<PAGE> 1
FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-03341 and 33-65658
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 18, 1996
$400,000,000
THE B.F.GOODRICH COMPANY
MEDIUM-TERM NOTES, SERIES A
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
------------------------
The B.F.Goodrich Company may offer from time to time its Medium-Term Notes,
Series A in an aggregate principal amount of up to $400,000,000. Each Note will
mature on a day more than nine months from its date of issue, as selected by the
purchaser and agreed to by the Company. Unless otherwise indicated herein or in
the applicable Pricing Supplement, the Notes will not be redeemable prior to
maturity by the Company and will not be subject to repayment prior to maturity
at the option of the holders thereof and will be issued in registered form in
denominations of $100,000 and any integral multiple of $1,000 in excess thereof.
Each Note will be represented either by a Global Note registered in the name of
The Depository Trust Company, as depositary, or a nominee thereof, or by a
certificate issued in definitive form, as set forth in the applicable Pricing
Supplement. Beneficial interests in Book-Entry Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary and its participants. Book-Entry Notes will not be exchangeable for
Certificated Notes except under the circumstances described under "Description
of Notes--Book-Entry System" herein.
Interest rates and interest rate formulae are subject to change by the
Company but no such change will affect any Note already issued or which the
Company has agreed to issue. Unless otherwise indicated in the applicable
Pricing Supplement, each Note will bear interest at a fixed rate or at a
floating rate determined by reference to the CD Rate, the Commercial Paper Rate,
the Federal Funds Rate, LIBOR, the Prime Rate or the Treasury Rate, as adjusted
by the Spread and/or Spread Multiplier, if any, applicable to such Note. Certain
Notes issued at a discount from the principal amount payable at maturity thereof
may provide that holders of such Notes will not receive periodic payments of
interest. See "Description of Notes--Original Issue Discount Notes".
Unless otherwise indicated in the applicable Pricing Supplement, interest on
Fixed Rate Notes will be payable each April 15 and October 15 and at maturity or
upon any earlier redemption or repayment and interest on Floating Rate Notes
will be payable on the dates indicated herein and in the applicable Pricing
Supplement. See "Description of Notes--Interest and Interest Rates".
------------------------
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, ANY PRICING SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
------------- -------------------- --------------------------
<S> <C> <C> <C>
Per Note................................ 100% .125-1.000% 99.875-99.000%
Total................................... $400,000,000 $500,000-$4,000,000 $399,500,000-$396,000,000
</TABLE>
- ---------------
(1) Unless otherwise indicated in a Pricing Supplement, Notes will be issued at
100% of their principal amount.
(2) The Company will pay a commission to the Agents from .125% to 1.000% of the
principal amount of any Note, depending upon its maturity, sold through such
Agents (or sold to such Agents as principal in circumstances in which no
other discount is agreed upon). The Company may also sell Notes to any Agent
at a discount for resale to one or more investors or other purchasers at
varying prices related to prevailing market prices at the time of resale or
otherwise, as determined by such Agent. Unless otherwise indicated in an
applicable Pricing Supplement, any Note sold to an Agent as principal shall
be purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage equal to the commission applicable to any agency
sale of a Note of identical maturity. See "Supplemental Plan of
Distribution".
(3) Before deducting other expenses payable by the Company, estimated at
$210,000.
------------------------
The Notes are being offered on a continuing basis by the Company through the
Agents, each of which has agreed to use its reasonable best efforts to solicit
offers to purchase the Notes. The Company also may sell Notes to any Agent
acting as principal for resale to investors or other purchasers and may sell
Notes directly to investors on its own behalf in jurisdictions where it is
authorized to do so. No commission will be payable nor will a discount be
allowed on any direct sales by the Company. Unless otherwise specified in the
applicable Pricing Supplement, the Notes will not be listed on any securities
exchange. The Company reserves the right to withdraw, cancel or modify the offer
made hereby without notice. The Company or any Agent may reject any offer to
purchase Notes, in whole or in part. See "Supplemental Plan of Distribution".
------------------------
GOLDMAN, SACHS & CO.
CITICORP SECURITIES, INC.
J.P. MORGAN & CO.
MORGAN STANLEY & CO.
INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JUNE 18, 1996.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE AGENTS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT LEVELS
ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED OR
DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE PROSPECTUS
TO WHICH IT RELATES.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Debt Securities")
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which reference is hereby made. Unless otherwise specified in the
applicable Pricing Supplement, the Notes will have the terms described below,
except that references to interest payments and interest-related information do
not apply to certain Original Issue Discount Notes (as defined below).
GENERAL
The Pricing Supplement relating to a Note will describe the following
terms: (i) whether such Note is a Fixed Rate Note or a Floating Rate Note (each
as defined below); (ii) the price at which such Note will be issued (the "Issue
Price"); (iii) the date on which such Note will be issued (the "Original Issue
Date"); (iv) the date on which such Note will mature (the "Maturity Date"); (v)
if such Note is a Fixed Rate Note, the rate per annum at which such Note will
bear interest, if any; (vi) if such Note is a Floating Rate Note, the Base Rate,
the Initial Interest Rate, the Interest Payment Dates, the Index Maturity, the
Spread and/or Spread Multiplier, if any (each as defined below) and any other
terms relating to the particular method of calculating the interest rate for
such Note; (vii) whether such Note is an Original Issue Discount Note and
whether it has been issued with original issue discount for United States
Federal income tax purposes; (viii) whether such Note may be redeemed at the
option of the Company, or repaid at the option of the holder, prior to maturity
as described under "Optional Redemption" and "Repayment at the Noteholders'
Option; Repurchase" below and, if so, the provisions relating to such redemption
or repayment, including, in the case of any Original Issue Discount Notes, the
information necessary to determine the amount due upon redemption or repayment;
(ix) any relevant material tax consequences associated with the terms of such
Note which have not been described in "United States Tax Considerations" below;
and (x) any other terms of such Note not inconsistent with the provisions of the
Indenture.
The Notes will be issued under an Indenture, dated as of May 1, 1991,
between The B.F.Goodrich Company (the "Company") and Harris Trust and Savings
Bank (the "Trustee"), as the same may be amended or supplemented from time to
time (said Indenture, as so supplemented, referred to herein as the
"Indenture"). The following summaries of certain provisions of the Indenture do
not purport to be complete, and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Indenture, including the
definitions therein of certain terms. The Notes are limited to an aggregate
principal amount of $400,000,000.
Each Fixed Rate Note will mature on a day more than nine months from the
date of issue, as specified in the applicable Pricing Supplement, as selected by
the initial purchaser and agreed to by the Company. In the event that such
maturity date of any Fixed Rate Note or any date fixed for redemption or
repayment of any Fixed Rate Note is not a Business Day (as defined below),
principal and interest payable at maturity or upon such redemption or repayment
will be paid on the next succeeding Business Day with the same effect as if such
Business Day were the maturity date or the date fixed for redemption or
repayment and no interest shall accrue for the period from and
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after the maturity date or date fixed for redemption or repayment to such next
succeeding Business Day.
Each Floating Rate Note will mature on an Interest Payment Date (as defined
below) more than nine months from the date of issue as specified in the
applicable Pricing Supplement, as selected by the initial purchaser and agreed
to by the Company. In the event that the Maturity Date of any Floating Rate Note
or any date fixed for redemption or repayment of any Floating Rate Note is not a
Business Day, the required payment of principal, premium, if any, or interest
otherwise payable on such date need not be made on such date, but may be made on
the next succeeding Business Day with the same force and effect as if made on
the date such payment was due, and no interest shall accrue for the period from
and after the Maturity Date (or any redemption or repayment date) to such next
succeeding Business Day.
Unless the applicable Pricing Supplement provides otherwise, the Notes will
be issuable only in registered form in denominations of $100,000 and integral
multiples of $1,000 in excess thereof.
The Notes will be offered on a continuing basis, and each Note will be
issued initially as either a global note (a "Book-Entry Note") registered in the
name of The Depository Trust Company, as depositary (the "Depositary") or a
nominee thereof, or a certificate issued in definitive form (a "Certificated
Note").
Principal of, premium, if any, and interest on the Notes will be payable,
the transfer of the Notes will be registrable, and Notes will be exchangeable
for Notes bearing identical terms and provisions at the offices of the Trustee,
currently located at 77 Water Street, New York, New York. Notwithstanding the
foregoing, payment of interest, other than interest at maturity or upon
redemption or repayment, may, at the option of the Company, be made by check
mailed to the address of the person entitled thereto as it appears on the
security register at the close of business on the Regular Record Date
corresponding to the relevant Interest Payment Date. Notwithstanding the
foregoing, the Depositary, as holder of Book-Entry Notes, shall be entitled to
receive payments of interest by wire transfer of immediately available funds.
Book-Entry Notes will be exchangeable only in the manner and to the extent set
forth under "Description of Notes--Book-Entry System" herein.
The principal and interest payable on each Note at maturity or upon
redemption or repayment will be paid by check mailed to the address of the
person entitled thereto against presentation of the Note at the office of the
Trustee, unless otherwise provided in the applicable Pricing Supplement.
INTEREST AND INTEREST RATES
Each Note will bear interest at either (a) a fixed rate (the "Fixed Rate
Notes") or (b) a floating rate determined by reference to an interest rate
formula (the "Floating Rate Notes"), which may be adjusted by a Spread and/or
Spread Multiplier (each as defined below). Any Floating Rate Note may also have
either or both of the following: (i) a maximum interest rate limitation, or
ceiling, on the rate at which interest may accrue during any interest period;
and (ii) a minimum interest rate limitation, or floor, on the rate at which
interest may accrue during any interest period. The applicable Pricing
Supplement will designate one of the following interest rate bases as applicable
to each Note: (a) a fixed rate per annum, in which case such Note will be a
"Fixed Rate Note"; (b) the CD Rate, in which case such Note will be a "CD Rate
Note"; (c) the Commercial Paper Rate, in which case such Note will be a
"Commercial Paper Rate Note"; (d) the Federal Funds Rate, in which case such
Note will be a "Federal Funds Rate Note"; (e) LIBOR, in which case such Note
will be a "LIBOR Note"; (f) the Prime Rate, in which case such Note will be a
"Prime Rate Note"; (g) the Treasury Rate, in which case such Note will be a
"Treasury Rate Note"; or (h) such other interest rate formula as is set forth in
such Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Note will be equal to (a) in the case of a Fixed Rate
Note, a fixed rate; or (b) in the case of a Floating Rate Note, either (i) the
interest rate determined by reference to the specified interest rate formula (as
specified in the applicable Pricing Supplement), plus or minus the Spread, if
any, and/or (ii) the
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interest rate determined by reference to the specified interest rate formula,
multiplied by the Spread Multiplier, if any, plus or minus the Spread, if any.
The "Spread" is the number of basis points (one one-hundredth of a percentage
point) specified in the applicable Pricing Supplement to be added to or
subtracted from the Base Rate of such Floating Rate Note, and the "Spread
Multiplier" is the percentage specified in the applicable Pricing Supplement to
be applied to the Base Rate for such Floating Rate Note. The "Base Rate" is the
rate specified, or determined according to a formula specified, in the
applicable Pricing Supplement.
Each Note will bear interest from its Original Issue Date or, except as
otherwise specified herein with respect to certain Floating Rate Notes, from the
most recent date to which interest on such Note has been paid or duly provided
for, at the annual rate, or at a rate determined pursuant to an interest rate
formula, stated therein, until the principal thereof is paid or made available
for payment. Interest will be payable on each Interest Payment Date (except for
certain Original Issue Discount Notes and except for Notes originally issued
between a Regular Record Date and an Interest Payment Date) and at maturity or
on redemption or repayment, if any.
Interest will be payable to the person in whose name a Note is registered
at the close of business on the Regular Record Date next preceding the Interest
Payment Date; provided, however, that (i) if the Company fails to pay such
interest on such Interest Payment Date, such defaulted interest will be paid to
the person in whose name such Note is registered at the close of business on the
record date to be established for the payment of defaulted interest and (ii)
interest payable at maturity, redemption or repayment will be payable to the
person to whom principal shall be payable. The first payment of interest on any
Note originally issued between a Regular Record Date and an Interest Payment
Date will be made on the Interest Payment Date following the next succeeding
Regular Record Date to the registered owner on such next Regular Record Date.
Interest rates and interest rate formulae are subject to change by the Company
from time to time but no such change will affect any Note theretofore issued or
which the Company has agreed to issue. Unless otherwise indicated in the
applicable Pricing Supplement, the Interest Payment Dates and the Regular Record
Dates for Fixed Rate Notes shall be as described below under "Fixed Rate Notes".
The Interest Payment Dates for Floating Rate Notes shall be as indicated in the
applicable Pricing Supplement and in such Note, and, unless otherwise specified
in the applicable Pricing Supplement, each Regular Record Date for a Floating
Rate Note will be the fifteenth day (whether or not a Business Day) next
preceding each Interest Payment Date.
Unless otherwise specified in a Pricing Supplement, all percentages
resulting from any calculation on Floating Rate Notes will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or
.09876545) being rounded to 9.87655% (or .0987655) and 9.876544% (or .09876544)
being rounded to 9.87654% (or .0987654)), and all dollar amounts used in or
resulting from such calculation on Floating Rate Notes will be rounded to the
nearest cent (with one-half cent being rounded upward).
The interest rate on the Notes will in no event be higher than the maximum
rate permitted by New York law as the same may be modified by United States
Federal law of general application.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest at the annual rate specified
therein and in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing Supplement, the Interest Payment Dates for the Fixed Rate
Notes will be on April 15 and October 15 of each year and the Regular Record
Dates will be on the last day of March and September of each year. Unless
otherwise specified in the applicable Pricing Supplement, interest on Fixed Rate
Notes will be computed and paid on the basis of a 360-day year of twelve 30-day
months. In the event that any Interest Payment Date, the Maturity Date or
redemption or repayment date is not a Business Day (as defined below under
"Floating Rate Notes"), payment of interest, premium, if any, or principal
payable on Fixed Rate Notes will be made on the next succeeding Business Day and
no interest
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shall accrue for the period from and after such Interest Payment Date or the
Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.
FLOATING RATE NOTES
Except as provided below and unless otherwise specified in the applicable
Pricing Supplement, interest on Floating Rate Notes will be payable (i) in the
case of Floating Rate Notes with a daily, weekly, or monthly Interest Reset Date
(as defined below) on (a) the third Wednesday of each month or (b) on the third
Wednesday of June and December of each year or (c) on the third Wednesday of
March, June, September and December of each year, as specified in the applicable
Pricing Supplement; (ii) in the case of Floating Rate Notes with a quarterly
Interest Reset Date, on the third Wednesday of March, June, September and
December of each year; (iii) in the case of Floating Rate Notes with a
semi-annual Interest Reset Date, on the third Wednesday of two months of each
year, as specified in the applicable Pricing Supplement; and (iv) in the case of
Floating Rate Notes with an annual Interest Reset Date, on the third Wednesday
of one month of each year, as specified in the applicable Pricing Supplement. If
any Interest Payment Date (other than the Maturity Date or any redemption or
repayment date) for any Floating Rate Note would otherwise be a day that is not
a Business Day, the Interest Payment Date for such Floating Rate Notes shall be
postponed to the next day that is a Business Day and interest shall accrue to
such next succeeding Business Day, except that in the case of a LIBOR Note, if
such Business Day is in the next succeeding calendar month, such Interest
Payment Date shall be the immediately preceding Business Day. If the Maturity
Date or any earlier redemption or repayment date of a Floating Rate Note falls
on a day that is not a Business Day, the required payment of principal, premium,
if any, or interest otherwise payable on such date need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date such payment was due, and no interest shall
accrue for the period from and after the Maturity Date (or any redemption or
repayment date) to such next succeeding Business Day.
"Business Day" means any day that is not a Saturday or Sunday and that is
not a day on which banking institutions are generally authorized or obligated by
law to close in The City of New York.
An "Interest Payment Date" with respect to any Note shall be a date on
which, under the terms of such Note, regularly scheduled interest shall be
payable.
"London Banking Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
The applicable Pricing Supplement will specify the issue price, the
interest rate basis, the interest payment period, the Spread or Spread
Multiplier, if any, and the maximum or minimum interest rate limitation, if any,
applicable to each Floating Rate Note. In addition, such Pricing Supplement will
define or particularize for each Floating Rate Note the following terms, if
applicable: the period to maturity of the instrument or obligation on which the
interest rate formula is based (the "Index Maturity"), Initial Interest Rate (as
defined below), Interest Payment Dates, Regular Record Dates and Interest Reset
Dates with respect to such Note.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually (each an "Interest Reset
Date"), as specified in the applicable Pricing Supplement. The Interest Reset
Date will be, in the case of Floating Rate Notes which are reset daily, each
Business Day; in the case of Floating Rate Notes which are reset weekly, the
Wednesday of each week; in the case of Floating Rate Notes which are reset
monthly, the third Wednesday of each month; in the case of Floating Rate Notes
which are reset quarterly, the third Wednesday of March, June, September and
December; in the case of Floating Rate Notes which are reset semi-annually, the
third Wednesday of two months of each year, as specified in the applicable
Pricing Supplement; and in the case of Floating Rate Notes which are reset
annually, the third Wednesday of one month of each year, as specified in the
applicable Pricing Supplement; provided, however, that (i) the interest rate in
effect from the Original Issue Date to the first Interest Reset Date with
respect to a Floating Rate Note (the "Initial Interest Rate") will be as set
forth in the applicable
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Pricing Supplement, (ii) except in the case of Floating Rate Notes which are
reset daily or weekly, the interest rate in effect for the ten calendar days
immediately prior to maturity or redemption or repayment will be that in effect
on the tenth calendar day preceding such maturity, redemption or repayment date
and (iii) in the case of Floating Rate Notes which are reset daily or weekly,
the interest rate in effect for the period beginning on the second Business Day
immediately prior to maturity or redemption or repayment and ending on such
maturity, redemption or repayment date will be that in effect on the second
Business Day preceding such maturity, redemption or repayment date. If the
Interest Reset Date for any Floating Rate Note would otherwise be a day that is
not a Business Day, the Interest Reset Date for such Floating Rate Note shall be
postponed to the next day that is a Business Day, except that in the case of a
LIBOR Note, if such Business Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the
"Interest Determination Date" pertaining to an Interest Reset Date for a CD Rate
Note (the "CD Interest Determination Date"), a Commercial Paper Rate Note (the
"Commercial Paper Interest Determination Date"), a Federal Funds Rate Note (the
"Federal Funds Interest Determination Date") or a Prime Rate Note (the "Prime
Interest Determination Date") will be the second Business Day prior to the
Interest Reset Date. Unless otherwise specified in the applicable Pricing
Supplement, the Interest Determination Date pertaining to an Interest Reset Date
for a LIBOR Note (the "LIBOR Interest Determination Date") will be the second
London Banking Day next preceding such Interest Reset Date. Unless otherwise
specified in the applicable Pricing Supplement, the Interest Determination Date
pertaining to an Interest Reset Date for a Treasury Rate Note will be the day of
the week in which such Interest Reset Date falls on which Treasury bills would
normally be auctioned. Treasury bills are normally sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, but such auction may be held on the
preceding Friday. If, as the result of a legal holiday, an auction is so held on
the preceding Friday, such Friday will be the Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week. If
an auction falls on a day that is an Interest Reset Date, such Interest Reset
Date will be the next following Business Day.
Unless otherwise indicated in the applicable Pricing Supplement, interest
payments on an Interest Payment Date for a Floating Rate Note will include
interest accrued from, and including, the next preceding Interest Payment Date
in respect of which interest has been paid (or from, and including, the date of
original issue if no interest has been paid with respect to such Floating Rate
Note) to, but excluding, such Interest Payment Date. However, if the Interest
Reset Dates with respect to such Note are daily or weekly, interest payable on
any Interest Payment Date, other than interest payable on any date on which the
principal of such Note is payable, will include interest accrued only from, and
excluding, the next preceding Regular Record Date to which interest has been
paid (or from, and including, the Original Issue Date if no interest has been
paid with respect to such Floating Rate Note) to, and including, the Regular
Record Date preceding the next applicable Interest Payment Date, except that the
interest payment at maturity or upon redemption or repayment will include
interest accrued to, but excluding, such Maturity Date or redemption or
repayment date, as the case may be. Accrued interest from the date of issue or
from the last date to which interest has been paid is calculated by multiplying
the face amount of a Note by an accrued interest factor. The accrued interest
factor is computed by adding together the interest factors calculated for each
day from the Original Issue Date, or from the last date to which interest has
been paid, to the date for which accrued interest is being calculated. Unless
otherwise specified in the applicable Pricing Supplement, the interest factor
for each such day is computed by dividing the interest rate applicable to such
day by 360, in the cases of CD Rate Notes, Commercial Paper Rate Notes, Federal
Funds Rate Notes and Prime Rate Notes or by the actual number of days in the
year, in the case of Treasury Rate Notes. The interest rate in effect on each
day will be (a) if such day is an Interest Reset Date, the interest rate with
respect to the Interest Determination Date pertaining to such Interest Reset
Date or (b) if such day is not an Interest Reset Date, the interest rate with
respect to the Interest Determination Date pertaining to the immediately
preceding Interest Reset
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Date, subject in either case to any maximum or minimum interest rate limitation
referred to above and to any adjustment by a Spread or a Spread Multiplier
referred to above.
Unless otherwise provided for in the applicable Pricing Supplement, Harris
Trust and Savings Bank will be the Calculation Agent (the "Calculation Agent",
which term includes any successor calculation agent appointed by the Company),
and for each Interest Reset Date will determine the interest rate as described
below. The Calculation Agent will notify the Trustee of each determination of
the interest rate applicable to any such Floating Rate Note promptly after such
determination is made. The Trustee will, upon the request of the holder of any
Floating Rate Note, provide the interest rate then in effect and, if applicable,
the interest rate which will become effective as a result of a determination
made with respect to the most recent Interest Determination Date relative to
such Note. Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date", where applicable, pertaining to any Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date (or, if such day is not a Business Day, the next succeeding
Business Day) or (ii) the Business Day immediately preceding the applicable
Interest Payment Date.
Interest Rates will be determined by the Calculation Agent as follows:
CD Rate Notes. CD Rate Notes will bear interest at the interest rate
(calculated with reference to the CD Rate and the Spread and/or Spread
Multiplier, if any) specified in the CD Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates", or any successor publication of the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)", or, if
not so published by 9:00 a.m., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the CD Rate will be the rate on
such Interest Determination Date for negotiable certificates of deposit of the
Index Maturity designated in the applicable Pricing Supplement as published by
the Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 p.m. Quotations for U.S. Government Securities" (the "Composite
Quotations") under the heading "Certificates of Deposit." If such rate is not
yet published in either H.15(519) or the Composite Quotations by 3:00 p.m., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the CD Rate on such Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 a.m., New York City time, on such
Interest Determination Date, for certificates of deposit in the denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity designated in
the Pricing Supplement of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major U.S. money
center banks of the highest credit standing in the market for negotiable
certificates of deposit; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as set forth above, the rate
of interest in effect for the applicable period will be the same as the CD Rate
for the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the rate of interest payable on the CD Rate Notes for
which such CD Rate is being determined shall be the Initial Interest Rate).
Commercial Paper Rate Notes. Commercial Paper Rate Notes will bear
interest at the interest rate (calculated with reference to the Commercial Paper
Rate and the Spread and/or Spread Multiplier, if any) specified in the
Commercial Paper Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date,
the Money Market Yield (as defined below)
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of the rate on that date for commercial paper having the Index Maturity
designated in the applicable Pricing Supplement, as such rate shall be published
in H.15(519), under the heading "Commercial Paper". In the event that such rate
is not published prior to 9:00 a.m., New York City time, on the Calculation
Date, then the Commercial Paper Rate shall be the Money Market Yield of the rate
on such Interest Determination Date for commercial paper of the specified Index
Maturity as published in Composite Quotations under the heading "Commercial
Paper". If by 3:00 p.m., New York City time, on such Calculation Date such rate
is not yet available in either H.15(519) or Composite Quotations, then the
Commercial Paper Rate shall be the Money Market Yield of the arithmetic mean of
the offered rates as of 11:00 a.m., New York City time, on such Interest
Determination Date of three leading dealers of commercial paper in The City of
New York selected by the Calculation Agent for commercial paper of the specified
Index Maturity, placed for an industrial issuer whose bond rating is "AA", or
the equivalent, from a nationally recognized rating agency; provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are not
quoting offered rates as mentioned in the preceding sentence, the rate of
interest in effect for the applicable period will be the same as the Commercial
Paper Rate for the immediately preceding Interest Reset Period (or, if there was
no such Interest Reset Period, the rate of interest payable on the Commercial
Paper Rate Notes for which such Commercial Paper Rate is being determined shall
be the Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
<TABLE>
<S> <C> <C>
D X 360
MONEY MARKET YIELD = -------------- X 100
360 -- (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Index Maturity.
Federal Funds Rate Notes. Federal Funds Rate Notes will bear interest at
the interest rate (calculated with reference to the Federal Funds Rate and the
Spread and/or Spread Multiplier, if any) specified in the Federal Funds Rate
Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" means, with respect to any Interest Determination Date, the
rate on such date for Federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)" or, if not so published by 9:00 a.m., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Federal Funds Rate will be the rate on such Interest Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate". If such rate is not yet published in either H.15(519) or the Composite
Quotations by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, the Federal Funds Rate for such Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight Federal funds
as of 11:00 a.m., New York City time, on such Interest Determination Date
arranged by three leading brokers of Federal funds transactions in The City of
New York selected by the Calculation Agent; provided, however, that if the
brokers selected as aforesaid by the Calculation Agent are not quoting as set
forth above, the rate of interest in effect for the applicable period will be
the same as the Federal Funds Rate for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the rate of interest
payable on the Federal Funds Rate Notes for which such Federal Funds Rate is
being determined shall be the Initial Interest Rate).
LIBOR Notes. LIBOR Notes will bear interest at the interest rate
(calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if
any) specified in the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
for each Interest Reset Date will be determined by the Calculation Agent as
follows:
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(a) LIBOR will be, as specified in the applicable LIBOR Note, either
(i) the arithmetic mean of the offered rates for deposits in the Index
Currency (as defined below) having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the second London Business Day
immediately following that Interest Determination Date, that appear on the
Reuters Screen LIBO Page as of 11:00 a.m., London time, on that Interest
Determination Date, if at least two such offered rates appear on the
Reuters Screen LIBO Page ("LIBOR Reuters") or (ii) the rate for deposits in
the Index Currency having the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second London Business Day
immediately following that Interest Determination Date, that appears on the
Telerate Page 3750, as of 11:00 a.m., London time, on that Interest
Determination Date ("LIBOR Telerate"). "Reuters Screen LIBO Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rates
Service (or such other page as may replace the LIBO page on that service
for the purpose of displaying London interbank offered rates of major
banks). "Telerate Page 3750" means the display designated as page "3750" on
the Telerate Service (or such other page as may replace the 3750 page on
that service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates for deposits in the Index Currency). If neither LIBOR Reuters
nor LIBOR Telerate is specified in such LIBOR Note, LIBOR will be
determined as if LIBOR Telerate had been specified. If fewer than two
offered rates appear on the Reuters Screen LIBO Page, or if no rate appears
on the Telerate Page 3750, as applicable, LIBOR in respect of that Interest
Determination Date will be determined as if the parties had specified the
rate described in (b) below.
(b) With respect to an Interest Determination Date on which fewer than
two offered rates appear on the Reuters Screen LIBO Page, as specified in
(a)(i) above, or on which no rate appears on Telerate Page 3750, as
specified in (a)(ii) above, as applicable, LIBOR will be determined on the
basis of the rates at which deposits in the Index Currency having the Index
Maturity designated in the applicable Pricing Supplement are offered at
approximately 11:00 a.m., London time, on that Interest Determination Date
by four major banks in the London interbank market selected by the
Calculation Agent ("LIBOR Reference Banks") to prime banks in the London
interbank market commencing on the second London Business Day immediately
following that Interest Determination Date and in a principal amount that
is representative of a single transaction in such Index Currency in such
market at such time. The Calculation Agent will request the principal
London office of each of the LIBOR Reference Banks to provide a quotation
of its rate. If at least two such quotations are provided, LIBOR in respect
of that Interest Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR in respect of
that Interest Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 a.m., or such other time specified in the
applicable Pricing Supplement, in the applicable Principal Financial Center
(as defined below), on that Interest Determination Date by three major
banks in such Principal Financial Center selected by the Calculation Agent
for loans in the Index Currency to leading European banks having the Index
Maturity designated in the applicable pricing supplement, commencing on the
second London Business Day immediately following that Interest
Determination Date and in a principal amount equal to an amount that is
representative of a single transaction in such Index Currency in such
market at such time; provided, however, that if the banks selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR with respect to such Interest Determination Date will be
the rate of LIBOR in effect on such date.
"Index Currency" means the currency (including composite currencies)
specified in the applicable Pricing Supplement as the currency for which LIBOR
shall be calculated. If no such currency is specified in the applicable Pricing
Supplement, the Index Currency shall be United States dollars.
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"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to United
States dollars, Deutsche marks, Italian lira, Swiss francs, Dutch gilders and
ECUs, the Principal Financial Center shall be The City of New York, Frankfurt,
Milan, Zurich, Amsterdam and Luxembourg, respectively.
Prime Rate Notes. Prime Rate Notes will bear interest at the interest rate
(calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any) specified in the Prime Rate Notes and in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date, the rate set forth
in H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate
is not yet published by 9:00 a.m., New York City time, on the Calculation Date,
the Prime Rate for such Interest Determination Date will be the arithmetic mean
of the rates of interest publicly announced by each bank named on the display
designated as page "USPRIME1" on the Reuters Monitor Money Rate Service (or such
other page as may replace the USPRIME1 page on such service for the purpose of
displaying prime rates of major New York City banks (the "Reuters Screen
USPRIME1 Page")) as such bank's prime rate or base lending rate as in effect for
such Interest Determination Date as quoted on the Reuters Screen USPRIME1 Page
on such Interest Determination Date, or, if fewer than four such rates appear on
the Reuters Screen USPRIME1 Page for such Interest Determination Date, the rate
shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business on
such Interest Determination Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than two quotations are provided, the Prime
Rate shall be calculated by the Calculation Agent and shall be determined as the
arithmetic mean on the basis of the prime rates in The City of New York by the
appropriate number of substitute banks or trust companies organized and doing
business under the laws of the United States, or any State thereof, in each case
having total equity capital of at least $500 million and being subject to
supervision or examination by Federal or State authority, selected by the
Calculation Agent to quote such rate or rates.
If in any month or two consecutive months the Prime Rate is not published
in H.15(519) and the banks or trust companies selected as aforesaid are not
quoting as mentioned in the preceding paragraph, the "Prime Rate" for such
Interest Reset Period will be the same as the Prime Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable on the Prime Rate Notes for which the Prime Rate is
being determined shall be the Initial Interest Rate). If this failure continues
over three or more consecutive months, the Prime Rate for each succeeding
Interest Determination Date until the maturity or redemption of such Prime Rate
Notes or, if earlier, until this failure ceases, shall be LIBOR determined as if
such Prime Rate Notes were LIBOR Notes, and the Spread, if any, shall be the
number of basis points specified in the applicable Pricing Supplement as the
"Alternate Rate Event Spread".
Treasury Rate Notes. Treasury Rate Notes will bear interest at the
interest rate (calculated with reference to the Treasury Rate and the Spread
and/or Spread Multiplier, if any) specified in the Treasury Rate Notes and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, with respect to any Interest Determination Date, the rate
for the auction held on such date of direct obligations of the United States
("Treasury Bills") having the Index Maturity designated in the applicable
Pricing Supplement, as published in H.15(519) under the heading "Treasury Bills
- -- auction average (investment)" or, if not so published by 9:00 a.m., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the auction average rate on such Interest Determination Date (expressed as
a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States Department
of the Treasury. In the event that the results of the auction of Treasury Bills
having the Index Maturity designated in the applicable Pricing Supplement are
not published or reported as
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provided above by 3:00 p.m., New York City time, on such Calculation Date or if
no such auction is held on such Interest Determination Date, then the Treasury
Rate shall be calculated by the Calculation Agent and shall be a yield to
maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City time,
on such Interest Determination Date, of three leading primary U.S. government
securities dealers selected by the Calculation Agent for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity designated in the
applicable Pricing Supplement; provided, however, that if the dealers selected
as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in
this sentence, the Treasury Rate for such Interest Reset Date will be the same
as the Treasury Rate for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the rate of interest payable on the
Treasury Rate Notes for which the Treasury Rate is being determined shall be the
Initial Interest Rate).
ORIGINAL ISSUE DISCOUNT NOTES
Original Issue Discount Notes are Notes issued at a discount from the
principal amount payable at maturity and which may be considered to be issued
with original issue discount which must be included in income for United States
Federal income tax purposes at a constant rate. Unless otherwise specified in
the applicable Pricing Supplement, if the principal of any Original Issue
Discount Note is declared to be due and payable immediately either (a) as
described under "Description of the Securities -- Events of Default, Waiver and
Notice" in the accompanying Prospectus, or (b) pursuant to any redemption, in
either such case the amount of principal due and payable with respect to such
Note shall be limited to the Issue Price of such Note (plus, in the case of a
redemption, the premium to par, if any, specified in the applicable Pricing
Supplement), plus the original issue discount amortized with respect to such
Note from the Original Issue Date to the date of acceleration or redemption,
which amortization shall be calculated using the "constant yield method"
(computed in accordance with the rules under the Internal Revenue Code of 1986,
as amended (the "Code"), and the regulations thereunder, in effect on the date
of acceleration or redemption) plus, in the case of a redemption, the premium,
if any, specified in the applicable Pricing Supplement.
OPTIONAL REDEMPTION
The Pricing Supplement will indicate either that the Notes cannot be
redeemed prior to maturity or will indicate the terms on which the Notes will be
redeemable at the option of the Company. Notice of redemption shall be provided
by mailing a notice of such redemption to each holder by first class mail,
postage prepaid, at least 30 days and not more than 60 days prior to the date
fixed for redemption to the respective address of each holder as that address
appears upon the books of the Company.
REPAYMENT AT THE NOTEHOLDERS' OPTION; REPURCHASE
If applicable, the Pricing Supplement relating to each Note will indicate
that the Note will be repayable at the option of the holder on a date or dates
specified prior to its Maturity Date and, unless otherwise specified in such
Pricing Supplement, at a price equal to 100% of the principal amount thereof,
together with accrued interest to the date of repayment.
In order for such a Note to be repaid, the Trustee must receive at least 30
days but not more than 60 days prior to the repayment, (i) the Note with the
form entitled "Option to Elect Repayment" on the reverse of the Note duly
completed or (ii) a telegram, facsimile transmission or a letter from a member
of a national securities exchange or a member of the National Association of
Securities Dealers, Inc. (the "NASD") or a commercial bank or trust company in
the United States which must set forth the name of the holder of the Note, the
principal amount of the Note, the principal amount of the Note to be repaid, the
certificate number or a description of the tenor and terms of the Note, a
statement that the option to elect repayment is being exercised thereby and a
guarantee that the
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Note to be repaid, together with the duly completed form entitled "Option to
Elect Repayment" on the reverse of the Note, will be received by the Trustee not
later than the fifth Business Day after the date of such telegram, facsimile
transmission or letter; provided, however, that such telegram, facsimile
transmission or letter from a member of a national securities exchange or a
member of the NASD, or a commercial bank or trust company in the United States
shall only be effective in such case, if such Note and form duly completed are
received by the Trustee by such fifth Business Day. Exercise of the repayment
option by the holder of a Note will be irrevocable. The repayment option may be
exercised by the holder of a Note for less than the entire principal amount of
the Note but, in that event, the principal amount of the Note remaining
outstanding after repayment must be an authorized denomination.
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes purchased by the Company may, at its discretion, be held,
resold or surrendered to the registrar for cancellation.
BOOK-ENTRY SYSTEM
As set forth in the applicable Pricing Supplement, Notes may be issued in
the form of one or more fully registered Book-Entry Notes that will be deposited
with the Depositary or a nominee thereof. In such case, one or more Book-Entry
Notes will be issued in a denomination or aggregate denominations equal to the
portion of the aggregate principal amount of outstanding Notes to be represented
by such Book-Entry Note. Unless and until it is exchanged in whole or in part
for Notes in definitive form, a Book-Entry Note may not be transferred except as
a whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor of the Depositary or a nominee of
such successor.
Upon the issuance of a Book-Entry Note, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Notes represented by such Book-Entry Note to the accounts of persons that
have accounts with the Depositary ("participants"). The accounts to be credited
shall be designated by any underwriters or agents participating in the
distribution of such Notes. Ownership of beneficial interests in a Book-Entry
Note will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in such Book-Entry Note will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depositary for such Book-Entry Note (with respect to
interests of participants) or by participants or persons that hold through
participants (with respect to interests of persons other than participants).
So long as the Depositary, or its nominee, is the registered owner of such
Book-Entry Note, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by such Book-Entry
Note for all purposes under the Indenture. Except as set forth below, owners of
beneficial interests in a Book-Entry Note will not be entitled to have the Notes
represented by such Book-Entry Note registered in their names, will not receive
or be entitled to receive physical delivery of such Notes in definitive form and
will not be considered the owners or holders thereof under the Indenture.
Principal, premium, if any, and interest payments on Notes represented by a
Book-Entry Note registered in the name of the Depositary or its nominee will be
made to the Depositary or its nominee, as the case may be, as the registered
owner of such Book-Entry Note. None of the Company, the Trustee or any paying
agent for such Notes will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in such Book-Entry Note or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interest.
The Company expects that the Depositary, with respect to any Notes
represented by a Book-Entry Note, upon receipt of any payment of principal,
premium or interest, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial
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interests in the principal amount of such Book-Entry Note as shown on the
records of the Depositary. The Company also expects that payments by
participants to owners of beneficial interest in such Book-Entry Note held
through such participants will be governed by standing instructions and
customary practices, as is now the case with the securities held for the
accounts of customers registered in "street names" and will be the
responsibility of such participants.
If the Depositary 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 Notes in definitive form in exchange for
each Book-Entry Note. In addition, the Company may at any time and in its sole
discretion determine not to have any of the Notes represented by one or more
Book-Entry Notes and, in such event, will issue Notes in definitive form in
exchange for all of the Book-Entry Notes representing such Notes.
Upon issuance, all Fixed Rate Book-Entry Notes having the same Original
Issue Date, interest rate, if any, ranking and Maturity Date will be represented
by a single global Note, and all Floating Rate Book-Entry Notes having the same
Original Issue Date, Initial Interest Rate, Base Rate, Interest Period, Interest
Payment Dates, Interest Reset Dates, Index Maturity, Spread or Spread
Multiplier, if any, Minimum Interest Rate, if any, Maximum Interest Rate, if
any, and Maturity Date will be represented by a single global Note unless, in
each such case, such Notes are to be represented by a master Note. Certificated
Notes will not be exchangeable for Book-Entry Notes and, except under the
circumstances described above, Book-Entry Notes will not be exchangeable for
Certificated Notes and will not otherwise be issuable as Certificated Notes.
GOVERNING LAW AND JUDGMENTS
The Indenture and Notes will be governed by and construed in accordance
with the laws of the State of New York.
UNITED STATES TAX CONSIDERATIONS
The following summary describes certain United States Federal income tax
consequences relevant to a holder of a Note that is a citizen or resident of the
United States, a corporation, partnership or other entity created in or
organized under the laws of the United States or any political subdivision
thereof, an estate or trust the income of which is subject to United States
Federal income taxation regardless of its source or a holder that otherwise is
subject to United States Federal income taxation on a net income basis in
respect of a Note (a "United States holder"). This summary is based on laws,
regulations, rulings and decisions now in effect (or, in the case of certain
Treasury Regulations, now in proposed form), all of which are subject to change.
This summary deals only with United States holders that will hold Notes as
capital assets, and does not address tax considerations applicable to holders
that may be subject to special tax rules, such as banks, insurance companies,
tax-exempt organizations, dealers in securities or currencies, persons that will
hold Notes as a position in a "straddle" or as part of a "hedging" or
"conversion" transaction for United States Federal income tax purposes, persons
that have a "functional currency" other than the U.S. dollar and persons that
are not United States holders. In addition, this summary assumes that a United
States holder will not elect to treat a Note and a hedge or combination of
hedges with respect thereto as an integrated transaction for United States
Federal income tax purposes. Moreover, this summary does not address tax
considerations applicable to Notes due more than 30 years from the Original
Issue Date, the tax consequences of which will be addressed in the applicable
Pricing Supplement.
Investors should consult their own tax advisors in determining the tax
consequences to them of the acquisition, holding and sale of Notes, including
the application to their particular situation of the tax considerations
discussed below, as well as the application of state, local, foreign or other
tax laws.
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PAYMENTS OF INTEREST
Payments of "qualified stated interest" (as defined under "Notes with
Original Issue Discount") on a Note generally will be taxable to a United States
holder as ordinary interest income at the time that such payments are accrued or
are received (in accordance with the United States holder's method of tax
accounting). A United States holder who uses the cash method of accounting and
who holds a Note denominated in a currency other than U.S. dollars (a "foreign
currency"), will be required to include in income the U.S. dollar value of the
amount of interest income received (determined as of the time that such payment
is received), regardless of whether such payment in fact is received in U.S.
dollars or converted into U.S. dollars. A United States holder that uses the
accrual method of accounting will be required to include in income the U.S.
dollar value of the amount of interest income that has accrued during an accrual
period. The U.S. dollar value of such accrued income will be determined by
translating such income at the average rate of exchange for the accrual period
or, at the United States holder's election, at the spot rate of exchange on the
last day of the accrual period. Additionally, if a payment of interest is
actually received within five business days of the last day of the accrual
period or taxable year, an electing accrual basis United States holder may
instead translate such accrued interest into U.S. dollars at the exchange rate
in effect on the day of actual receipt. The average rate of exchange for an
accrual period shall be a simple average of the spot exchange rates for each
business day of such period (or other average exchange rate for the period
reasonably derived and consistently applied by the holder). Such United States
holder will recognize foreign currency gain or loss, as the case may be, on the
receipt of an interest payment if the exchange rate in effect on the date the
payment is received differs from the rate applicable to a previous accrual of
that interest income. This foreign currency gain or loss will be treated as
ordinary income or loss.
PURCHASE, SALE AND RETIREMENT OF NOTES
A United States holder's tax basis in a Note generally will equal the cost
of such Note to such holder, increased by any amounts includible in income by
the holder as original issue discount or market discount (if the United States
holder elects to include such market discount in income on a current basis) and
reduced by any amortized premium (each as described below) and any payments
other than qualified stated interest (as defined below) made on such Note. In
the case of a Note denominated in a foreign currency, the cost of such Note to a
United States holder will be the U.S. dollar value of the foreign currency
purchase price determined on the date of purchase. In the case of a Note which
is denominated in a foreign currency and is traded on an established securities
market, a cash basis taxpayer (or, if it elects, an accrual basis taxpayer) will
determine the U.S. dollar value of the cost of such Note by translating the
amount paid at the spot rate of exchange on the settlement date of the purchase.
The amount of any subsequent adjustments to a United States holder's tax basis
in a Note in respect of foreign currency-denominated original issue discount,
market discount and premium will be determined in the manner described below for
such adjustments. The conversion of U.S. dollars to a foreign currency and the
immediate use of the currency to purchase a Note generally will not result in
taxable gain or loss for a United States holder.
Upon the sale, exchange or retirement of a Note, a United States holder
generally will recognize gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement (less any accrued interest, which
will be taxable as such) and the United States holder's tax basis in the Note.
With respect to the sale, exchange or retirement of a Note denominated in a
foreign currency, the amount realized generally will be the U.S. dollar value of
the payment received determined on (i) the date of receipt of payment in the
case of a cash basis taxpayer and (ii) the date of disposition in the case of an
accrual basis taxpayer. In the case of a Note which is denominated in a foreign
currency and is traded on an established securities market, a cash basis
taxpayer (or, if it elects, an accrual basis taxpayer) will determine the U.S.
dollar value of the amount realized by translating such amount at the spot rate
of exchange on the settlement date of the sale.
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Except as discussed below with respect to market discount, short-term OID
Notes and foreign currency gain or loss, or to the extent attributable to
accrued but unpaid interest, gain or loss recognized by a United States holder
on the sale, exchange or retirement of a Note generally will be long-term
capital gain or loss if the United States holder has held the Note for more than
one year at the time of disposition and will be short-term capital gain or loss
if held for one year or less. United States holders generally may only offset
capital losses against capital gains.
Notwithstanding the foregoing, gain or loss recognized by a United States
holder on the sale, exchange or retirement of a Note denominated in a foreign
currency generally will be treated as ordinary income or loss to the extent that
the gain or loss is attributable to changes in exchange rates during the period
in which the holder held such Note.
NOTES WITH ORIGINAL ISSUE DISCOUNT
Certain Notes, including Original Issue Discount Notes (collectively, "OID
Notes"), may be considered to be issued with original issue discount, as such
term is defined under the Code, and certain Treasury Regulations issued
thereunder. A Note will be considered to be issued with original issue discount
if such Note has a stated redemption price at maturity (as defined below) that
exceeds its issue price (as defined below) by at least 0.25% of its stated
redemption price at maturity multiplied by the number of complete years to the
maturity for such Note. If the stated redemption price at maturity of a Note
exceeds its issue price, but by less than this amount, such Note will be
considered to have de minimis original issue discount and will not be an OID
Note. United States holders of OID Notes generally will be subject to the
special tax accounting rules for original issue discount obligations provided by
the Code and the Treasury Regulations issued thereunder (the "OID Regulations").
United States holders of such Notes should be aware that, as described in
greater detail below, they generally must include original issue discount in
income for United States Federal income tax purposes as it accrues, in advance
of the receipt of cash attributable to that income.
In general, each United States holder of an OID Note which matures more
than one year from the issue date, whether such holder uses the cash or the
accrual method of tax accounting, will be required to include in ordinary gross
income the sum of the "daily portions" of original issue discount on that Note
calculated under a constant yield method for all days during the taxable year
that the United States holder owns the Note. In addition, a United States holder
will be required to include any "qualified stated interest" (as defined below)
on such a Note in gross income (as interest) under the holder's regular method
of tax accounting. The daily portions of original issue discount on an OID Note
are determined by allocating to each day in any accrual period (generally any
period that is elected by a holder, provided that each accrual period is no
longer than one year and that each Interest Payment Date is the first or last
day of the accrual period) a ratable portion of the original issue discount
allocable to that accrual period. In the case of an initial holder, the amount
of original issue discount on an OID Note allocable to each accrual period is
generally determined by (i) multiplying the "adjusted issue price" (as defined
below) of the Note at the beginning of the accrual period by the yield to
maturity of the Note (adjusting the yield to take into account the length of the
particular accrual period) and (ii) subtracting from that product the amount (if
any) payable as "qualified stated interest" during that accrual period. The
"adjusted issue price" of an OID Note at the beginning of any accrual period
will be the sum of its issue price and the amount of original issue discount
allocable to all prior accrual periods, reduced by the amount of all payments
other than "qualified stated interest" payments (if any) made with respect to
such Note in all prior accrual periods. The "issue price" of a Note for this
purpose is generally the first price at which a substantial amount of the Notes
included in the particular issuance is sold to the public (excluding bond
houses, brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers). "Qualified stated interest"
generally is stated interest that is unconditionally payable in cash or in
property (other than debt instruments of the issuer) at least annually at a
single fixed rate. The "stated redemption price at maturity" of a Note is the
sum of all payments provided by the Note other than qualified stated interest
payments.
S-15
<PAGE> 16
Under the OID Regulations, interest payments on a "variable rate debt
instrument" will be considered qualified stated interest. For this purpose, a
Note is a "variable rate debt instrument" if it (x) has an issue price that does
not exceed the total noncontingent principal payments by more than an amount
equal to the lesser of (i) 0.015 multiplied by the product of such total
noncontingent principal payments and the number of complete years to maturity of
the Note and (ii) 15% of the total noncontingent principal payments; (y)
provides for stated interest (compounded or paid at least annually) at the
current value of (A) one or more qualified floating rates (as defined below),
(B) a single fixed rate followed by one or more qualified floating rates, (C) a
single objective rate (as defined below), or (D) a single fixed rate and a
single objective rate that is a qualified inverse floating rate (as defined
below); and (z) does not provide for any principal payments that are contingent.
If a Note that provides for a variable rate of interest does not qualify as a
variable rate debt instrument, such Note will be considered a "contingent
payment debt instrument" subject to rules set forth in the Treasury Regulations
that address the United States Federal income tax treatment of such instruments.
As noted under the caption "Notes with Contingent Payments," a description of
any material United States Federal income tax considerations relevant to United
States holders of such Notes will be set forth in the applicable Pricing
Supplement. A "qualified floating rate" is a floating rate under which
variations in the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the Note
is denominated. A multiple of a qualified floating rate is not a qualified
floating rate unless the relevant multiplier is (x) fixed at a number that is
greater than zero (or, for Notes issued on or after August 13, 1996, greater
than 0.65) but not more than 1.35 or (y) fixed at a number that is greater than
zero (or, for Notes issued on or after August 13, 1996, greater than 0.65) but
not more than 1.35, increased or decreased by a fixed rate. For Notes issued
before August 13, 1996, an "objective rate" is a rate (other than a qualified
floating rate) that is determined using a single fixed formula and that is based
on (i) one or more qualified floating rates; (ii) one or more rates where each
rate would be a qualified floating rate for a debt instrument denominated in a
currency other than the currency in which the Note is denominated; (iii) the
yield or changes in the price of one or more items of personal property (other
than stock or debt of the issuer or a party related thereto), each of which is
"actively traded" (within the meaning of the applicable statutory provisions);
(iv) any combination of rates described in clauses (i) through (iii) above; or
(v) other variable rates designated by the Internal Revenue Service (the
"Service"). For Notes issued on or after August 13, 1996, an "objective rate"
will be a rate "other than a qualified floating rate" that is determined using a
single fixed formula and that is based on objective financial or economic
information, provided, however, that an objective rate would not include a rate
based on information that is within the control of, or unique to the
circumstances of, the issuer (or related party within the meaning of the
applicable statutory provisions), such as dividends, profits or the value of the
issuer's stock. A variable rate is not an objective rate, however, if it is
reasonably expected that the average value of the rate during the first half of
the Note's term will be either significantly less than or significantly greater
than the average value of the rate during the final half of the Note's term. A
"qualified inverse floating rate" is an objective rate (1) that is equal to a
fixed rate minus a qualified floating rate and (2) the variations in which can
reasonably be expected to inversely reflect contemporaneous variations in the
cost of newly borrowed funds.
Under the OID Regulations, stated interest on a Note that is subject to a
maximum or minimum interest rate limitation (i.e., a cap or floor), a
restriction on the amount of increase or decrease in such rate (i.e., a
governor) or other similar restrictions generally will not be treated as a
qualified floating rate. However, a restriction will not cause a variable rate
to fail to be a qualified floating rate if it is a cap, floor or governor that
is fixed throughout the term of the Note or is a cap, floor, governor or similar
restriction that is not reasonably expected on the issue date to cause the yield
on the Note to be significantly less than (in the case of a cap), more than (in
the case of a floor), or different from (in the case of a governor), the
expected yield determined without such cap, floor or governor, as the case may
be. A Note under which interest is payable pursuant to a variable rate that
fails to qualify as a qualified floating rate or an objective rate will be
considered under the OID Regulations to have been issued with original issue
discount.
S-16
<PAGE> 17
Generally, the rules for determining the amount and accrual of original
issue discount and qualified stated interest on a variable rate debt instrument
provide for the conversion of such debt instrument into a fixed rate debt
instrument and the application of the general rules regarding original issue
discount to such debt instrument. Under such rules, the qualified stated
interest allocable to an accrual period based on such assumed fixed rate is
increased or decreased, as the case may be, if the interest actually paid during
such accrual period exceeds, or is less than, the interest assumed to be paid
during the accrual period based on such assumed fixed rate. Certain variable
rate debt instruments, though, are subject to special rules. If such special
rules apply to Notes, any material United States Federal income tax consequences
to a United States holder of such Notes resulting therefrom will be discussed in
the applicable Pricing Supplement.
While each United States holder of an OID Note which matures more than one
year from the issue date will be required to accrue original issue discount
income under a constant yield method, as described above, a taxpayer may also
elect to include in gross income all interest that accrues on a debt instrument
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount (as defined below) and unstated
interest, as adjusted by any amortizable bond premium or acquisition premium (as
discussed below)) under a constant yield method.
As a result of this "constant yield" method of including original issue
discount income, the amounts so includible in income by a United States holder
in respect of an OID Note denominated in U.S. dollars are lesser in the early
years and greater in the later years than the amounts that would be includible
on a straight-line basis.
OID Notes which are subject to redemption prior to maturity may be subject
to rules that differ from the general rules discussed above. Holders who intend
to purchase OID Notes with such a feature should carefully examine the
applicable Pricing Supplement and should consult with their own tax advisors
with respect to such a feature since the tax consequences with respect to
original issue discount will depend, in part, on the particular terms and the
particular features of the purchased Note.
Under the OID Regulations, no payment of interest on a Note that matures
one year or less from the date of its issuance would be considered to be
qualified stated interest. Therefore, any such Note would be considered to be
issued with original issue discount. In general, a United States holder who uses
the cash method of tax accounting and who holds an OID Note that matures one
year or less from the date of its issuance (a "short-term OID Note") is not
required to accrue original issue discount for United States Federal income tax
purposes unless such holder elects to do so. United States holders who utilize
the accrual method of accounting and certain other holders, including banks and
dealers in securities, are required to include original issue discount (or
alternatively, acquisition discount) on such short-term OID Notes on a
straight-line basis, unless an election is made to accrue the original issue
discount according to a constant yield method based on daily compounding. In the
case of a United States holder who is not required, and does not elect, to
include original issue discount in income currently, any gain recognized on the
sale, exchange or retirement of a short-term OID Note will be ordinary income to
the extent of the original issue discount accrued on a straight-line basis (or
alternatively under the constant yield method) through the date of sale,
exchange or retirement. In addition, such non-electing United States holders who
are not subject to the current inclusion requirement described in the fourth
sentence of this paragraph will be required to defer the deduction of all or a
portion of any interest paid on indebtedness incurred to purchase short-term OID
Notes until such original issue discount is included in such holder's income.
In the case of an OID Note denominated in a foreign currency, a United
States holder should determine the U.S. dollar amount includible in income as
original issue discount for each accrual period by (i) calculating the amount of
original issue discount allocable to each accrual period in the foreign currency
using the constant yield method described above, and (ii) translating the
foreign currency amount so derived at the average exchange rate in effect during
that accrual period or, at
S-17
<PAGE> 18
the United States holder's election, at the spot rate of exchange on the last
day of the accrual period. Because exchange rates may fluctuate, a United States
holder of an OID Note denominated in a foreign currency may recognize a
different amount of original issue discount income in each accrual period than
would the holder of a similar OID Note denominated in U.S. dollars.
A subsequent United States holder of an OID Note that purchases the Note at
a cost less than its remaining redemption amount also generally will be required
to include in gross income the daily portions of original issue discount,
calculated as described above. The remaining redemption amount is the total
amount of all future payments due under such Note other than qualified stated
interest. However, if the subsequent United States holder acquires the OID Note
at a lower yield to maturity than the yield of the Note for original issue
discount purposes with respect to the initial holder of the Note, the subsequent
United States holder may reduce its periodic inclusions of original issue
discount income to reflect the lower yield to maturity of the Note or elect to
compute original issue discount accruals by treating the purchase as a purchase
at original issue and applying the mechanics of the constant yield method.
PREMIUM AND MARKET DISCOUNT
A United States holder of a Note that purchases the Note at a cost greater
than its principal amount will be considered to have purchased the Note at a
premium, and may make an election, applicable to all notes purchased at a
premium and held by such holder, to amortize such premium, using a constant
yield method, over the remaining term of such notes. In the case of a Note
denominated in a foreign currency purchased at a premium, a United States holder
should calculate the amortization of the premium in the relevant foreign
currency and should reduce interest income by the amortizable bond premium in
units of such foreign currency. Exchange gain or loss is realized with respect
to such amortizable premium by treating such premium as a return of principal.
If a United States holder of a Note purchases the Note at a price that
produces a yield to maturity higher than the yield to maturity at which such
Note first was issued, the Note generally will be considered to bear "market
discount" in the hands of such United States holder. In such case, gain realized
by the United States holder on the sale, exchange or retirement of the Note
generally will be treated as ordinary income to the extent of the market
discount that accrued on the Note while held by such holder and such holder
could be required to defer the deduction of a portion of the interest paid on
any indebtedness incurred or continued to purchase or carry the Note (unless the
holder elects to include such market discount in income as it accrues). In
general terms, market discount on a Note will be treated as accruing ratably
over the term of such Note, or, at the election of the holder, under a constant
yield method. With respect to Notes which are denominated in a foreign currency,
the amount of market discount which accrues during any accrual period will be
determined in the foreign currency and translated into U.S. dollars (i) at the
spot rate of exchange on the date the Note is disposed of, or (ii), if the
holder elects to include such market discount in income as it accrues, at the
average exchange rate for the accrual period. A United States holder will
recognize foreign currency gain or loss, as the case may be, to the extent that
the spot rate on the date the Note is disposed of differs from the rate used to
accrue such market discount.
NOTES WITH CONTINGENT PAYMENTS
The tax consequences to United States holders of Notes with contingent
payments will depend on factors including the specific index or indices used to
determine payments on such Notes and the amount and timing of any noncontingent
payments on such Notes. A description of any material United States Federal
income tax considerations relevant to United States holders of such Notes will
be set forth in the applicable Pricing Supplement.
BACKUP WITHHOLDING AND INFORMATION REPORTING
A 31% backup withholding tax and information reporting requirements apply
in the case of certain noncorporate United States holders to certain payments of
principal of, premium, if any, and
S-18
<PAGE> 19
interest on an obligation, and to the proceeds of the sale or redemption of an
obligation before maturity. The payor will be required to withhold from any
payment that is subject to backup withholding a tax equal to 31% of such payment
if the United States holder fails to furnish his correct taxpayer identification
number (social security number or employer identification number), to certify
that such holder is not subject to backup withholding, or to otherwise comply
with the applicable requirements of the backup withholding rules. Certain
holders (including, among others, corporations and persons who are not United
States persons (if such a holder certifies as to its non-United States status
and the payor does not have actual knowledge that such certificate is false))
are not subject to the backup withholding tax and information reporting
requirements.
These backup withholding tax and information reporting rules currently are
under review by the United States Treasury Department and proposed Treasury
Regulations issued on April 15, 1996 would modify certain of such rules
generally with respect to payments made after December 31, 1997. Accordingly,
the application of such rules to the Notes could be changed.
SUPPLEMENTAL PLAN OF DISTRIBUTION
Under the terms of the Amended and Restated Distribution Agreement dated
June 18, 1996 (the "Distribution Agreement"), the Notes are being offered on a
continuing basis by the Company through Goldman, Sachs & Co., Citicorp
Securities, Inc., J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated
and NationsBanc Capital Markets, Inc. (the "Agents"), each of which has agreed
to use its reasonable best efforts to solicit purchases of the Notes. The
Company will pay each Agent a commission ranging (except as otherwise provided
in a Pricing Supplement with respect to certain Original Issue Discount Notes)
from 0.125% to 1.000% of the principal amount of each Note, depending on its
maturity, sold through such Agent. The Company will have the sole right to
accept offers to purchase Notes and may reject any such offer, in whole or in
part. Each Agent shall have the right, in its discretion reasonably exercised,
to reject any offer to purchase Notes received by it, in whole or in part.
The Company also may sell Notes to any Agent, acting as principal, for
resale to one or more investors or other purchasers at varying prices related to
prevailing market prices at the time of such resale or otherwise, as determined
by such Agent. The Agents may sell Notes to any dealer at a discount and, unless
otherwise indicated in the applicable Pricing Supplement, such discount allowed
to any dealer may include all or part of the discount to be received from the
Company. Unless otherwise indicated in the applicable Pricing Supplement, any
Note sold to an Agent as principal will be purchased by such Agent at a price
equal to 100% of the principal amount thereof less a percentage equal to the
commission applicable to any agency sale of a Note of identical maturity. After
the initial public offering of Notes to be resold to investors and other
purchasers on a fixed public offering price basis, the public offering price,
concession and discount may be changed.
The Notes may also be sold by the Company directly to investors (other than
broker-dealers) in those jurisdictions in which the Company is permitted to do
so. No commission will be paid on Notes sold directly by the Company.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Act"). The Company has agreed to
indemnify the Agents against certain liabilities, including liabilities under
the Act. The Company has agreed to reimburse the Agents for certain expenses.
The Notes may also be sold at the price to the public set forth herein to
dealers who may resell to investors. Such dealers may be deemed to be
"underwriters" within the meaning of the Act.
Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds.
S-19
<PAGE> 20
Each of the Agents may from time to time purchase and sell Notes in the
secondary market, but is not obligated to do so, and there can be no assurance
that there will be a secondary market for the Notes or liquidity in the
secondary market if one develops.
The Agents do not intend to confirm sales to accounts over which they
exercise discretionary authority.
Goldman, Sachs & Co. has rendered financial advisory services to the
Company from time to time and has received customary fees for its services. From
time to time the other Agents and certain of their affiliates have engaged, and
may in the future engage, in transactions with, and perform services for, the
Company and its affiliates in the ordinary course of business.
VALIDITY OF THE NOTES
The validity of the Notes offered hereby will be passed upon for the
Company by Nicholas J. Calise, Vice President, Associate General Counsel and
Secretary of the Company, and for the Agents by Sullivan & Cromwell, New York,
New York. The opinions of Mr. Calise and Sullivan & Cromwell will be conditioned
upon, and subject to certain assumptions regarding, future action required to be
taken by the Company and the Trustee in connection with the issuance and sale of
a particular Note, the specific terms of Notes and other matters which may
affect the validity of Notes but which cannot be ascertained on the dates of
such opinions. As of June 17, 1996, Mr. Calise owned approximately 8,590 shares
of the Company's Common Stock; held 4,000 Restricted Shares and 12,200
Performance Shares under the Company's Stock Option Plan, all of which are
subject to forfeiture; held options to purchase 76,000 shares of Common Stock;
and had credited to his account in the Company's Retirement Plus Savings Plan
approximately 4,095 shares of Common Stock.
S-20
<PAGE> 21
THE B.F.GOODRICH COMPANY
DEBT SECURITIES
------------------------
The B.F.Goodrich 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. 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 series of 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 a composite currency), maturity, rate
(which may be fixed or variable), if any, 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, any intent of any underwriter or agent to make a market
in the Debt Securities 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. See
"Plan of Distribution". Such underwriters may include Goldman, Sachs & Co., or
may be a group of underwriters represented by firms including Goldman, Sachs &
Co. Goldman, Sachs & Co. and such other firms may also act as 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.
------------------------
GOLDMAN, SACHS & CO.
------------------------
The date of this Prospectus is June 18, 1996.
<PAGE> 22
AVAILABLE INFORMATION
The B.F.Goodrich Company (including its subsidiaries unless the context
otherwise requires, the "Company" or "BFGoodrich") 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 filed
by the Company 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 Commission's Regional Offices located at Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such materials can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
such material may also be inspected and copied at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which
certain of the Company's securities are listed.
The Company has filed with the Commission registration statements on Form
S-3 (herein, together with all amendments and exhibits, collectively referred to
as the "Registration Statement") under the Securities Act of 1933, as amended
(the "Act"). This Prospectus does not contain all of the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-892) pursuant
to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1995; and
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996.
All other documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering of Debt Securities shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the respective dates of the filing of such documents. 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 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 this Prospectus.
The Company will provide without charge to each person, including a
beneficial owner, to whom a copy of this Prospectus has been delivered, upon the
written or oral request of any such person, a copy of any and all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests for such copies should be directed to
The B.F.Goodrich Company, 3925 Embassy Parkway, Akron, Ohio 44333-1799,
Attention: Secretary, telephone: (330) 374-3985.
2
<PAGE> 23
THE COMPANY
BFGoodrich participates in two principal business segments: BFGoodrich
Aerospace ("Aerospace") and BFGoodrich Specialty Chemicals ("Specialty
Chemicals"). Aerospace includes the Landing Systems Group, which manufactures
aircraft wheels and brakes and aircraft landing gear; the Sensors and Integrated
Systems Group, which manufactures sensors and related equipment, fuel and
integrated utility measurement and management systems, and engine ignition
systems; the Safety Systems Group, which manufactures aircraft evacuation slides
and rafts, ice protection systems, navigation, traffic alert and collision
avoidance systems, weather detection systems, and airport and aircraft lighting
components; and the Maintenance, Repair and Overhaul Group, which repairs and
overhauls commercial airframes, components, wheels and brakes, landing gear,
instruments and avionics for commercial, regional, business and general aviation
customers. Specialty Chemicals includes the Specialty Plastics Group, which
manufactures thermoplastic polyurethanes, low combustibility/high temperature
plastics, static-dissipating polymers and reaction-injection molding resins; the
Specialty Additives Group, which manufactures synthetic thickeners and
emulsifiers, control release and suspension agents, polymer emulsions, rubber
and lubricant additives, and plastic and adhesive additives and modifiers; and
the Sealants and Coatings Group, which manufactures insulating glass sealants,
construction sealants and waterproof coatings, commercial glazing products and
roofing products. In addition, the Company has Other Operations which include
the manufacture of chlorine, caustic soda, ethylene, and various by-products and
co-products.
BFGoodrich maintains its principal executive offices at 3925 Embassy
Parkway, Akron, Ohio 44333-1799 (telephone: (330) 374-3985). The Company was
incorporated under the laws of the State of New York in 1912 as a successor to a
business founded in 1870.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS
-------------------------------------------------- ENDED
1991 1992 1993 1994 1995 MARCH 31, 1996
------ ------ ------ ------ ------ --------------
<S> <C> <C> <C> <C> <C> <C>
1.83 1.20 1.19 2.64 3.70 2.70
</TABLE>
For the purpose of computing the ratio of earnings to fixed charges,
"earnings" represent income from continuing operations before income taxes,
fixed charges (excluding capitalized interest and distributions on quarterly
income preferred securities), amortization of previously capitalized interest
and undistributed earnings (losses) of affiliated companies which are accounted
for on the equity method. "Fixed charges" consist of interest expense (including
capitalized interest and interest costs on company-owned life insurance
policies), amortization of debt discount or premium, the portion of rental
expense representative of an interest factor and distributions on quarterly
income preferred securities.
USE OF PROCEEDS
Except as may be set forth in the Prospectus Supplement accompanying this
Prospectus, the Company intends to use the net proceeds from the sale of the
Debt Securities for general corporate purposes.
DESCRIPTION OF SECURITIES
GENERAL
The Debt Securities offered hereby will be issuable in one or more series
under an Indenture, dated as of May 1, 1991 (the "Indenture"), between the
Company and Harris Trust and Savings Bank, as Trustee (the "Trustee"). The
following statements are subject to the detailed provisions of the Trust
Indenture Act of 1939, as amended ("TIA"), and the Indenture, which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
Wherever references are made to particular provisions of the Indenture or terms
defined therein are referred to, such provisions or definitions are incorporated
by reference as a part of the statements made and such statements are qualified
in their entirety by such references.
3
<PAGE> 24
The Debt Securities to be offered by this Prospectus are limited to
$400,000,000 in aggregate principal amount. The aggregate principal amount of
Debt Securities which can be issued under the Indenture is unlimited. Except as
otherwise provided in the Prospectus Supplement relating to a particular series
of Debt Securities, the Indenture does not limit the amount of other debt,
secured or unsecured, which may be issued by the Company. The Debt Securities
may be issued in one or more series, as may be authorized from time to time by
the Company. (Section 2.5)
Reference is made to the Prospectus Supplement relating to the particular
series of Debt Securities offered hereby (the "Offered Debt Securities") for the
following terms, where applicable, of the Offered Debt Securities: (1) the
designation, the aggregate principal amount and the authorized denominations of
the Offered Debt Securities; (2) the percentage of principal amount at which the
Offered Debt Securities will be issued; (3) the currency or currencies in which
the principal of and interest, if any, on the Offered Debt Securities will be
payable; (4) the date or dates on which the Offered Debt Securities will mature;
(5) the rate or rates at which the Offered Debt Securities will bear interest,
if any, or the method by which such rate or rates will be determined; (6) the
dates on which and places at which such interest, if any, will be payable; (7)
the terms of any mandatory or optional repayment or redemption (including any
sinking fund); and (8) any other terms of the Offered Debt Securities. The
Indenture provides that Debt Securities of a single series may be issued at
various times, with different maturity dates and redemption and repayment
provisions (if any) and may bear interest at different rates. (Section 2.5)
Interest, if any, on the Offered Debt Securities is to be payable to the
persons, and in the manner, specified in the Prospectus Supplement relating to
such Offered Debt Securities.
The Debt Securities will be unsecured, unsubordinated indebtedness of the
Company and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company.
The Debt Securities will be issued in fully registered form, and, with
regard to each series of Debt Securities in respect of which this Prospectus is
being delivered, in the denominations set forth in the Prospectus Supplement
relating to such series. The Company will maintain in the place specified in the
Prospectus Supplement relating to a particular series of Debt Securities, an
office or agency where the Debt Securities of such series may be presented for
payment and may be transferred or exchanged. (Section 3.2) No service charge
will be made for any transfer or exchange of the 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 2.10)
Some of the Debt Securities may be issued as discounted Debt Securities
(bearing no interest or interest at a rate which at the time of issuance is
below market rates) to be sold at a substantial discount below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such discounted Debt Securities will be
described in the Prospectus Supplement relating thereto.
GLOBAL NOTE, DELIVERY AND FORM
Except as otherwise set forth in the Prospectus Supplement accompanying
this Prospectus, the Debt Securities will be issued in the form of one or more
fully registered Global Notes (collectively, the "Global Note") that will be
deposited with, or on behalf of, The Depository Trust Company, New York, New
York (the "Depository") and registered in the name of the Depository's nominee.
The Depository currently limits the maximum denomination of any single Global
Note to $150,000,000. Therefore, for purposes of this Prospectus, "Global Note"
refers to the Global Note or Global Notes representing an entire issue of Debt
Securities.
Except as set forth below, the Global Note may be transferred, in whole and
not in part, only to another nominee of the Depository or to a successor of the
Depository or its nominee.
The Depository has advised as follows: it is a limited-purpose trust
company which was created to hold securities for its participating organizations
(the "Participants") and to facilitate the clearance and settlement of
securities transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. Participants
include securities brokers and dealers, banks and trust companies, clearing
corporations and certain other organizations.
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Access to the Depository's 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 ("indirect
participants"). Persons who are not Participants may beneficially own securities
held by the Depository only through Participants or indirect participants.
The Depository advises that pursuant to procedures established by it (i)
upon issuance of the Global Note by the Company in connection with the sale
thereof to an underwriter or underwriters, the Depository will credit the
accounts of Participants designated by such underwriter or underwriters with the
principal amount of the Notes purchased by such underwriter or underwriters and
(ii) ownership of beneficial interests in the Global Note will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depository (with respect to Participants), by the Participants (with
respect to indirect participants and certain beneficial owners) and by indirect
participants (with respect to all other beneficial owners). The laws of some
states require that certain persons take physical delivery in definitive form of
securities which they own. Consequently, the ability to transfer beneficial
interests in the Global Note is limited to such extent.
So long as a nominee of the Depository is the registered owner of the
Global Note, such nominee for all purposes will be considered the sole owner or
holder of such Debt Securities under the Indenture. Except as provided below,
owners of beneficial interests in the Global Note will not be entitled to have
Debt Securities registered in their names, will not receive or be entitled to
receive physical delivery of Debt Securities in definitive form, and will not be
considered the owners or holders thereof under the Indenture.
Neither the Company, the Trustee, any paying agent nor any registrar of the
Debt 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 the Global Note, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Principal and interest payments on the Debt Securities registered in the
name of the Depository's nominee will be made in immediately available funds to
the Depository's nominee as the registered owner of the Global Note. Under the
terms of the Indenture, the Company and the Trustee will treat the persons in
whose names the Debt Securities are registered as the owners of such Debt
Securities for the purpose of receiving payment of principal and interest on
such Debt Securities and for all other purposes whatsoever. Therefore, neither
the Company, the Trustee nor any paying agent has any direct responsibility or
liability for the payment of principal or interest on the Debt Securities to
owners of beneficial interests in the Global Note. The Depository has advised
the Company and the Trustee that its current practice is, upon receipt of any
payment of principal or interest, to immediately credit the accounts of the
Participants with such payment in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the Global Note as shown
in the records of the Depository. The Depository's current practice is to credit
such accounts, as to interest, in next-day funds and, as to principal, in
same-day funds. Payments by Participants and indirect participants to owners of
beneficial interests in the Global Note 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 the Participants or indirect participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Debt Securities in definitive form in exchange for
the Global Note. In addition, the Company may at any time determine not to have
the Debt Securities represented by a Global Note and, in such event, will issue
Debt Securities in definitive form in exchange for the Global Note. In either
instance, an owner of a beneficial interest in the Global Note will be entitled
to have Debt Securities equal in principal amount to such beneficial interest
registered in its name and will be entitled to physical delivery of such Debt
Securities in definitive form. Debt Securities so issued in definitive form will
be issued in denominations of $1,000 and integral multiples thereof and will be
issued in registered form only, without coupons.
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CERTAIN COVENANTS
Limitation on Liens. For the benefit of each series of Debt Securities
issued under the Indenture, the Company will not, nor will it permit any
Restricted Subsidiary to, incur, issue, assume or guarantee any indebtedness for
money borrowed or any other indebtedness evidenced by notes, bonds, debentures
or other similar evidences of indebtedness for money borrowed (hereinafter
called "Debt") other than guarantees arising in connection with the sale,
discount, guarantee or pledge of notes, chattel mortgages, leases, accounts
receivable, trade acceptances and other paper arising, in the ordinary course of
business, out of installment or conditional sales to or by, or transactions
involving title retention with, distributors, dealers or other customers, of
merchandise, equipment or services, secured by pledge of, or mortgage, deed of
trust or other lien on, any Principal Property owned by the Company or any
Restricted Subsidiary, or any shares of stock or Debt of any Restricted
Subsidiary (such pledges, mortgages, deeds of trust and other liens being
hereinafter called "Mortgage" or "Mortgages"), except with respect to each
series of Debt Securities any Debt so secured on the date of issuance of such
series, without effectively providing that the Debt Securities of all series
(together with, if the Company shall so determine, any other Debt of the Company
or such Restricted Subsidiary then existing or thereafter created which is not
subordinate to the Debt Securities) shall be secured equally and ratably with
(or prior to) such secured Debt, so long as such secured Debt shall be so
secured, unless, after giving effect thereto, the aggregate principal amount of
all such secured Debt which would otherwise be prohibited, plus all Attributable
Debt of the Company and its Restricted Subsidiaries in respect of sale and
leaseback transactions (as defined below) which would otherwise be prohibited by
the covenant limiting sale and leaseback transactions described below would not
exceed the sum of 10% of Consolidated Net Tangible Assets; provided, however,
that these restrictions shall not apply to, and there shall be excluded from
secured Debt in any computation under these restrictions, Debt secured by: (i)
Mortgages on property of, or on any shares of stock or Debt of, any corporation
existing at the time such corporation becomes a Restricted Subsidiary; (ii)
Mortgages to secure indebtedness of any Restricted Subsidiary to the Company or
to another Restricted Subsidiary; (iii) Mortgages for taxes, assessments or
governmental charges or levies in each case (a) not then due and delinquent or
(b) the validity of which is being contested in good faith by appropriate
proceedings, and materialmen's, mechanics', carriers', workmen's, repairmen's,
landlord's or other like Mortgages, or deposits to obtain the release of such
Mortgages; (iv) Mortgages arising under an order of attachment or distraint or
similar legal process so long as the execution or enforcement thereof is
effectively stayed and the claims secured thereby are being contested in good
faith; (v) Mortgages to secure public or statutory obligations or to secure
payment of workmen's compensation or to secure performance in connection with
tenders, leases of real property, bids or contracts or to secure (or in lieu of)
surety or appeal bonds and Mortgages made in the ordinary course of business for
similar purposes; (vi) Mortgages in favor of the United States of America or any
State thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any State thereof, or in favor of
any other country, or any political subdivision thereof, to secure partial,
progress, advance or other payments pursuant to any contract or statute
(including Debt of the Pollution Control or Industrial Revenue Bond type) or to
secure any indebtedness incurred for the purpose of financing all or any part of
the purchase price or the cost of construction of the property subject to such
Mortgages; (vii) Mortgages on property (including any lease which should be
capitalized on the lessee's balance sheet in accordance with generally accepted
accounting principles), shares of stock or Debt existing at the time of
acquisition thereof (including acquisition through merger or consolidation or
through purchase or transfer of the properties of a corporation as an entirety
or substantially as an entirety) or to secure the payment of all or any part of
the purchase price or construction cost or improvement cost thereof or to secure
any Debt incurred prior to, at the time of, or within one year after, the
acquisition of such property or shares or Debt or the completion of any such
construction (including any improvements on an existing property) or the
commencement of commercial operation of such property, whichever is later, for
the purpose of financing all or any part of the purchase price or construction
cost thereof; (viii) Mortgages existing at the date of the Indenture; and (ix)
any extension, renewal or
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replacement (or successive extensions, renewals or replacements), as a whole or
in part, of any Mortgage referred to in the foregoing clauses (i) to (viii),
inclusive; provided, however, that (a) such extension, renewal or replacement
Mortgage shall be limited to all or a part of the same property, shares of stock
or Debt that secured the Mortgage extended, renewed or replaced (plus
improvements on such property) and (b) the Debt secured by such Mortgage at such
time is not increased. (Section 3.4)
Limitation on Sales and Leasebacks. For the benefit of each series of Debt
Securities issued under the Indenture, the Company will not, nor will it permit
any Restricted Subsidiary to, enter into any arrangement with any bank,
insurance company or other lender or investor (not including the Company or any
Restricted Subsidiary) or to which any such lender or investor is a party,
providing for the leasing by the Company or any such Restricted Subsidiary for a
period, including renewals in excess of three years, of any Principal Property
owned by the Company or such Restricted Subsidiary which has been or is to be
sold or transferred more than one year after the acquisition thereof or after
the completion of construction and commencement of full operation thereof, by
the Company or any such Restricted Subsidiary to such lender or investor or to
any person to whom funds have been or are to be advanced by such lender or
investor on the security of such Principal Property (herein referred to as a
"sale and leaseback transaction") unless either: (i) the Company or such
Restricted Subsidiary could create Debt secured by a Mortgage on the Principal
Property to be leased back in an amount equal to the Attributable Debt with
respect to such sale and leaseback transaction without equally and ratably
securing the Debt Securities of all series pursuant to the provisions of the
covenant on limitation on liens described above (which provisions include the
exceptions set forth in clauses (i) through (ix) of such covenant) or (ii) the
Company within 270 days after the sale or transfer shall have been made by the
Company or by any such Restricted Subsidiary, applies an amount equal to the
greater of (a) the net proceeds of the sale of the Principal Property sold and
leased back pursuant to such arrangement or (b) the fair market value of the
Principal Property so sold and leased back at the time of entering into such
arrangement (as determined by any two of the following: the chairman of the
Board of Directors of the Company, its president, any vice president, its
treasurer and its controller) to (x) the purchase of property, facilities or
equipment (other than the property, facilities or equipment involved in such
sale) having a value at least equal to the net proceeds of such sale or (y) the
retirement of Funded Debt of the Company (and any retirement of Debt Securities
of any series pursuant to this provision shall not be deemed to constitute a
refunding operation or anticipated refunding operation for the purposes of any
provision restricting any refunding operations with moneys borrowed having an
interest cost to the Company in excess of a certain amount with respect to the
Debt Securities of such series); provided, however, that the amount to be
applied to the retirement of Funded Debt of the Company shall be reduced by (a)
the principal amount of any Debt Securities of any series (or, if the Debt
Securities of any series are original issue discount Debt Securities, such
portion of the principal amount as may be due and payable with respect to such
series pursuant to a declaration in accordance with Section 5.1 of the
Indenture) delivered within 270 days after such sale to the Trustee for
retirement and cancellation and (b) the principal amount of Funded Debt, other
than the Debt Securities of any series, voluntarily retired by the Company
within 270 days after such sale. Notwithstanding the foregoing, no retirement
referred to in this clause (ii) may be effected by payment at maturity or
pursuant to any mandatory sinking fund payment or any mandatory prepayment
provision. (Section 3.5)
Absence of Other Restrictions. The Indenture does not contain (i) any
restrictions on the declaration of dividends; (ii) any requirements concerning
the maintenance of any asset ratio; or (iii) any requirement for the creation or
maintenance of reserves.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
The Indenture permits the Company to consolidate or merge with or into any
other entity or entities, or to sell, convey or lease all or substantially all
of its property to any other entity authorized to acquire and operate the same;
provided, however, (i) that the Person (if other than the
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Company) formed by such consolidation, or into which the Company is merged or
which acquires or leases substantially all of the property of the Company,
expressly assumes the Company's obligations on the Debt Securities and under the
Indenture, (ii) that the Company or such successor entity shall not immediately
after such consolidation or merger, or such sale, conveyance or lease, be in
default in the performance of any covenant or condition of the Indenture and
(iii) that certain other conditions are met. (Article Eight)
CERTAIN DEFINITIONS APPLICABLE TO COVENANTS
"Attributable Debt" shall mean, as to any particular lease under which the
Company is at the time liable, at any date as of which the amount thereof is to
be determined, the lesser of (i) the fair value of the property subject to such
lease (as determined by certain officers of the Company as set forth in the
Indenture) or (ii) the total net amount of rent required to be paid by the
Company under such lease during the remaining term thereof, discounted from the
respective due dates thereof to such date at the rate of interest per annum
implicit in the terms of such lease, as determined by certain officers of the
Company as set forth in the Indenture, compounded semiannually. The net amount
of rent required to be paid under any such lease for any such period shall be
the 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 a 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" shall mean the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (i) all current liabilities (excluding any thereof which are
by their terms extendible or renewable at the option of the obligor thereon to a
time more than 12 months after the time as of which the amount thereof is being
computed and excluding current maturities of long-term indebtedness and capital
lease obligations) and (ii) all goodwill, all as shown in the audited
consolidated balance sheet of the Company and its Subsidiaries contained in the
Company's then most recent annual report to stockholders.
"Funded Debt" shall mean all indebtedness for money borrowed having a
maturity of more than
12 months from the date as of which the amount thereof is to be determined or
having a maturity of less than 12 months but by its terms being renewable or
extendible beyond 12 months from such date at the option of the borrower.
"Principal Property" shall mean any building, structure or other facility,
together with the land upon which it is erected and fixtures comprising a part
thereof, used primarily for manufacturing and located in the United States of
America, in each case the net book value of which on the date as of which the
determination is being made exceeds 3% of Consolidated Net Tangible Assets;
provided, however, that Principal Property shall not include (i) any building,
structure or facility which, in the opinion 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 or (ii) any portion of a particular
building, structure or facility which, in the opinion of the Company, is not of
material importance to the use or operation of such building, structure or
facility.
"Restricted Subsidiary" shall mean any Subsidiary (i) substantially all of
the property of which is located, or substantially all of the business of which
is carried on, within the United States of America and (ii) which owns a
Principal Property; provided, however, that Restricted Subsidiary shall not
include any Subsidiary the primary business of which consists of financing
operations in connection with leasing and conditional sales transactions on
behalf of the Company and its Subsidiaries, and/or purchasing accounts
receivable and/or making loans secured by accounts receivable or inventory, or
which is otherwise primarily engaged in the business of a finance company. As of
the date of this Prospectus, the only Restricted Subsidiary is TRAMCO, INC.
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"Subsidiary" shall mean any corporation of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power for the
election of directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned by the Company, or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries. (Section
1.1)
EVENTS OF DEFAULT, WAIVER AND NOTICE
As to any series of Debt Securities, an Event of Default is defined in the
Indenture as (a) default in the payment of any installment of interest, if any,
on the Debt Securities of such series and the continuance of such default for a
period of 10 days; (b) default in the payment of the principal of (and premium,
if any, on) any of the Debt Securities of such series when due, whether at
maturity, upon redemption, by declaration or otherwise; (c) default in the
payment of a sinking fund installment, if any, on the Debt Securities of such
series; (d) default by the Company in the performance of any other covenant or
agreement contained in the Indenture for the benefit of such series and the
continuance of such default for a period of 90 days after written notice as
provided in the Indenture; (e) acceleration of any indebtedness for money
borrowed by the Company in excess of $50,000,000 under the terms of the
instrument under or by which such indebtedness is issued, evidenced or secured
if such acceleration is not rescinded or annulled within 10 days after written
notice as provided in the Indenture; (f) certain events of bankruptcy,
insolvency and reorganization of the Company; and (g) any other Event of Default
established with respect to Debt Securities of that series. (Sections 2.5 and
4.1)
The Trustee shall, within 90 days after the occurrence of a default with
respect to Debt Securities of any series, give all holders of Debt Securities of
such series then outstanding notice of all uncured defaults known to it (the
term default to mean the events specified above without grace periods); provided
that, except in the case of a default in the payment of principal (and premium,
if any) or interest, if any, on any Debt Security of any series, or in the
payment of any sinking fund installment with respect to Debt Securities of any
series, the Trustee shall be protected in withholding such notice if it in good
faith determines that the withholding of such notice is in the interest of all
holders of Debt Securities of such series then outstanding. (TIA)
The Indenture provides that if an Event of Default with respect to 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
(calculated as provided in the Indenture) of the Debt Securities of such series
then outstanding may declare the principal (or, in the case of original issue
discount Debt Securities, the portion thereof as may be specified in the
Prospectus Supplement relating to such series) of the Debt Securities of such
series and the interest accrued thereon, if any, to be due and payable
immediately. (Section 4.1)
Upon certain conditions such declarations may be annulled and past defaults
(except for defaults in the payment of principal (or premium, if any) or
interest, if any, on such Debt Securities not theretofore cured) may be waived
by the holders of not less than a majority in aggregate principal amount
(calculated as provided in the Indenture) of the Debt Securities of such series
then outstanding. (Section 4.9)
The TIA requires that the Company file with the Trustee annually a written
statement as to the presence or absence of certain defaults under the terms of
the Indenture. (TIA)
The Indenture provides that, if a default or an Event of Default shall have
occurred and be continuing, the holders of not less than a majority in aggregate
principal amount (calculated as provided in the Indenture) of the Debt
Securities of such affected series then outstanding (with each such series
voting separately as a class) shall have the right to direct the time, method
and place of conducting any proceeding or remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee by the Indenture with
respect to Debt Securities of such series. (Section 4.8)
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The Indenture provides that the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by the Indenture at the
direction of the holders of Debt Securities unless such holders shall have
offered to the Trustee reasonable security or indemnity against expenses and
liabilities. (Section 5.1(d))
DEFEASANCE
Defeasance and Discharge. The Indenture provides that the Company will be
discharged from any and all obligations in respect of the Debt Securities of any
series (except for certain obligations to register the transfer or exchange of
Debt Securities of such series, to replace stolen, lost or mutilated Debt
Securities of such series, to maintain paying agencies and to hold monies for
payment in trust), upon the deposit with the Trustee, in trust, of money and/or
U.S. Government Obligations (as defined in the Indenture) which through the
payment of interest and principal in respect thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of and
each installment of interest on the Debt Securities of such series on the stated
maturity of such payments in accordance with the terms of the Indenture and the
Debt Securities of such series. (Section 12.2) Such a trust may only be
established if, among other things, the Company delivers to the Trustee an
opinion of counsel (who may be counsel to the Company) stating that either (i)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (ii) since the date of the Indenture there has been
a change in the applicable Federal income tax law, to the effect that holders of
the Debt Securities of such series will not recognize income, 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 and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred. (Section 12.4)
Defeasance of Certain Covenants and Certain Events of Default. The
Indenture provides that the Company may omit to comply with certain restrictive
covenants in Sections 3.4 and 3.5, and Section 4.1(d) (described in clause (d)
under the caption "Events of Default" above), which noncompliance shall not be
deemed to be an Event of Default under the Indenture and the Debt Securities of
a series, upon the deposit with the Trustee, in trust, of money and/or U.S.
Government Obligations (as defined in the Indenture) which through the payment
of interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of and each
installment of interest on the Debt Securities of such series on the stated
maturity of such payments in accordance with the terms of the Indenture and the
Debt Securities of such series. The obligations of the Company under the
Indenture and the Debt Securities of such series, other than with respect to the
covenants referred to above, and the Events of Default, other than the Event of
Default referred to above, shall remain in full force and effect. (Section 12.3)
Such a trust may only be established if, among other things, the Company has
delivered to the Trustee an opinion of counsel (who may be counsel to the
Company) to the effect that the holders of the Debt Securities of such series
will not recognize income, gain, or loss for Federal income tax purposes as a
result of such deposit and defeasance of certain covenants and Events of Default
and will be subject to Federal income tax on the same amounts and in the same
manner and at the same times, as would have been the case if such deposit and
defeasance had not occurred. (Section 12.4)
In the event the Company exercises its option to omit compliance with
certain covenants of the Indenture with respect to the Debt Securities of a
series as described in the preceding paragraph and the Debt Securities of such
series are declared due and payable because of the occurrence of any Event of
Default other than an Event of Default described in clause (d) under the caption
"Events of Default" above, the amount of money and U.S. Government Obligations
on deposit with the Trustee will be sufficient to pay amounts due on the Debt
Securities of such series at the time of their stated maturity but may not be
sufficient to pay amounts due on the Debt Securities of such series at the time
of the acceleration resulting from such Event of Default.
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MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount (calculated as provided in the Indenture) of the outstanding
Debt Securities of all series affected by such modification (all such series
voting as a single class), to modify the Indenture or any supplemental indenture
or the rights of the holders of the Debt Securities; provided that no such
modification shall (i) extend the fixed maturity of any Debt Security, or reduce
the principal or premium amount thereof, or reduce the rate or extend the time
of payment of interest thereon, or make the principal amount thereof or interest
or premium thereon payable in any coin or currency other than that provided in
the Debt Security, or reduce the portion of the principal amount of an original
issue discount Debt Security due and payable upon acceleration of the maturity
thereof or the portion of the principal amount thereof provable in bankruptcy,
or reduce any amount payable upon redemption of any Debt Security, or reduce the
overdue rate thereof, or impair, if the Debt Securities provide therefor, any
right of repayment at the option of the holder of a Debt Security, without the
consent of the holder of each Debt Security so affected or (ii) reduce the
aforesaid percentage of Debt Securities the consent of the holders of which is
required for any such modification, without the consent of the holder of each
Debt Security so affected. (Section 7.2)
The Indenture also permits the Company and the Trustee to amend the
Indenture in certain circumstances without the consent of the holders of any
Debt Securities to evidence the merger of the Company or the replacement of the
Trustee and for certain other purposes. (Section 7.1)
CONCERNING THE TRUSTEE
The Trustee is also the trustee under an Indenture of Trust and Pledge,
dated as of December 1, 1981, under which the Company has guaranteed the payment
of $27 million aggregate principal amount of Port Facilities Bonds due 2001 and
2011, an Indenture of Trust and Pledge, dated as of December 1, 1981, under
which the Company has guaranteed the payment of $19.5 million aggregate
principal amount of Pollution Control Revenue Bonds due 2001 and 2011, and an
Indenture of Trust and Pledge, dated as of March 1, 1982, under which the
Company has guaranteed the payment of $1 million aggregate principal amount of
Industrial Revenue Bonds due 2001. In addition, the Company maintains deposit
accounts and conducts other banking transactions with the Trustee in the
ordinary course of the Company's business.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters and also
may sell Debt Securities directly to other purchasers or through agents. Such
underwriters may include Goldman, Sachs & Co. or a group of underwriters
represented by firms including Goldman, Sachs & Co. Goldman, Sachs & Co. and
such other firms may also act as 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.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securities to or through dealers and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Debt Securities may be deemed to be underwriters, and any discounts, concessions
or commissions received by them from the Company and any profit on the resale of
Debt Securities by them may be deemed to be underwriting discounts and
commissions, under the Act. Any such underwriter or agent will be
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identified, and any such compensation received from the Company will be
described, in the Prospectus Supplement accompanying this Prospectus.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Debt Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Act.
The Debt Securities, when first issued, will have no established trading
market. Any underwriters or agents to or through whom Debt Securities are sold
by the Company for public offering and sale may make a market in such Debt
Securities, but such underwriters or agents will not be obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of the trading market for any Debt Securities.
If so indicated in the Prospectus Supplement accompanying this Prospectus,
the Company will authorize underwriters or other persons acting as the Company's
agents to solicit offers by certain institutions to purchase Debt Securities
from the Company pursuant to contracts providing for payment and delivery on a
future date. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all cases
such institutions must be approved by the Company. The obligations of any
purchaser under any such contract will be subject to the condition that the
purchase of the offered Debt Securities shall not at the time of delivery be
prohibited under the laws of the jurisdiction to which such purchaser is
subject. The underwriters and such other agents will not have any responsibility
in respect of the validity or performance of such contracts.
Goldman, Sachs & Co. has rendered financial advisory services to the
Company from time to time and has received customary fees for its services.
VALIDITY OF DEBT SECURITIES
The validity of the Debt Securities offered hereby will be passed upon for
the Company by Nicholas J. Calise, Vice President, Associate General Counsel and
Secretary of the Company, and for the underwriters or agents, as the case may
be, by Sullivan & Cromwell, New York, New York. As of June 17, 1996, Mr. Calise
owned approximately 8,590 shares of the Company's Common Stock; held 4,000
Restricted Shares and 12,200 Performance Shares under the Company's Stock Option
Plan, all of which are subject to forfeiture; held options to purchase 76,000
shares of Common Stock; and had credited to his account in the Company's
Retirement Plus Savings Plan approximately 4,095 shares of Common Stock.
EXPERTS
The consolidated financial statements of The B.F.Goodrich Company
incorporated by reference in The B.F.Goodrich Company's Annual Report (Form
10-K) for the year ended December 31, 1995, 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.
12
<PAGE> 33
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
----
<S> <C>
Description of Notes.................. S-2
United States Tax Considerations...... S-13
Supplemental Plan of Distribution..... S-19
Validity of the Notes................. S-20
</TABLE>
<TABLE>
<CAPTION>
PROSPECTUS
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 3
Description of Securities............. 3
Plan of Distribution.................. 11
Validity of Debt Securities........... 12
Experts............................... 12
</TABLE>
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$400,000,000
THE B.F.GOODRICH
COMPANY
MEDIUM-TERM NOTES,
SERIES A
---------------------------------
---------------------------------
GOLDMAN, SACHS & CO.
CITICORP SECURITIES, INC.
J.P. MORGAN & CO.
MORGAN STANLEY & CO.
INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
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