities are to be payable at the election of the Company or a
holder thereof in a currency or currency unit other than that in which the
Offered Securities are stated to be payable, the period or periods within
which and the terms and conditions upon which such election may be made;
(8) the place or places where the principal of, premium, if any, and
interest, if any, on the Offered Securities shall be payable;
(9) the period or periods within which, the price or prices at which
and the terms and conditions upon which the Offered Securities may be
redeemed, in whole or in part, at the option of the Company;
(10) the obligation, if any, of the Company to redeem, purchase or
repay the Offered Securities pursuant to any sinking fund or analogous
provision or at the option of a holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which the Offered Securities shall be redeemed, purchased or repaid,
in whole or in part, pursuant to such obligation;
(11) whether the Offered Securities are to be issued as Bearer
Securities and, if so, (i) whether the Offered Securities are also to be
issued as Registered Securities and (ii) the manner in which such Bearer
Securities are to be dated;
4
<PAGE> 9
(12) whether the Offered Securities are to be issued in whole or in
part in the form of one or more Global Securities and, if so, the identity
of the Depositary for such Global Security or Securities;
(13) if a temporary Global Security is to be issued with respect to
the Offered Securities, whether any interest thereon payable on an interest
payment date prior to the issuance of a permanent Global Security or
definitive Bearer Securities will be paid to the Depositary for such
temporary Global Security and, in such event, the terms and conditions upon
which such interest payments received by such Depositary will be credited
to the account of the persons entitled thereto on such interest payment
date;
(14) if a temporary Global Security is to be issued with respect to
the Offered Securities, the terms upon which interests in such temporary
Global Security may be exchanged for interests in a permanent Global
Security or for definitive Securities of the series and the terms upon
which interests in a permanent Global Security, if any, may be exchanged
for definitive Securities of the series;
(15) if any of the Offered Securities are to be issued in registered
form, the denominations, if other than denominations of $1,000 and any
integral multiple thereof, in which such Registered Securities are to be
issued and, if any of the Offered Securities are to be issued in bearer
form, the denominations, if other than the denomination of $5,000, in which
such Bearer Securities are to be issued;
(16) if other than the principal amount thereof, the portion of the
principal amount of the Offered Securities payable upon declaration of
acceleration of the maturity of the Offered Securities;
(17) the provisions, if any, relating to the cancellation and
satisfaction of the Indenture or certain covenants contained in the
Indenture with respect to the Offered Securities prior to the maturity
thereof pursuant to Section 12.02 thereof (see "Defeasance of the Indenture
and the Indenture Securities");
(18) any deletions from or modifications of or additions to the Events
of Default set forth in Section 6.01 or covenants contained in Article 5 of
the Indenture pertaining to the Offered Securities;
(19) whether and under what circumstances and with what procedures and
documentation the Company will pay additional amounts on any of the Offered
Securities to any holder who is not a United States Person (including a
definition of such term), in respect of any tax, assessment or governmental
charge withheld or deducted and, if so, whether the Company will have the
option to redeem such Securities rather than pay additional amounts (and
the terms of any such option);
(20) the Person to whom any interest on any Registered Security shall
be payable, if other than the Person in whose name that Security (or a
Predecessor Security) is registered at the close of business on the record
date therefor, the manner in which, or the Person to whom, any interest on
any Bearer Security shall be payable, if otherwise than upon presentation
and surrender of the coupons appertaining thereto as they severally mature
and the extent to which, or the manner in which, any interest payable on a
temporary Global Security will be paid; and
(21) any other terms of the Offered Securities not inconsistent with
the provisions of the applicable Indenture and not adversely affecting the
rights of the holders of any other series of Indenture Securities then
outstanding. (Section 3.01)
The Company may authorize the issuance and provide for the terms of a
series of Indenture Securities pursuant to a resolution of its Board of
Directors or any duly authorized committee thereof or pursuant to a supplemental
indenture. The provisions of the Indenture described above provide the Company
with the ability, in addition to the ability to issue Indenture Securities with
terms different from those of Indenture Securities previously issued, to
"reopen" a previous issue of a series of Indenture Securities and to issue
additional Indenture Securities of such series.
The Indenture Securities may be issued as Registered Securities, Bearer
Securities or both. Indenture Securities of a series may be issued in whole or
in part in the form of one or more Global Securities, as described below under
"Global Securities." One or more Global Securities will be issued in a
denomination or aggregate denominations equal to the aggregate principal amount
of outstanding Indenture Securities of the series to be represented by such
Global Security or Securities. The Prospectus Supplement relating to a series
5
<PAGE> 10
of Indenture Securities denominated in a foreign currency or currency unit will
specify the denomination thereof. (Section 3.02)
Limitations on the issuance of Bearer Securities, as well as certain
Federal income tax consequences and other special considerations applicable to
any such Bearer Securities, will be described in the Prospectus Supplement
relating thereto.
Exchange, Registration and Transfer: At the option of a holder of the
Indenture Securities upon request confirmed in writing, and subject to the terms
of the applicable Indenture, Bearer Securities (with all unmatured coupons,
except as provided below) of any series may be exchanged for an equal aggregate
principal amount of Registered Securities (if the Indenture Securities of such
series are to be issued as Registered Securities) or Bearer Securities (if
Bearer Securities of such series are to be issued in more than one denomination)
of the same series (with the same interest rate and maturity date), but no
Bearer Security will be delivered in or to the United States, and Registered
Securities of any series (other than a Global Security, except as set forth
below) will be exchangeable into an equal aggregate principal amount of
Registered Securities of the same series (with the same interest rate and
maturity date) of different authorized denominations. If a holder surrenders
Bearer Securities in exchange for Registered Securities between a Regular Record
Date or, in certain circumstances, a Special Record Date, and the relevant
interest payment date, such holder will not be required to surrender the coupon
relating to such interest payment date. Registered Securities may not be
exchanged for Bearer Securities. (Section 3.05)
Indenture Securities may be presented for exchange, and Registered
Securities (other than a Global Security) may be presented for transfer (with
the form of transfer endorsed thereon duly executed), at the office of any
transfer agent or at the office of the Security Registrar, without service
charge and upon payment of any taxes and other governmental charges as described
in the applicable Indenture. Such transfer or exchange will be effected upon the
transfer agent or the Security Registrar, as the case may be, being satisfied
with the documents of title and identity of the person making the request.
Bearer Securities, and the coupons if any appertaining thereto, will be
transferable by delivery. (Section 3.05)
Global Securities: The Indenture Securities of a series may be issued in
whole or in part in the form of one or more Global Securities that will be
deposited with, or on behalf of, the Depositary identified in the Prospectus
Supplement relating thereto. Global Securities may be issued in either
registered or bearer form and in either temporary or permanent form. Unless and
until it is exchanged in whole or in part for Indenture Securities in definitive
form, a Global Security may not be transferred except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. (Sections 3.03 and 3.05)
The specific terms of the depositary arrangement with respect to any
Indenture Securities of a series will be described in the Prospectus Supplement
relating thereto. The Company anticipates that the following provisions will
apply to all depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Indenture Securities represented by such
Global Security to the accounts of institutions that have accounts with such
Depositary ("participants"). The accounts to be credited shall be designated by
the underwriters or agents through which such Indenture Securities were sold or
by the Company, if such Indenture Securities are offered and sold directly by
the Company. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depositary for such Global Security or by participants or persons that
hold through participants. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
owner of such Global Security, such Depositary or such nominee, as the case may
be, will be considered the sole owner or holder of the
6
<PAGE> 11
Indenture Securities represented by such Global Security for all purposes under
the Indenture governing such Indenture Securities. Except as set forth below,
owners of beneficial interests in a Global Security will not be entitled to have
Indenture Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Indenture Securities of such series in definitive form and will not
be considered the owners or holders thereof under the Indenture governing such
Indenture Securities.
Subject to certain limitations on the issuance of Bearer Securities which
will be described in the Prospectus Supplement relating thereto, payments of
principal of, premium, if any, and interest, if any, on Indenture Securities
registered in the name of or held by a Depositary or its nominee will be made to
the Depositary or its nominee, as the case may be, as the registered owner or
the holder of the Global Security representing such Indenture Securities. None
of the Company, the Trustee for such Indenture Securities, any paying agent or
the Security Registrar for such Indenture Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Indenture Securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the Depositary for Indenture Securities of a
series, upon receipt of any payment of principal, premium, if any, or interest,
if any, in respect of a permanent Global Security, will credit immediately
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
as shown on the records of such Depositary. The Company also expects that
payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants. Receipt by owners of beneficial
interests in a temporary Global Security of payments in respect of such
temporary Global Security may be subject to restrictions. Any such restrictions
will be described in the Prospectus Supplement relating thereto.
If a Depositary for Indenture Securities of a series is at any time
unwilling or unable to continue as Depositary and a successor depositary is not
appointed by the Company within ninety days, the Company will issue Indenture
Securities of such series in definitive form in exchange for the Global Security
or Securities representing the Indenture Securities of such series. In addition,
the Company may at any time and in its sole discretion determine not to have any
Indenture Securities of a series represented by one or more Global Securities
and, in such event, will issue Indenture Securities of such series in definitive
form in exchange for the Global Security or Securities representing such
Indenture Securities. Further, if the Company so specifies with respect to the
Indenture Securities of a series, each Person specified by the Depositary of the
Global Security representing Indenture Securities of such series may, on terms
acceptable to the Company and the Depositary for such Global Security, receive
Indenture Securities of such series in definitive form. In any such instance,
each Person so specified by the Depositary of the Global Security will be
entitled to physical delivery in definitive form of Indenture Securities of the
series represented by such Global Security equal in principal amount to such
Person's beneficial interest in the Global Security. Indenture Securities of
such series so issued in definitive form will be issued (a) as Registered
Securities if the Indenture Securities of such series are to be issued as
Registered Securities, (b) as Bearer Securities if the Indenture Securities of
such series are to be issued as Bearer Securities or (c) as either Registered or
Bearer Securities, if the Indenture Securities of such series are to be issued
in either form. A description of certain restrictions on the issuance of a
Bearer Security in definitive form in exchange for an interest in a Global
Security will be contained in the Prospectus Supplement relating thereto.
(Section 3.05)
Payment and Paying Agents: Payment of principal of, premium, if any, and
interest, if any, on Bearer Securities will be made in the currency or currency
unit designated in the Prospectus Supplement, subject to any applicable laws and
regulations, at such paying agencies outside the United States as the Company
may appoint from time to time. Any such payment may be made, at the option of a
holder, by a check in the designated currency or currency unit or by transfer to
an account in the designated currency or currency unit maintained by the payee
with a bank located outside the United States. No payment with respect to any
Bearer Security will be made at the principal corporate trust office of the
Trustee or any other paying agency
7
<PAGE> 12
maintained by the Company in the United States nor will any such payment be made
by transfer to an account with a bank located, or by check mailed to an address,
in the United States. Notwithstanding the foregoing, payments of principal of
and premium, if any, and interest, if any, on Bearer Securities may be made in
U.S. dollars at the principal corporate trust office of the Trustee in the
Borough of Manhattan, The City of New York, if payment of the full amount
thereof at all paying agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions.
(Sections 3.11 and 5.02)
Unless otherwise set forth in the applicable Prospectus Supplement, payment
of principal of and premium, if any, on Registered Securities will be made in
the designated currency or currency unit against surrender of such Registered
Securities at the principal corporate trust office of the Trustee in the Borough
of Manhattan, The City of New York. Unless otherwise indicated in the Prospectus
Supplement, payment of any installment of interest on Registered Securities will
be made to the person in whose name such Registered Security is registered at
the close of business on the regular record date for such interest. Unless
otherwise indicated in the Prospectus Supplement, payments of such interest will
be made at the principal corporate trust office of the Trustee in the Borough of
Manhattan, The City of New York, or by a check in the designated currency or
currency unit mailed to each holder of a Registered Security at such holder's
registered address. (Section 3.11)
The paying agents outside the United States initially appointed by the
Company for a series of Indenture Securities will be named in the Prospectus
Supplement. The Company may terminate the appointment of any of the paying
agents from time to time, except that the Company will maintain at least one
paying agent in the Borough of Manhattan, The City of New York, for payments
with respect to Registered Securities and at least one paying agent in a city in
Europe so long as any Bearer Securities are outstanding where Bearer Securities
may be presented for payment and may be surrendered for exchange, provided that
so long as any series of Indenture Securities is listed on The International
Stock Exchange of the United Kingdom and the Republic of Ireland or the
Luxembourg Stock Exchange or any other stock exchange located outside the United
States and such stock exchange shall so require, the Company will maintain a
paying agent in London or Luxembourg or any other required city located outside
the United States, as the case may be, for such series of Indenture Securities.
(Section 5.02)
All moneys paid by the Company to a paying agent for the payment of
principal of, premium, if any, or interest, if any, on any Indenture Security
that remains unclaimed at the end of two years after such principal, premium or
interest shall have become due and payable will be repaid to the Company and the
holder of such Indenture Security entitled to receive such payment will
thereafter look only to the Company for payment thereof. (Section 12.05)
Concerning the Trustee: The Trustee shall, prior to the occurrence of any
Event of Default with respect to the Indenture Securities of any series and
after the curing or waiving of all Events of Default with respect to such series
which have occurred, perform only such duties as are specifically set forth in
such Indenture. During the existence of any Event of Default with respect to the
Indenture Securities of any series, the Trustee shall exercise such of the
rights and powers vested in it under the Indenture with respect to such series
and use the same degree of care and skill in their exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own affairs.
The Trustee may acquire and hold Indenture Securities and, subject to
certain conditions, otherwise deal with the Company as if it were not Trustee
under the Indenture. (Section 7.03)
The Company has lines of credit from the Trustee.
Modification of the Indenture: The Indenture contains provisions
permitting the Company and the Trustee, without the consent of the holders of
the Indenture Securities, to establish, among other things, the form and terms
of any series of Indenture Securities issuable thereunder by one or more
supplemental indentures, to add covenants and to provide for security for the
Indenture Securities, and, with the consent of the holders of not less than a
majority of the aggregate principal amount of the Indenture Securities of any
series at the time outstanding, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of
8
<PAGE> 13
any supplemental indenture with respect to Indenture Securities of such series
or modifying in any manner the rights of the holders of the Indenture Securities
of such series; provided, however, that no such supplemental indenture shall (i)
extend the fixed maturity, or the earlier optional date of maturity, if any, of
any Indenture Security of a particular series or reduce the principal amount
thereof or the premium thereon, if any, or reduce the rate or extend the time of
payment of interest, if any, thereon, or make the principal thereof or premium,
if any, or interest, if any, thereon payable in any currency or currency unit
other than as provided pursuant to the Indenture or in the Indenture Securities
of such series, or reduce the amount of any original issue discount security
payable upon acceleration or provable in bankruptcy or impair the right to
institute suits for the enforcement of any payment on any Indenture Security
when due, without the consent of the holder of each Indenture Security so
affected, or (ii) reduce the aforesaid percentage of Indenture Securities of any
series, the holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of all Indenture Securities of
such series outstanding thereunder. (Sections 10.01 and 10.02)
Certain Covenants: Unless otherwise provided in the Indenture Securities,
the Indenture contains a covenant by the Company not to create, assume or suffer
to exist any lien on any Restricted Property (described below) to secure any
debt of the Company, any subsidiary or any other person, or permit any
subsidiary so to do, without securing the Indenture Securities of any series
having the benefit of the covenant by such lien equally and ratably with such
debt for so long as such debt shall be so secured, subject to certain exceptions
specified in the Indenture. Exceptions include: (a) existing liens or liens on
facilities of corporations at the time they become subsidiaries; (b) liens
existing on facilities when acquired, or incurred to finance the purchase price,
construction or improvement thereof; (c) certain liens in favor of or required
by contracts with governmental entities; and (d) liens otherwise prohibited by
such covenant, securing indebtedness which, together with the aggregate amount
of outstanding indebtedness secured by liens otherwise prohibited by such
covenant and the value of certain sale and leaseback transactions, does not
exceed 15% of the Company's consolidated net tangible assets (defined in the
Indenture as total assets less current liabilities and intangible assets).
(Section 5.09)
Unless otherwise provided in the Indenture Securities, the Indenture also
contains a covenant by the Company not to, and not to permit any subsidiary to,
enter into any sale and leaseback transaction covering any Restricted Property
unless (a) the Company would be entitled under the provisions described above to
incur debt equal to the value of such sale and leaseback transaction, secured by
liens on the facilities to be leased, without equally and ratably securing the
Indenture Securities, or (b) the Company, during the six months following the
effective date of such sale and leaseback transaction, applies an amount equal
to the value of such sale and leaseback transaction to the voluntary retirement
of long-term indebtedness or to the acquisition of Restricted Property. (Section
5.10)
The Indenture defines Restricted Property as (a) any manufacturing facility
(or portion thereof) owned or leased by the Company or any subsidiary and
located within the continental United States which, in the opinion of the Board
of Directors, is of material importance to the business of the Company and its
subsidiaries taken as a whole, but no such manufacturing facility (or portion
thereof) shall be deemed of material importance if its gross book value (before
deducting accumulated depreciation) is less than 2% of the Company's
consolidated net tangible assets, or (b) any shares of capital stock or
indebtedness of any subsidiary owning any such manufacturing facility. (Section
5.09)
Because the covenants described above cover only manufacturing facilities
in the continental United States, the Company's manufacturing facilities in
Puerto Rico are excluded from the operation of the covenants.
There are no other restrictive covenants contained in the Indenture. The
Indenture does not contain any provision which will restrict the Company from
incurring, assuming or becoming liable with respect to any indebtedness or other
obligations, whether secured or unsecured, or from paying dividends or making
other distributions on its capital stock or purchasing or redeeming its capital
stock. The Indenture does not contain any financial ratios, or specified levels
of net worth or liquidity to which the Company must adhere. In addition, the
Indenture does not contain any provision which would require that the Company
repurchase or
9
<PAGE> 14
redeem or otherwise modify the terms of any of its Securities upon a change in
control or other events involving the Company which may adversely affect the
creditworthiness of the Securities.
Default and Certain Rights on Default: The Indenture provides that upon
the happening of any Event of Default with respect to any series of Indenture
Securities specified therein (unless it is inapplicable to such series of
Indenture Securities or it is specifically deleted in the supplemental indenture
or Board Resolution under which such series of Indenture Securities is issued or
has been modified in any such supplemental indenture), including (i) failure to
pay interest when due on the Indenture Securities of such series outstanding
thereunder, continued for 30 days; (ii) failure to pay principal or premium, if
any, when due (whether at maturity, declaration or otherwise) on the Indenture
Securities of such series outstanding thereunder; (iii) failure to observe or
perform any covenant of the Company in the Indenture or the Indenture Securities
of such series (other than a covenant included in the Indenture or the Indenture
Securities solely for the benefit of a series of Indenture Securities other than
such series), continued for 60 days after written notice from the Trustee or the
holders of 25% or more in aggregate principal amount of the Indenture Securities
of such series outstanding thereunder; (iv) certain events of bankruptcy,
insolvency or reorganization; and (v) any other Event of Default as may be
specified for such series, the Trustee or the holders of 25% or more in
aggregate principal amount of Indenture Securities of such series outstanding
thereunder may declare the principal amount of all Indenture Securities of such
series to be due and payable immediately, but if all defaults with respect to
Indenture Securities of such series (other than non-payment of accelerated
principal) are cured and there has been no sale of property under any judgment
or decree for the payment of moneys due which shall have been obtained or
entered, the holders of a majority in aggregate principal amount of the
Indenture Securities of such series outstanding thereunder may waive the default
and rescind the declaration and its consequences. (Section 6.01)
The Indenture provides that the holders of a majority in aggregate
principal amount of the Indenture Securities of any series outstanding
thereunder may, subject to certain exceptions, direct the time, method and place
of conducting any proceeding for any remedy available to, or exercising any
power or trust conferred upon, the Trustee with respect to Indenture Securities
of such series and may on behalf of all holders of Indenture Securities of such
series waive any past default and its consequences with respect to Indenture
Securities of such series, except a default in the payment of the principal of,
premium, if any, or interest, if any, on any of the Indenture Securities of such
series. (Section 6.06)
Holders of any Security of any series may not institute any proceeding to
enforce the Indenture unless the Trustee shall have refused or neglected to act
for 60 days after a request and offer of satisfactory indemnity by the holders
of 25% or more in aggregate principal amount of the Indenture Securities of such
series outstanding thereunder, but the right of any holder of any Security of
any series to enforce payment of the principal of, premium, if any, or interest,
if any, on his Indenture Securities when due shall not be impaired without the
consent of such holder. (Section 6.04)
The Trustee is required to give the holders of any Security of any series
notice of default with respect to such series (Events of Default summarized
above, exclusive of any grace period and irrespective of any requirement that
notice of default be given) known to it within 90 days after the happening
thereof, unless cured before the giving of such notice, but, except for defaults
in payments of the principal of, premium, if any, or interest, if any, on the
Indenture Securities of such series, the Trustee may withhold notice if and so
long as it determines in good faith that the withholding of such notice is in
the interests of the holders of the Securities of such series.
The Company is required to deliver to the Trustee each year an officers'
certificate stating whether such officers have obtained knowledge of any default
by the Company in the performance of certain covenants and, if so, specifying
such default and the nature thereof. (Section 5.06)
Consolidation, Merger and Sale of Assets: The Company, without the consent
of the Holders of any of the Outstanding Securities under the Indenture, may
consolidate or merge with or into, or transfer or lease substantially all of its
assets to, any Person that is a corporation organized and validly existing under
the laws of any domestic jurisdiction, or may permit any such Person to
consolidate with or merge into the Company or convey, transfer or lease
substantially all of its assets to the Company, provided (a) that any successor
Person
10
<PAGE> 15
assumes the Company's obligations on the Securities under the Indenture, (b)
that after giving effect to the transaction no Event of Default, and no event
which, after notice or lapse of time, would become an Event of Default, shall
have occurred and be continuing, and (c) that certain other conditions are met.
(Section 11.02)
Defeasance of the Indenture and the Indenture Securities: If the
Prospectus Supplement relating to the Offered Securities so provides, the
Company at its option (a) will be Discharged (as such term is defined in the
Indenture) from any and all obligations in respect of the Offered Securities
(except for certain obligations to register the transfer and exchange of
Securities, replace stolen, lost or mutilated Securities and coupons, maintain
paying agencies and hold moneys for payment in trust) or (b) need not comply
with certain restrictive covenants of the Indenture, in each case after the
Company deposits with the Trustee thereunder, in trust, money, and, in the case
of Securities and coupons denominated in U.S. dollars, U.S. Government
Obligations (as defined in the Indenture) or, in the case of Securities and
coupons denominated in a foreign currency, Foreign Government Securities (as
defined in the Indenture), which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money or a
combination of money, and U.S. Government Obligations or Foreign Government
Securities, as the case may be, in an amount sufficient to pay in the currency,
currencies or currency unit or units in which the Offered Securities are payable
all the principal of, and interest on, the Offered Securities on the dates such
payments are due in accordance with the terms of the Offered Securities. Among
the conditions to the Company's exercising any such option, the Company is
required to deliver to the Trustee an opinion of independent counsel of
recognized standing to the effect that the deposit and related defeasance would
not cause the Holders of the Offered Securities to recognize income, gain or
loss for United States Federal income tax purposes and that the Holders will be
subject to United States Federal income tax in the same amounts, in the same
manner and at the same time as would have been the case if such deposit and
related defeasance had not occurred. (Sections 12.01 and 12.02)
PLAN OF DISTRIBUTION
The Company may offer the Securities (i) to or through one or more
underwriters, (ii) to or through dealers, (iii) through agents, or (iv) directly
or through its subsidiaries to purchasers. Any such underwriter (or any
representative thereof), dealer or agent may include Morgan Stanley & Co.
Incorporated. The Prospectus Supplement will describe the method of distribution
of the Offered Securities.
The distribution of Offered Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such market
prices or at negotiated prices.
If underwriters are used in the offering of Offered Securities, the names
of the managing underwriter or underwriters and any other underwriters, and the
terms of the transaction, including compensation of the underwriters and
dealers, if any, will be set forth in the Prospectus Supplement relating to such
offering. Only underwriters named in a Prospectus Supplement will be deemed to
be underwriters in connection with the Offered Securities described therein.
Firms not so named will have no direct or indirect participation in the
underwriting of such Offered Securities, although such a firm may participate in
the distribution of such Offered Securities under circumstances entitling it to
a dealer's commission. It is anticipated that any underwriting agreement
pertaining to any Offered Securities will (1) entitle the underwriters to
indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities Act"),
or to contribution for payments which the underwriters may be required to make
in respect thereof, (2) provide that the obligations of the underwriters will be
subject to certain conditions precedent, and (3) provide that the underwriters
generally will be obligated to purchase all Offered Securities if any are
purchased.
The Company also may sell Offered Securities to a dealer as principal. In
such event, the dealer may then resell such Offered Securities to the public at
varying prices to be determined by such dealer at the time of resale. The name
of the dealer and the terms of the transactions will be set forth in the
Prospectus Supplement relating thereto.
11
<PAGE> 16
Offered Securities also may be offered through agents designated by the
Company from time to time. Any such agent will be named, and the terms of any
such agency will be set forth, in the Prospectus Supplement relating thereto.
Unless otherwise indicated in such Prospectus Supplement, any such agent will
act on a best efforts basis for the period of its appointment.
As one of the means of direct issuance of the Indenture Securities, the
Company may utilize the services of any available electronic auction system to
conduct an electronic "dutch auction" of the Indenture Securities among
potential purchasers who are eligible to participate in the auction of such
Indenture Securities, if so described in the Prospectus Supplement.
Dealers and agents named in a Prospectus Supplement may be deemed to be
underwriters (within the meaning of the Securities Act) of the Offered
Securities described therein and, under agreements which may be entered into
with the Company, may be entitled to indemnification by the Company against
certain civil liabilities, including liabilities under the Securities Act, or to
contribution for payments which they may be required to make in respect thereof.
Underwriters, dealers and agents may engage in transactions with, or perform
services for, the Company in the ordinary course of business.
In connection with the original issuance of Offered Securities issued as
Bearer Securities, in order to meet the requirements set forth in U.S. Treasury
Regulation Section 1.163-5(c)(2)(i)(D), each underwriter, dealer and agent will
agree to certain restrictions in connection with the original issuance of such
Offered Securities. Such restrictions will be described in the Prospectus
Supplement relating thereto.
Offers to purchase Securities may be solicited directly by the Company or
through its subsidiaries and sales thereof may be made by the Company directly
to institutional investors or others. The terms of any such sales will be
described in the Prospectus Supplement relating thereto.
LEGAL MATTERS
The legality of the Securities offered hereby will be passed upon by Dewey
Ballantine, 1301 Avenue of the Americas, New York, New York, on behalf of the
Company, and Davis Polk & Wardwell, on behalf of the underwriters or agents, if
any. Dewey Ballantine and Davis Polk & Wardwell, in rendering their opinions,
will rely, as to matters governed by the laws of the State of Indiana, upon the
opinion of Baker & Daniels, Indianapolis, Indiana.
EXPERTS
The consolidated financial statements of the Company for the year ended
December 31, 1991, incorporated by reference in the Company's Annual Report
(Form 10-K) have been audited by Ernst & Young, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
12
