<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 33-73830
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 30, 1997)
(EASTMAN LOGO)
$300,000,000
EASTMAN CHEMICAL COMPANY
7.60% DEBENTURES DUE FEBRUARY 1, 2027
------------------------
Interest on the Debentures is payable on February 1 and August 1 of each
year, commencing August 1, 1997. The Debentures are unsecured obligations of the
Company and will rank pari passu with all senior indebtedness of the Company.
The indenture pursuant to which the Debentures will be issued contains no
restrictions on the Company's ability to incur other senior indebtedness. The
Debentures are not redeemable prior to maturity and will not be entitled to any
sinking fund. See "Description of Debt Securities" in the Prospectus
accompanying this Prospectus Supplement.
The Debentures will be issued in book-entry form through the facilities of
The Depository Trust Company, New York, New York. Interests in the Debentures
will be shown on, and transfers thereof will be effected only through, records
maintained by The Depository Trust Company and its direct and indirect
participants. Except as described herein, Debentures in definitive form will not
be issued. See "Description of Debentures -- Book-Entry System".
Settlement for the Debentures will be made in immediately available funds.
The Debentures will trade in The Depository Trust Company's Same-Day Funds
Settlement System, and secondary market trading activity in the Debentures will
therefore settle in immediately available funds. All payments of principal of
and interest on the Debentures will be made by the Company in immediately
available funds or the equivalent. See "Description of Debentures -- Same-Day
Settlement and Payment".
------------------------
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 TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture............................... 98.722% .875% 97.847%
- -----------------------------------------------------------------------------------------------------------------------
Total....................................... $296,166,000 $2,625,000 $293,541,000
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from February 3, 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(3) Before deducting estimated expenses of $75,000 payable by the Company.
------------------------
The Debentures are offered by the Underwriters, as specified herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that delivery of the Debentures
will be made in New York, New York, against payment therefor in immediately
available funds, on or about February 3, 1997.
------------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
------------------------
The date of this Prospectus Supplement is January 30, 1997.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE DEBENTURES AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
---------------------
THE COMPANY
GENERAL
Eastman Chemical Company (the "Company") is a leading international
chemical company with a broad portfolio of plastic, chemical and fiber products.
The Company manufactures and sells polyester plastics such as polyethylene
terephthalate ("PET"), a plastic widely used in soft drink containers; coatings
and paint raw materials; industrial and fine chemicals; and acetate tow. The
Company believes it has a competitive advantage in several product areas due to
its high level of manufacturing integration, the use of state of the art process
technologies and its operating efficiencies due to its large-scale plants.
The Company began business in 1920 and today is one of the largest chemical
producers in the United States and a leader in the application of several
manufacturing technologies. The Company pioneered the application of coal
gasification technology for the production of chemicals (also referred to as
"chemicals from coal technology") and currently operates one of the largest coal
gasification facilities in the United States, thereby reducing the Company's
dependence on petro chemicals in the manufacture of acetate tow, certain
plastics and other chemicals. The Company is also a leader in the manufacture of
oxo chemicals that are used in the production of numerous coatings and resin
intermediates, the manufacture of fine chemicals used in photographic and other
custom chemicals, and the application of advanced environmental waste management
practices for chemical manufacturing operations. The Company is a world leader
in developing end-use applications for and recycling of a wide variety of
polyester plastics, including PET and other flexible packaging materials.
The Company's principal executive offices are located at 100 North Eastman
Road, Kingsport, Tennessee 37660, telephone (423) 229-2000.
RECENT DEVELOPMENTS
Industry Segments
On December 9, 1996, the Company announced that, effective with the
year-end 1996 financial information, it would present three business segments in
its financial reporting, a revision from its previous two-segment approach. The
Company believes that the new segmentation will provide more useful information
for decision-making and for understanding the Company's financial results. The
three segments are Specialty and Performance, Core Plastics and Chemical
Intermediates.
The Specialty and Performance segment contains products that are sold to
customers that base their buying decisions principally on product performance
attributes. The major products in this segment include specialty plastics,
coatings and paint raw materials, fine chemicals, performance chemicals, and
fibers. Targeted markets for this segment are diverse and include medical,
electronics, recreation, consumer durables, photographic chemicals, additives
for fibers and plastics, adhesives, sealants, food and beverages, nutrition,
cosmetics, textiles, construction, coatings, inks, paints, filters, and
specialty plastic applications. Competitive factors for this segment include
price, reliability of supply, customer service, and technical competence.
Coatings and paint raw materials are sold primarily to North American industrial
concerns. The principal markets for the Company's fine chemicals are largely
U.S. photographic, agricultural, and pharmaceutical companies. Acetate tow is
sold worldwide to the tobacco industry for use in cigarette filters.
The Core Plastics segment includes the Company's two major plastics
products, EASTAPAK PET polyester packaging plastic and TENITE polyethylene, as
well as cellulose acetate and polyesters. These container and packaging products
share similar physical characteristics and compete based on price and integrated
manufacturing capabilities. Polyester plastics are sold to soft drink and other
packaging manufac-
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<PAGE> 3
turers principally in North America, Europe, and Latin America. Polyethylene is
sold generally to North American industries.
The Chemical Intermediates segment contains industrial intermediate
chemicals that are produced based on the Company's oxo chemistry technology and
chemicals-from-coal technology and are sold to customers operating in mature
markets in which multiple sources of supply exist. They are sold generally in
large volume mostly to North American industries. These products are targeted at
markets for industrial additives, agricultural chemicals, esters,
pharmaceuticals, and vinyl compounding. Competitive factors include price,
reliability of supply, and integrated manufacturing capability. Favorable cost
position, proprietary products, and improving standards of living worldwide are
key value drivers for this segment.
1996 Financial Results
On January 21, 1997, the Company announced its preliminary financial
results for 1996. The following table sets forth summary consolidated financial
data for the Company for the years ended December 31, 1994, 1995 and 1996 and
gives effect to the revised business segment reporting described above under the
caption "-- Industry Segments":
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,(1)
--------------------------
1996 1995 1994
------ ------ ------
(IN MILLIONS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C>
SUMMARY OF OPERATING DATA:
Sales
Specialty and Performance.............................. $2,657 $2,647 $2,364
Core Plastics.......................................... 1,409 1,685 1,390
Chemical Intermediates................................. 716 708 575
------ ------ ------
Total sales.................................... 4,782 5,040 4,329
Cost of sales............................................ 3,603 3,536 3,216
------ ------ ------
Gross profit............................................. 1,179 1,504 1,113
Selling and general administrative expenses.............. 332 364 310
Research and development costs........................... 184 176 167
Operating earnings (loss)
Specialty and Performance.............................. 519 433 350
Core Plastics.......................................... (1) 347 199
Chemical Intermediates................................. 145 184 87
------ ------ ------
Total operating earnings....................... 663 964 636
Interest expense, net.................................... 67 79 87
Other income, net........................................ 11 14 1
------ ------ ------
Earnings before income taxes............................. 607 899 550
Provision for income taxes............................... 227 340 214
------ ------ ------
Net earnings............................................. $ 380 $ 559 $ 336
====== ====== ======
Net earnings per share(2)................................ $ 4.80 $ 6.78 $ 4.05
====== ====== ======
STATEMENT OF FINANCIAL POSITION DATA (AT END OF PERIOD):
Total assets........................................... $5,266 $4,872 $4,375
Long-term borrowings................................... 1,523 1,217 1,195
Total liabilities...................................... 3,627 3,344 3,080
Total shareowners' equity.............................. 1,639 1,528 1,295
</TABLE>
- ---------------
(1) The foregoing summary financial data is qualified in its entirety by and
should be read in conjunction with the Company's Consolidated Financial
Statements and notes thereto for the years ended December 31, 1994 and
1995, which are included in the Company's Form 10-K for the year ended
December 31, 1995, incorporated herein by reference, and for the quarters
ended March 31, June 30 and September 30, 1996, which are included in the
Company's Forms 10-Q, also incorporated herein by reference.
(2) Weighted average shares used for earnings per share calculations were 83.0
million, 82.4 million and 79.2 million for the years ended 1994, 1995 and
1996, respectively.
S-3
<PAGE> 4
Summary Discussion
The Company's revenues declined 5 percent in 1996 to $4.782 billion. Net
earnings declined 32 percent to $380 million. The principal factors contributing
to the 1996 earnings decline were lower selling prices for the Company's core
plastics, PET and polyethylene, preproduction and start-up costs at the
Company's new PET plants, and higher labor rates. These factors were somewhat
offset by higher overall sales volumes, lower variable-incentive compensation
and overall lower costs for paraxylene, certain other raw materials and energy.
Despite flat sales in 1996 as compared to 1995, operating earnings in the
Specialty and Performance Segment increased 20 percent, primarily as a result of
overall lower raw material costs, the Company's divestiture and discontinuance
of certain businesses and product lines, favorable product mix changes and lower
variable-incentive compensation. Sales of coatings, inks and resins products
increased due to higher volumes, partially offset by decreased prices. Fibers
sales increased due to increased selling prices and slight volume gains. Fine
chemicals product sales declined due primarily to lower volumes. Specialty
plastics products sales were level with 1995, with volume increases offset by
price declines. Sales of performance chemicals products decreased due to lower
volumes, partially offset by higher prices, and also reflecting the divestiture
and discontinuance of certain businesses and product lines in late 1995 and
early 1996.
Revenues in the Core Plastics segment declined 16 percent and operating
earnings declined $348 million, due mainly to significantly lower EASTAPAK PET
prices but also due to moderately lower polyethylene prices and higher propane
feedstock costs.
Increased sales in the Chemical Intermediates segment reflected higher
volumes, partially offset by lower selling prices for industrial intermediates.
Decreased operating earnings were attributed primarily to lower selling prices
for certain industrial intermediate products and higher propane costs.
The Company's capital expenditures for 1996 totaled $789 million. The
Company's commitment for capital expenditures at December 31, 1996 was
approximately $740 million, consisting primarily of planned expenditures for
previously announced expansions of production capacity. The Company expects that
approximately 80 percent of this amount will be disbursed in 1997, and that
total capital expenditures in 1997 will be approximately $850 million.
Existing sources of capital, together with cash flows from operations, are
expected to be sufficient to meet foreseeable cash flow requirements.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.......................... 6.1x 9.7x 6.3x 11.2x 13.4x
</TABLE>
For purposes of computing this ratio, earnings represents income from
continuing operations before income taxes plus interest expense, the interest
component of rental expense and amortization of capitalized interest. Fixed
charges consist of interest expense, one-third of rent expense, which
approximates the interest portion of rent expense, and capitalized interest.
The historical information for 1992-1993 as presented above, was determined
during periods when the Company was a wholly owned chemical business of Eastman
Kodak Company ("Kodak"). If the Company was an independent publicly held entity
during those years, the pro forma ratio of earnings to fixed charges would
approximate 4.1x and 3.7x for 1992 and 1993, respectively, reflecting the
assumption of $1.8 billion of new borrowings at a 6% annual interest rate, and
adjustments for pension, postretirement and certain other employee benefit
costs. These costs were not allocated to the Company by Kodak during 1992-1993
and therefore are not included in the historical information presented above.
S-4
<PAGE> 5
USE OF PROCEEDS
The net proceeds received by the Company from the sale of the Debentures,
estimated at $293.5 million, will be used to repay outstanding commercial paper
borrowings of the Company. At December 31, 1996, $295 million of commercial
paper was outstanding at an effective interest rate of 5.59% and maturity dates
of 90 days or less. The commercial paper is supported by a bank revolving credit
facility. Indebtedness under the credit facility is subject to interest at
varying spreads above quoted market rates, principally LIBOR.
S-5
<PAGE> 6
DESCRIPTION OF DEBENTURES
The following description of the particular terms of the Debentures offered
hereby (referred to in the accompanying Prospectus as the "Offered Debt
Securities") supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of Debt Securities set forth in
the Prospectus, to which description reference is hereby made. The following
statements relating to the Debentures and the Indenture are summaries of
provisions contained therein and do not purport to be complete. Such statements
are qualified by reference to the provisions of the Indenture, including the
definitions therein of certain terms. A copy of the Indenture has been filed as
an exhibit to the registration statement of which the Prospectus accompanying
this Prospectus Supplement is a part. Capitalized terms not otherwise defined
herein shall have the meanings given to them in the Prospectus.
GENERAL
The 7.60% Debentures due February 1, 2027 (the "Debentures") will be
limited to $300,000,000 aggregate principal amount and will mature on February
1, 2027. The Debentures will be issued only in the form of one or more Global
Securities (as defined below) in denominations of $1,000 and integral multiples
thereof. See "Book-Entry System" below. The Debentures will be unsecured and
unsubordinated obligations of the Company and will rank pari passu with other
unsecured and unsubordinated indebtedness of the Company. The Debentures are not
redeemable prior to maturity and will not be entitled to any sinking fund.
INTEREST
The Debentures will bear interest at the rate set forth on the cover page
of this Prospectus Supplement from February 3, 1997, or the most recent interest
payment date to which interest has been paid or provided for, payable
semi-annually on February 1 and August 1 of each year, beginning August 1, 1997,
to the person in whose name a Debenture (or any predecessor Debenture) is
registered at the close of business on the January 15 or July 15, as the case
may be, next preceding such interest payment date.
DEFEASANCE
The provisions of Article 13 of the Indenture relating to defeasance and
covenant defeasance, which are described in the accompanying Prospectus, will
apply to the Debentures.
BOOK-ENTRY SYSTEM
The Debentures will be represented by one or more global securities (each,
a "Global Security") and registered in the name of The Depository Trust Company,
New York, New York ("DTC"), or its nominee. Upon the issuance of a Global
Security, DTC or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debentures represented
by such Global Security to the accounts designated by the Underwriters.
Ownership of beneficial interests in such Global Securities will be limited to
institutions that have accounts with DTC or its nominee ("participants") and to
persons that may hold interests through participants. Ownership of beneficial
interests in such Global Securities will be shown only on, and the transfer of
those ownership interests will be effected only through, records maintained by
such participants. The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and laws may impair the ability to transfer beneficial
interests in a Global Security.
Notwithstanding any provision of the Indenture or the Debentures, no Global
Security may be exchanged in whole or in part for Debentures registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than DTC or any nominee of DTC unless (i) DTC has notified
the Company that it is unwilling or unable to continue as depositary for such
Global Security or has ceased to be qualified to act as such as required by the
Indenture or (ii) there shall have occurred and be continuing an Event of
Default with respect to the Debentures represented by such Global Security. All
Debentures issued in exchange for a Global Security or any portion thereof will
be registered in such names as DTC may direct.
S-6
<PAGE> 7
As long as DTC or its nominee is a registered holder and owner of such
Global Security, DTC or such nominee, as the case may be, will be considered the
sole owner and holder of the Debentures represented by such Global Security for
all purposes of such Debentures and for all purposes under the Indenture. Except
in the limited circumstances referred to above, owners of beneficial interests
in any such Global Securities will not be entitled to have the Debentures
represented by such Global Securities registered in their names, will not
receive or be entitled to receive physical delivery of certificated Debentures
in definitive form and will not be considered to be the owners or holders of any
Debentures under the Indenture or the Debentures. Payment of principal of, and
interest on, Debentures represented by a Global Security registered in the name
of or held by DTC or its nominee will be made to DTC or its nominee, as the case
may be, as the registered owner or holder of such Global Security.
Payments, transfers, exchanges and other matters relating to beneficial
interests in a Global Security may be subject to various policies and procedures
adopted by DTC from time to time. Neither the Company nor the Trustee 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 any Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or for any other aspect of the
relationship between DTC and its participants or the relationship between such
participants and the owners of beneficial interests in a Global Security owning
through such participants.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Debentures will be made by the Underwriters in
immediately available funds. All payments of principal and interest will be made
by the Company in immediately available funds or the equivalent, so long as DTC
continues to make its Same-Day Funds Settlement System available to the Company.
The Debentures also will trade in DTC's Same-Day Funds Settlement System, and
secondary market trading activity in the Debentures will therefore be required
by DTC to settle in immediately available funds.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the
principal amount of the Debentures set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF DEBENTURES
----------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $ 75,000,000
Credit Suisse First Boston.................................. 75,000,000
Goldman, Sachs & Co. ....................................... 75,000,000
Morgan Stanley & Co. Incorporated........................... 75,000,000
------------
Total.......................................... $300,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Debentures, if any are
taken.
The Underwriters propose initially to offer the Debentures to the public at
the initial public offering price set forth on the cover page of this Prospectus
Supplement and to certain securities dealers at such price less a concession not
in excess of .5% of the principal amount of the Debentures. The Underwriters may
allow, and such dealers may reallow, a discount not in excess of .25% of the
principal amount of the Debentures to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
The Debentures are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that the Underwriters
intend to make a market in the Debentures but are not
S-7
<PAGE> 8
obligated to do so and may discontinue market making at any time without notice.
No assurance can be given as to the liquidity of the trading market for the
Debentures.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
S-8
<PAGE> 9
[EASTMAN LOGO]
$1,500,000,000
EASTMAN CHEMICAL COMPANY
DEBT SECURITIES
------------------------
The Company may from time to time offer Debt Securities consisting of
debentures, notes and/or other unsecured evidences of indebtedness in one or
more series at an aggregate initial offering price (or net proceeds, in the case
of Debt Securities issued at an original issue discount) not to exceed
$1,500,000,000, or its equivalent in such other currency or in composite
currencies as may be designated by the Company at the time of offering. The Debt
Securities may be offered as separate series in amounts, at prices and on terms
to be determined at the time of sale. The accompanying Prospectus Supplement
sets forth with regard to the Debt Securities in respect of which this
Prospectus is being delivered the title, aggregate principal amount,
denominations (which may be in United States dollars, in any other currency or
in composite currencies), maturity, rate, if any (which may be fixed or
variable), and time of payment of any interest, any terms for redemption at the
option of the Company or the holder, any terms for sinking fund payments, any
listing on a securities exchange and the initial public offering price and any
other terms in connection with the offering and sale of such Debt Securities.
The Company may sell Debt Securities to or through underwriters, and also
may sell Debt Securities directly to other purchasers or through agents. The
accompanying Prospectus Supplement sets forth the names of any underwriters or
agents involved in the sale of the Debt Securities in respect of which this
Prospectus is being delivered, the principal amounts, if any, to be purchased by
underwriters and the compensation, if any, of such underwriters or agents.
------------------------
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 date of this Prospectus is January 30, 1997.
<PAGE> 10
AVAILABLE INFORMATION
Eastman Chemical Company (the "Company") has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Debt Securities offered hereby. This Prospectus, which forms
a part of the Registration Statement, does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information about the Company and the Debt
Securities, reference is hereby made to the Registration Statement and to such
exhibits and schedules. Statements contained herein concerning the provisions of
any document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission are not necessarily complete, and in each instance
reference is made to the copy of such document so filed. Each such statement is
qualified in its entirety by such reference.
In addition, 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 Commission. Reports, proxy and information statements and other information
filed by the Company with the Commission pursuant to the informational
requirements of the Exchange Act may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Northeast Regional Office, Seven World Trade Center, Suite 1300,
New York, New York 10048, and Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material or
any part thereof may also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Certain of such reports, proxy statements and other information are also
available over the Internet at http://www.sec.gov. The Company's common stock is
listed and traded on the New York Stock Exchange, Inc. (the "NYSE"). Reports,
proxy and information statements and other information concerning the Company
can also be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has filed the following documents with the Commission and
hereby incorporates such documents by reference in this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (the "Form 10-K"); and
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, June 30 and September 30, 1996 (the "Forms 10-Q").
Each document or report subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and
prior to the termination of the offering of the Debt Securities shall be deemed
to be incorporated by reference into this Prospectus and to be a part of this
Prospectus from the date of filing of such document. Any statement contained
herein, or in a document all or a portion of which is incorporated or deemed to
be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference, other than
certain exhibits to such documents. Written requests should be directed to:
Eastman Chemical Company, 100 North Eastman Road, Kingsport, Tennessee 37660,
Attention: Secretary (telephone: (423) 229-2000).
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<PAGE> 11
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement, the
net proceeds from the sale of the Debt Securities will be used to refinance
existing indebtedness of the Company and for general corporate purposes,
including investments in, or extensions of credit to, the Company's
subsidiaries. Except as described in the accompanying Prospectus Supplement,
specific allocations of the proceeds to such purposes have not been made,
although management will have determined at the date of the accompanying
Prospectus Supplement that funds should be borrowed at that time.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an indenture, dated as of
January 10, 1994 (the "Indenture"), between the Company and The Bank of New
York, as Trustee (the "Trustee"), a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indenture do not purport to be complete
and are subject, and are qualified in their entirety by reference, to all the
provisions of the Indenture, including the definitions therein of certain terms.
Wherever particular sections or defined terms of the Indenture are referred to
herein, such sections or defined terms are incorporated by reference herein.
The following sets forth certain general terms and provisions of the Debt
Securities offered hereby. The particular terms of the Debt Securities offered
by any Prospectus Supplement (the "Offered Debt Securities") will be described
in the Prospectus Supplement relating to such Offered Debt Securities (the
"Applicable Prospectus Supplement").
GENERAL
The Indenture provides that Securities in separate series may be issued
thereunder from time to time without limitation as to aggregate principal
amount. The Company may specify a maximum aggregate principal amount for the
Securities of any series. (Section 301). Such Securities may have such terms and
provisions which are not inconsistent with the Indenture, including as to
maturity, principal and interest, as the Company may determine. All Securities
issued under the Indenture will be unsecured senior obligations of the Company
and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company.
The Applicable Prospectus Supplement will describe the following terms of
the Offered Debt Securities: (1) the title of the Offered Debt Securities; (2)
any limit on the aggregate principal amount of the Offered Debt Securities; (3)
the Person to whom any interest on the Offered Debt Securities will be payable,
if other than the person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest; (4) the date or dates on which the principal of and premium,
if any, on the Offered Debt Securities is payable or the method of determination
thereof; (5) the rate or rates at which the Offered Debt Securities will bear
interest, if any, the date or dates from which any such interest will accrue or
the method by which such date or dates shall be determined, the Interest Payment
Dates on which any such interest will be payable and the Regular Record Date for
interest payable on any Interest Payment Date; (6) the place or places where the
principal of, premium, if any, and interest on the Offered Debt Securities will
be payable; (7) the period or periods within which, the price or prices at
which, the currency or currencies (including currency units) in which and the
other terms and conditions upon which the Offered Debt Securities may be
redeemed, in whole or in part, at the option of the Company; (8) the obligation,
if any, of the Company to redeem or purchase the Offered Debt Securities
pursuant to any sinking fund or analogous provisions or at the option of a
Holder thereof and the period or periods within which, the price or prices at
which and the other terms and conditions upon which the Offered Debt Securities
will be redeemed or purchased, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple thereof, the
denominations in which the Offered Debt Securities will be issuable; (10) the
currency, currencies or currency units in which payment of the principal of and
any premium and interest on any Offered Debt Securities will be payable if other
than the currency of the United States of America; (11) if the amount of
payments of principal of or any premium or interest on any Offered Debt
Securities may be determined with reference to an index, formula or other
method, the index, formula or
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other method by which such amounts will be determined; (12) if the principal of
or any premium or interest on any Offered Debt Securities is to be payable, at
the election of the Company or a Holder thereof, in one or more currencies or
currency units other than that or those in which the Debt Securities are stated
to be payable, the currency, currencies or currency units in which payment of
the principal of and any premium and interest on the Offered Debt Securities as
to which such election is made will be payable, and the periods within which and
the other terms and conditions upon which such election is to be made; (13) if
other than the principal amount thereof, the portion of the principal amount of
the Offered Debt Securities that will be payable upon declaration of
acceleration of the Maturity thereof or the method by which such portion may be
determined; (14) the applicability of the provisions described under "Defeasance
and Covenant Defeasance"; (15) if the Offered Debt Securities will be issuable
only in the form of a Global Security as described under "Book-Entry
Securities", the depositary or its nominee with respect to the Offered Debt
Securities, if other than The Depository Trust Company, and the circumstances
under which the Global Security may be registered for transfer or exchange or
authenticated and delivered in the name of a Person other than the depositary or
its nominee; and (16) any other terms of the Offered Debt Securities. (Section
301).
The Debt Securities may be offered and sold at a substantial discount 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 Applicable Prospectus Supplement.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issued in fully registered form,
without coupons, and, unless otherwise specified in the Applicable Prospectus
Supplement, in denominations of $1,000 and any integral multiple thereof.
(Section 302). At the option of the Holder, subject to the terms of the
Indenture, Debt Securities of any series will be exchangeable for other Debt
Securities of such series of any authorized denomination and of a like tenor and
aggregate principal amount. Subject to the terms of the Indenture and the limits
applicable to Global Securities, Debt Securities may be presented for exchange
as provided above or for registration of transfer (duly endorsed or with the
form of transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Section 305). Such transfer or exchange will be effected upon the
Security Registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the person making the request. The
Company has appointed the Trustee as Security Registrar. The Company may at any
time designate additional transfer agents or rescind the designation of any
transfer agent or approve a change in the office through which any transfer
agent acts, except that the Company will be required to maintain a transfer
agent in each place of payment for the Debt Securities of each series. (Section
1002).
If the Debt Securities of any series are to be redeemed in part, the
Company will not be required to (i) issue, register the transfer of or exchange
any Debt Security of such series during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption of any such
Debt Security that may be selected for redemption and ending at the close of
business on the day of such mailing or (ii) register the transfer of or exchange
the Debt Security selected for redemption, in whole or in part, except the
unredeemed portion of the Debt Security being redeemed in part. (Section 305).
NOTICES
Notices to Holders of Securities will be given by mail to the addresses of
such Holders as they may appear in the Security Register. (Sections 101 and
106).
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Security is registered as the absolute owner
thereof (whether or not such Security may be overdue) for the purpose of making
payment and for all other purposes. (Section 308).
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GOVERNING LAW
The Indenture and the Securities will be governed by, and construed in
accordance with, the law of the State of New York. (Section 112).
BOOK-ENTRY SYSTEM
Some or all of the Debt Securities of any series may be represented by one
or more global securities (each, a "Global Security") registered in the name of
The Depository Trust Company, New York, New York ("DTC") or its nominee, as
depositary. Upon the issuance of a Global Security, DTC or its nominee will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Global Security to
the accounts of the participants. The accounts to be credited shall be
designated by the Underwriters. Ownership of beneficial interests in such Global
Securities will be limited to institutions that have accounts with DTC or its
nominee ("participants") and to persons that may hold interests through
participants. Ownership of beneficial interests by participants in such Global
Securities will be shown on, and the transfer of those ownership interests will
be effected only through, records maintained by such participants. The laws of
some jurisdictions may require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and laws
may impair the ability to transfer beneficial interests in a Global Security.
Notwithstanding any provision of the Indentures or of any series of Debt
Securities, no Global Security may be exchanged in whole or in part for Debt
Securities registered, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than DTC or any nominee of
DTC unless (i) DTC has notified the Company that it is unwilling or unable to
continue as depositary for such Global Security or has ceased to be qualified to
act as such as required by the Indenture or (ii) there shall have occurred and
be continuing an Event of Default with respect to the Debt Securities
represented by such Global Security. All Securities issued in exchange for a
Global Security or any portion thereof will be registered in such names as DTC
may direct.
As long as DTC or its nominee is a registered holder and owner of such
Global Security, DTC or such nominee, as the case may be, will be considered the
sole owner and holder of the related Debt Securities for all purposes of such
Debt Securities and for all purposes under the Indenture. Except in the limited
circumstances referred to above, owners of beneficial interests in any such
Global Securities will not be entitled to have the Debt Securities represented
by such Global Securities registered in their names, will not receive or be
entitled to receive physical delivery of certificated Debt Securities in
definitive form and will not be considered to be the owners or holders of any
Debt Securities under the Indenture or the Debt Securities. Payment of principal
of, interest, if any, and premium, if any, on Debt Securities represented by a
Global Security registered in the name of or held by DTC or its nominee will be
made to DTC or its nominee, as the case may be, as the registered owner or
holder of such Global Security.
Payments, transfers, exchanges and other matters relating to beneficial
interests in a Global Security may be subject to various policies and procedures
adopted by DTC from time to time. Neither the Company nor the Trustee 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 any Debt Securities or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests or for any other aspect of the
relationship between DTC and its participants or the relationship between such
participants and the owners of beneficial interests in a Global Security owning
through such participants.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the Applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest. (Section 307).
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<PAGE> 14
Unless otherwise indicated in the Applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a particular
series will be payable at the office of such Paying Agent or Paying Agents as
the Company may designate for such purpose from time to time, except that at the
option of the Company payment of any interest may be made by check mailed to the
address of the Person entitled thereto as such address appears in the Security
Register. Unless otherwise indicated in the Applicable Prospectus Supplement,
the corporate trust office of the Trustee in The City of New York will be
designated as the Company's sole Paying Agent for payments with respect to
Securities of each series. Any other Paying Agents initially designated by the
Company for the Securities of a particular series will be named in the
applicable Prospectus Supplement. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except that
the Company will be required to maintain a Paying Agent in each Place of Payment
for the Securities of a particular series. (Section 1002).
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Security which remain unclaimed
at the end of two years after such principal, premium or interest has become due
and payable will be repaid to the Company, and the Holder of such Security
thereafter may look only to the Company for payment thereof. (Section 1003).
COVENANTS
The Indenture contains, among others, the following covenants:
Maintenance of Properties
The Company will cause all properties material to the conduct of its
business or the business of any Subsidiary (as defined below) to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times. However,
this covenant will not prohibit the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the holders of the
Securities.
Restrictions on Secured Debt
If the Company or any Restricted Subsidiary (as defined below) shall incur
or guarantee any Debt (as defined) secured by a Mortgage (as defined) on any
Principal Property (as defined below) or on any shares of stock of or Debt of
any Restricted Subsidiary, the Company will secure the Debt Securities equally
and ratably with (or prior to) such secured Debt, unless after giving effect
thereto, the aggregate amount of all such Debt so secured, together with all
Attributable Debt (as defined below) in respect of sale and leaseback
transactions involving Principal Properties (see "Restrictions on Sales and
Leasebacks" below), would not exceed 10% of the Consolidated Net Tangible Assets
of the Company and its consolidated Subsidiaries. This restriction will not
apply to, and there will be excluded from secured Debt in any computation under
such restriction, Debt secured by (a) Mortgages on property, shares of stock or
Debt existing on the date of the Indenture, (b) Mortgages securing only
Securities issued under the Indenture, (c) Mortgages on property of, or on any
shares of stock of or Debt of, any Person, which Mortgages are existing at the
time (i) such Person became a Restricted Subsidiary, (ii) such Person is merged
into or consolidated with the Company or any Subsidiary or (iii) another
Subsidiary merges into or consolidates with such Person (in a transaction in
which such Person becomes a Restricted Subsidiary), which Mortgage was not
incurred in anticipation of such transaction and was outstanding prior to such
transaction, (d) Mortgages in favor of the Company or a Subsidiary, (e)
Mortgages in favor of governmental bodies to secure progress or advance
payments, (f) Mortgages of property, shares of stock or Debt existing at the
time of acquisition thereof (including acquisition through merger or
consolidation), (g) certain purchase money Mortgages and Mortgages to secure the
construction cost of property, and (h) any extension, renewal or replacement of
any Mortgage referred to in the foregoing clauses (a) through (g), inclusive.
(Section 1008).
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At December 31, 1996, the Company had less than $10 million of debt that
would be covered by this covenant. Based on the Company's balance sheet as of
December 31, 1996, this covenant would permit additional secured indebtedness of
in excess of $400 million dollars.
Restrictions on Sales and Leasebacks
Neither the Company nor any Restricted Subsidiary may enter into any sale
and leaseback transaction involving any Principal Property, completion of
construction and commencement of full operation of which has occurred more than
180 days prior thereto, unless (a) the Company or such Restricted Subsidiary
could create Debt secured by a Mortgage on such property as provided for above
under the caption "Restrictions on Secured Debt" in an amount equal to the
Attributable Debt with respect to the sale and leaseback transaction without
equally and ratably securing the Securities of each series issued under the
Indenture, or (b) the net proceeds of the sale or transfer of the Principal
Property leased pursuant to such arrangement exceeds the fair market value of
such Principal Property and the Company, within 180 days, applies to the
retirement of its Funded Debt (as defined) an amount not less than the greater
of (i) the net proceeds of the sale of the Principal Property leased pursuant to
such arrangement or (ii) the fair market value of the Principal Property so
leased (subject to credits for certain voluntary retirements of Funded Debt).
This restriction will not apply to any sale and leaseback transaction (a)
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries or (b) involving the taking back of a lease for a period, including
renewals, of less than three years. (Section 1009).
Restrictions on Subsidiary Debt
The Company may not permit any Restricted Subsidiary to incur or assume any
Debt except (a) Debt that is or could be secured by a Mortgage permitted
pursuant to the restrictions described above under the caption "Restrictions on
Secured Debt"; (b) Debt that is outstanding on the date of the Indenture; (c)
Debt that is issued to and held by the Company or another Restricted Subsidiary;
(d) Debt incurred by a Person prior to the time (i) such person became a
Restricted Subsidiary, (ii) such Person is merged into or consolidated with the
Company or any Subsidiary or (iii) another Subsidiary merges into or
consolidates with such Person (in a transaction in which such Person becomes a
Restricted Subsidiary), which Debt was not incurred in anticipation of such
transaction and was outstanding prior to such transaction; (e) Debt that is
incurred in the ordinary course of business and that matures within one year;
and (f) extensions, renewals or replacements of any of the foregoing. The
Company may permit a Restricted Subsidiary to incur Debt as described in clauses
(b) through (f) of the preceding sentence only to the extent that the aggregate
amount of all such Debt of all Restricted Subsidiaries does not exceed 10% of
Consolidated Net Tangible Assets. (Section 1010).
The Company does not currently have any Restricted Subsidiaries that would
be subject to this limitation.
CONSOLIDATION, MERGER AND CERTAIN SALES OF ASSETS
The Company, without the consent of the Holders of any Outstanding
Securities, may consolidate with or merge into, or convey, transfer or lease its
properties and assets substantially as an entirety to, any Person, and may
permit any Person to merge into, or convey, transfer or lease its properties and
assets substantially as an entirety to, the Company, provided that (i) any
successor Person must be a corporation, partnership, trust or other entity
organized and validly existing under the laws of any domestic jurisdiction and
must assume the Company's obligations on the Securities and under the Indenture,
(ii) after giving effect to the transaction no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have occurred and be continuing and (iii) certain other conditions are
met. (Article Eight).
CERTAIN DEFINITIONS
"Attributable Debt" means, as to any particular lease under which any
Person is at the time liable, at any date as of which the amount thereof is to
be determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof, discounted from the
respective due dates
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<PAGE> 16
thereof to such date at the weighted average rate per annum borne by the
Securities compounded annually. The net amount of rent required to be paid under
any such lease for any such period shall be the aggregate amount of the rent
payable by the lessee with respect to such period after excluding amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges. In the case of any lease which is
terminable by the lessee upon the payment of penalty, such net amount shall also
include the amount of such penalty, but no rent shall be considered as required
to be paid under such lease subsequent to the first date upon which it may be so
terminated.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (a) all current liabilities, except for (i) notes and loans payable,
(ii) current maturities of long-term debt and (iii) current maturities of
obligations under capital leases and (b) goodwill and other intangibles.
"Principal Property" means any single parcel of real estate, any
manufacturing plant or warehouse owned or leased by the Company or any
Subsidiary which is located within the United States and the gross book value
(without reduction of any depreciation reserves) of which on the date as of
which the determination is being made exceeds 1% of Consolidated Net Tangible
Assets, other than any manufacturing plant or warehouse or portion thereof (a)
which is a pollution control or other facility financed by obligations issued by
a state or local government unit, or (b) which, in the good faith opinion of the
Board of Directors of the Company as evidenced by a resolution of the Board of
Directors of the Company, is not of material importance to the total business
conducted by the Company and its Subsidiaries as an entirety.
"Restricted Subsidiary" means any wholly owned Subsidiary of the Company
substantially all of the assets of which are located in the United States
(excluding territories or possessions) and which owns a Principal Property,
except for a Subsidiary that is principally engaged in the business of
financing, of owning, buying, selling, leasing, dealing in or developing real
property, or of exporting goods or merchandise from or importing goods or
merchandise into the United States.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock that ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to the Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of the same series when due;
(b) failure to pay any interest on any Debt Securities of that series when due,
continued for 30 days; (c) failure to perform any other covenant of the Company
in the Indenture, continued for 90 days after written notice has been given by
the Trustee, or the Holders of at least 10% in principal amount of the
Outstanding Securities of that series, as provided in the Indenture; and (d)
certain events in bankruptcy, insolvency or reorganization. (Section 501).
If an Event of Default (other than an Event of Default described in clause
(d) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Securities of such
series by notice as provided in the Indenture may declare the principal amount
of the Debt Securities of such series to be due and payable immediately. If an
Event of Default described in clause (d) above with respect to the Debt
Securities of such series at the time Outstanding shall occur, the principal
amount of all the Debt Securities of such series will automatically, and without
any action by the Trustee or any Holder, become immediately due and payable.
After any such acceleration, but before a judgment or decree based on
acceleration, the Holders of a majority in aggregate principal amount of the
Outstanding Securities of such series may, under certain circumstances, rescind
and annul such acceleration if all Events of Default in respect of such series,
other than the non-payment of accelerated principal (or other specified amount),
have been cured or waived as provided in the Indenture. (Section 502). For
information as to waiver of defaults, see "Modification and Waiver".
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<PAGE> 17
Subject to the provisions of the Indenture relating to the duties of the
Trustee if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request or direction of any of the Holders, unless such Holders shall
have offered to the Trustee reasonable indemnity. (Section 603). Subject to such
provisions for the indemnification of the Trustee, the Holders of a majority in
aggregate principal amount of the Outstanding Securities of any series will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee with respect to the Debt Securities of that series. (Section
512).
No Holder of a Debt Security will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of a receiver
or a trustee, or for any other remedy thereunder, unless (i) such Holder has
previously given to the Trustee written notice of a continuing Event of Default
with respect to the Debt Securities of such series, (ii) the Holders of at least
25% in aggregate principal amount of the Outstanding Securities of such series
have made written request, and such Holder or Holders have offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee and (iii) the
Trustee has failed to institute such proceeding, and has not received from the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of such series a direction inconsistent with such request, within 60
days after such notice, request and offer. (Section 507). However, such
limitations do not apply to a suit instituted by a Holder of a Debt Security for
the enforcement of payment of the principal of or any premium or interest on
such Debt Security on or after the applicable due date specified in such Debt
Security. (Section 508).
The Indenture does not contain any provisions that would provide protection
to holders of Debt Securities against a sudden and dramatic decline in credit
quality resulting from a takeover, recapitalization or similar restructuring of
the Company.
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their knowledge,
is in default in the performance or observance of any of the terms, provisions
and conditions of the Indenture and, if so, specifying all such known defaults.
(Section 1004).
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of each series affected
by such modification or amendment; provided, however, that no such modification
or amendment may, without the consent of the Holder of each Outstanding Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, (b) reduce the
principal amount of, or any premium or interest on, any Security, (c) change the
place or currency of payment of principal of, or any premium or interest on, any
Security, (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any Security, (e) reduce the percentage in
principal amount of Outstanding Securities, the consent of whose Holders is
required for modification or amendment of the Indenture, (f) reduce the
percentage in principal amount of Outstanding Securities of any series necessary
for waiver of compliance with certain provisions of the Indenture or for waiver
of certain defaults or (g) modify such provisions with respect to modification
and waiver. (Section 902).
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may waive compliance by the Company with
certain restrictive provisions of the Indenture with respect to such series.
(Section 1011). The Holders of a majority in principal amount of the Outstanding
Securities of such series may waive any past default under the Indenture, except
a default in the payment of principal, premium or interest and certain covenants
and provisions of the Indenture which cannot be amended without the consent of
the Holder of each Outstanding Security affected. (Section 513).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities of any series have
given or taken any direction, notice, consent, waiver or other action under the
Indenture as of any date, certain Securities, including those for whose payment
or redemption
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<PAGE> 18
money has been deposited or set aside in trust for the Holders and those that
have been fully defeased pursuant to Section 1302, will not be deemed to be
Outstanding. (Section 101).
Except in certain limited circumstances, the Company will be entitled to
set any day as a record date for the purpose of determining the Holders of
Outstanding Securities entitled to give or take any direction, notice, consent,
waiver or other action under the Indenture, in the manner and subject to the
limitations provided in the Indenture. In certain limited circumstances, the
Trustee also will be entitled to set a record date for action by Holders. If a
record date is set for any action to be taken by Holders, such action may be
taken only by persons who are Holders of Outstanding Securities on the record
date. To be effective, such action must be taken by Holders of the requisite
principal amount of the Securities within a specified period following the
record date. For any particular record date, this period will be 180 days or
such shorter period as may be specified by the Company (or the Trustee, if it
set the record date), and may be shortened or lengthened (but not beyond 180
days) from time to time. (Section 104).
DEFEASANCE AND COVENANT DEFEASANCE
The Company may elect, at its option at any time, to have the provisions of
Section 1302, relating to defeasance and discharge of indebtedness, or Section
1303, relating to defeasance of certain restrictive covenants in the Indenture,
applied to any series of Debt Securities, or to any specified part of a series.
(Section 1301).
Defeasance and Discharge
The Indenture provides that, upon the Company's exercise of its option to
have Section 1302 applied to any Debt Securities, the Company will be discharged
from all its obligations with respect to such Debt Securities (except for
certain obligations to exchange or register the transfer of Debt Securities, to
replace stolen, lost or mutilated Debt Securities, to maintain paying agencies
and to hold moneys for payment in trust) upon the deposit in trust for the
benefit of the Holders of such Debt Securities of money or U.S. Government
Obligations, or both, which, through the payment of principal and interest in
respect thereof in accordance with their terms, will provide money in an amount
sufficient to pay the principal of and any premium and interest on such Debt
Securities on the respective Stated Maturities in accordance with the terms of
the Indenture and such Debt Securities. Such defeasance or discharge may occur
only if, among other things, the Company has delivered to the Trustee an Opinion
of Counsel to the effect that the Company has received from, or there has been
published by, the United States Internal Revenue Service a ruling, or there has
been a change in tax law, in either case to the effect that Holders of such Debt
Securities will not recognize gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to federal
income tax on the same amount, in the same manner and at the same times as would
have been the case if such deposit, defeasance and discharge were not to occur.
(Sections 1302 and 1304).
Defeasance of Certain Covenants
The Indenture provides that, upon the Company's exercise of its option to
have Section 1303 applied to any Debt Securities, the Company may omit to comply
with certain restrictive covenants, including those described above under the
caption "Covenants" and certain of the conditions referred to in clause (iii)
under the caption "Consolidation, Merger and Certain Sales of Assets", and the
occurrence of certain Events of Default, which are described above in clause (c)
under the caption "Events of Default", will be deemed not to be or result in an
Event of Default with respect to such Debt Securities. The Company, in order to
exercise such option, will be required to deposit, in trust for the benefit of
the Holders of such Debt Securities, money or U.S. Government Obligations, or
both, which, through the payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an amount sufficient to pay
the principal of and any premium and interest on such Debt Securities on the
respective Stated Maturities in accordance with the terms of the Indenture and
such Debt Securities. The Company will also be required, among other things, to
deliver to the Trustee an Opinion of Counsel to the effect that Holders of such
Debt Securities will not recognize gain or loss for federal income tax purposes
as a result of such deposit and defeasance of certain obligations and will be
subject to federal income tax on the same amount, in the same manner and at the
same
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times as would have been the case if such deposit and defeasance were not to
occur. In the event the Company exercised this option with respect to any Debt
Securities and such Debt Securities were declared due and payable because of the
occurrence of any Event of Default, the amount of money and U.S. Government
Obligations so deposited in trust would be sufficient to pay amounts due on such
Debt Securities at the time of their respective Stated Maturities but may not be
sufficient to pay amounts due on such Debt Securities upon any acceleration
resulting from such Event of Default. In such case, the Company would remain
liable for such payments. (Sections 1303 and 1304).
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby through
agents, through underwriters and through dealers, and Debt Securities may be
sold to other purchasers directly or through agents.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
Offers to purchase Debt Securities may be solicited by agents designated by
the Company from time to time. Any such agent, who may be deemed to be an
underwriter, as that term is defined in the Securities Act, involved in the
offer or sale of the Debt Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent set forth, in the Applicable Prospectus Supplement. Agents may be entitled
under agreements that may be entered into with the Company to indemnification by
the Company against certain liabilities, including liabilities under the
Securities Act, and such agents or their affiliates may be customers of, extend
credit to or engage in transactions with or perform services for the Company in
the ordinary course of business.
If any underwriters are utilized in the sale, the Company will enter into
an underwriting agreement with such underwriters at the time of sale to them and
the names of the underwriters and the terms of the transaction will be set forth
in the Applicable Prospectus Supplement that will be used by the underwriters to
make resales of the Debt Securities in respect of which this Prospectus is
delivered to the public. The underwriters may be entitled, under the relevant
underwriting agreement, to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, and such
underwriters or their affiliates may be customers of, extend credit to or engage
in transactions with or perform services for the Company in the ordinary course
of business.
If dealers are utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to such dealers, as principal. The dealers may then resell such Debt Securities
to the public at varying prices to be determined by such dealers at the time of
resale. Dealers may be entitled to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and such
dealers or their affiliates may be customers of, extend credit to or engage in
transactions with or perform services for the Company in the ordinary course of
business.
VALIDITY OF DEBT SECURITIES
The validity of the Debt Securities will be passed upon for the Company by
Harold L. Henderson, Senior Vice President, General Counsel and Secretary of the
Company, and for the Underwriters by Sullivan & Cromwell, New York, New York. As
of December 31, 1996, Mr. Henderson held 876 shares of the Company's Common
Stock, as well as options to purchase 50,000 shares of the Company's Common
Stock under a Company stock option plan.
EXPERTS
The financial statements of the Company as of December 31, 1995 and 1994
and for each of the three years in the period ended December 31, 1995 included
in the Company's Annual Report on Form 10-K for the year ended December 31, 1995
and incorporated by reference in this Prospectus have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
11
<PAGE> 20
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company........................... S-2
Use of Proceeds....................... S-5
Description of Debentures............. S-6
Underwriting.......................... S-7
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Use of Proceeds....................... 3
Description of Debt Securities........ 3
Plan of Distribution.................. 11
Validity of Debt Securities........... 11
Experts............................... 11
</TABLE>
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$300,000,000
(EASTMAN LOGO)
7.60% DEBENTURES
DUE FEBRUARY 1, 2027
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PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
JANUARY 30, 1997
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