<PAGE> 1
================================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
COMMISSION FILE NUMBER: 1-1927
THE GOODYEAR TIRE & RUBBER COMPANY
(Exact name of Registrant as specified in its charter)
OHIO 34-0253240
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1144 EAST MARKET STREET, AKRON, OHIO 44316-0001
(Address of Principal Executive Offices) (Zip Code)
(330) 796-2121
(Registrant's Telephone Number, Including Area Code)
-----------------------------------
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes No
---- ----
-----------------------------------
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
Number of Shares of Common Stock,
Without Par Value, Outstanding at March 31, 2000: 156,368,543
================================================================================
<PAGE> 2
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
Unaudited
<TABLE>
<CAPTION>
(In millions, except per share) THREE MONTHS ENDED
MARCH 31,
2000 1999
------------ ------------
<S> <C> <C>
NET SALES $ 3,536.5 $ 2,991.2
Cost of Goods Sold 2,788.6 2,331.4
Selling, Administrative and General Expense 559.7 444.8
Rationalizations - 167.4
Interest Expense 62.1 37.7
Other Expense 3.9 5.3
Foreign Currency Exchange 5.1 (34.6)
Minority Interest in Net Income of Subsidiaries 16.6 4.5
------------ ------------
Income before Income Taxes 100.5 34.7
United States and Foreign Taxes on Income 36.9 9.2
------------ ------------
NET INCOME 63.6 25.5
Retained Earnings at Beginning of Period 3,531.4 3,477.8
CASH DIVIDENDS (47.1) (46.9)
------------ ------------
Retained Earnings at End of Period $ 3,547.9 $ 3,456.4
============ ============
NET INCOME PER SHARE OF COMMON STOCK - BASIC: $ 0.41 $ 0.16
============ ============
Average Shares Outstanding 156.3 156.0
NET INCOME PER SHARE OF COMMON STOCK - DILUTED: $ 0.40 $ 0.16
============ ============
Average Shares Outstanding 158.7 157.8
CASH DIVIDENDS PER SHARE $ 0.30 $ 0.30
============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement.
-1-
<PAGE> 3
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Unaudited
<TABLE>
<CAPTION>
(In millions)
MARCH 31, DECEMBER 31,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 229.8 $ 241.3
Accounts and notes receivable,
less allowance - $86.7 ($81.9 in 1999) 2,395.3 2,296.3
Inventories:
Raw materials 338.8 389.7
Work in process 102.4 99.2
Finished product 1,943.4 1,798.3
----------- -----------
2,384.6 2,287.2
Sumitomo 1.2% Convertible Note Receivable Due 8/00 136.0 107.2
Prepaid expenses and other current assets 366.3 329.2
----------- -----------
TOTAL CURRENT ASSETS 5,512.0 5,261.2
Long Term Accounts and Notes Receivable 89.3 97.7
Investments in Affiliates, at equity 107.0 115.4
Other Assets 89.1 79.0
Goodwill 544.9 516.9
Deferred Charges 1,240.6 1,271.4
Properties and Plants,
less accumulated depreciation - $5,629.6 ($5,551.4 in 1999) 5,664.1 5,761.0
----------- -----------
TOTAL ASSETS $ 13,247.0 $ 13,102.6
=========== ===========
LIABILITIES:
CURRENT LIABILITIES:
Accounts payable - trade $ 1,320.6 $ 1,417.5
Compensation and benefits 777.3 794.5
Other current liabilities 301.2 294.5
United States and foreign taxes 261.8 249.0
Notes payable 1,193.0 862.3
Sumitomo 1.2% Convertible Note Payable Due 8/00 126.6 127.8
Long term debt due within one year 181.4 214.3
----------- -----------
TOTAL CURRENT LIABILITIES 4,161.9 3,959.9
Long Term Debt and Capital Leases 2,279.2 2,347.9
Compensation and Benefits 2,147.7 2,137.4
Other Long Term Liabilities 139.5 149.1
Minority Equity in Subsidiaries 884.7 891.2
----------- -----------
TOTAL LIABILITIES 9,613.0 9,485.5
SHAREHOLDERS' EQUITY:
Preferred Stock, no par value:
Authorized 50,000,000 shares, unissued - -
Common Stock, no par value:
Authorized 300,000,000 shares
Outstanding shares - 156.4 (156.3 in 1999)
after deducting 39.3 treasury shares (39.3 in 1999) 156.4 156.3
Capital Surplus 1,030.1 1,029.6
Retained Earnings 3,547.9 3,531.4
Accumulated Other Comprehensive Income (1,100.4) (1,100.2)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 3,634.0 3,617.1
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 13,247.0 $ 13,102.6
=========== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-2-
<PAGE> 4
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Unaudited
<TABLE>
<CAPTION>
(In millions) Accumulated Other
Comprehensive Income
-----------------------------------
Common Capital Retained Foreign Minimum Unrealized Total
Stock Surplus Earnings Currency Pension Investment Shareholders'
Translation Liability Gains Equity
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 $156.3 $ 1,029.6 $3,531.4 $ (1,072.2) $ (15.2) $ (12.8) $ 3,617.1
Comprehensive income for 2000:
NET INCOME 63.6
FOREIGN CURRENCY TRANSLATION (20.4)
MINIMUM PENSION LIABILITY 1.7
UNREALIZED INVESTMENT GAIN 18.5
(NET OF TAX OF $11.4)
TOTAL COMPREHENSIVE INCOME 63.4
Cash dividends (47.1) (47.1)
Common stock issued 0.1 0.5 0.6
-------------------------------------------------------------------------------
Balance at March 31, 2000 $156.4 $ 1,030.1 $3,547.9 $ (1,092.6) $ (13.5) $ 5.7 $ 3,634.0
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive Income
-------------------------
Common Capital Retained Foreign Minimum Total
Stock Surplus Earnings Currency Pension Shareholders'
Translation Liability Equity
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 $ 155.9 $ 1,015.9 $ 3,477.8 $ (877.6) $ (26.2) $ 3,745.8
COMPREHENSIVE INCOME FOR 1999:
NET INCOME 25.5
FOREIGN CURRENCY TRANSLATION (161.1)
MINIMUM PENSION LIABILITY 4.6
TOTAL COMPREHENSIVE INCOME (131.0)
Cash dividends (46.9) (46.9)
Common stock transactions 0.1 0.7 0.8
--------------------------------------------------------------------------------
Balance at March 31, 1999 $ 156.0 $ 1,016.6 $ 3,456.4 $ (1,038.7) $ (21.6) $ 3,568.7
================================================================================
</TABLE>
The accompanying notes are an integral part of this financial statement.
-3-
<PAGE> 5
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
(In millions)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 63.6 $ 25.5
Adjustments to reconcile net income to cash flows
from operating activities:
Depreciation and amortization 160.4 140.1
Rationalizations - 116.0
Changes in operating assets and liabilities, net of noncash
rationalizations:
Accounts and notes receivable (151.9) (226.3)
Inventories (130.7) (0.5)
Accounts payable-trade (76.7) (24.5)
Other assets and liabilities 0.9 (131.1)
-------- --------
Total adjustments (198.0) (126.3)
-------- --------
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES (134.4) (100.8)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (127.7) (148.8)
Other transactions 19.7 (47.7)
-------- --------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (108.0) (196.5)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short term debt incurred 536.2 380.8
Short term debt paid (830.9) (70.0)
Long term debt incurred 600.7 14.7
Long term debt paid (26.3) (16.1)
Common stock issued 0.5 0.7
Dividends paid (47.1) (46.9)
-------- --------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 233.1 263.2
Effect of Exchange Rate Changes on Cash and Cash Equivalents (2.2) (13.9)
-------- --------
Net Change in Cash and Cash Equivalents (11.5) (48.0)
Cash and Cash Equivalents at Beginning of the Period 241.3 239.0
-------- --------
Cash and Cash Equivalents at End of the Period $ 229.8 $ 191.0
======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-4-
<PAGE> 6
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
All per share amounts in these Notes to Financial Statements are
diluted unless otherwise indicated.
RATIONALIZATIONS
Rationalization charges were recorded on the Consolidated Statement of
Income, as follows:
<TABLE>
<CAPTION>
(In millions, except per share) THREE MONTHS ENDED
MARCH 31, 1999
<S> <C>
Rationalizations $ 167.4
=========
After Tax 116.0
=========
</TABLE>
The 1999 first quarter charge related primarily to the termination of tire
production at the Company's Gadsden, Alabama facility and the downsizing and
consolidation of tire manufacturing facilities at Freeport, Illinois and 12
other locations in Europe and Latin America. Of the $167.4 million charge
recorded, $28.4 million related to non-cash writeoffs and $139.0 million related
to future cash outflows, primarily for associate severance costs. Of the $167.4
million of rationalization actions recorded during the first quarter of 1999,
$33.4 million and $11.3 million related to Gadsden were reversed in the 1999
third and fourth quarters, respectively. The reversals resulted from the
Company's decision to resume production of certain tire lines in a portion of
the Gadsden facility due to higher than expected demand.
1999 PROGRAM - The Company committed to a number of rationalization actions in
the first, third and fourth quarters of 1999 totaling $240.1 million, of which
$167.4 million was recorded in the 1999 first quarter. The balance of the
provisions recorded under the 1999 program totaled $24.8 million and $41.2
million at March 31, 2000 and December 31, 1999, respectively.
Associate-related rationalization costs totaling $171.6 million were
recorded in 1999 and were incurred during the 2000 first quarter, as follows:
Balance at Balance at
(In millions) 12/31/99 INCURRED 3/31/00
------- ------- -------
North American Tire staffing $ 11.1 $ (4.2) $ 6.9
European associate reductions 6.2 (.7) 5.5
Asset sales and other exit costs 5.8 (.1) 5.7
Termination of tire production 5.6 (2.7) 2.9
Plant downsizing and consolidation .4 (.4) -
Withdrawal of support for CART/IRL .3 (.3) -
------- ------- -------
$ 29.4 $ (8.4) $ 21.0
======= ======= =======
Under the above programs, during the 2000 first quarter, approximately 200
associates, primarily production and support associates at a Latin American
facility were released. The Company plans to release approximately 600 more
associates under the above programs during 2000.
Rationalization costs, other than associate-related costs, totaling $68.5
million were recorded in 1999 and were incurred during the 2000 first quarter,
as follows:
Balance at Balance at
(In millions) 12/31/99 INCURRED 3/31/00
------- ------- -------
Withdrawal of support for CART/IRL $ 9.5 $ (6.8) $ 2.7
Termination of tire production 2.1 (1.2) .9
Plant downsizing and consolidation .1 - .1
Asset sales and other exit costs .1 - .1
------- ------- -------
$ 11.8 $ (8.0) $ 3.8
======= ======= =======
The Company will complete these actions during 2000.
-5-
<PAGE> 7
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
RATIONALIZATIONS (continued)
- ----------------------------
1997 PROGRAM - Associate-related rationalization costs totaling $146.1 million
were recorded in 1997 and were incurred during the 2000 first quarter, as
follows:
Balance at Balance at
(In millions) 12/31/99 Incurred 3/31/00
-------- -------- -------
Kelly-Springfield consolidation $ 10.3 $ (1.5) $ 8.8
Plant downsizing and closure activities 4.8 (4.4) .4
Consolidation of North American
distribution facilities 5.3 (.8) 4.5
------- ------- -------
$ 20.4 $ (6.7) $ 13.7
======= ======= =======
During the 2000 first quarter, approximately 150 associates were released under
the above programs. Under the 1997 program, the Company plans to release
approximately 250 more associates during 2000, primarily hourly associates at
manufacturing and distribution locations in the United States and certain
supervisory and staff associates in the United States.
Rationalization costs, other than associate-related costs, totaling
$119.1 million were recorded in 1997 and were incurred during the 2000 first
quarter, as follows:
Balance at Balance at
(In millions) 12/31/99 Incurred 3/31/00
------- ------- -------
Kelly-Springfield consolidation $ 12.1 $ (.1) $ 12.0
Consolidation of North American
distribution facilities .4 (.3) .1
------- ------- -------
$ 12.5 $ (.4) $ 12.1
======= ======= =======
The Company will complete these actions during 2000.
DUNLOP RATIONALIZATIONS
- -----------------------
The following rationalization actions have been recorded as adjustments
to the purchase price allocation in respect of the acquired Dunlop businesses,
and did not affect the Consolidated Statement of Income.
2000 DUNLOP PROGRAM - The Company committed to certain rationalization actions
in the first quarter of 2000 related to the Dunlop businesses acquired from
Sumitomo on September 1, 1999 for the purpose of optimizing market growth
opportunities and maximizing cost efficiencies. The Company recorded $17.0
million related to these actions, all of which related to future cash outflows,
primarily for associate severance costs. The balance of these provisions totaled
$15.3 million at March 31, 2000.
Associate-related rationalization costs were recorded in the first
quarter of 2000 and were incurred during 2000, as follows:
Balance at
(In millions) Recorded Incurred 3/31/00
-------- -------- -------
Birmingham associate reductions $17.0 $(1.7) $15.3
======= ======= =======
The first quarter 2000 charges provide for the release of approximately 650
operating, engineering and support associates in Birmingham, England. During the
2000 first quarter, approximately 150 associates were released. The Company
plans to release approximately 500 more associates by March 31, 2001.
-6-
<PAGE> 8
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
RATIONALIZATIONS (continued)
- ----------------------------
1999 DUNLOP PROGRAM - Associate-related rationalization costs totaling $4.4
million were recorded in 1999, and were incurred during the 2000 first quarter,
as follows:
Balance at Balance at
(In millions) 12/31/99 Incurred 3/31/00
-------- -------- -------
Research and development reorganization $ 1.9 $ (.9) $ 1.0
Associate downsizing and relocation 1.4 (.4) 1.0
------ ------ ------
$ 3.3 $ (1.3) $ 2.0
====== ====== ======
During the 2000 first quarter, approximately 60 associates primarily in research
and development operations were released or relocated. The Company plans to
release approximately 20 more associates during 2000 under this program.
Rationalization costs, other than associate-related costs, totaling $2.5
million were recorded in 1999, and were incurred during the 2000 first quarter,
as follows:
Balance at Balance at
(In millions) 12/31/99 Incurred 3/31/00
---------- -------- ----------
Closure of United Kingdom retail outlets $ 2.1 $ (.1) $ 2.0
====== ====== ======
The Company expects that these actions will be completed during 2000, except for
future rental payments under noncancellable leases.
The Company has been undergoing an extensive analysis and assessment of
the various activities of the combined businesses and is formulating, but has
not completed, plans to further integrate the businesses in order to optimize
market growth opportunities as well as maximize cost efficiencies. The actions
contemplated under the plans will include the downsizing or consolidation of
various manufacturing, distribution, sales, support and administrative
operations. The execution of the plan is contingent upon the completion of the
analysis of the optimal integration of manufacturing, distribution and sales
operations and facilities, information systems, research and development
activities and the appropriate staffing levels for various other functions. The
plans are expected to be finalized by the third quarter of 2000. The Company
anticipates that some of these actions will result in charges to future
operations while others will result in an adjustment to the acquisition cost.
The Company anticipates that it may incur additional rationalization charges in
future periods, in the range of $15 million to $18 million, related to the
closure of the Italian plant.
Further actions contemplated by the Company related to the Dunlop
businesses acquired on September 1, 1999 are expected to result in costs
totaling $50 million to $80 million. These costs include associate severance
costs and noncancellable lease obligations. The costs will be recorded as an
adjustment to the acquisition cost and will result in increased values assigned
to goodwill.
PER SHARE OF COMMON STOCK
- -------------------------
Basic earnings per share have been computed based on the average number
of common shares outstanding. The following table presents the number of
incremental weighted average shares used in computing diluted per share amounts:
THREE MONTHS ENDED
MARCH 31,
2000 1999
----- -----
Average share outstanding - basic 156.3 156.0
Stock options .1 1.1
1.2% Convertible Note 2.3 .7
----- -----
Average shares outstanding - diluted 158.7 157.8
===== =====
-7-
<PAGE> 9
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
INVESTMENTS AND NONCASH INVESTING ACTIVITIES
- --------------------------------------------
The Consolidated Statement of Cash Flows is presented net of the
following transactions.
In connection with the Company's strategic alliance with Sumitomo, on
February 25, 1999 the Company issued to Sumitomo at par its 1.2% Convertible
Note Due August 16, 2000, in the principal amount of Yen13,073,070,934. The
Company's Note is convertible, if not earlier redeemed, during the period
beginning July 16, 2000 through August 15, 2000 into 2,281,115 shares of the
Common Stock, without par value, of the Company at a conversion price of
Yen5,731 per share, subject to certain adjustments. In addition, on February 25,
1999, the Company purchased at par from Sumitomo a 1.2% Convertible Note Due
August 16, 2000, in the principal amount of Yen13,073,070,934 (the "Sumitomo
Note"). The Sumitomo Note is convertible, if not earlier redeemed, during the
period beginning July 16, 2000 through August 15, 2000 into 24,254,306 shares of
the Common Stock, Yen50 par value per share, of Sumitomo at a conversion price
of Yen539 per share, subject to certain adjustments. The principal amount of
each Note was equivalent to $126.6 million at March 31, 2000. The Company and
Sumitomo have agreed not to redeem their respective Notes, and to convert the
Notes, if the joint ventures are operating on July 1, 2000.
The Company has classified its investment in the Sumitomo Note as
available-for-sale, as provided in Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities". The
fair value of the Sumitomo Note as an equity instrument was $136.0 million at
March 31, 2000. Changes in the fair value of the Sumitomo Note are reported in
the Consolidated Balance Sheet as Accumulated Other Comprehensive Income. The
Company's 1.2% Convertible Note Payable has been designated as a hedge of the
exchange exposure of the Sumitomo Note. To the extent the hedge is effective,
the effect of exchange rate changes on the Company's Note are reported on the
Consolidated Balance Sheet as Accumulated Other Comprehensive Income. At March
31, 2000 the gross unrealized holding gain on the Sumitomo Note, net of the
hedge, totaled $9.2 million ($5.7 million after tax).
NON-CONSOLIDATED OPERATIONS - SOUTH PACIFIC TYRE
- ------------------------------------------------
In addition to its consolidated operations in the Asia region, the Company
owns a 50% interest in South Pacific Tyres Ltd (SPT), a partnership with Pacific
Dunlop Ltd of Australia. SPT is the largest tire manufacturer, marketer and
exporter in Australia and New Zealand. The Company is required to use the equity
method to account for its interest in the results of operations and financial
position of SPT.
The following table presents sales and EBIT of the Company's Asia Tire
segment and 100% of the operations of SPT:
(In millions) THREE MONTHS ENDED
MARCH 31,
------------------
2000 1999
------ ------
NET SALES:
Asia Tire $134.7 $141.0
SPT 150.1 154.6
------ ------
$284.8 $295.6
====== ======
EBIT:
Asia Tire $ 9.8 $ 3.6
SPT (3.0) 8.8
------ ------
$ 6.8 $ 12.4
====== ======
ADJUSTMENTS
- -----------
All adjustments, consisting of normal recurring adjustments, necessary for
a fair statement of the results of these unaudited interim periods have been
included.
RECLASSIFICATION
- ----------------
Certain items previously reported in specific financial statement captions
have been reclassified to conform to the 2000 presentation.
-8-
<PAGE> 10
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
STRATEGIC ALLIANCE
- ------------------
The following table presents supplemental pro forma estimated results
of operations as if the joint ventures had commenced operations on January 1,
1999.
THREE MONTHS ENDED
MARCH 31,
2000 1999
---- ----
(In millions, except per share)
Net Sales $ 3,536.5 $ 3,569.5
============ ============
Net Income $ 63.6 $ 30.6
============ ============
Net Income Per Share - Basic $ .41 $ .19
============ ============
Net Income Per Share - Diluted $ .40 $ .19
============ ============
BUSINESS SEGMENTS
- -----------------
Portions of the items reported as Rationalizations on the Consolidated
Statement of Income were not charged to segment operating income (EBIT) but were
attributable to the Company's seven segments as follows:
(In millions) THREE MONTHS ENDED
MARCH 31, 1999
------------------
RATIONALIZATIONS
----------------
North American Tire $ 95.5
European Union Tire 6.7
Eastern Europe, Africa
and Middle East Tire 2.1
Latin American Tire 42.5
Asia Tire 1.5
------
TOTAL TIRES 148.3
Engineered Products 9.1
Chemical Products 3.1
------
TOTAL SEGMENTS 160.5
Corporate 6.9
------
TOTAL RATIONALIZATIONS $167.4
=======
-9-
<PAGE> 11
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
SEGMENT INFORMATION
Unaudited
<TABLE>
<CAPTION>
(In millions) THREE MONTHS ENDED
MARCH 31,
2000 1999
--------- ---------
SALES:
<S> <C> <C>
North American Tire $ 1,653.4 $ 1,507.1
European Union Tire 846.5 503.5
Eastern Europe, Middle East & Africa Tire 187.2 181.2
Latin American Tire 253.3 240.6
Asia Tire 134.7 141.0
---------- ----------
TOTAL TIRES 3,075.1 2,573.4
Engineered Products 314.6 308.7
Chemical Products 273.0 228.4
---------- ----------
TOTAL SEGMENT SALES 3,662.7 3,110.5
Inter-SBU Sales (135.4) (120.4)
Other 9.2 1.1
---------- ----------
NET SALES $ 3,536.5 $ 2,991.2
========== ==========
INCOME:
North American Tire $ 71.6 $ 91.7
European Union Tire 43.7 45.3
Eastern Europe, Middle East & Africa Tire 15.3 9.8
Latin American Tire 23.4 30.1
Asia Tire 9.8 3.6
---------- ----------
TOTAL TIRES 163.8 180.5
Engineered Products 23.5 20.5
Chemical Products 22.5 28.7
---------- ----------
TOTAL SEGMENT INCOME (EBIT) 209.8 229.7
Rationalizations - (167.4)
Interest expense (62.1) (37.7)
Foreign currency exchange (5.1) 34.6
Minority interest in net income of subsidiaries (16.6) (4.5)
Inter-SBU income (9.4) (14.0)
Other (16.1) (6.0)
---------- ----------
INCOME BEFORE INCOME TAXES $ 100.5 $ 34.7
========== ==========
</TABLE>
- 10 -
<PAGE> 12
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
CONSOLIDATED
(All per share amounts are diluted)
Sales in the first quarter of 2000 were $3.54 billion, increasing 18.3%
from $2.99 billion in the 1999 quarter. Net income in the 2000 quarter was $63.6
million or $.40 per share, compared to $25.5 million or $.16 per share in the
1999 period, which included after-tax rationalization charges of $116.0 million
or $.74 per share.
Worldwide tire unit sales in the 2000 quarter were 54.8 million units, an
increase of 9.1 million units or 19.8% compared to the 1999 period, including
8.9 million units contributed by the Dunlop businesses acquired from Sumitomo on
September 1, 1999. North American (U.S. and Canada) volume increased 3.1 million
units or 12.3% (including 2.9 million units from Dunlop operations), while
international unit sales increased 5.9 million units or 29.1% (including 6
million units contributed by Dunlop operations) in the 2000 quarter. Worldwide
replacement unit sales increased 17.7% from the 1999 quarter, primarily in
Europe. Original equipment unit sales increased 24.7%, due primarily to
increased volume in Europe.
Sales increased in the 2000 quarter due primarily to higher tire unit sales
resulting from the addition of the Dunlop businesses. The Dunlop businesses
contributed $576.8 million to 2000 first quarter sales. Revenues in the 2000
quarter were adversely impacted by the effect of currency translations on
international results. The Company estimates that versus the 1999 quarter,
currency movements adversely affected revenues by approximately $50 million. In
addition, revenues were adversely affected by continued worldwide competitive
pricing pressures and a shift in mix to lower priced tires. All business units
of the Company have announced price increases to offset increasing raw material
costs, however revenues in future periods may continue to be adversely affected
by competitive pricing pressures and currency translations.
- 11 -
<PAGE> 13
EBIT (sales less cost of goods sold and selling, administrative and general
expense) decreased in the first quarter of 2000 due to the worldwide competitive
pricing environment, increased cost of goods sold due primarily to higher raw
material costs and a change in product and market mix to lower priced and lower
margin tires. The Company estimates that versus the 1999 quarter, currency
movements adversely affected EBIT by approximately $5 million. EBIT in the 2000
first quarter was favorably affected by the acquisition of the Dunlop
businesses, which contributed $44.1 million in EBIT.
The Company is unable to predict the impact of currency fluctuations and
economic conditions on its sales and EBIT in future periods. Reported EBIT in
future periods is likely to be unfavorably impacted if the dollar strengthens
versus various foreign currencies and by anticipated increases in energy and raw
material prices and labor costs, which may not be recoverable in the market due
to pricing pressures present in today's highly competitive market conditions.
Similarly, continued weak economic conditions in Latin America could adversely
affect EBIT in future periods.
The following table presents cost of goods sold (CGS) and selling,
administrative and general expense (SAG) as a percent of sales:
Three Months Ended March 31,
2000 1999
---- ----
CGS 78.9% 77.9%
SAG 15.8 14.9
Cost of goods sold increased in dollars due primarily to the addition of the
Dunlop businesses. Costs of goods sold increased in dollars and as a percent to
sales due primarily to increased raw material costs. SAG increased in the first
quarter of 2000 in dollars and as a percent to sales due to higher SAG levels at
the Dunlop businesses.
Interest expense rose 64.4% in the 2000 quarter due to higher debt levels
incurred primarily to fund the acquisition of the Dunlop businesses.
Foreign currency exchange losses of $5.1 million reduced first quarter 2000
earnings, compared to a gain of $34.6 million in the 1999 period, primarily due
to the revaluation of the Brazilian real.
U.S. and foreign taxes on income in the 2000 quarter reflected an increase
in the Company's estimated annual effective tax rate to 31.5%. The effective tax
rate in the 1999 first period was 23.5%, reflecting rationalization charges in
that period.
- 12 -
<PAGE> 14
RATIONALIZATION ACTIVITY - Rationalization charges were recorded on the
Consolidated Statement of Income in the 1999 first quarter as follows:
(In millions, except per share) THREE MONTHS ENDED
MARCH 31, 1999
------------------
Rationalization Actions $167.4
After Tax 116.0
Per Share $ .74
The 1999 first quarter charge related primarily to the termination of tire
production at the Company's Gadsden, Alabama facility and the downsizing and
consolidation of tire manufacturing facilities at Freeport, Illinois and 12
other locations in Europe and Latin America. Of the $167.4 million charge
recorded, $28.4 million related to non-cash writeoffs and $139.0 million related
to future cash outflows, primarily for associate severance costs. Of the $167.4
million of rationalization actions recorded during the first quarter of 1999,
$33.4 million and $11.3 million related to Gadsden were reversed in the 1999
third and fourth quarters, respectively. The reversals resulted from the
Company's decision to resume production of certain tire lines in a portion of
the Gadsden facility due to higher than expected demand.
1999 RATIONALIZATION PROGRAM - The Company committed to a number of
rationalization actions in the first, third and fourth quarters of 1999 totaling
$240.1 million, of which $167.4 million ($116.0 million after tax or $.74 per
share) was recorded in the 1999 first quarter. The balance of the provisions
recorded under the 1999 program totaled $24.8 million and $41.2 million at March
31, 2000 and December 31, 1999, respectively.
Under the 1999 program, during the first quarter of 2000, approximately 200
associates, primarily production and support associates at a Latin American
facility, were released at a cost of $8.4 million. The Company plans to release
approximately 600 more associates under the 1999 program during 2000. The
remaining reserve related to the completion of the 1999 program was $21.0
million and $29.4 million at March 31, 2000 and December 31, 1999, respectively.
Rationalization costs, other than for associate-related costs, totaling
$8.0 million were incurred during the first quarter of 2000, primarily for
contract settlement costs as a result of the Company's exit from the
Championship Auto Racing Teams and Indy Racing League (CART/IRL) racing series.
The balance of the reserve at March 31, 2000 totaled $3.8 million compared to
$11.8 million at December 31, 1999.
- 13 -
<PAGE> 15
The Company will complete these actions during 2000. Annual pretax savings
of approximately $219 million are expected when the planned actions have been
fully implemented.
1997 RATIONALIZATION PROGRAM - During the first quarter of 2000, approximately
150 associates in North American operations were released under the 1997 program
at a cost of $6.7 million. The Company plans to release approximately 250 more
associates under the 1997 program during 2000 and had reserved $13.7 million for
that cost at March 31, 2000, compared to $20.4 million at December 31, 1999.
Rationalization costs, other than for associate-related costs, totaling $.4
million were incurred during the first quarter of 2000. The balance of the
reserve at March 31, 2000 totaled $12.1 million compared to $12.5 million at
December 31, 1999.
The Company will complete the 1997 program during 2000. Annual pretax
savings of approximately $200 million are expected when the planned actions have
been fully implemented.
DUNLOP RATIONALIZATIONS - The following rationalization actions have been
recorded as adjustments to the purchase price allocation in respect of the
acquired Dunlop businesses, and did not affect the Consolidated Statement of
Income.
2000 DUNLOP RATIONALIZATION PROGRAM - The Company committed to certain
rationalization actions in the first quarter of 2000 related to the Dunlop
businesses acquired from Sumitomo on September 1, 1999 for the purpose of
optimizing market growth opportunities and maximizing cost efficiencies. The
Company recorded $17.0 million related to these actions, all of which related to
future cash outflows, primarily for associate severance costs. The balance of
these provisions totaled $15.3 million at March 31, 2000.
The first quarter 2000 charges provide for the release of approximately
650 operating, engineering and support associates in Birmingham, England. During
the first quarter of 2000, approximately 150 associates were released at a cost
of $1.7 million. The Company plans to release approximately 500 more associates
under the 2000 Dunlop program by March 31, 2001 and had reserved $15.3 million
for that cost at March 31, 2000.
1999 DUNLOP RATIONALIZATION PROGRAM - During the first quarter of 2000,
approximately 60 associates were released or relocated under the 1999 Dunlop
program at a cost of $1.3 million. The Company plans to release approximately
20 more associates under the 1999 Dunlop program during 2000 and had reserved
$2.0 million for that cost at March 31, 2000, compared to $3.3 million at
December 31, 1999.
- 14 -
<PAGE> 16
Under the 1999 Dunlop program, rationalization costs, other than for
associate-related costs, totaling $.1 million were incurred during the first
quarter of 2000. The balance of the reserve at March 31, 2000 totaled $2.0
million compared to $2.1 million at December 31, 1999.
The Company expects that these actions will be completed during 2000,
except for future rental payments under noncancellable leases. Annual pretax
savings of approximately $11 million are expected when the planned actions have
been fully implemented.
For further information, refer to the note to the financial statements,
Rationalizations.
The Company has been undergoing an extensive analysis and assessment of the
various activities of the combined businesses and is formulating, but has not
completed, plans to further integrate the businesses in order to optimize market
growth opportunities as well as maximize cost efficiencies. The actions
contemplated under the plans will include the downsizing or consolidation of
various manufacturing, distribution, sales, support and administrative
operations. The execution of the plan is contingent upon the completion of the
analysis of the optimal integration of manufacturing, distribution and sales
operations and facilities, information systems, research and development
activities and the appropriate staffing levels for various other functions. The
plans are expected to be finalized by the third quarter of 2000. The Company
anticipates that some of these actions will result in charges to future
operations while others will result in an adjustment to the acquisition cost.
Further actions contemplated by the Company related to the businesses
acquired are expected to result in costs totaling $50 million to $80 million.
These costs include associate severance costs and noncancellable lease
obligations. The costs will be recorded as an adjustment to the acquisition cost
and will result in increased values assigned to goodwill.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities". SFAS 133 requires all derivatives to be
recognized as either assets or liabilities on the balance sheet and measured at
fair value. Changes in such fair value are required to be recognized in earnings
to the extent that the derivatives are not effective as hedges. The provisions
of SFAS 133, as amended, are effective for fiscal years beginning January 1,
2001 for companies on a calendar year reporting basis and are effective for
interim periods in the initial year of adoption. The Company is currently
assessing the financial statement impact of the adoption of SFAS 133.
- 15 -
<PAGE> 17
SEGMENT INFORMATION
Segment EBIT was $209.8 million in the first quarter of 2000, decreasing
8.7% from $229.7 million in the 1999 quarter. Segment operating margin in the
first quarter of 2000 was 5.7%, compared to 7.4% in the 1999 period. Segment
EBIT did not include rationalization charges attributable to operating segments
totaling $160.5 million in the 1999 first quarter.
NORTH AMERICAN TIRE
North American Tire segment sales in the first quarter of 2000 were $1.65
billion, increasing 9.7% from $1.51 billion in the 1999 quarter.
Unit sales in the 2000 quarter increased 3.1 million units or 12.3% from
the 1999 period. Dunlop operations contributed 2.9 million units. Replacement
unit sales increased 14.8% and original equipment volume increased 8.2%.
Sales in the 2000 quarter increased from the 1999 period due to the
acquisition of the Dunlop Tire businesses in the United States and Canada. The
Dunlop businesses contributed $178.7 million to 2000 first quarter sales.
Revenues in the first quarter of 2000 were adversely impacted by competitive
pricing pressures and a shift in mix in the replacement market to lower priced
tires and less profitable channels of distribution. Revenues in future periods
are likely to be adversely affected by competitive pricing pressures and a
change in the channel mix in the replacement market.
EBIT in North America was $71.6 million in the first quarter of 2000,
decreasing 21.9% from $91.7 million in the 1999 quarter. The Dunlop businesses
contributed $16.1 million to 2000 first quarter EBIT. Operating margin in 2000
was 4.3%, compared to 6.1% in 1999.
EBIT in the first quarter of 2000 decreased from the 1999 period due
primarily to increased raw material costs and a change in product and channel
mix. EBIT was favorably affected in the first quarter of 2000 by the acquisition
of the Dunlop Tire businesses in the United States and Canada.
EBIT in the 1999 period did not include rationalizations totaling $95.5
million.
In addition to potential adverse changes in pricing and mix, EBIT in
future periods is likely to be adversely affected by higher raw material costs.
- 16 -
<PAGE> 18
EUROPEAN UNION TIRE
European Union Tire segment sales in the first quarter of 2000 were $846.5
million, increasing 68.1% from $503.5 million in the 1999 period.
Unit sales in the 2000 quarter increased 5.7 million units or 60.4% from
the 1999 period. Dunlop operations contributed 5.9 million units. Replacement
unit sales increased 48.7% and original equipment volume increased 96.2%.
Sales in the 2000 quarter increased from the 1999 period due to the
acquisition of the Dunlop Tire businesses, which contributed $395.9 million to
2000 first quarter sales. Revenues in the 2000 quarter were adversely impacted
by the effects of currency translation (which the Company estimates to be
approximately $50 million in the European Union), competitive pricing pressures
and a shift in mix to lower priced tires.
European Union Tire segment EBIT was $43.7 million in the 2000 quarter,
decreasing 3.5% from $45.3 million in the 1999 period. The Dunlop businesses
contributed $27.7 million to 2000 first quarter EBIT. Operating margin in 2000
was 5.2%, compared to 9.0% in 1999.
EBIT in the 2000 quarter decreased from the 1999 period due primarily to
additional costs related to discontinuing production in Italy and servicing
customers during the closure period, the adverse margin impact of competitive
market conditions and cost differentials driven by a weak Euro versus the
British pound.
EBIT in the 1999 period did not include rationalizations totaling $6.7
million. The Company anticipates that it may incur additional rationalization
charges in future periods, in the range of $15 million to $18 million, related
to the closure of the Italian plant.
The Company anticipates continued fluctuations in the value of the U.S.
dollar relative to the Euro and other Western European currencies. Revenues and
EBIT in the European Union Tire segment may be affected in future periods by the
effects of currency translations and continued competitive pricing in the
various markets. Additionally, EBIT in future periods may be adversely affected
by rising raw material prices.
EASTERN EUROPE, AFRICA AND MIDDLE EAST TIRE
Eastern Europe, Africa and Middle East Tire ("Eastern Europe Tire") segment
sales in the first quarter of 2000 were $187.2 million, increasing 3.3% from
$181.2 million in the 1999 quarter.
Unit sales in the 2000 first quarter decreased slightly from 1999.
Replacement unit sales were 4.5% lower but OE volume increased 11.9%.
- 17 -
<PAGE> 19
Revenues in the 2000 first quarter increased from the 1999 period despite
slightly lower tire unit sales, due primarily to a more favorable product mix,
improved pricing and a general improvement in the economic conditions in Eastern
Europe and South Africa. Revenues included Dunlop sales of $2.2 million.
Eastern Europe Tire EBIT was $15.3 million in the 2000 first quarter,
increasing 56.1% from $9.8 million in the 1999 period. Operating margin in 2000
was 8.2%, compared to 5.4% in 1999.
EBIT in the 2000 first quarter increased from the 1999 period due primarily
to higher margins, higher factory utilization levels and a general market
upturn.
EBIT in the 1999 period did not include rationalization charges totaling
$2.1 million.
Revenues and EBIT in future periods may be adversely affected by
competitive pricing pressures and economic conditions in the markets served by
the Eastern Europe segment. Additionally, EBIT in future periods may be
adversely affected by rising raw material prices.
The Company anticipates continued fluctuations in the value of the U.S.
dollar relative to the various currencies in the markets served by Eastern
Europe Tire. Revenues and EBIT in Eastern Europe Tire are likely to be adversely
affected in future periods by the effects of currency translations if the dollar
strengthens against the currencies in the region.
LATIN AMERICAN TIRE
Latin American Tire segment sales in the first quarter of 2000 were $253.3
million, increasing 5.3% from $240.6 million in the 1999 period.
Unit sales in the 2000 quarter increased 2.1% from the 1999 period.
Replacement unit sales decreased 1% but original equipment volume increased
15.8%.
Revenues in the first quarter of 2000 increased from the 1999 period due
primarily to the effects of currency translation on Brazilian and Mexican
results. Revenues in the 2000 quarter were adversely affected by competitive
pricing pressures and adverse economic conditions in the region.
EBIT in Latin America was $23.4 million in the first quarter of 2000,
decreasing 22.3% from $30.1 million in the 1999 quarter. Operating margin in
2000 was 9.2%, compared to 12.5% in 1999.
EBIT in the 2000 first quarter decreased from the 1999 period due primarily
to increased raw material prices and competitive pricing. EBIT was favorably
impacted by the effects of currency translation on results in Brazil and Mexico.
- 18 -
<PAGE> 20
EBIT in the 1999 period did not include rationalization charges totaling
$42.5 million.
The Company anticipates continued fluctuations in the value of the U.S.
dollar relative to Latin American currencies. Revenues and EBIT in the Latin
American Tire segment in future periods are likely to be adversely affected by
continued competitive pricing pressures, the effects of currency translations
and by the expected continuing unfavorable economic conditions in the region.
Additionally, EBIT in future periods may be adversely affected by rising raw
material prices.
ASIA TIRE
Asia Tire segment sales in the first quarter of 2000 were $134.7 million,
decreasing 4.5% from $141.0 million in the 1999 period.
Unit sales in the 2000 quarter increased 5.3% from the 1999 period.
Replacement unit sales decreased 1.5%, but original equipment volume increased
35.5%.
Revenues in the first quarter of 2000 decreased from the 1999 period due
primarily to the deconsolidation of the replacement tire business transferred to
the Company's joint venture with Sumitomo in Japan, which contributed
approximately $13 million in the 1999 period, a less favorable product mix and
competitive pricing. Currency translation had a minimal positive impact.
EBIT in Asia was $9.8 million in the first quarter of 2000, increasing from
$3.6 million in the 1999 quarter. Operating margin in 2000 was 7.3%, compared to
2.6% in 1999. EBIT in the 2000 period increased due primarily to cost
efficiencies associated with higher volume.
EBIT in the first quarter of 1999 did not include rationalization charges
totaling $1.5 million.
The Company anticipates continued fluctuations in the value of the U.S.
dollar relative to Asian currencies. Revenues and EBIT in the Asia Tire segment
in future periods may be affected by the effects of currency translations. In
addition, changing economic conditions in the region may adversely affect future
revenues and EBIT. Revenues and EBIT in future periods may be adversely affected
by competitive pricing pressures and higher raw material costs.
- 19 -
<PAGE> 21
Sales and EBIT of the Asia Tire segment reflect the results of the
Company's majority-owned tire business in the region. In addition, the Company
owns a 50% interest in South Pacific Tyres Ltd. (SPT), the largest tire
manufacturer, marketer and exporter in Australia and New Zealand. Results of
operations of SPT are not reported in segment results, and are reflected in the
Company's Consolidated Statement of Income using the equity method.
The following table presents the sales and EBIT of the Company's Asia Tire
segment together with 100% of the sales and EBIT of SPT:
THREE MONTHS ENDED
MARCH 31,
(In millions) 2000 1999
---- ----
NET SALES:
Asia Tire $134.7 $141.0
SPT 150.1 154.6
------ ------
$284.8 $295.6
====== ======
EBIT:
Asia Tire $ 9.8 $ 3.6
SPT (3.0) 8.8
------ ------
$ 6.8 $ 12.4
====== ======
ENGINEERED PRODUCTS
Sales in Engineered Products in the first quarter of 2000 were $314.6
million, increasing 1.9% from $308.7 million in the 1999 period.
EBIT in Engineered Products was $23.5 million in the first quarter of 2000,
increasing 14.6% from $20.5 million in the 1999 quarter. Operating margin in
2000 was 7.5%, compared to 6.6% in 1999.
Revenues in the 2000 quarter increased from the 1999 period on strong sales
of power transmission products and molded products. Revenues increased despite
the exit from the interior trim business, which contributed $24.2 million to
1999 sales, and reduced demand for conveyor belting from the mining and
agriculture industries. EBIT in the 2000 quarter increased due primarily to
lower unit costs due to increased volume and various manufacturing cost
reduction programs.
The Company anticipates continued fluctuations in the value of the U.S.
dollar relative to Latin American currencies. Revenues and EBIT in the
Engineered Products segment in future periods are likely to be adversely
affected by continued competitive pricing pressures, the effects of currency
translations, expected continuing unfavorable economic conditions in Latin
America, adverse economic conditions globally in the mining and agriculture
industries and increasing raw material and energy prices.
EBIT in the 1999 quarter did not include rationalization charges totaling
$9.1 million.
- 20 -
<PAGE> 22
CHEMICAL PRODUCTS
Sales in Chemical Products in the first quarter of 2000 were $273.0
million, increasing 19.5% from $228.4 million in the 1999 period on higher
pricing and volume. Approximately 50% of Chemical Products sales are to the
Company's other segments.
EBIT in Chemical Products was $22.5 million in the first quarter of 2000,
decreasing 21.6% from $28.7 million in the 1999 period. Operating margin in 2000
was 8.2%, compared to 12.6% in 1999. EBIT in the 2000 quarter decreased from the
1999 period due primarily to increased raw material and energy prices.
EBIT in the first quarter of 1999 did not include a rationalization charge
of $3.1 million for the anticipated loss on the sale of a rubber plantation in
Asia.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Net cash used in operating activities was $134.4 million during the first
quarter of 2000, as reported on the Consolidated Statement of Cash Flows.
Working capital requirements increased for accounts receivable, inventories and
accounts payable.
Net cash used in investing activities was $108.0 million during the 2000
first quarter, including capital expenditures totaling $127.7 million, primarily
for plant modernizations and expansions and new tire molds.
Net cash provided by financing activities was $233.1 million during the
first quarter of 2000, which was used primarily to support the previously
mentioned operating and investing activities.
(Dollars in millions) 3/31/00 12/31/99
-------- --------
Consolidated Debt $3,653.6 $3,424.5
Debt to Debt and Equity 50.1% 48.6%
During the first quarter of 2000, the Company issued $300 million of its 8.125%
Notes due 2003 and $300 million of its 8.50% Notes due 2007. The proceeds from
the issuance of the Notes were used to repay outstanding commercial paper and
short term bank borrowings.
- 21 -
<PAGE> 23
In connection with the Company's strategic alliance with Sumitomo, on
February 25, 1999 the Company issued to Sumitomo at par a 1.2% Convertible Note
Due August 16, 2000 in the principal amount of Yen13,073,070,934 (equivalent to
$126.6 million at March 31, 2000). The Company's Note is convertible, if not
earlier redeemed, during the period beginning July 16, 2000 through August 15,
2000 into 2,281,115 shares of the Common Stock, without par value, of the
Company at a conversion price of Yen5,731 per share, subject to certain
adjustments. Consolidated Debt and Debt to Debt and Equity as stated above do
not reflect the issuance of the Company's 1.2% Convertible Note.
In addition, on February 25, 1999 the Company purchased at par from
Sumitomo a 1.2% Convertible Note Due August 16, 2000 in the principal amount of
Yen13,073,070,934 (also equivalent to $126.6 million at March 31, 2000). The
Sumitomo Note is convertible, if not earlier redeemed, during the period
beginning July 16, 2000 through August 15, 2000 into 24,254,306 shares of the
Common Stock, Yen50 par value per share, of Sumitomo at a conversion price of
Yen539 per share, subject to certain adjustments. Upon conversion of the
Sumitomo Note into Sumitomo Common Stock, the Company would own 10% of
Sumitomo's outstanding shares. The Company accounts for the Sumitomo note as an
available-for-sale equity instrument. The fair value of the note at March 31,
2000 was $136.0 million.
The Company and Sumitomo have each agreed to convert and not redeem its
convertible note if the Goodyear/Dunlop joint ventures are operating on July 1,
2000.
Substantial short term and long term credit sources are available to
the Company globally under normal commercial practices. At March 31, 2000, the
Company had an aggregate of $.95 billion of commercial paper outstanding. In
addition, at March 31, 2000, the Company had short term committed and
uncommitted bank credit arrangements totaling $2.81 billion, of which $1.76
billion were unused. The Company also had available long term credit
arrangements at March 31, 2000 totaling $3.66 billion, of which $2.00 billion
were unused.
- 22 -
<PAGE> 24
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
INTEREST RATE RISK
The Company actively manages its fixed and floating rate debt mix, within
defined limitations, using refinancings and unleveraged interest rate swaps. The
Company will enter into fixed and floating interest rate swaps to alter its
exposure to the impact of changing interest rates on consolidated results of
operations and future cash outflows for interest. Fixed rate swaps are used to
reduce the Company's risk of increased interest costs during periods of rising
interest rates. Floating rate swaps are used to convert the fixed rates of long
term borrowings into short term variable rates. Interest rate swap contracts are
thus used by the Company to separate interest rate risk management from the debt
funding decision. At March 31, 2000, the interest rate on 36% of the Company's
debt was fixed by either the nature of the obligation or through the interest
rate contracts, compared to 28% at December 31, 1999 and 46% at March 31, 1999.
Interest rate lock contracts are used to hedge the risk-free component of
anticipated long term debt issuances.
The following table presents information at March 31:
(Dollars in millions)
INTEREST RATE SWAP CONTRACTS 2000 1999
- ---------------------------- ---- ----
Notional principal amount $ 75.0 $100.0
Pay fixed rate 6.24% 6.17%
Receive variable LIBOR 6.09% 5.05%
Average years to maturity 1.3 1.9
Fair value - asset (liability) $ .6 $ (1.6)
Carrying amount - (liability) - (.1)
Pro forma fair value - asset (liability) .1 (2.5)
INTEREST RATE LOCK CONTRACTS
- ----------------------------
EURO CONTRACTS 2000 1999
- -------------- ---- ----
Notional $191.2 $ -
Average contract rate 4.82% -
Fair value - asset 0.7 -
Carrying amount - -
Pro forma fair value - (liability) (3.2) -
The pro forma fair value assumes a 10% decrease in variable market interest
rates at March 31, 2000 and 1999, respectively, and reflects the estimated fair
value of contracts outstanding at that date under that assumption.
- 23 -
<PAGE> 25
Weighted average interest rate contract information follows:
THREE MONTHS ENDED MARCH 31,
(Dollars in millions) 2000 1999
---- ----
Notional principal $ 75.0 $100.0
Pay fixed rate 6.24% 6.17%
Receive variable LIBOR 6.09% 5.13%
The following table presents fixed rate debt information at March 31:
(In millions)
FIXED RATE DEBT 2000 1999
- --------------- ---- ----
Fair value - liability $1,451.9 $ 980.0
Carrying amount - liability 1,456.2 955.6
Pro forma fair value - liability 1,518.7 1,035.2
The pro forma fair value assumes a 100 basis point decrease in market interest
rates at March 31, 2000 and 1999, respectively, and reflects the estimated fair
value of fixed rate debt outstanding at that date under that assumption.
The sensitivity to changes in interest rates of the Company's interest rate
contracts and fixed rate debt was determined with a valuation model based upon
net modified duration analysis. The model assumes a parallel shift in the yield
curve, and the precision of the model decreases as the assumed change in
interest rates increases.
FOREIGN CURRENCY EXCHANGE RISK
In order to reduce the impact of changes in foreign exchange rates on
consolidated results of operations and future foreign currency denominated cash
flows, the Company was a party to various foreign currency forward exchange
contracts at March 31, 2000 and 1999. These contracts reduce exposure to
currency movements affecting existing foreign currency denominated assets,
liabilities and firm commitments resulting primarily from trade receivables and
payables, equipment acquisitions, intercompany loans and the Company's Swiss
franc debt. The contract maturities match the maturities of the currency
positions. Changes in the fair value of forward exchange contracts are
substantially offset by changes in the fair value of the hedged positions.
The following table presents foreign exchange contract information at March
31:
(In millions) 2000 1999
---- ----
Fair value - favorable $43.9 $73.7
Carrying amount - asset 47.8 79.9
Pro forma change in fair value 10.7 12.6
- 24 -
<PAGE> 26
The pro forma change in fair value assumes a 10% change in foreign exchange
rates at March 31, 2000 and 1999, respectively, and reflects the estimated
change in the fair value of contracts outstanding at that date under that
assumption.
The sensitivity to changes in exchange rates of the Company's foreign
currency positions was determined using current market pricing models.
FORWARD-LOOKING INFORMATION - SAFE HARBOR STATEMENT
---------------------------------------------------
Certain information set forth herein (other than historical data and
information) may constitute forward-looking statements regarding events and
trends which may affect the Company's future operating results and financial
position. The words "estimate," "expect," "intend" and "project," as well as
other words or expressions of similar meaning, are intended to identify
forward-looking statements. Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date of this quarterly
report. Such statements are based on current expectations, are inherently
uncertain, are subject to risks and should be viewed with caution. Actual
results and experience may differ materially from the forward-looking statements
as a result of many factors, including: changes in general economic and industry
conditions in the various markets served by the Company's operations; increased
competitive activity; demand for Goodyear's products; fluctuations in the prices
paid for raw materials and energy; the ability to control costs and expenses;
changes in the monetary policies of various countries where the Company has
significant operations; changes in interest rates; changes in the relative
values of currencies; and other unanticipated events and conditions. It is not
possible to foresee or identify all such factors. The Company disclaims any
intention, commitment or obligation to revise or to update any forward-looking
statement, or to disclose any facts, events or circumstances that occur after
the date hereof which may affect the accuracy of any forward-looking statement.
- 25 -
<PAGE> 27
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Annual Report of The Goodyear Tire & Rubber
Company ("Registrant") on Form 10-K for the year ended December 31, 1999 (the
"1999 10-K"), wherein at Item 3, pages 23, 24, 25 and 26, Registrant reported
certain legal proceedings. Registrant reports the following developments in
respect of the legal proceedings described at paragraph (D) of Item 3 of the
1999 10-K:
On December 27, 1999, China Tire Holdings Limited, a Bermuda
corporation ("China Tire"), filed a civil action (China Tire v. Goodyear, et
al., Case No. 5:99CV3163) in the United States District Court for the North
District of Ohio, Eastern Division, against Registrant and Goodyear
International Corporation ("GIC") alleging that (1) Registrant committed
violations of Section 1962(b) and Section 1962(c) of the Racketeer Influenced
and Corrupt Organization Act in connection with the Registrant's acquisition of
a 75% interest in a tire manufacturing facility in Dalian, People's Republic of
China (the "Dalian Facility") in 1994, (2) Registrant and GIC committed trade
libel by intentionally publishing statements known to be untrue concerning China
Tire to various parties that were for the purpose of disparaging and causing
monetary harm to China Tire, and (3) Registrant and GIC violated the Ohio
Deceptive Trade Practices Act in negotiations regarding the Dalian Facility.
China Tire is seeking an aggregate of $3.5 billion of actual and punitive
damages, prejudgment interest, attorneys' fees and costs, and such further
relief as the court deems proper. On January 14, 2000, Registrant and GIC filed
a motion to dismiss on the grounds that, among other things, the claims are
barred as a result of Orion Tire Corporation, et al. vs. Goodyear, et al. (Cause
No. SACV95-221), a civil action that was dismissed by the United States District
Court for the Central District of California, which dismissal is currently on
appeal before the United States Court of Appeals for the Ninth Circuit, are time
barred as a matter of law and fail to state claims upon which relief can be
granted. On March 3, 2000, the court issued an order and related opinion
granting the motion to dismiss based on its finding that the claims made by
China Tire are barred by the doctrine of claims preclusion.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of Registrant was held on April 10,
2000 (the "Annual Meeting"). Proxies for the Annual Meeting were solicited
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Act"), there was no solicitation in opposition to the four nominees of the
Board of Directors of Registrant listed in Registrant's Proxy Statement, dated
February 25, 2000, for the Annual Meeting (the "Proxy Statement"), filed with
the Securities and Exchange Commission, and said four nominees were elected.
The following matters were acted upon by the shareholders of Registrant
at the Annual Meeting, at which 136,219,797 shares of the Common Stock, without
par value, of Registrant (the
-26-
<PAGE> 28
"Common Stock", the only class of voting securities of Registrant outstanding),
or approximately 87.1 percent of the 156,353,770 shares of Common Stock
outstanding and entitled to vote at the Annual Meeting, were present in person
or by proxies:
1. ELECTION OF DIRECTORS. Four persons were nominated by the Board of
Directors of Registrant for election as directors of Registrant. Thomas H.
Cruikshank, Katherine G. Farley, Steven A. Minter and Agnar Pytte were nominated
as Class III directors, each to hold office for a three year term expiring at
the 2003 Annual Meeting of Shareholders and until his or her successor shall
have been duly elected and qualified. Each nominee was an incumbent director. No
other person was nominated. Each nominee was elected. The votes cast for, or
withheld or abstained with respect to, each nominee were as follows:
SHARES OF COMMON SHARES OF COMMON STOCK
NAME OF DIRECTOR STOCK VOTED FOR WITHHELD OR ABSTAINED
Thomas H. Cruikshank 132,571,200 3,648,597
Katherine G. Farley 132,642,610 3,577,187
Steven A. Minter 132,590,881 3,628,916
Agnar Pytte 132,548,445 3,671,352
The seven directors whose terms of office continue after the Annual Meeting are:
(A) John G. Breen, William E. Butler and George H. Schofield, whose terms expire
in 2001; and (B) Samir G. Gibara, William J. Hudson, Jr., William C. Turner and
Martin D. Walker, whose terms expire in 2002.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS. A resolution
proposed by the Board of Directors of Registrant that the shareholders ratify
the action of the Board of Directors in selecting and appointing
PricewaterhouseCoopers LLP as independent accountants for Registrant for the
year ending December 31, 2000 was submitted to, and voted upon by, the
shareholders of Registrant. There were 133,908,008 shares of Common Stock voted
in favor of, and 1,378,156 shares of Common Stock voted against, said
resolution. The holders of 933,633 shares of Common Stock abstained. There were
no "broker non-votes". The resolution, having received the affirmative vote of
the holders of a majority of the shares of Common Stock outstanding and entitled
to vote at the Annual Meeting, was adopted and the appointment of
PricewaterhouseCoopers LLP as the independent accountants for Registrant for
2000 was ratified by the shareholders.
ITEM 5. OTHER INFORMATION
(A) ISSUANCE OF $300,000,000 OF 8.125% NOTES DUE 2003. On March 17,
2000, Registrant issued $3000,000,000 in principal amount of its 8.125% Notes
due 2003 (the "8.125% Notes") pursuant to that certain Indenture, dated March 1,
1999 (the "Indenture"), between
-27-
<PAGE> 29
Registrant and The Chase Manhattan Bank. The net proceeds to Registrant from the
sale of the 8.125% Notes were $298,245,000, before deducting expenses payable by
Registrant which are estimated to be approximately $378,126. The net proceeds
were used to repay a portion of Registrant's outstanding commercial paper and
short term bank borrowings. The terms and conditions of the 8.125% Notes are set
forth in the Indenture and the supplement thereto evidenced by that certain
Officers' Certificate, dated March 17, 2000, and in the form of Global Note
attached as Annex A to said Officers' Certificate, all of which are filed as
Exhibit 4.1 to this Quarterly Report on Form 10-Q and are hereby incorporated by
reference herein and made an integral part hereof.
(B) ISSUANCE OF $300,000,000 OF 8.50% NOTES DUE 2007. On March 17,
2000, Registrant issued $300,000,000 in principal amount of its 8.50% Notes due
2007 (the "8.50% Notes") pursuant to the Indenture. The net proceeds to
Registrant from the sale of the 8.50% Notes were $298,125,000, before deducting
expenses payable by Registrant which are estimated to be approximately $378,126.
The net proceeds were used to repay a portion of Registrant's outstanding
commercial paper and short term bank borrowings. The terms and conditions of the
8.50% Notes are set forth in the Indenture and the supplement thereto evidenced
by that certain Officers' Certificate, dated March 17, 2000, and in the form of
Global Note attached to said Officers' Certificate as Annex A, all of which are
filed as Exhibit 4.1 to this Quarterly Report on Form 10-Q and are hereby
incorporated by reference herein and made an integral part hereof.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS. See the Index of Exhibits at page E-1, which is by
specific reference incorporated into and made a part of this Quarterly Report on
Form 10-Q.
(b) REPORTS ON FORM 8-K. No Current Report on Form 8-K was filed by The
Goodyear Tire & Rubber Company during the quarter ended March 31, 2000.
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GOODYEAR TIRE & RUBBER COMPANY
(Registrant)
Date: April 14, 2000 By /s/ RICHARD J. KRAMER
------------------------------------
Richard J. Kramer, Vice President
(Signing on behalf of Registrant as a
duly authorized officer of Registrant
and signing as the principal accounting
officer of registrant.)
-28-
<PAGE> 30
THE GOODYEAR TIRE & RUBBER COMPANY
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2000
INDEX OF EXHIBITS (1)
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
------- -------
TABLE ITEM NO.* DESCRIPTION OF EXHIBIT NUMBER
--------------- ----------------------------------------------- ------
<S> <C> <C> <C>
3 ARTICLES OF INCORPORTATION AND BY-LAWS
--------------------------------------
(a) Certificate of Amended Articles of
Incorporation of Registrant, dated December
20, 1954, and Certificate of Amendment to
Amended Articles of Incorporation of
Registrant, dated April 6, 1993, and
Certificate of Amendment to Amended Articles
of Incorporation of Registrant dated June 4,
1996, three documents comprising Registrant's
Articles of Incorporation as amended
(incorporated by reference, filed with the
Securities and Exchange Commission as Exhibit
3.1 to Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996).
(b) Code of Regulations of The Goodyear Tire &
Rubber Company, adopted November 22, 1955, as
amended April 5, 1965, April 7, 1980, April 6,
1981 and April 13, 1987 (incorporated by
reference, filed as Exhibit 4.1(B) to
Registrant's Registration Statement on Form
S-3, File No. 333-1995).
4 INSTRUMENTS DEFINING
THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES `
------------------------------------------------
(a) Specimen nondenominational Certificate for
shares of the Common Stock, Without Par Value,
of Registrant; First Chicago Trust Company of
New York as transfer agent and registrar
(incorporated by reference, filed with the
Securities and Exchange Commission as Exhibit
4.3 to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996,
File No. 1-1927).
</TABLE>
- --------------
*Pursuant to Item 601 of Regulation S-K.
E-1
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
------- -------
TABLE ITEM NO.* DESCRIPTION OF EXHIBIT NUMBER
--------------- ------------------------------------------------ ------
<S> <C> <C> <C>
4 (b) Conformed copy of Rights Agreement, dated
as of June 4, 1996, between Registrant and
First Chicago Trust Company of New York,
rights Agent (incorporated by reference, filed
with the Securities and Exchange Commission as
Exhibit 1 to Registrant's Registration
Statement on Form 8-A dated June 11, 1996 and
as Exhibit 4(a) to Registrant's Current Report
on Form 8-K dated June 4, 1996, File No.
1-1927).
(c) Conformed copy of Amendment to Rights
Agreement, dated as of February 8, 2000,
between Registrant and First Chicago Trust
Company of New York, Rights Agent
(incorporated by reference, filed with the
Securities and Exchange Commission as Exhibit
4.1 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1999, File No.
1-1927).
(d) Conformed copy of Revolving Credit
Facility Agreement, dated as of July 15, 1994,
among Registrant, the Lenders named therein
and Chemical Bank, as Agent (incorporated by
reference, filed with the Securities and
Exchange Commission as Exhibit A to
Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994, File No.
1-1927).
(e) Conformed copy of Replacement and
Restatement Agreement, dated as of July 15,
1996, among Registrant, the Lenders named
therein and The Chase Manhattan Bank (formerly
Chemical Bank), as Agent (incorporated by
reference, filed with the Securities and
Exchange Commission as Exhibit 4.5 to
Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, File 1-1927).
(f) Conformed copy of First Amendment to
Replacement and Restatement Agreement, dated
as of March 31, 1997, among Registrant, the
Lenders named therein and The Chase Manhattan
Bank (formerly Chemical Bank), as Agent
(incorporated by reference, filed with the
Securities and Exchange Commission as Exhibit
4.5 to Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997, File
1-1927).
</TABLE>
- --------------
*Pursuant to Item 601 of Regulation S-K.
E-2
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
------- -------
TABLE ITEM NO.* DESCRIPTION OF EXHIBIT NUMBER
--------------- ----------------------------------------------- ------
<S> <C> <C> <C>
4 (g) Conformed copy of Second Replacement and
Restatement Agreement, dated as of July 13, 1998,
among Registrant, the Lender named therein and The
Chase Manhattan Bank, as Agent (incorporated by
reference, filed with the Securities and Exchange
Commission as Exhibit 4 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended September
30, 1998, File No. 1-1927).
(h) Form of Indenture, dated as of March 15, 1996,
between Registrant and Chemical Bank (now The Chase
Manhattan Bank), as Trustee, as supplemented on
December 3, 1996, March 11, 1998 and March 17, 1998
(incorporated by reference, filed with the
Securities and Exchange Commission as Exhibit 4.1 to
Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998, File No. 1-1927).
(i) Form of Indenture, dated as of March 1, 1999, 4.1
between Registrant and The Chase Manhattan Bank,
as Trustee, as supplemented on March 14, 2000 in
respect of Registrant's $300,000,000 principal
amount of 8.125% Notes due 2003 and $300,000,000
principal amount of 8.50% Notes due 2007.
No instrument defining the rights of holders
of long-term debt which relates to securities
having an aggregate principal amount in excess
of 10% of the consolidated assets of
Registrant and its subsidiaries was entered
into during the quarter ended March 31, 2000.
In accordance with paragraph (iii) to Part 4
of Item 601 of Regulation S-K, agreements and
instruments defining the rights of holders of
certain items of long term debt entered into
during the quarter ended March 31, 2000 which
relate to securities having an aggregate
principal amount less than 10% of the
consolidated assets of Registrant and its
Subsidiaries are not filed herewith. The
Registrant hereby agrees to furnish a copy of
any such agreements or instruments to the
Securities and Exchange Commission upon
request.
</TABLE>
- --------------
*Pursuant to Item 601 of Regulation S-K.
E-3
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
------- -------
TABLE ITEM NO.* DESCRIPTION OF EXHIBIT NUMBER
--------------- ------------------------------------------------- ------
<S> <C> <C> <C>
12 STATEMENT RE COMPUTATION
OF RATIOS
-------------------------------------------------
Statement setting forth the computation of Ratio of 12
Earnings to Fixed Charges.
27 FINANCIAL DATA SCHEDULE
-------------------------------------------------
Financial Data Schedule for quarter ended March 31, 27
2000.
</TABLE>
- --------------
*Pursuant to Item 601 of Regulation S-K.
E-4
<PAGE> 1
EXHIBIT 4.1
================================================================================
INDENTURE
Between
THE GOODYEAR TIRE & RUBBER COMPANY
and
THE CHASE MANHATTAN BANK,
as Trustee
---------------------
Dated as of March 1, 1999
---------------------
DEBT SECURITIES
================================================================================
<PAGE> 2
THE GOODYEAR TIRE & RUBBER COMPANY
Certain Sections of This Indenture Relating to
Sections 310 Through 318, Inclusive, of the
Trust Indenture Act of 1939.
Trust Indenture Act Section Indenture Section
310 (a)(1) 6.09
(a)(2) 6.09
(a)(2) Not Applicable
(a)(3) Not Applicable
(a)(4) 6.08
(b) 6.11
311 (a) 6.13
(b) 6.13
312 (a) 7.01
7.02(a)
(b) 7.02(b)
(c) 7.02(c)
313 (a) 7.03(a)
(b) 7.03(a)
(c) 7.03(a)
(d) 7.03(b)
314 (a) 7.04
(a)(4) 1.01
10.05
(b) Not Applicable
(c)(1) 1.02
(c)(2) 1.02
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.02
315 (a) 6.01
(b) 6.02
(c) 6.01
(d) 6.01
(e) 5.14
316 (a) 1.01
(a)(1)(A) 5.02
5.12
(a)(2)(B) 5.13
(a)(2) Not Applicable
<PAGE> 3
(b) 5.08
(c) 1.04(c)
317 (a)(1) 5.03
(a)(2) 5.04
(b) 10.04
318 (a) 1.07
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
Page
----
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. Definitions ................................................. 1
SECTION 1.02. Compliance Certificates and Opinions ........................ 8
SECTION 1.03. Form of Documents Delivered to Trustee ...................... 8
SECTION 1.04. Acts of Holders; Record Dates ............................... 9
SECTION 1.05. Notices, Etc., to Trustee and Company ....................... 11
SECTION 1.06. Notice to Holders; Waiver ................................... 11
SECTION 1.07. Conflict with Trust Indenture Act ........................... 11
SECTION 1.08. Effect of Headings and Table of Contents .................... 11
SECTION 1.09. Successors and Assigns ...................................... 11
SECTION 1.10. Separability Clause ......................................... 11
SECTION 1.11. Benefits of Indenture ....................................... 12
SECTION 1.12. Governing Law ............................................... 12
SECTION 1.13. Legal Holidays .............................................. 12
ARTICLE TWO
SECURITY FORMS
SECTION 2.01. Forms Generally ............................................. 12
SECTION 2.02. Form of Face of Security .................................... 13
SECTION 2.03. Form of Reverse of Security ................................. 14
SECTION 2.04. Form of Legend for Global Securities ........................ 18
SECTION 2.05. Form of Trustee's Certificate of Authentication ............. 18
ARTICLE THREE
THE SECURITIES
SECTION 3.01. Amount of Securities Issuable Unlimited; Issuable in Series . 19
SECTION 3.02. Denominations ............................................... 21
SECTION 3.03. Execution, Authentication, Delivery and Dating .............. 21
SECTION 3.04. Temporary Securities ........................................ 22
SECTION 3.05. Registration, Registration of Transfer and Exchange ......... 22
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities ............ 24
SECTION 3.07. Payment of Interest; Interest Rights Preserved .............. 24
SECTION 3.08. Persons Deemed Owners ....................................... 25
SECTION 3.09. Cancellation ................................................ 25
SECTION 3.10. Computation of Interest ..................................... 26
(i)
<PAGE> 5
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture ..................... 26
SECTION 4.02. Application of Trust Money .................................. 27
ARTICLE FIVE
REMEDIES
SECTION 5.01. Events of Default ........................................... 27
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment .......... 28
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Trustee ............................................. 29
SECTION 5.04. Trustee May File Proofs of Claim ............................ 29
SECTION 5.05. Trustee May Enforce Claims Without Possession of Securities . 30
SECTION 5.06 Application of Money Collected .............................. 30
SECTION 5.07. Limitation on Suits ......................................... 30
SECTION 5.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest ................................... 31
SECTION 5.09. Restoration of Rights and Remedies .......................... 31
SECTION 5.10. Rights and Remedies Cumulative .............................. 31
SECTION 5.11. Delay or Omission Not Waiver ................................ 31
SECTION 5.12. Control by Holders .......................................... 31
SECTION 5.13. Waiver of Past Defaults ..................................... 32
SECTION 5.14. Undertaking for Costs ....................................... 32
SECTION 5.15. Waiver of Stay or Extension Laws ............................ 32
ARTICLE SIX
THE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities ......................... 32
SECTION 6.02. Notice of Defaults .......................................... 33
SECTION 6.03. Certain Rights of Trustee ................................... 33
SECTION 6.04. Not Responsible for Recitals or Issuance of Securities ...... 34
SECTION 6.05. May Hold Securities ......................................... 34
SECTION 6.06. Money Held in Trust ......................................... 34
SECTION 6.07. Compensation and Reimbursement .............................. 34
SECTION 6.08. Disqualification; Conflicting Interests ..................... 34
SECTION 6.09. Corporate Trustee Required; Eligibility ..................... 35
SECTION 6.10. Resignation and Removal; Appointment of Successor ........... 35
SECTION 6.11. Acceptance of Appointment by Successor ...................... 36
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business . 37
SECTION 6.13. Preferential Collection of Claims Against Company ........... 37
SECTION 6.14. Appointment of Authenticating Agent ......................... 37
(ii)
<PAGE> 6
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS
BY TRUSTEE AND COMPANY
SECTION 7.01. Company to Furnish Trustee Names and Addresses of Holders ... 39
SECTION 7.02. Preservation of Information; Communications to Holders ...... 39
SECTION 7.03. Reports by Trustee .......................................... 39
SECTION 7.04. Reports by Company .......................................... 39
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
SECTION 8.01. Company May Consolidate, etc., Only on Certain Terms ........ 40
SECTION 8.02. Successor Corporation to be Substituted ..................... 40
SECTION 8.03. Opinion of Counsel to be Given Trustee ...................... 40
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Holders .......... 41
SECTION 9.02. Supplemental Indentures With Consent of Holders ............. 41
SECTION 9.03. Execution of Supplemental Indentures ........................ 42
SECTION 9.04. Effect of Supplemental Indentures ........................... 42
SECTION 9.05. Conformity with Trust Indenture Act ......................... 43
SECTION 9.06. Reference in Securities to Supplemental Indentures .......... 43
ARTICLE TEN
COVENANTS
SECTION 10.01. Payment of Principal, Premium and Interest .................. 43
SECTION 10.02. Maintenance of Office or Agency ............................. 43
SECTION 10.03. Vacancy in the Office of Trustee ............................ 44
SECTION 10.04. Money for Securities Payments to be Held in Trust ........... 44
SECTION 10.05. Limitation on Secured Indebtedness .......................... 44
SECTION 10.06. Limitation on Sale and Lease-back Transactions .............. 46
SECTION 10.07. Existence ................................................... 46
SECTION 10.08. Statement by Officers as to Default ......................... 46
SECTION 10.09. Waiver of Certain Covenants ................................. 46
(iii)
<PAGE> 7
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.01. Applicability of Article..................................... 47
SECTION 11.02. Election to Redeem; Notice to Trustee........................ 47
SECTION 11.03. Selection by Trustee of Securities to be Redeemed............ 47
SECTION 11.04. Notice of Redemption......................................... 47
SECTION 11.05. Deposit of Redemption Price.................................. 48
SECTION 11.06. Securities Payable on Redemption Date........................ 48
SECTION 11.07. Securities Redeemed in Part.................................. 48
ARTICLE TWELVE
SINKING FUNDS
SECTION 12.01. Applicability of Article..................................... 49
SECTION 12.02. Satisfaction of Sinking Fund Payments with Securities........ 49
SECTION 12.03. Redemption of Securities for Sinking Fund.................... 49
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 13.01. Applicability of Article; Company's Option To Effect
Defeasance or Covenant Defeasance....................... 50
SECTION 13.02. Defeasance and Discharge..................................... 50
SECTION 13.03. Covenant Defeasance.......................................... 50
SECTION 13.04. Conditions to Defeasance or Covenant Defeasance.............. 51
SECTION 13.05. Deposited Money and U.S. Government Obligations to be
Held in Trust........................................... 52
SECTION 13.06. Reinstatement................................................ 53
ARTICLE FOURTEEN
IMMUNITY OF SHAREHOLDERS, OFFICERS
AND DIRECTORS
SECTION 14.01. Exemption from Individual Liability.......................... 53
Testimonium................................................................. 54
Signatures and Seals........................................................ 54
Acknowledgements............................................................ 55
NOTE: This Table of Contents shall not, for any purpose, be deemed to
be a part of the Indenture.
(iv)
<PAGE> 8
INDENTURE dated as of March 1, 1999, between THE GOODYEAR TIRE & RUBBER
COMPANY, a corporation duly organized and existing under the laws of the State
of Ohio (herein called the "Company"), having its principal offices at 1144 East
Market Street, Akron, Ohio 44316-0001, and THE CHASE MANHATTAN BANK, a banking
corporation duly organized and existing under the laws of the State of New York,
as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. Definitions. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation;
(d) Unless the context otherwise requires, any reference to an
"Article" or "Section" refers to an Article or a Section, as the case may
be, of this Indenture; and
(e) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
1
<PAGE> 9
"Act", when used with respect to any Holder, has the meaning
specified in Section 1.04.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Attributable Debt" means, as to any particular lease under which
any Person is at the time liable, at any date as of which the amount thereof is
to be determined, the total net amount of rent required to be paid by such
Person under such lease during the remaining term thereof (excluding renewals at
the option of lessee), discounted from the respective due dates thereof at a
rate per annum equal to the lesser of (i) prevailing market interest rate, at
the date as of which the amount of such discounted net rent is being or to be
determined, on United States Treasury obligations having a maturity
substantially equal to the average term of all payments due under such lease,
plus 3%, or (ii) weighted average rate per annum interest rate borne by
Outstanding Securities at the date as of which the amount of such discounted net
rent is being or to be determined. 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, reduced by the amount of any income from any sublease under such
lease, with respect to such period, excluding amounts required to be paid on
account of maintenance and repairs, insurance, taxes, assessments, water rates
and similar charges and contingent rents such as those based on sales. 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.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either the Board of Directors of the
Company or any duly authorized committee of that board or any directors or
officers of the Company to whom such board of directors shall have delegated its
authority to act hereunder.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment are authorized or obligated
by law or executive order to close.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
2
<PAGE> 10
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President and by its Treasurer, its Comptroller, an
Assistant Comptroller, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee.
"Company Sale" has the meaning specified in Section 8.01.
"Consolidated Assets of the Company and Subsidiaries" means, as at
the date as of which any determination is being or to be made, the total
consolidated assets of the Company and Subsidiaries as shown on the consolidated
balance sheet of the Company for the then most recently ended fiscal quarter of
the Company (as such consolidated balance sheet is filed with the Securities and
Exchange Commission pursuant to the Exchange Act).
"Consolidated Subsidiary" means, as at the date as of which any
determination is being or to be made, each Subsidiary included in the Company's
consolidated statement of income and consolidated balance sheet for the then
most recently completed fiscal quarter of the Company.
"Corporate Trust Office" means the office of the Trustee in the
Borough of Manhattan, the City of New York, at which at any particular time its
corporate trust business shall be principally administered.
"corporation" means a corporation, association, company, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in Section 3.07.
"Defeasible Covenant" has the meaning specified in Section 13.03.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Depositary for such series by the Company
pursuant to Section 3.01, which Person shall be a clearing agency registered
under the Exchange Act; and, if at any time there is more than one such Person,
"Depositary", as used with respect to the Securities of any series, shall mean
the Depositary with respect to the Securities of such series.
"Dollars", "dollars", "U.S.$", or "$" shall mean lawful money of the
United States of America.
"Dollar Equivalent" shall mean, in respect of any amount of any
currency, and as at the date and time as of which any determination thereof is
being or to be made, that number of Dollars into which such amount of currency
may be converted on such date, which shall be equal to the product of (a) the
principal amount of such currency (expressed in standard units of such currency)
multiplied by (b) the prevailing spot rate for exchanging such currency into
Dollars as quoted on page "Spot" of the Reuter System (or on a comparable page
of the Telerate System or the Bloomberg Business Information System) as at such
date and time as of which the determination of Dollar Equivalent is being or to
be made, or, if no rate is quoted in respect of such currency on the Reuter
System (or the Telerate System or the Bloomberg Business Information System, as
applicable) display designated page "Spot" (or such comparable page, as
applicable) as at such date and time, the prevailing spot rate for exchanging
such currency into Dollars in the New York City foreign currency exchange market
(or, if a more substantial and liquid market for the exchange of such currency,
the London currency exchange market or the currency exchange market in the
principal financial center of such currency) as at such date and time.
"Event of Default" has the meaning specified in Section 5.01.
3
<PAGE> 11
"Exchange Act" means the Securities Exchange Act of 1934 and any
successor act thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.04(c).
"Funded Debt" of any Person means, as at any date as of which any
determination thereof is being or to be made, any Indebtedness of such Person
that by its terms (i) will mature more than one year after the date it was
issued, incurred, assumed or guaranteed by such Person, or (ii) will mature one
year or less after the date it was issued, incurred, assumed or guaranteed which
at such date of determination may be renewed or extended at the election or
option of such Person so as to mature more than one year after such date of
determination.
"GAAP" means generally accepted accounting principles in the United
States.
"Global Security" means a Security bearing the legend prescribed in
Section 2.04 (or such legend as may be specified as contemplated by Section 3.01
for such Securities) evidencing all or part of a series of Securities,
authenticated and delivered to the Depositary for such series or its nominee and
registered in the name of such Depositary or nominee.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indebtedness" of any Person means, as at the date as of which any
determination thereof is being or is to be made and in respect of any Person,
(without duplication and excluding in the case of the Company and the Restricted
Subsidiaries intercorporate debt solely between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries) all (i) indebtedness of such
Person for borrowed money, (ii) obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) obligations of such Person to
pay the deferred purchase price of property or services under conditional sales
or other similar agreements which provide for the deferral of the payment of the
purchase price for a period in excess of one year following the date of such
Person's receipt and acceptance of the complete delivery of such property and/or
services, and (iv) obligations of such Person as lessee under leases which
obligations are, in accordance with GAAP, recorded as capital lease obligations.
Whenever any determination of the amount of Indebtedness is required or
permitted to be, or is otherwise being or to be, made for any purpose under this
Indenture, the amount of any such Indebtedness denominated in any currency other
than Dollars shall be calculated at the Dollar Equivalent of such Indebtedness
as at the date as of which such determination of the amount of Indebtedness is
being or to be made, except that, if all or any portion of the principal amount
of any such Indebtedness which is payable in a currency other than Dollars is
hedged into Dollars, the principal amount of such hedged Indebtedness, or the
hedged portion thereof, shall be deemed to be equal to the amount of Dollars
specified in, or determined pursuant to, the applicable hedging contract.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 3.01.
"interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after maturity.
4
<PAGE> 12
"Interest Payment Date", when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"Lien" means, with respect to an asset of any Person, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest
in or on such asset, other than for (i) taxes or any other obligation or
liability imposed under any law or regulation of the United States of America,
any State thereof or any political subdivision, department, agency, bureau or
instrumentality of any thereof, or (ii) mechanics', materialmen's, repairmen's
or other similar liens incurred in the ordinary course of business, or (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement relating to such asset.
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 5.01(d).
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, the President or a Vice President, the Chief Financial Officer or
the Comptroller of the Company and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company and delivered to the Trustee.
One of the officers signing an Officers' Certificate given pursuant to Section
10.08 shall be the principal executive, financial or accounting officer of the
Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 5.02.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Securities; provided that, if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been
made;
(c) Securities as to which defeasance has been effected pursuant to
Section 13.02; and
(d) Securities which have been paid pursuant to Section 3.06 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that, in determining whether the Holders of the requisite
principal amount of the Outstanding
5
<PAGE> 13
Securities have given, made or taken any request, demand, authorization,
direction, notice, consent, waiver or other action hereunder, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof pursuant to Section 5.02, (ii) the principal amount of a Security
denominated in one or more foreign currencies or currency units shall be the
Dollar Equivalent, determined in the manner provided as contemplated by Section
3.01 on the date of original issuance of such Security, of the principal amount
(or, in the case of an Original Issue Discount Security, the Dollar Equivalent
on the date of original issuance of such Security of the amount determined as
provided in (i) above) of such Security and (iii) Securities owned by the
Company or any other obligor upon the Securities or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, waiver
or other action, only Securities which the Trustee knows to be so owned shall be
so disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 3.01.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.06 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 3.01.
"Responsible Officer", when used with respect to the Trustee, means
any officer in the Corporate Trust Office of the Trustee or any other officer of
the Trustee customarily performing functions similar to those performed by any
of the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Property" means any manufacturing plant or equipment
owned by the Company or a
6
<PAGE> 14
Restricted Subsidiary which is used primarily to manufacture tires or other
automotive products and is located within any one or more of the States of the
United States of America, but shall not include (i) tire retreading plants,
facilities or equipment, (ii) manufacturing plants, facilities or equipment
which, in the opinion of the Board of Directors, are not of material importance
to the total business conducted by the Company and its Subsidiaries, taken as a
whole, (iii) plants, facilities or equipment which, in the opinion of the Board
of Directors, are used primarily for transportation, marketing or warehousing,
or (iv) any gas or oil pipeline or related assets.
"Restricted Subsidiary" means a Subsidiary engaged primarily in
manufacturing tires or other automotive products (i) substantially all the
assets of which are located within, and substantially all the operations of
which are conducted within, any one or more of the States of the United States
of America, and (ii) which has assets in excess of 5% of the total amount of
Consolidated Assets of the Company and Subsidiaries, as shown on the
consolidated balance sheet for the then most recently ended fiscal quarter of
the Company; except that such term shall not include any Subsidiary the
principal business of which is financing accounts receivable, leasing, owning
and developing real estate, engaging in transportation activities, or engaging
in distribution and related activities.
"Secured Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary secured by a Lien on Restricted Property, but excluding
Indebtedness which is either (i) outstanding on March 1, 1999 and is secured by
one or more Liens existing on that date, including any renewals or extensions
thereof, or (ii) not Funded Debt.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.05.
"Shareholders' Equity" means, at any date as of which any
determination thereof is being or to be made, the sum of the stated capital,
capital surplus and retained earnings of the Company and its Subsidiaries at
such date, determined on a consolidated basis in accordance with GAAP.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means a Person (other than an individual or a
government or any agency or political subdivision thereof) more than 50% of the
outstanding voting interest of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries, or the Company, in accordance with GAAP, otherwise
consolidates as a Subsidiary of the Company.
"Successor Company" has the meaning specified in Section 8.01.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect
7
<PAGE> 15
to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"U.S. Government Obligations" has the meaning specified in Section
13.04.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president"; but shall not
include any assistant vice president.
"Yield to Maturity", when used with respect to any Original Issue
Discount Security, means the yield to maturity, if any, set forth in the
prospectus supplement relating thereto, which shall be equal to the yield to
maturity, if any, set forth on the face of such Security.
SECTION 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee such
certificates and opinions as may be required under the Trust Indenture Act. Each
such certificate or opinion shall be given in the form of an Officers'
Certificate, if to be given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of
the Trust Indenture Act and any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by, an opinion
of any specified Person, such matters be certified by, or covered by the opinion
of, only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an officer of the Company may be based
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the
8
<PAGE> 16
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company stating
that the information with respect to such factual matters is in the possession
of the Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.04. Acts of Holders; Record Dates. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
Without limiting the generality of the foregoing, a Holder,
including a Depositary that is a Holder of a Global Security, may make, give or
take, by a proxy, or proxies, duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other Act provided or
permitted in this Indenture to be made, given or taken by Holders, and a
Depositary that is a Holder of a Global Security may provide its proxy or
proxies to the beneficial owners of interest in any such Global Security.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as a record date for the purpose of determining the
Holders of Outstanding Securities of any series entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
Act, or to vote on any action, authorized or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If not set
by the Company prior to the first solicitation of a Holder of Securities of such
series made by any Person in respect of any such action, or, in the case of any
such vote, prior to such vote, the record date for any such action or vote shall
be the 30th day (or, if later, the date of the most recent list of Holders
required to be provided pursuant to Section 7.01) prior to such first
solicitation or vote, as the case may be. With regard to any record date for
action to be taken by the Holders of one or more series of Securities, only the
Holders of Securities of such series on such date (or their duly designated
proxies) shall be entitled to give or take, or vote on, the relevant action. If
any record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record
9
<PAGE> 17
date, and no other Holders, shall be entitled to take the relevant action,
whether or not such Holders remain Holders after such record date; provided that
no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of
Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of any Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Company, at its own expense, shall cause notice
of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Trustee in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 1.06.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to join
in the giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 5.02, (iii) any request to institute
proceedings referred to in Section 5.07(b) or (iv) any direction referred to in
Section 5.12, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Company in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 1.06.
With respect to any record date set pursuant to this Section, the
party hereto which set such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 1.06, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
(f) Without limiting the foregoing, a Holder entitled hereunder to
give or take any action
10
<PAGE> 18
hereunder with regard to any particular Security may do so with regard to all or
any part of the principal amount of such Security or by one or more duly
appointed agents, each of which may do so pursuant to such appointment with
regard to all or any different part of such principal amount.
SECTION 1.05. Notices, etc., to Trustee and Company. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, or dispatched for
delivery (prepaid by the sender) by an overnight courier service with
written evidence of delivery required, to the Company addressed to it at
the address of its principal office specified in the first paragraph of
this instrument, marked "Attention: Vice President and General Counsel",
or at any other address previously furnished in writing to the Trustee by
the Company.
SECTION 1.06. Notice to Holders; Waiver. Where this Indenture
provides for any notice to Holders, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder entitled to receive such notice, at
his address as it appears in the Security Register, not later than the latest
date (if any), and not earlier than the earliest date (if any), prescribed for
the giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.07. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with a provision of the Trust indenture
Act that is required under such Act to be a part of and govern this Indenture,
the latter provision shall control. If any provision of this Indenture modifies
or excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be.
SECTION 1.08. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns. All covenants and agreements
in this Indenture by the Company shall bind its successors and assigns, whether
so expressed or not.
SECTION 1.10. Separability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
11
<PAGE> 19
SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in
the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and the Holders, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law. This Indenture and the Securities shall
be governed by and construed in accordance with the laws of the State of New
York.
SECTION 1.13. Legal Holidays. In any case where any Interest Payment
Date, Redemption Date or Stated Maturity of any Security shall not be a Business
Day at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Securities (other than a provision of the Securities of any
series which specifically states that such provision shall apply in lieu of this
Section)) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity; provided that no interest shall accrue for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be.
ARTICLE TWO
SECURITY FORMS
SECTION 2.01. Forms Generally. The Securities of each series shall
be in substantially the form set forth in this Article, or in such other form as
shall be established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistent herewith, be determined by the officers executing such Securities, as
evidenced by their execution of the Securities. If the form of Securities of any
series is established by action taken pursuant to a Board Resolution, a copy of
an appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.03 for the
authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be in
substantially the form set forth at Section 2.05.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officer or officers of the Company executing such Securities,
as evidenced by their execution of such Securities.
12
<PAGE> 20
SECTION 2.02. Form of Face of Security.
[Insert any legend required by the Internal Revenue Code and the
regulations thereunder.]
THE GOODYEAR TIRE & RUBBER COMPANY
------------------
No. $___________
The Goodyear Tire & Rubber Company, a corporation duly organized and
existing under the laws of the State of Ohio (herein called the "Company", which
term includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to___________________________________
____________________________________ , or registered assigns, the principal sum
of ______ Dollars ______ on ______, _____ [if the Security is to bear interest
prior to Maturity, insert-, and to pay interest thereon from _________________
or from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on ________ and _________ in each year,
commencing _________________, at the rate of ___% per annum, until the principal
hereof is paid or made available for payment] [if applicable, insert-, and (to
the extent that the payment of such interest shall be legally enforceable) at
the rate of ___% per annum on any overdue principal and premium and on any
overdue installment of interest]. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the ______ or _______ (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture].
[If the Security is not to bear interest prior to Maturity, insert--
The principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of _____% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
default in payment to the date payment of such principal has been made or duly
provided for. Interest on any overdue principal shall be payable on demand. Any
such interest on any overdue principal that is not so paid on demand shall bear
interest at the rate of ______% per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue from the date of
such demand for payment to the date payment of such interest has been made or
duly provided for, and such interest shall also be payable on demand.]
Payment of the principal of (and premium, if any) and [if
applicable, insert any such] interest on this Security will be made at the
office or agency of the Company maintained for that purpose in such coin or
currency of [the United States of America] [insert other currency, if
applicable] as at the time of payment is legal tender for payment of public and
private debts [if applicable, insert-; provided, however, that at the option of
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register].
13
<PAGE> 21
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated: THE GOODYEAR TIRE & RUBBER COMPANY
By________________________________
[Seal]
Attest:
__________________________________
SECTION 2.03. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of March 1, 1999 (herein called the
"Indenture"), between the Company and The Chase Manhattan Bank, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof[, limited in aggregate principal amount to $____].
[If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable,
insert--(1) _________________ on in any year commencing with the year ____ and
ending with the year ___ through operation of the sinking fund for this series
at a Redemption Price equal to 100% of the principal amount, and (2)] at any
time on or after ______________, 19__], as a whole or in part, at the election
of the Company, at the following Redemption Prices (expressed as percentages of
the principal amount): if redeemed [on or before ___________________, ___%, and
if redeemed] during the 12-month period beginning ______________________________
of the years indicated,
14
<PAGE> 22
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
---- ----- ---- -----
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption [if applicable, insert -- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on ___________ in any
year commencing with the year and ending with the year
___________________________________________________ through operation of the
sinking fund for this series at the Redemption Prices for redemption through
operation of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below, and (2) at any time [on or after
________________], as a whole or in part, at the election of the Company, at the
Redemption Prices for redemption otherwise than through operation of the sinking
fund (expressed as percentages of the principal amount) set forth in the table
below: If redeemed during the 12-month period beginning of the years indicated,
<TABLE>
<CAPTION>
Redemption Price Redemption Price for
for Redemption Redemption Otherwise
Through Operation Than Through Operation
Year of the Sinking Fund of the Sinking Fund
---- ------------------- -------------------
<S> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ___% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Date referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert - The Securities are subject to redemption,
as a whole at any time or in part from time to time, at the sole election of the
Company, upon not less than 30 or more than 60 days' notice by mail to the
Trustee at a Redemption Price equal to [ ].]
[If applicable, insert - The holder of this Security shall have the
right to require the Company to pay this Security in full on ____________, __ by
giving the Company or the Registrar written notice of the exercise of such right
not less than 30 or more than 60 days' prior to such date.]
15
<PAGE> 23
[If applicable, insert -- Notwithstanding the foregoing, the Company
may not, prior to __________________ redeem any Securities of this series as
contemplated by [Clause (2) of] the preceding paragraph as a part of, or in
anticipation of, any refunding operation by the application, directly or
indirectly, of moneys borrowed having an interest cost to the Company
(calculated in accordance with generally accepted financial practice) of less
than % per annum.]
[If applicable, insert -- The sinking fund for this series provides
for the redemption on in each year beginning with the year and ending with the
year of [not less than $ ("mandatory sinking fund") and not more than] $
aggregate principal amount of Securities of this series. Securities of this
series acquired or redeemed by the Company otherwise than through [mandatory]
sinking fund payments may be credited against subsequent [mandatory] sinking
fund payments otherwise required to be made [if applicable, insert--in the
inverse order in which they become due].]
[If the Security is subject to redemption, insert--In the event of
redemption of this Security in part only, a new Security or Securities of this
series and of like tenor for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert--This Security is not subject to redemption
prior to maturity.]
[If applicable, insert--The Indenture contains provisions for
defeasance at any time of [(a)] (the entire indebtedness evidenced by this
Security] [and (b)] [certain restrictive covenants,] [in each case] upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.]
[If the Security is not an Original Issue Discount Security,
insert--If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. "Event of Default" means any one of the events specified at clauses
________ and _______ of Section 5.01 of the Indenture.]
[If the Security is an Original Issue Discount Security, insert--If
an Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to [--insert formula for determining the
amount]. Upon payment [if applicable, insert--(i)] of the amount of principal so
declared due and payable [if applicable, insert--and (ii) of interest on any
overdue principal and overdue interest (in each case to the extent that the
payment of such interest shall be legally enforceable)], all of the Company's
obligations in respect of the payment of the principal of and interest, if any,
on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of all series to be affected (voting as a single class).
The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
16
<PAGE> 24
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
[If applicable, insert -- The Securities of this series are issuable
only in registered form without coupons in denominations of $___________ and any
integral multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.]
[If applicable, insert - The Securities of this series will be
represented by one or more global securities (collectively, the "Global
Security") registered in the name of The Depositary Trust Company, New York, New
York (the "Depositary"), or a nominee of the Depositary. So long as the
Depositary, or its nominee, is the registered holder and owner of this Global
Note, the Depositary or such nominee, as the case may be, will be considered the
sole owner and holder of the Notes for all purposes under the Indenture. The
Global Security may be transferred, in whole and not in part, only to the
Depositary or another nominee of the Depositary. The Depositary will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the Notes represented by such Global Security to the accounts of
institutions that have accounts with the Depositary or its nominee
("participants"). Ownership of beneficial interests in a Global Security will be
shown on, and the transfer of those ownership interests will be effected
through, records maintained by the Depositary (with respect to participants'
interests) and such participants (with respect to the owners of beneficial
interests in such Global Security).]
[If applicable, insert - The Securities represented by this Global
Security are exchangeable for Securities in definitive form of like tenor as
such Global Security in denominations of $1,000 and in any greater amount that
is an integral multiple thereof if (i) the Depositary notifies the Company that
it is unwilling or unable to continue as Depositary for this Global Security or
if at any time the Depositary ceases to be a clearing agency registered under
the Securities Exchange Act of 1934, as amended, (ii) the Company in its
discretion at any time determines not to have all of the Securities of this
series represented by the Global Security and notifies the Trustee thereof, or
(iii) an Event of Default has occurred and is continuing with respect to the
Securities. Any Security that is exchangeable pursuant to the preceding sentence
is exchangeable only for Securities of this series.]
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
17
<PAGE> 25
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 2.04. Form of Legend for Global Security. Unless otherwise
specified as contemplated by Section 3.01 for the Securities evidenced thereby,
any Global Security authenticated and delivered hereunder shall bear a legend in
substantially the following form:
"THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED,
WHETHER IN WHOLE OR IN PART, TO, OR REGISTERED OR EXCHANGED FOR SECURITIES
REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A
NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY
AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN
EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY
SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES."
SECTION 2.05. Form of Trustee's Certificate of Authentication. The
Trustee's certificates of authentication shall be in substantially the following
form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By
------------------------------------
Authorized Officer
18
<PAGE> 26
ARTICLE THREE
THE SECURITIES
SECTION 3.01. Amount of Securities Issuable Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered on original issuance under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in one or more Board Resolutions or pursuant to authority granted by
one or more Board Resolutions and, subject to Section 3.03, set forth, or
determined in the manner provided, in an Officers' Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of
Securities of any series any or all of the following, as applicable:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) the aggregate principal amount of the Securities of the series
which may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Securities of the series pursuant
to Section 3.04, 3.05, 3.06, 9.06 or 11.07 and except for any Securities
which, pursuant to Section 3.03, are deemed never to have been
authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series
shall be payable, if other than the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest;
(4) the date or dates on which the principal of the Securities of
the series is payable;
(5) the rate or rates (which may be fixed or variable) and/or the
method of determination thereof at which the Securities of the series
shall bear interest, if any, the date or dates from which such interest
shall accrue, the Interest Payment Dates on which any such interest shall
be payable and the Regular Record Date for any interest payable on any
Interest Payment Date;
(6) the place or places where the principal of and any premium and
interest on Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which any Securities of the series may
be redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(9) if other than denominations of $l,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(10) if the currency, currencies or currency units in which payment
of the principal of and any
19
<PAGE> 27
premium and interest on any Securities of the series shall be other than
the currency of the United States of America, such currency, currencies or
currency units and the manner of determining the equivalent thereof in the
currency of the United States of America for purposes of the definition of
"Outstanding" in Section 1.01;
(11) if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined by reference to
an index or formula, the manner in which such amounts shall be determined;
(12) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the Company
or a Holder thereof, in one or more currencies or currency units other
than that or those in which the Securities are stated to be payable, the
currency, currencies or currency units in which payment of the principal
of and any premium and interest on Securities of such series as to which
such election is made shall be payable, and the periods within which and
the term and conditions upon which such election is to be made;
(13) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
5.02;
(14) the application, if any, of either or both of Section 13.02 and
Section 13.03 to the Securities of the series;
(15) whether the Securities of the series shall be issuable in whole
or in part in the form of one or more Global Securities and, in such case,
the Depositary or Depositaries for such Global Security or Global
Securities and any circumstances other than those set forth in Section
3.05 in which any such Global Security may be transferred to, and
registered and exchanged for Securities registered in the name of, a
Person other than the Depositary for such Global Security or a nominee
thereof and in which any such transfer may be registered;
(16) if other than as specified in Section 5.01, the Events of
Default applicable with respect to the Securities of the series;
(17) if other than as specified in Section 5.02, the Events of
Default the occurrence of which would permit the declaration of the
acceleration of maturity pursuant to Section 5.02;
(18) any addition to or change in the covenants set forth in Article
Ten which applies to Securities of the series, and any other covenant or
warranty included for the benefit of Securities of the series in addition
to (and not inconsistent with) those included in this Indenture for the
benefit of Securities of all series, or any other covenant or warranty
included for the benefit of Securities of the series in lieu of any
covenant or warranty included in this Indenture for the benefit of
Securities of all series, or any provision that any covenant or warranty
included in this Indenture for the benefit of Securities of all series
shall not be for the benefit of Securities of such series, or any
combination of such covenants, warranties or provisions; and
(19) any other term of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 9.01(e)).
All Securities of any one series shall be substantially identical
except as to denomination and
20
<PAGE> 28
except as may otherwise be provided in or pursuant to the Board Resolution
referred to above and (subject to Section 3.03) set forth, or determined in the
manner provided, in the Officers' Certificate referred to above or in any such
indenture supplemental hereto.
If any of the terms of a series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of such series.
SECTION 3.02. Denominations. The Securities of each series shall be
issuable in registered form without coupons in such denominations as shall be
specified as contemplated by Section 3.01. In the absence of any such provisions
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 3.03. Execution, Authentication, Delivery and Dating. The
Securities shall be executed on behalf of the Company by its Chairman of the
Board, its President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any series executed by
the Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 2.01 and 3.01, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 6.01) shall be
fully protected in relying upon, an Opinion of Counsel stating:
(a) if the form of such Securities has been established by or pursuant to
Board Resolution as permitted by Section 2.01, that such form has been
established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or pursuant
to Board Resolution as permitted by Section 3.01, that such terms have
been established in conformity with the provisions of this Indenture; and
(c) that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities
21
<PAGE> 29
under the Securities and this Indenture or otherwise in a manner which is not
reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.01 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.01 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 3.09, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and delivered hereunder and shall
never be entitled to the benefits of this Indenture.
SECTION 3.04. Temporary Securities. Pending the preparation of
definitive Securities of any series, the Company may execute, and upon Company
Order the Trustee shall authenticate and deliver, temporary Securities which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Securities
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series may be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations and of
a like aggregate principal amount and tenor. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series and tenor.
SECTION 3.05. Registration, Registration of Transfer and Exchange.
The Company shall cause to the kept at the Corporate Trust Office a register
(the register maintained in such office and in any other office or agency of the
Company in a Place of Payment being herein sometimes collectively referred to as
the "Security Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
of transfers of Securities. The Trustee is hereby appointed "Security Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security of any
series at the office or agency in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor.
22
<PAGE> 30
At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender
of the securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 3.04, 9.06 or 11.07 not involving any
transfer.
The Company shall not be required (a) to issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption under Section
11.03 and ending at the close of business on the day of such mailing or (b) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
If the Securities of any series (or any series and specified tenor)
are to be redeemed in part, the Company shall not be required (i) to issue,
register the transfer of or exchange Securities of that series (or that series
and tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 11.03 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply
only to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global
Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be registered
in the name of any Person other than the Depositary for such Global
Security or a nominee thereof unless (A) such Depositary (i) has notified
the Company that it is unwilling or unable to continue as Depositary for
such Global Security or (ii) has ceased to be a clearing agency registered
under the Exchange Act, (B) there shall have occurred and be continuing an
Event of Default with respect to such Global Security or (C) there shall
exist such circumstances, if any, in addition to or in lieu of the
foregoing as have been specified for this purpose as contemplated by
Section 3.01.
23
<PAGE> 31
(3) Subject to Clause (2) above, any exchange of a Global Security
for other Securities may be made in whole or in part, and all Securities
issued in exchange for a Global Security or any portion thereof shall be
registered in such name as the Depositary for such Global Security shall
direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 3.04, 3.06,
9.06 or 11.07 or otherwise, shall be authenticated and delivered in the
form of, and shall be, a Global Security, unless such Security is
registered in the name of a Person other than the Depositary for such
Global Security or a nominee thereof.
Upon the occurrence in respect of any Global Security of any series
of any one or more of the conditions specified in clause (2) of the preceding
paragraph or such other conditions as may be specified as contemplated by
Section 3.01 for such series, such Global Security may be exchanged for
Securities registered in the names of, and the transfer of such Global Security
may be registered to, such Persons (including Persons other than the Depositary
with respect to such series and its nominees) as such Depositary shall direct.
Notwithstanding any other provision of this Indenture, any Security
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, any Global Security shall also be a Global Security and
shall bear the legend specified in Section 2.04 except for any Security
authenticated and delivered in exchange for, or upon registration of transfer
of, a Global Security pursuant to the preceding sentence.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities. If
any mutilated Security is surrendered to the Trustee, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Security of the same series and of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (b) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.07. Payment of Interest; Interest Rights Preserved. Except
as otherwise provided as contemplated by Section 3.01 with respect to any series
of Securities, interest on any Security which is
24
<PAGE> 32
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Security of any series which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder of
Securities of such series at his address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following clause (b).
(b) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange or which such Securities may
be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 3.08. Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of and any premium and (subject to Section 3.07) any interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
SECTION 3.09. Cancellation. All Securities surrendered for payment,
redemption, registration of transfer or exchange or for credit against any
sinking fund payment shall, if surrendered to any Person other
25
<PAGE> 33
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any
securities previously authenticated and delivered hereunder which the Company
may have acquired in any manner whatsoever and may deliver to the Trustee (or to
any other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this section, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be disposed of as
directed by a Company Order, which shall be effected consistent with such
Company Order in accordance with the standard procedures of the Trustee. The
Trustee shall deliver a certificate of each such disposal to the Company.
SECTION 3.10. Computation of Interest. Except as otherwise specified
as contemplated by Section 3.01 for Securities of any series, interest on the
Securities of each series shall be computed on the basis of a 360-day year of
twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture. This
Indenture shall upon Company Request cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Securities
herein expressly provided for), and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture when:
(a) either:
(i) all Securities theretofore authenticated and delivered
(other than (x) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 3.06 and
(y) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust,
as provided in Section 10.04) have been delivered to the Trustee for
cancellation; or
(ii) all such Securities not theretofore delivered to the
Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at their Stated Maturity
within one year, or
(C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (A), (B) or (C) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust
for the purpose an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal and any premium and interest
to the date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
26
<PAGE> 34
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 6.07, the
obligations of the Trustee to any Authenticating Agent under Section 6.14 and,
if money shall have been deposited with the Trustee pursuant to subclause (ii)
of clause (a) of this Section, the obligations of the Trustee under Section 4.02
and the last paragraph of Section 10.04 shall survive.
SECTION 4.02. Application of Trust Money. Subject to the provisions
of the last paragraph of Section 10.04, all money deposited with the Trustee
pursuant to Section 4.01 shall be held in trust and applied by it, in accordance
with the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal and any premium and interest for whose payment such money has been
deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 5.01. Events of Default. "Event of Default", wherever used
herein with respect to Securities of any particular series, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) default in the due and punctual payment of any installment of
interest upon any of the Securities of that series as and when the same
shall become due and payable and continuance of such default for a period
of 30 days; or
(b) default in the due and punctual payment of the principal of (or
premium, if any, on) any of the Securities of that series at Maturity; or
(c) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(d) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company set
forth in the Securities of that series or in this Indenture (other than
those set forth exclusively in the terms of Securities of any series other
than that series, or those which have been included in this Indenture for
the benefit of Securities of any series other than that series) continued
for a period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee, or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Securities of that series at the time Outstanding, a written notice
specifying such failure and requiring the same to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
27
<PAGE> 35
(e) the entry of a decree or order by a court having jurisdiction in
the premises granting relief in respect of the Company in an involuntary
case under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law adjudging the Company as being
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company under any applicable Federal or state law, or appointing a
receiver, liquidator, custodian, assignee, trustee, sequestrator (or other
similar official) of the Company, or of substantially all of its
properties, or ordering the winding up or liquidation of the affairs of
the Company, and the continuance of any such decree or order unstayed and
in effect for a period of 90 consecutive days; or
(f) the institution by the Company of proceedings to be adjudicated
as being bankrupt or insolvent, or the consent by the Company to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by the Company of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law, or the consent by the
Company to the filing of any such petition or to the appointment of a
receiver, liquidator, custodian, assignee, trustee, sequestrator (or other
similar official) of the Company, or of any substantial part of its
properties, or the making by the Company of an assignment for the benefit
of creditors, or the admission by the Company in writing of its inability
to pay its debts generally as they become due, or the taking of corporate
action by the Company in furtherance of any such action; or
(g) any other Event of Default provided with respect to Securities
of that series.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. If
one or more of the Events of Default specified in Section 5.01 shall have
occurred and be continuing with respect to any particular series of Securities,
then in each and every such case, unless the principal of all the Securities of
that series shall have already become due and payable, either the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Securities of
that series then Outstanding hereunder, by notice in writing to the Company (and
to the Trustee if given by Holders), may declare the principal amount (or, if
the Securities of that series are Original Issue Discount Securities, such
amount of principal as may be specified by the terms of that series) of all the
Securities of that series to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable.
Notwithstanding the foregoing, at any time after such a declaration
of acceleration with respect to Securities of any series has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in the principal amount of the Outstanding Securities of that series, by written
notice to the Company and the Trustee, may rescind and annul such declarations
and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed therefor
in such Securities,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such
Securities, and
28
<PAGE> 36
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and other amounts due to Trustee under
Section 6.07;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of (and premium, if any) and
accrued interest on the Securities of that series which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Trustee. The Company covenants that if:
(a) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days, or
(b) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon written demand of the Trustee, pay to it, for the benefit
of the Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and other amounts due to Trustee under
Section 6.07.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and rights of the Holders of Securities of such series by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
SECTION 5.04. Trustee May File Proofs of Claim. In case of any
judicial proceeding relative to the Company (or any other obligor upon the
Securities), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise, to take any and all
actions authorized under the Trust Indenture Act in order to have claims of the
Holders and the Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized:
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding; and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims
29
<PAGE> 37
and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may vote on behalf of the Holders for the election of
a trustee in bankruptcy or similar official and may be a member of a creditors'
or other similar committee.
SECTION 5.05. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and for any
other amounts due the Trustee under Section 6.07, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 5.06. Application of Money Collected. Any money collected by
the Trustee pursuant to this Article shall be applied in the following order, at
the date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal or any premium or interest, upon presentation of
the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
(a) First: To the payment of all amounts due the Trustee under
Section 6.07; and
(b) Second: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Securities for principal and any premium and interest,
respectively.
SECTION 5.07. Limitation on Suits. No Holder of any Security of any
series shall have any right to institute any proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that
series;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
30
<PAGE> 38
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 5.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest. Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and any premium and
(subject to Section 3.07) any interest on such Security on the Stated Maturity
or Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in the last paragraph of Section 3.06, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any Holder of any Securities to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or By-Law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders. The Holders of a majority in
principal amount of the Outstanding Securities of any series shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Securities of such series, provided that: (a)
such direction shall not be in conflict with any rule of law or with this
Indenture, and (b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
31
<PAGE> 39
SECTION 5.13. Waiver of Past Defaults. The Holders of not less than
a majority in principal amount of the Outstanding Securities of any series may
on behalf of the Holders of all the Securities of such series waive any past
default hereunder with respect to such series and its consequences, except a
default: (a) in the payment of the principal of or any premium or interest on
any Security of such series, or (b) in respect of a covenant or provision hereof
which under Article Nine cannot be modified or amended without the consent of
the Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit in
the manner and to the extent provided in the Trust Indenture Act, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant, but the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the Outstanding Securities of any series, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Security on or after the
Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date); provided that neither this Section
nor the Trust Indenture Act shall be deemed to authorize any court to require
such an undertaking or to make such an assessment in any suit instituted by the
Company.
SECTION 5.15. Waiver of Stay or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities. The duties and
responsibilities of the Trustee shall be as provided by the Trust Indenture Act.
Notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Whether or not therein expressly
so provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
32
<PAGE> 40
SECTION 6.02. Notice of Defaults. If a default occurs hereunder with
respect to Securities of any series, the Trustee shall give the Holders of
Securities of such series notice of such default as and to the extent provided
by the Trust Indenture Act; provided, however, that in the case of any default
of the character specified in Section 5.01(d) with respect to Securities of such
series, no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default with respect to Securities of such series.
SECTION 6.03. Certain Rights of Trustee. Subject to the provisions
of Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be charged with knowledge of any default
or Event of Default with respect to the Securities of any series for which it is
acting as Trustee unless either (1) a Responsible Officer shall have actual
knowledge of such default or Event of Default or (2) written notice of such
default or Event of Default shall have been given to the Trustee by the Company
or any other obligor on such Securities or by any Holder of such Securities; and
33
<PAGE> 41
(i) The Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or within the
discretion of rights or powers conferred upon it by this Indenture.
SECTION 6.04. Not Responsible for Recitals or Issuance of
Securities. The recitals contained in this Indenture and in the Securities,
except the Trustee's certificates of authentication, shall be taken as the
statements of the Company, and the Trustee or any Authenticating Agent assumes
no responsibility for their correctness. Neither the Trustee nor the
Authenticating Agent makes any representation as to the validity or sufficiency
of this Indenture or of the Securities. The Trustee or any Authenticating Agent
shall not be accountable for the use or application by the Company of Securities
or the proceeds thereof.
SECTION 6.05. May Hold Securities. The Trustee, any Authenticating
Agent, any Paying Agent, any Security Registrar or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 6.08 and 6.13, may otherwise deal
with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 6.06. Money Held in Trust. Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in writing with the
Company.
SECTION 6.07. Compensation and Reimbursement. The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
SECTION 6.08. Disqualification; Conflicting Interests. If the
Trustee has or shall acquire a conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions of,
the Trust Indenture Act and this Indenture. To the extent permitted by the Trust
Indenture Act, the Trustee shall not be deemed to have a conflicting interest by
virtue of being a trustee under this Indenture with respect to Securities of
more than one series or by virtue of being the trustee under that certain
indenture, dated as of March 15, 1996, between the Company and the Trustee under
which the Company's 6 5/8% Notes due 2006, 7% Notes due 2028 and 6 3/8% Notes
due 2008 were issued and are outstanding.
34
<PAGE> 42
SECTION 6.09. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder which shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000 and its Corporate Trust Office is in the
Borough of Manhattan, New York, New York, or, with the written consent of the
Company, the United States or any State or Territory thereof or the District of
Columbia, and subject to supervision or examination by Federal or State
authority. If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 6.10. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 6.11 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.09 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged as being bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purposes of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 5.14, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities
35
<PAGE> 43
of any particular series) and shall comply with the applicable requirements of
Section 6.11. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 6.11, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 6.11, any
Holder who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
to all Holders of Securities of such series in the manner provided in Section
1.06. Each notice shall include the name of the successor Trustee with respect
to the Securities of such series and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor. (a) In case of
the appointment hereunder of a successor Trustee with respect to all Securities,
every successor Trustee so appointed shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one of more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
36
<PAGE> 44
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 6.13. Preferential Collection of Claim Against Company. If
and when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Company
(or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent. The Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon original issue and upon
exchange, registration of transfer or partial redemption thereof or pursuant to
Section 3.06, and Securities so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or state authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
37
<PAGE> 45
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.07.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:__________________________________________
As Authenticating Agent
By:__________________________________________
Authorized Officer
38
<PAGE> 46
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01. Company To Furnish Trustee Names and Addresses of
Holders. The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after each Regular Record
Date for each series of Securities at the time outstanding, a list for
each series of Securities, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Securities of such
series on such Regular Record Date (or on a date to be determined pursuant
to Section 3.01 for any series of Original Issue Discount Securities); and
(b) at such other times as the Trustee may request in writing,
within 15 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 10 days prior
to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar, if it is acting as such.
SECTION 7.02. Preservation of Information; Communications to
Holders. (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar, if it is acting as such. The Trustee may destroy any list furnished
to it as provided in Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 7.03. Reports by Trustee. (a) The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto. To the extent that any such report is required
by the Trust Indenture Act with respect to any 12-month period, such report
shall cover the 12-month period ending May 15 and shall be transmitted by the
next succeeding July 15.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when any Securities are listed on any stock
exchange.
SECTION 7.04. Reports by Company. The Company shall file with the
Trustee and the Commission, and transmit to Holders, such information, documents
and other reports, and such summaries thereof, as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant to such
Act; provided that any such information, documents or reports required to be
filed with the Commission
39
<PAGE> 47
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.01. Company May Consolidate, etc., Only on Certain Terms.
Nothing contained in this Indenture or in any of the Securities shall prevent
any consolidation or merger of the Company with or into any other Person, or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any conveyance,
transfer or lease of the properties and assets of the Company substantially as
an entirety to any other Person authorized to acquire and operate the same (with
each of the foregoing transactions referred to as a "Company Sale"); provided,
however, (a) the Person formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company substantially as an entirety
(the "Successor Company") shall be a corporation, shall be organized and validly
existing under the laws of the United States of America, any state thereof or
the District of Columbia, and (b) the Company hereby covenants and agrees that,
as a condition precedent to any such consolidation, merger, sale or conveyance,
the due and punctual payment of the principal of (and premium, if any) and
interest, if any, on all of the Securities, according to their tenor, and the
due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed by the Company shall be expressly
assumed by supplemental indenture satisfactory in form to the Trustee, executed
and delivered to the Trustee, by the Successor Company.
Nothing contained in this Indenture or in any of the Securities
shall prevent the Company from merging into itself any other Person or acquiring
by purchase or otherwise all or any part of the property of any other Person.
SECTION 8.02. Successor Corporation to be Substituted. In case of
any such Company Sale, such Successor Company shall succeed to and be
substituted for the Company, with the same effect as if it had been named herein
as the Company. Such Successor Company thereupon may cause to be signed, and may
issue either in its own name or in the name of The Goodyear Tire & Rubber
Company or in the name of any corporation which previously shall have become the
Company in accordance with the provisions of this Article any or all of the
Securities issuable hereunder, which theretofore shall not have been signed by
the Company and delivered to the Trustee; and, upon the order of such Successor
Company instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver, any Securities which previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication, and
any Securities which such Successor Company thereafter shall cause to be signed
and delivered to the Trustee for that purpose; and, thereafter the predecessor
Person shall be relieved of all obligations and covenants under this Indenture
and the Securities. All of the Securities of a particular series so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Securities of such series theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Securities had been issued at
the date or the execution hereof.
SECTION 8.03. Opinion of Counsel to be Given Trustee. The Trustee,
subject to Sections 6.01 and 6.03, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale or conveyance and
any such assumption complies with the provisions of this Article.
40
<PAGE> 48
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(b) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(c) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such Events of Default
are to be for the benefit of less than all series of Securities, stating
that such additional Events of Default are expressly being included solely
for the benefit of such series); or
(d) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form; or
(e) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that
any such addition, change or elimination (i) shall neither (A) apply to
any Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such provision nor
(B) modify the rights of the Holder of any such Security with respect to
such provision or (ii) shall become effective only when there is no such
Security outstanding; or
(f) to secure the Securities pursuant to the requirements of Section
10.05; or
(g) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 3.01; or
(h) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 6.11(b); or
(i) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this clause
(i) shall not adversely affect the interests of the Holders of Securities
of any series in any material respect.
SECTION 9.02. Supplemental Indentures With Consent of Holders. With
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities of all series affected by such
41
<PAGE> 49
supplemental indenture (voting as a single class), by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of each such
series under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or reduce the amount of the principal
of an Original Issue Discount Security that would be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section
5.02, or change any Place of Payment where, or the coin or currency in
which, any Security or any premium or interest thereon is payable or
impair the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the case of redemption, on
or after the Redemption Date), or
(b) reduce the percentage in principal amount of the outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(c) modify any of the provisions of this Section or Section 5.13 or
Section 10.09, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, provided, however, that this clause shall not be deemed to
require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and
Section 10.09, or the deletion of this proviso, in accordance with the
requirements of Sections 6.11(b) and 9.01(h).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
6.01) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted by
this Indenture. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indentures. Upon the execution
of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes, and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
42
<PAGE> 50
SECTION 9.05. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act.
SECTION 9.06. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 10.01. Payment of Principal, Premium and Interest. The
Company covenants and agrees for the benefit of each series of Securities that
it will duly and punctually pay or cause to be paid the principal of and any
premium and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture. Interest on Securities shall be
payable without presentment of such Securities and only to the registered
Holders thereof determined as provided in Section 3.07. The Company shall have
the right to require a Holder, in connection with the payment of the principal
of and any premium and interest on a Security, to present at the office or
agency of the Company at which such payment is made a certificate, in such form
as the Company may from time to time prescribe, to enable the Company to
determine its duties and liabilities with respect to any taxes, assessments or
governmental charges which it may be required to deduct or withhold therefrom
under any present or future law of the United States of America or of any state,
county, municipality or taxing or withholding authority therein, and the Company
shall be entitled to determine its duties and liabilities with respect to such
deduction or withholding on the basis of information contained in such
certificate or, if no such certificate shall be so presented, on the basis of
any presumption created by any such law and shall be entitled to act in
accordance with such determination.
SECTION 10.02. Maintenance of Office or Agency. So long as any
Securities remain outstanding, the Company will maintain in each Place of
Payment for any series of Securities an office or agency where Securities of
that series may be presented or surrendered for payment, where Securities of
that series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities of
that series and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
43
<PAGE> 51
SECTION 10.03. Vacancy in the Office of Trustee. The Company,
whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Article Six, a Trustee, so that there shall
at all times be a Trustee hereunder.
SECTION 10.04. Money for Securities Payments to be Held in Trust. If
the Company shall at any time act as its own Paying Agent with respect to any
series of Securities, it will, on or before each due date of the principal of or
any premium or interest on any of the Securities of that series, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum sufficient
to pay the principal and any premium and interest so becoming due until such sum
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of or any
premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided by
the Trust Indenture Act and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company shall cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will (a) comply with the
provisions of the Trust Indenture Act applicable to it as a Paying Agent and (b)
during the continuance of any default by the Company (or any other obligor upon
the Securities of that series) in the making of any payment in respect of the
Securities of that series, and upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent for
payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent, and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or any premium
or interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request or (if then held by the Company) shall be
discharged from such trust, and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 10.05. Limitation on Secured Indebtedness. The Company will
not, nor will it permit any Restricted Subsidiary to, issue, assume or guarantee
any Secured Indebtedness if such Secured Indebtedness is secured by a Lien upon
Restricted Property of the Company or a Restricted Subsidiary without in any
such case effectively providing, concurrently with the issuance, assumption or
guarantee of any such Secured
44
<PAGE> 52
Indebtedness, that the Securities of any series then or thereafter outstanding
(together with, if the Company shall so determine, any other Indebtedness of the
Company or such Restricted Subsidiary ranking equally and ratably with such
Securities and then existing or thereafter created) shall be secured by such
Lien equally and ratably with any and all such Secured Indebtedness; provided,
however, that the foregoing shall not apply to:
(a) any Lien on Restricted Property of any corporation if such Lien
is in existence at the time such corporation becomes a Restricted
Subsidiary;
(b) any Lien on Restricted Property if such Lien is in existence at
the time of acquisition by the Company or a Restricted Subsidiary of such
Restricted Property;
(c) any Lien on Restricted Property to secure the payment of all or
any part of the purchase price (or other acquisition cost) of such
Restricted Property or to secure any Indebtedness incurred (prior to, at
the time of, or within one year after, the acquisition by the Company or a
Restricted Subsidiary of such Restricted Property) for the purpose of, or
in connection with, financing all or any part of the purchase price (or
other acquisition cost) thereof;
(d) any Lien on property of a corporation if such Lien was in
existence prior to the time such corporation is merged into or
consolidated with the Company or a Restricted Subsidiary or prior to the
time of a sale, lease or other disposition of the properties of a
corporation or firm as an entirety or substantially as an entirety to the
Company or a Restricted Subsidiary;
(e) any Lien securing Secured Indebtedness owing by any Restricted
Subsidiary to the Company or to any other Restricted Subsidiary;
(f) any Lien on Restricted Property 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, or
performance of any other obligations, pursuant to any contract or statute
or to secure any Indebtedness incurred for the purpose of financing all or
any part of the purchase price or cost of construction of the Restricted
Property subject to such Lien, including, without limiting the
generalities of the foregoing, Liens to secure pollution control or
industrial revenue bonds or other types of financings;
(g) any Lien on personal property (other than manufacturing
equipment); or
(h) any extension or renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Secured
Indebtedness or any Lien referred to in clauses (a) through (g),
inclusive, of this Section 10.05; provided, however, that the principal
amount of Secured Indebtedness secured by the Lien shall not exceed the
principal amount of Secured Indebtedness so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement Lien shall be limited to all or a part of the Restricted
Property which secured the Lien so extended, renewed or replaced (plus
improvements on such Restricted Property).
Notwithstanding the foregoing provisions of this Section 10.05, the
Company or any one or more Restricted Subsidiaries may issue, assume or
guarantee Secured Indebtedness that would (but for the provision of clauses (a)
through (h), inclusive, of the preceding paragraph) otherwise be subject to the
foregoing restrictions in an aggregate amount which, together with the aggregate
principal amount of all other such Secured Indebtedness of the Company and
Restricted Subsidiaries outstanding at the time of such issuance, assumption or
guarantee (but excluding Secured Indebtedness permitted by clauses (a) through
(h), inclusive, of the preceding paragraph), does
45
<PAGE> 53
not at such time exceed 15% of the Shareholders' Equity of the Company as at the
last day of the then most recently ended fiscal quarter of the Company, as
reported on the applicable consolidated balance sheet of the Company.
SECTION 10.06. Limitation on Sale and Leaseback Transactions. So
long as the Securities of any Series are Outstanding, the Company will not, and
will not permit any Restricted Subsidiary to, enter into any arrangement,
directly or indirectly, with any Person providing for the leasing by the Company
or a Restricted Subsidiary of any Restricted Property owned at the date hereof,
which Restricted Property has been or is to be sold or transferred by the
Company or such Restricted Subsidiary to such Person or to any other Person
where funds have been or are to be advanced to such Person subject to a Lien on
the Restricted Property to be leased (a "Sale and Leaseback Transaction"),
unless (a) the Company or such Restricted Subsidiary would be entitled, pursuant
to the provisions of Section 10.05, to incur Secured Indebtedness secured by a
Lien on the Restricted Property to be leased in an amount equal to the
Attributable Debt with respect to such Sale and Leaseback Transaction without
equally and ratably securing the Outstanding Securities, or (b) the Company or
such Restricted Subsidiary shall apply an amount equal to the proceeds from the
sale of such Restricted Property to the retirement, within 120 days of the
effective date of any such Sale and Leaseback Transaction, of Funded Debt of the
Company or such Restricted Subsidiary; provided, however, that this Section
10.06 shall not prevent the Company or any Restricted Subsidiary from: (a)
entering into any Sale and Leaseback Transaction not involving a lease with a
term of more than three years, or (b) entering into any Sale and Leaseback
Transaction in respect of any Restricted Property owned at the date hereof by
the Company or a Restricted Subsidiary, if such Sale and Leaseback Transaction
is entered into within 180 days after the later of the acquisition, completion
of construction or commencement of operation of such Restricted Property.
SECTION 10.07. Existence. Subject to Article Eight, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its existence, rights (charter and statutory) and franchises to carry
on its business; provided, however, that nothing in this Section 10.07 shall
prevent (a) any consolidation or merger of the Company, or any conveyance,
transfer or lease of its property and assets substantially as an entirety,
permitted by Article Eight, or (b) the liquidation or dissolution of the Company
after such conveyance, transfer or lease of its property and assets
substantially as an entirety permitted by Article Eight.
SECTION 10.08. Statement by Officers as to Default. The Company will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company ending after the date hereof, an Officers' Certificate, stating whether
or not to the best knowledge of the signers thereof the Company is in default in
the performance and observance of any of the terms, provisions and conditions of
Sections 10.01 to 10.07, inclusive, and, if the Company shall be in default,
specifying all such defaults and the nature and status thereof of which they may
have knowledge.
SECTION 10.09. Waiver of Certain Covenants. The Company may omit in
any particular instance to comply with any term, provision or condition set
forth in Sections 10.05 to 10.07, inclusive, with respect to the Securities of
any series if before the time for such compliance the Holders of at least a
majority in principal amount of the Outstanding Securities of such series shall,
by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition, but no such
waiver shall extend to or affect such term, provision or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
46
<PAGE> 54
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.01. Applicability of Article. Securities of any series
which are redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 3.01 for Securities of any series) in accordance with this Article.
SECTION 11.02. Election to Redeem; Notice to Trustee. The election
of the Company to redeem any Securities shall be evidenced by a Board Resolution
or in any other manner specified, as contemplated by Section 3.01 for such
Securities or series of Securities. In the case of any redemption at the
election of the Company of less than all the Securities of any series, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date, of the principal amount of Securities of
such series to be redeemed and, if applicable, of the tenor of the Securities to
be redeemed. In the case of any redemption of Securities prior to the expiration
of any restriction on such redemption provided in the terms of such Securities
or elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with such restriction.
SECTION 11.03. Selection by Trustee of Securities to be Redeemed. If
less than all the Securities of any series are to be redeemed in accordance with
this Article (unless all of the Securities of such series and of a specified
tenor are to be redeemed), the particular Securities to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of such series not previously called for redemption,
by such method as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any integral multiple
thereof) of the principal amount of Securities of such series, provided that the
unredeemed portion of the principal amount of any Security shall be in an
authorized denomination or a denomination larger than the minimum authorized
denomination for Securities of that series. If less than all of the Securities
of such series and of a specified tenor are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee from the Outstanding Securities of such series
and specified tenor not previously called for redemption in accordance with the
preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 11.04. Notice of Redemption. Notice of redemption shall be
given by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date, to each Holder of Securities to be
redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price and accrued interest, if any,
(c) if less than all the Outstanding Securities of any series
are to be redeemed, the
47
<PAGE> 55
identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to
be redeemed and, if less than all the Outstanding Securities of any
series consisting of a single Security are to be redeemed, the
principal amount of the Security to be redeemed,
(d) that on the Redemption Date the Redemption Price and
accrued interest, if any, will become due and payable upon each such
Security to be redeemed and, if applicable, that interest thereon
will cease to accrue on and after said date,
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued
interest, if any, and
(f) that the redemption is for a sinking fund, if such is the
case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
SECTION 11.05. Deposit of Redemption Price. Prior to any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.04) an amount of money sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date.
SECTION 11.06. Securities Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 3.01, installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, required as such at the close
of business on the relevant Record Dates according to their terms and the
provisions of Section 3.07.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
SECTION 11.07. Securities Redeemed in Part. Any Security which is to
be redeemed only in part shall be surrendered at a Place of Payment therefor
(with, if the Company or the Security Registrar so requires, due endorsement by,
or a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the Security
Registrar shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series and of like
tenor, of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
48
<PAGE> 56
ARTICLE TWELVE
SINKING FUNDS
SECTION 12.01. Applicability of Article. The provisions of this
Article shall be applicable to any sinking fund for the retirement of Securities
of a series except as otherwise specified as contemplated by Section 3.01 for
Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 12.02. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
SECTION 12.02. Satisfaction of Sinking Fund Payments with
Securities. The Company (1) may deliver outstanding Securities of a series
(other than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the term of such Securities or through the application of
permitted optional sinking fund payments pursuant to the term of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the term of such
series; provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 12.03. Redemption of Securities for Sinking Fund. Not less
than 60 days prior to each sinking fund payment date for any series of
Securities, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities of that series pursuant to
Section 12.02 and will also deliver to the Security Registrar any Securities to
be so delivered. Not less than 60 days before each such sinking fund payment
date, the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 11.03 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 11.04. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 11.05, 11.06 and 11.07.
49
<PAGE> 57
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 13.01. Applicability of Article; Company's Option to Effect
Defeasance or Covenant Defeasance. If pursuant to Section 3.01 provision is made
for either or both of (a) defeasance of the Securities of a series under Section
13.02, or (b) covenant defeasance of the Securities of a series under Section
13.03, then the provisions of such Section or Sections, as the case may be,
together with the other provisions of this Article Thirteen, shall be applicable
to the Securities of such series, and the Company may at any time elect (such
election to be evidenced by a Board Resolution), with respect to the Securities
of such series, either to effect such defeasance pursuant to Section 13.02 (if
applicable) or to effect such covenant defeasance pursuant to Section 13.03 (if
applicable) in respect of the Outstanding Securities of such series upon
compliance with the conditions set forth below in this Article Thirteen.
SECTION 13.02. Defeasance and Discharge. Upon the Company's exercise
of the above option applicable to this Section, the Company shall be deemed to
have been discharged from its obligations with respect to the Outstanding
Securities of such series on and after the date the conditions precedent set
forth below are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the Outstanding Securities of such series
and to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (A) the rights of Holders of outstanding Securities of
such series to receive, solely from the trust fund described in Section 13.05 as
more fully set forth in such Section, payments of the principal of (and premium,
if any) and interest on such Securities when such payments are due, (B) the
Company's obligations with respect to such Securities under Sections 3.04, 3.05,
3.06, 10.02 and 10.04 and such obligations as shall be ancillary thereto, (C)
the rights, powers, trusts, duties, immunities and other provisions in respect
of the Trustee hereunder and (D) this Article Thirteen. Subject to compliance
with this Article Thirteen, the Company may exercise its option under this
Section 13.02 notwithstanding the prior exercise of its option under Section
13.03 with respect to the Securities of such series. Following a defeasance,
payment of the Securities of such series may not be accelerated because of the
occurrence and continuance of an Event of Default.
SECTION 13.03. Covenant Defeasance. Upon the Company's exercise of
the above option applicable to this Section and after the date the conditions
set forth below are satisfied, the Company shall be released from its
obligations under Section 10.05 and Section 10.06 and under any additional or
substitute covenant established with respect to the Securities of any series
pursuant to Section 3.01(18) if the Securities of such series have been
determined pursuant to Section 3.01 to be subject to this provision (with
Section 10.05, Section 10.06 and any such additional or substitute covenant
referred to herein as a "Defeasable Covenant"), and the occurrence of an event
specified in Section 5.01(d) with respect to such Defeasable Covenant shall not
be deemed to be an Event of Default with respect to the Outstanding Securities
of such series (hereinafter, "covenant defeasance"). For this purpose, such
covenant defeasance means that, with respect to the Outstanding Securities of
such series, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such Defeasable
Covenant whether directly or indirectly by reason of any reference elsewhere
herein to any such Defeasable Covenant or by reason of any reference in any such
Defeasable Covenant to any other provision herein or in any other document, but
the remainder of this Indenture and such Securities shall be unaffected thereby.
Following a covenant defeasance, payment of the Securities of such series may
not be accelerated because of an Event of Default specified in Section 5.01(e)
or Section 5.01(f) or by reference to Section 5.01(d) and such Defeasable
Covenant.
50
<PAGE> 58
SECTION 13.04. Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions precedent to application of either Section
13.02 or Section 13.03 to the outstanding Securities of such series:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 6.09 who shall agree to comply with the provisions of this
Article Thirteen applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for,
and dedicated solely to the benefit of the Holders of such Securities, (A)
money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before
the due date of any payment, money in an amount, or (C) a combination
thereof, sufficient, without reinvestment, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, and
which shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge, the principal of (and premium, if any) and interest on the
Outstanding Securities of such series on the Maturity of such principal,
premium, if any, or interest and any mandatory sinking fund payments or
analogous payments applicable to the Outstanding Securities of such series
on the due dates thereof. Before such a deposit, the Company may make
arrangements satisfactory to the Trustee for the redemption of Securities
at a future date or dates in accordance with Article Eleven, which shall
be given effect in applying the foregoing. For this purpose, "U.S.
Government Obligations" means securities that are (x) direct obligations
of the United States of America for the payment of which its full faith
and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United
States of America, the payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States of America, which,
in either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as
custodian with respect to any such U.S. Government Obligation or a
specific payment of principal of or interest on any such U.S. Government
Obligation held by such custodian for the account of the holder of such
depository receipt, provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific
payment of principal of or interest on the U.S. Government Obligation
evidenced by such depository receipt.
(2) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default with respect to the Securities of
such series shall have occurred and be continuing (A) on the date of such
deposit or (B) insofar as subsections 5.01(e) and (f) are concerned, at
any time during the period ending on the 91st day after the date of such
deposit or, if longer, ending on the day following the expiration of the
longest preference period applicable to the Company in respect of such
deposit (it being understood that the condition in this Clause (B) shall
not be deemed satisfied until the expiration of such period).
(3) Such defeasance or covenant defeasance shall not (A) cause the
Trustee for the Securities of such series to have a conflicting interest
as defined in Section 6.08 or for purposes of the Trust Indenture Act with
respect to any securities of the Company or (B) result in the trust
arising from such deposit constituting, unless it is qualified as, a
regulated investment company under the Investment Company Act of 1940, as
amended.
(4) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other agreement or instrument to which the Company is a party or by
which it is bound.
51
<PAGE> 59
(5) Such defeasance or covenant defeasance shall not cause any
Securities of such series then listed on any registered national
securities exchange under the Exchange Act to be delisted.
(6) In the case of an election under Section 13.02, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (x)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the date of this Indenture
there has been a change in the applicable Federal income tax law, in
either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of the outstanding Securities of such series
will not recognize income, gain or loss for Federal income tax purposes as
a result of such defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred.
(7) In the case of an election under Section 13.03, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities of such series will not
recognize income, gain or loss for Federal income tax purposes as a result
of such covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred.
(8) Such defeasance or covenant defeasance shall be effected in
compliance with any additional terms, conditions or limitations which may
be imposed on the Company in connection therewith pursuant to Section
3.01.
(9) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section
13.02 or the covenant defeasance under Section 13.03 (as the case may be)
have been complied with.
SECTION 13.05. Deposited Money and U.S. Government Obligations to be
Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the
last paragraph of Section 10.04, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee collectively, for purposes of this Section 13.05, the "Trustee")
pursuant to Section 13.04 in respect of the Outstanding Securities of such
series shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (but not including the Company acting as
its own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
(and premium, if any) and interest, but such money need not be segregated from
other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the money or U.S. Government
Obligations deposited pursuant to Section 13.04 or the principal and interest
received in respect thereof.
Anything herein to the contrary notwithstanding, the Trustee shall
deliver or pay to the Company from time to time upon Company Request any money
or U.S. Government Obligations held by it as provided in Section 13.04 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance, as the case may be, with
respect to such Securities.
52
<PAGE> 60
SECTION 13.06. Reinstatement. If the Trustee or the Paying Agent is
unable to apply any money in accordance with Section 13.05 by reason of any
order or judgment or any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the Company's obligations under
the Securities of such series shall be revived and reinstated as though no
deposit had occurred pursuant to this Article Thirteen until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 13.05; provided, however, that, if the Company makes any payment of
principal of (and premium, if any) or interest on any such Security following
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money
so held in trust by the Trustee or the Paying Agent.
ARTICLE FOURTEEN
IMMUNITY OF SHAREHOLDERS,
OFFICERS AND DIRECTORS
SECTION 14.01. Exemption from Individual Liability. No recourse
under or upon any obligation, covenant or agreement of this Indenture, or of any
Security, or for any claim based thereon or otherwise in respect thereof, shall
be had against any shareholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
indirectly or through the Company, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the obligations
issued hereunder are solely corporate obligations of the Company, that no such
liability whatever shall attach to, or is or shall be incurred by, the
shareholders, officers or directors, as such, of the Company or of any successor
corporation, or any of them, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any of the Securities or implied therefrom,
and that any and all such liability, either at common law or in equity or by
constitution or statute is hereby expressly waived and released as a condition
of, and as a consideration for, the execution of this Indenture and the issuance
of the Securities.
53
<PAGE> 61
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
THE GOODYEAR TIRE & RUBBER COMPANY
By /s/ Robert W. Tieken
------------------------------------------
Name: Robert W. Tieken
Title: Executive Vice President
[Seal]
Attest:
/s/ James Boyazis
- --------------------------------
James Boyazis, Secretary
THE CHASE MANHATTAN BANK
By: /s/ Andrew M. Deck
-----------------------------------------
Name: Andrew M. Deck
Title: Vice President
[Seal]
Attest:
/s/ Robert S. Peschler
- --------------------------------
Robert S. Peschler,
Assistant Vice President
54
<PAGE> 62
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 23rd day of March, 1999 before me personally came Andrew M. Deck,
to me known, who, being by me duly sworn, did depose and say that he is a Vice
President of The Chase Manhattan Bank, a banking corporation described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
/s/ Annabelle DeLuca
--------------------------------------------
Notary Public
Annabelle DeLuca
[Notarial Seal] Notary Public, State of New York
No. 01DE5013759
Qualified in Kings County
Certificate Filed in New York County
Commission Expires July 15, 1999
STATE OF OHIO )
) ss.:
COUNTY OF SUMMIT )
On the 22nd day of March, 1999 before me personally came Robert W. Tieken,
to me known, who, being by me duly sworn, did depose and say that he is an
Executive Vice President of The Goodyear Tire & Rubber Company, the corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
/s/ Mary Anne Reiber
--------------------------------------------
Notary Public
Mary Anne Reiber, Notary Public
[Notarial Seal] Residence - Summit County
State Wide Jurisdiction, Ohio
My Commission Expires February 24, 2002
55
<PAGE> 63
THE GOODYEAR TIRE & RUBBER COMPANY
OFFICERS' CERTIFICATE
---------------------
Robert W Tieken, Executive Vice President and Chief Financial Officer,
and Stephanie W Bergeron, Vice President and Treasurer, of The Goodyear Tire &
Rubber Company, an Ohio corporation (the "Company"), pursuant to Sections 2.01,
3.01 and 3.03 of the Indenture, dated as of March 1, 1999 (the "Indenture"),
between the Company and Chase Manhattan Bank, as Trustee (the "Trustee"), each
hereby certifies to the Trustee that:
I. In accordance with resolutions adopted by the Board of Directors of
the Company on February 2, 1999, October 6, 1998, August 5, 1997, December 3,
1996 and January 9, 1996, (the "Board Resolutions") and with resolutions adopted
by the Special Finance Committee of the Board of Directors of the Company on
March 14, 2000 (the "Committee Resolutions"), the Company has established a
series of Securities (as defined in the Indenture) for issuance, authentication
and delivery pursuant to the Indenture. Capitalized terms as used herein shall
have the meaning specified in the Indenture unless otherwise defined herein.
Such series of Securities shall have the following terms and conditions:
1. The series of Securities shall be known as the 8.125% Notes
due 2003 (herein the "Notes").
2. The aggregate principal amount of Notes which may be
authenticated and delivered under the Indenture (other than pursuant
to Sections 3.04, 3.05, 3.06, 3.09 or 11.07 of the Indenture and other
than any Notes which, pursuant to Section 3.03 of the Indenture, are
deemed never to have been authenticated and delivered under the
Indenture) is $300,000,000.00.
3. Interest on the Notes shall be paid to The Depository Trust
Company, provided that the Company may pay interest by check mailed to
the address of the Person entitled thereto at such address as shall
appear in the Security Register at the relevant Interest Payment Date.
4. The principal amount of the Notes shall be payable on March
15, 2003.
5. The interest rate to be borne by the Notes shall be 8.125% per
annum, payable from March 17, 2000, commencing on September 15, 2000,
and on each March 15 and September 15 thereafter to and including
March 15, 2003 ("Interest
<PAGE> 64
Payment Dates") and the Regular Record Date (as defined in the
Indenture) in respect of each Interest Payment Date shall be the March
1 immediately preceding a March 15 Interest Payment Date and the
September 1 immediately preceding a September 15 Interest Payment
Date. Interest will be computed as provided in Section 3.10 of the
Indenture.
6. The payment of the principal of and any premium and interest
on the Notes shall be payable at the office or agency of the Company
maintained for that purpose, which agency shall initially be The
Depository Trust Company, New York, New York; provided that the
Company may, at its option, make payment of interest by check mailed
to the address of the Person entitled thereto as such address shall
appear in the Security Register at the relevant Interest Payment Date.
7. The Notes are subject to redemption, as a whole at any time or
in part from time to time, at the sole election of the Company, upon
not less than 30 or more than 60 days' notice by mail to the Trustee
at a Redemption Price equal to the greater of (1) 100% of their
principal amount, and (2) the sum of the present values of the
Remaining Scheduled Payments (as herein defined) thereon, discounted
to the Redemption Date, on a semiannual basis, at the Treasury Rate
(as herein defined) plus fifteen basis points (.15%), plus in each
case accrued interest thereon to the Redemption Date. In determining
the Redemption Price and accrued interest, interest shall be
calculated on the basis of a 360-day year consisting of twelve 30-day
months. As used herein and in the Notes, the term: (a) "Treasury Rate"
means, with respect to any Redemption Date, the rate per annum equal
to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Redemption Date; (b) "Comparable
Treasury Issue" means the United States Treasury security selected by
an Independent Investment Banker as having a maturity comparable to
the Treasury security selected by an Independent Investment Banker as
having a maturity compared to the remaining term of the Notes to be
redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term
of such Notes; (c) "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation
with the Company; (d) "Comparable Treasury Price" means, with respect
to any Redemption Date, (i) the average of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third business day
preceding such redemption date, as set forth in the daily statistical
release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor
release) is not published or does not contain such prices on such
business day, (A) the average of the Reference Treasury Dealer
2
<PAGE> 65
Quotations for such Redemption Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the
Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations; (e) "Reference
Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at
5:00 p.m. on the third business day preceding such Redemption Date;
and (f) "Reference Treasury Dealer" means each of Chase Securities
Inc., and its successors, and, at the option of the Company, other
primary U.S. Government securities dealers in New York City selected
by the Company; and (g) "Remaining Scheduled Payments" means, with
respect to any Note, the remaining scheduled payments of the principal
thereof to be redeemed and interest thereon that would be due after
the related Redemption Date but for such redemption; provided,
however, that, if such Redemption Date is not an interest payment date
with respect to such Note, the amount of the next succeeding schedule
interest payment thereon will be reduced by the amount of interest
accrued thereon to such Redemption Date. If money sufficient to pay
the redemption price of and accrued interest on all Notes (or the
portions thereof) to be redeemed on the Redemption Date is deposited
with the Trustee on or before the Redemption Date and certain other
conditions specified in the Indenture are satisfied, on and after such
date interest will cease to accrue on such Notes (or such portions
thereof) called for redemption.
8. There shall be no provision obligating the Company to redeem
or purchase the Notes pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof.
9. The Notes are issuable in denominations of $1,000 and any
integral multiple thereof. The Notes will be represented by one or
more global securities (collectively, the "Global Securities")
registered in the name of Cede & Co., a partnership nominee of The
Depository Trust Company, New York, New York (the "Depositary"), or
another nominee of the Depositary. The Global Securities may be
transferred, in whole and not in part, only to the Depositary or
another nominee of the Depositary.
The Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Notes
represented by such Global Securities to the accounts of institutions
that have accounts with the Depositary or its nominee
("participants"). Ownership of beneficial interests in the Global
Securities will be limited to participants or persons that may hold
interests through participants. Ownership of interests in such Global
Securities will be shown on, and the transfer of those ownership
interests will be effected through, records maintained
3
<PAGE> 66
by the Depositary (with respect to participants' interests) and such
participants (with respect to the owners of beneficial interests in
such Global Securities).
So long as the Depositary, or its nominee, is the registered
holder and owner of the Global Securities, the Depositary or such
nominee, as the case may be, will be considered the sole owner and
holder of the Notes for all purposes under the Indenture.
The Global Securities are exchangeable for Notes in definitive
form of like tenor as such Global Securities in denominations of
$1,000 and in any greater amount that is an integral multiple thereof
if (i) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for the Global Securities or if at
any time the Depositary ceases to be a clearing agency registered
under the Securities Exchange Act of 1934, as amended, (ii) the
Company in its discretion at any time determines not to have all of
the Notes represented by the Global Securities and notifies the
Trustee thereof, or (iii) an Event of Default has occurred and is
continuing with respect to the Notes.
10. The Notes shall be denominated in, and the principal of and
interest and premium, if any, on the Notes shall be payable only in,
United States Dollars.
11. The Redemption Price in respect of the Notes shall be
determined as follows:
That amount equal to the greater of (1) 100% of the
principal amount, and (2) the sum of the present values of the
Remaining Scheduled Payments (as herein defined) thereon,
discounted to the Redemption Date, on a semiannual basis, at the
Treasury Rate (as herein defined) plus fifteen basis points
(.15%), plus in each case accrued interest thereon to the
Redemption Date. In determining the Redemption Price and accrued
interest, interest shall be calculated on the basis of a 360-day
year consisting of twelve 30-day months. As used herein, the
term: (a) "Treasury Rate" means, with respect to any Redemption
Date, the rate per annum equal to the semiannual equivalent yield
to maturity of the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for
such Redemption Date; (b) "Comparable Treasury Issue" means the
United States Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the
remaining term of the Notes to be redeemed that would be
utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate
debt
4
<PAGE> 67
securities of comparable maturity to the remaining term of such
Notes; (c) "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after
consultation with the Company; (d) "Comparable Treasury Price"
means, with respect to any Redemption Date, (i) the average of
the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount)
on the third business day preceding such redemption date, as set
forth in the daily statistical release (or any successor release)
published by the Federal Reserve Bank of New York and designated
"Composite 3:30 p.m. Quotations for U.S. Government Securities"
or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day,
(A) the average of the Reference Treasury Dealer Quotations for
such Redemption Date, after excluding the highest and lowest such
Reference Treasury Dealer Quotations, or (B) if the Trustee
obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations; (e) "Reference
Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as
determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such Redemption Date; and (f) "Reference Treasury
Dealer" means each of Chase Securities Inc., and its successors,
and, at the option of the Company, other primary U.S. Government
securities dealers in New York City selected by the Company; and
(g) "Remaining Scheduled Payments" means, with respect to any
Note, the remaining scheduled payments of the principal thereof
to be redeemed and interest thereon that would be due after the
related Redemption Date but for such redemption; provided,
however, that, if such Redemption Date is not an interest payment
date with respect to such note, the amount of the next succeeding
scheduled interest payment thereon will be reduced by the amount
of interest accrued thereon to such Redemption Date.
12. The principal of and any premium or interest on the Notes
shall be payable only in United States Dollars.
13. The entire principal amount of the Notes shall be payable
upon the declaration of acceleration of the Maturity of the Notes
pursuant to Section 5.02 of the Indenture in the manner and with the
effect provided in the Indenture.
5
<PAGE> 68
14. Sections 13.02 and 13.03 of the Indenture shall apply to the
Notes.
15. The Notes shall be issuable in the form of, and will be
represented by one or more, global securities (collectively, the
"Global Securities") registered in the name of Cede & Co., a
partnership nominee of The Depository Trust Company, New York, New
York (the "Depositary"), or a nominee of the Depositary. The Global
Securities may be transferred, in whole and not in part, only to the
Depositary or another nominee of the Depositary.
The Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Notes
represented by such Global Securities to the accounts of institutions
that have accounts with the Depositary or its nominee
("participants"). Ownership of beneficial interests in the Global
Securities will be limited to participants or persons that may hold
interests through participants. Ownership of interests in such Global
Securities will be shown on, and the transfer of those ownership
interests will be effected through, records maintained by the
Depositary (with respect to participants' interests) and such
participants (with respect to the owners of beneficial interests in
such Global Securities).
So long as the Depositary, or its nominee, is the registered
holder and owner of the Global Securities, the Depositary or such
nominee, as the case may be, will be considered the sole owner and
holder of the Notes for all purposes under the Indenture.
The Global Securities are exchangeable for Notes in definitive
form of like tenor as such Global Securities in denominations of
$1,000 and in any greater amount that is an integral multiple thereof
if (i) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for the Global Securities or if at
any time the Depositary ceases to be a clearing agency registered
under the Securities Exchange Act of 1934, as amended, (ii) the
Company in its discretion at any time determines not to have all of
the Notes represented by the Global Securities and notifies the
Trustee thereof, or (iii) an Event of Default has occurred and is
continuing with respect to the Notes.
16. The Events of Default applicable to the Notes are set forth
at clauses (a), (b), (d), (e) and (f) of Sections 5.01 of the
Indenture; clauses (c) and (g) of Section 5.01 of the Indenture shall
not apply to the Notes.
17. Section 5.02 of the Indenture shall apply without variation,
except that clauses (c) and (g) of Section 5.01 of the Indenture shall
not be operative with respect to, and shall not apply to, the Notes or
to Section 5.02 of the Indenture.
18. There shall be no addition to or change in the covenants set
forth in
6
<PAGE> 69
Article Ten of the Indenture which shall be operative in respect of or
apply to the Notes; there shall be no other covenant or warranty
included for the benefit of the Notes in addition to those included in
the Indenture for the benefit of all Securities of all series issued
or to be issued pursuant to the Indenture; there shall be no other
covenant or warranty included for the benefit of the Notes and there
shall be no provision that any covenant or warranty included in the
Indenture for the benefit of all Securities issued or to be issued
pursuant to the Indenture shall not be for the benefit of the Notes,
or any combination of such covenants, warranties or provisions.
19. There are no other terms of the Notes which are not otherwise
specified for all Securities issued pursuant to the Indenture.
20. The terms and conditions of the Notes are set forth in the
form of Global Note attached to this certificate as Annex A.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this
17th day of March, 2000.
/s/ Robert W Tieken
----------------------------
Robert W Tieken,
Executive Vice President and
Chief Financial Officer
/s/ Stephanie W Bergeron
------------------------------
Stephanie W Bergeron,
Vice President and Treasurer
7
<PAGE> 70
ANNEX A
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL, inasmuch as the registered owner hereof, Cede & Co., has an
interest therein.
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.
THIS SECURITY MAY NOT BE TRANSFERRED, WHETHER IN WHOLE OR IN PART, TO, OR
REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON
OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE
REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR
IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT
TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
THE GOODYEAR TIRE & RUBBER COMPANY
8.125% NOTE DUE 2003
CUSIP 382550 AF 8
No. GSINS1-1 $300,000,000.00
THE GOODYEAR TIRE & RUBBER COMPANY, a corporation duly organized and
existing under the laws of the State of Ohio (herein called the "Company", which
term includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to CEDE & Co., or registered assigns,
the principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000.00) on March
15, 2003, and to pay interest thereon from March 17, 2000, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semiannually on March 15 and September 15 in each year, commencing
September 15, 2000, at the rate of 8.125% per annum, until the principal hereof
is paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the March 1 or September 1 whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Notes of this series not less than 10 days
prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this
Note will be made at the office or agency of the Company maintained for that
purpose in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: March 17, 2000 THE GOODYEAR TIRE & RUBBER COMPANY
By /s/ Robert W. Tieken
------------------------------------
[Seal] Robert W. Tieken, Executive
Vice President
Attest: /s/ James Boyazis
James Boyazis, Secretary
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
by
------------------------------------
Authorized Officer
<PAGE> 71
This Note is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of March 1, 1999 (herein called the
"Indenture"), between the Company and The Chase Manhattan Bank, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all Indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Note is one of the series
designated on the face hereof as the Company's 8.125% Notes due 2003, limited in
aggregate principal amount to Three Hundred Million Dollars [$300,000,000.00]
(herein referred to as the "Notes").
The Notes are subject to redemption, as a whole at any time or in part
from time to time, at the sole election of the Company, upon not less than 30 or
more than 60 days' notice by mail to the Trustee at a Redemption Price equal to
the greater of (1) 100% of their principal amount, and (2) the sum of the
present values of the Remaining Scheduled Payments (as herein defined) thereon,
discounted to the Redemption Date, on a semiannual basis, at the Treasury Rate
(as herein defined) plus fifteen basis points (.15%), plus accrued interest
thereon to the Redemption Date. In determining the Redemption Price and accured
interest, interest shall be calculated on the basis of a 360-day year consisting
of twelve 30 day months. As used herein, the term: (a) "Treasury Rate" means,
with respect to any Redemption Date, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such Redemption Date; (b)
"Comparable Treasury Issue" means the United States Treasury security selected
by an Independent Investment Banker as having a maturity comparable to the
remaining term of the Notes to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of such Notes; (c) "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Trustee after consultation with the Company;
(d) "Comparable Treasury Price" means, with respect to any Redemption Date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations; (e) "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and any
Redemption Date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. on the third business day preceding such Redemption
Date; (f) "Reference Treasury Dealer" means each of Chase Securities Inc., and
its successors, and, at the option of the Company, other primary U.S. Government
securities dealers in New York City selected by the Company; and (g) "Remaining
Scheduled Payments" means, with respect to any Note, the remaining scheduled
payments of the principal thereof to be redeemed and interest thereon that would
be due after the related Redemption Date but for such redemption; provided,,
however, that, if such Redemption Date is not an interest payment date with
respect to such Note, the amount of the next succeeding scheduled interest
payment thereon will be reduced by the amount of interest accrued thereon to
such Redemption Date. If money sufficient to pay the redemption price of and
accrued interest on all Notes (or the portions thereof) to be redeemed on the
Redemption Date is deposited with the Trustee on or before the Redemption Date
and certain other conditions specified in the Indenture are satisfied, on and
after such date interest will cease to accrue on such Notes (or such portions
thereof) called for redemption.
In the event of redemption of this Note in part only, a new Note or
Notes of like tenor for the unredeemed portion hereof will be issued in the name
of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness evidenced by this Security and (b) certain restrictive
covenants, in each case upon compliance by the Company with certain conditions
set forth therein, which provisions apply to this Note.
If an Event of Default with respect to the Notes of this series shall
occur and be continuing, the principal of the Notes of this Series may be
declared due and payable in the manner and with the effect provided in the
Indenture. "Event of Default" means any one of the events specified at clauses
(a), (b), (d), (e) and (f) of Section 5.01 of the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of all series to be affected (voting as a single class).
The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registerable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes of this series will be represented by one or more global
securities (collectively, the "Global Security") registered in the name of The
Depository Trust Company, New York, New York (the "Depositary"), or a nominee of
the Depositary. So long as the Depositary, or its nominee, is the registered
holder and owner of this Global Note, the Depositary or such nominee, as the
case may be, will be considered the sole owner and holder of the Notes for all
purposes under the Indenture. The Global Security may be transferred, in whole
and not in part, only to the Depositary or another nominee of the Depositary.
The Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Notes represented by such Global
Security to the accounts of institutions that have accounts with the Depositary
or its nominee ("participants"). Ownership of beneficial interests in a Global
Security will be limited to participants or persons that may hold interests
through participants. Ownership of interests in such Global Security will be
shown on, and the transfer of those ownership interests will be effected
through, records maintained by the Depositary (with respect to participants'
interests) and such participants (with respect to the owners of beneficial
interests in such Global Security).
The Global Security are exchangeable for Notes in definitive form of
like tenor as such Global Security in denominations of $1,000 and in any greater
amount that is an integral multiple thereof if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for this Global
Security or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, (ii) the
Company in its discretion at any time determines not to have all of the Notes of
this series represented by a Global Security and notifies the Trustee thereof,
or (iii) an Event of Default has occurred and is continuing with respect to the
Notes. Any Note that is exchangeable pursuant to the preceding sentence is
exchangeable only for Notes of this series.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
<PAGE> 72
THE GOODYEAR TIRE & RUBBER COMPANY
OFFICERS' CERTIFICATE
---------------------
Robert W Tieken, Executive Vice President and Chief Financial Officer,
and Stephanie W Bergeron, Vice President and Treasurer, of The Goodyear Tire &
Rubber Company, an Ohio corporation (the "Company"), pursuant to Sections 2.01,
3.01 and 3.03 of the Indenture, dated as of March 1, 1999 (the "Indenture"),
between the Company and Chase Manhattan Bank, as Trustee (the "Trustee"), each
hereby certifies to the Trustee that:
I. In accordance with resolutions adopted by the Board of Directors of
the Company on February 2, 1999, October 6, 1998, August 5, 1997, December 3,
1996 and January 9, 1996, (the "Board Resolutions") and with resolutions adopted
by the Special Finance Committee of the Board of Directors of the Company on
March 14, 2000 (the "Committee Resolutions"), the Company has established a
series of Securities (as defined in the Indenture) for issuance, authentication
and delivery pursuant to the Indenture. Capitalized terms as used herein shall
have the meaning specified in the Indenture unless otherwise defined herein.
Such series of Securities shall have the following terms and conditions:
1. The series of Securities shall be known as the 8.50% Notes due
2007 (herein the "Notes").
2. The aggregate principal amount of Notes which may be
authenticated and delivered under the Indenture (other than pursuant
to Sections 3.04, 3.05, 3.06, 3.09 or 11.07 of the Indenture and other
than any Notes which, pursuant to Section 3.03 of the Indenture, are
deemed never to have been authenticated and delivered under the
Indenture) is $300,000,000.00.
3. Interest on the Notes shall be paid to The Depository Trust
Company, provided that the Company may pay interest by check mailed to
the address of the Person entitled thereto at such address as shall
appear in the Security Register at the relevant Interest Payment Date.
4. The principal amount of the Notes shall be payable on March
15, 2007.
5. The interest rate to be borne by the Notes shall be 8.50% per
annum, payable from March 17, 2000, commencing on September 15, 2000,
and on each March 15 and September 15 thereafter to and including
March 15, 2007 ("Interest
<PAGE> 73
Payment Dates") and the Regular Record Date (as defined in the
Indenture) in respect of each Interest Payment Date shall be the March
1 immediately preceding a March 15 Interest Payment Date and the
September 1 immediately preceding a September 15 Interest Payment
Date. Interest will be computed as provided in Section 3.10 of the
Indenture.
6. The payment of the principal of and any premium and interest
on the Notes shall be payable at the office or agency of the Company
maintained for that purpose, which agency shall initially be The
Depository Trust Company, New York, New York; provided that the
Company may, at its option, make payment of interest by check mailed
to the address of the Person entitled thereto as such address shall
appear in the Security Register at the relevant Interest Payment Date.
7. The Notes are subject to redemption, as a whole at any time or
in part from time to time, at the sole election of the Company, upon
not less than 30 or more than 60 days' notice by mail to the Trustee
at a Redemption Price equal to the greater of (1) 100% of their
principal amount, and (2) the sum of the present values of the
Remaining Scheduled Payments (as herein defined) thereon, discounted
to the Redemption Date, on a semiannual basis, at the Treasury Rate
(as herein defined) plus twenty-five basis points (.25%), plus in each
case accrued interest thereon to the Redemption Date. In determining
the Redemption Price and accrued interest, interest shall be
calculated on the basis of a 360-day year consisting of twelve 30-day
months. As used herein and in the Notes, the term: (a) "Treasury Rate"
means, with respect to any Redemption Date, the rate per annum equal
to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Redemption Date; (b) "Comparable
Treasury Issue" means the United States Treasury security selected by
an Independent Investment Banker as having a maturity comparable to
the Treasury security selected by an Independent Investment Banker as
having a maturity compared to the remaining term of the Notes to be
redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term
of such Notes; (c) "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation
with the Company; (d) "Comparable Treasury Price" means, with respect
to any Redemption Date, (i) the average of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third business day
preceding such redemption date, as set forth in the daily statistical
release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor
release) is not published or does not contain such prices on such
business day, (A) the average of the Reference Treasury Dealer
2
<PAGE> 74
Quotations for such Redemption Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the
Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations; (e) "Reference
Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at
5:00 p.m. on the third business day preceding such Redemption Date;
and (f) "Reference Treasury Dealer" means each of Chase Securities
Inc., and its successors, and, at the option of the Company, other
primary U.S. Government securities dealers in New York City selected
by the Company; and (g) "Remaining Scheduled Payments" means, with
respect to any Note, the remaining scheduled payments of the principal
thereof to be redeemed and interest thereon that would be due after
the related Redemption Date but for such redemption; provided,
however, that, if such Redemption Date is not an interest payment date
with respect to such Note, the amount of the next succeeding schedule
interest payment thereon will be reduced by the amount of interest
accrued thereon to such Redemption Date. If money sufficient to pay
the redemption price of and accrued interest on all Notes (or the
portions thereof) to be redeemed on the Redemption Date is deposited
with the Trustee on or before the Redemption Date and certain other
conditions specified in the Indenture are satisfied, on and after such
date interest will cease to accrue on such Notes (or such portions
thereof) called for redemption.
8. There shall be no provision obligating the Company to redeem
or purchase the Notes pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof.
9. The Notes are issuable in denominations of $1,000 and any
integral multiple thereof. The Notes will be represented by one or
more global securities (collectively, the "Global Securities")
registered in the name of Cede & Co., a partnership nominee of The
Depository Trust Company, New York, New York (the "Depositary"), or
another nominee of the Depositary. The Global Securities may be
transferred, in whole and not in part, only to the Depositary or
another nominee of the Depositary.
The Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Notes
represented by such Global Securities to the accounts of institutions
that have accounts with the Depositary or its nominee
("participants"). Ownership of beneficial interests in the Global
Securities will be limited to participants or persons that may hold
interests through participants. Ownership of interests in such Global
Securities will be shown on, and the transfer of those ownership
interests will be effected through, records maintained
3
<PAGE> 75
by the Depositary (with respect to participants' interests) and such
participants (with respect to the owners of beneficial interests in
such Global Securities).
So long as the Depositary, or its nominee, is the registered
holder and owner of the Global Securities, the Depositary or such
nominee, as the case may be, will be considered the sole owner and
holder of the Notes for all purposes under the Indenture.
The Global Securities are exchangeable for Notes in definitive
form of like tenor as such Global Securities in denominations of
$1,000 and in any greater amount that is an integral multiple thereof
if (i) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for the Global Securities or if at
any time the Depositary ceases to be a clearing agency registered
under the Securities Exchange Act of 1934, as amended, (ii) the
Company in its discretion at any time determines not to have all of
the Notes represented by the Global Securities and notifies the
Trustee thereof, or (iii) an Event of Default has occurred and is
continuing with respect to the Notes.
10. The Notes shall be denominated in, and the principal of and
interest and premium, if any, on the Notes shall be payable only in,
United States Dollars.
11. The Redemption Price in respect of the Notes shall be
determined as follows:
That amount equal to the greater of (1) 100% of the
principal amount, and (2) the sum of the present values of the
Remaining Scheduled Payments (as herein defined) thereon,
discounted to the Redemption Date, on a semiannual basis, at the
Treasury Rate (as herein defined) plus twenty-five basis points
(.25%), plus in each case accrued interest thereon to the
Redemption Date. In determining the Redemption Price and accrued
interest, interest shall be calculated on the basis of a 360-day
year consisting of twelve 30-day months. As used herein, the
term: (a) "Treasury Rate" means, with respect to any Redemption
Date, the rate per annum equal to the semiannual equivalent yield
to maturity of the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for
such Redemption Date; (b) "Comparable Treasury Issue" means the
United States Treasury security selected by an Independent
Investment Banker as having a maturity comparable to the
remaining term of the Notes to be redeemed that would be
utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues
4
<PAGE> 76
of corporate debt securities of comparable maturity to the
remaining term of such Notes; (c) "Independent Investment Banker"
means one of the Reference Treasury Dealers appointed by the
Trustee after consultation with the Company; (d) "Comparable
Treasury Price" means, with respect to any Redemption Date, (i)
the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its
principal amount) on the third business day preceding such
redemption date, as set forth in the daily statistical release
(or any successor release) published by the Federal Reserve Bank
of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such
prices on such business day, (A) the average of the Reference
Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such
Quotations; (e) "Reference Treasury Dealer Quotations" means,
with respect to each Reference Treasury Dealer and any Redemption
Date, the average, as determined by the Trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing
to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on
the third business day preceding such Redemption Date; and (f)
"Reference Treasury Dealer" means each of Chase Securities Inc.,
and its successors, and, at the option of the Company, other
primary U.S. Government securities dealers in New York City
selected by the Company; and (g) "Remaining Scheduled Payments"
means, with respect to any Note, the remaining scheduled payments
of the principal thereof to be redeemed and interest thereon that
would be due after the related Redemption Date but for such
redemption; provided, however, that, if such Redemption Date is
not an interest payment date with respect to such note, the
amount of the next succeeding scheduled interest payment thereon
will be reduced by the amount of interest accrued thereon to such
Redemption Date.
12. The principal of and any premium or interest on the Notes
shall be payable only in United States Dollars.
13. The entire principal amount of the Notes shall be payable
upon the declaration of acceleration of the Maturity of the Notes
pursuant to Section 5.02 of the Indenture in the manner and with the
effect provided in the Indenture.
5
<PAGE> 77
14. Sections 13.02 and 13.03 of the Indenture shall apply to the
Notes.
15. The Notes shall be issuable in the form of, and will be
represented by one or more, global securities (collectively, the
"Global Securities") registered in the name of Cede & Co., a
partnership nominee of The Depository Trust Company, New York, New
York (the "Depositary"), or a nominee of the Depositary. The Global
Securities may be transferred, in whole and not in part, only to the
Depositary or another nominee of the Depositary.
The Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Notes
represented by such Global Securities to the accounts of institutions
that have accounts with the Depositary or its nominee
("participants"). Ownership of beneficial interests in the Global
Securities will be limited to participants or persons that may hold
interests through participants. Ownership of interests in such Global
Securities will be shown on, and the transfer of those ownership
interests will be effected through, records maintained by the
Depositary (with respect to participants' interests) and such
participants (with respect to the owners of beneficial interests in
such Global Securities).
So long as the Depositary, or its nominee, is the registered
holder and owner of the Global Securities, the Depositary or such
nominee, as the case may be, will be considered the sole owner and
holder of the Notes for all purposes under the Indenture.
The Global Securities are exchangeable for Notes in definitive
form of like tenor as such Global Securities in denominations of
$1,000 and in any greater amount that is an integral multiple thereof
if (i) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for the Global Securities or if at
any time the Depositary ceases to be a clearing agency registered
under the Securities Exchange Act of 1934, as amended, (ii) the
Company in its discretion at any time determines not to have all of
the Notes represented by the Global Securities and notifies the
Trustee thereof, or (iii) an Event of Default has occurred and is
continuing with respect to the Notes.
16. The Events of Default applicable to the Notes are set forth
at clauses (a), (b), (d), (e) and (f) of Sections 5.01 of the
Indenture; clauses (c) and (g) of Section 5.01 of the Indenture shall
not apply to the Notes.
17. Section 5.02 of the Indenture shall apply without variation,
except that clauses (c) and (g) of Section 5.01 of the Indenture shall
not be operative with respect to, and shall not apply to, the Notes or
to Section 5.02 of the Indenture.
18. There shall be no addition to or change in the covenants set
forth in
6
<PAGE> 78
Article Ten of the Indenture which shall be operative in respect of or
apply to the Notes; there shall be no other covenant or warranty
included for the benefit of the Notes in addition to those included in
the Indenture for the benefit of all Securities of all series issued
or to be issued pursuant to the Indenture; there shall be no other
covenant or warranty included for the benefit of the Notes and there
shall be no provision that any covenant or warranty included in the
Indenture for the benefit of all Securities issued or to be issued
pursuant to the Indenture shall not be for the benefit of the Notes,
or any combination of such covenants, warranties or provisions.
19. There are no other terms of the Notes which are not otherwise
specified for all Securities issued pursuant to the Indenture.
20. The terms and conditions of the Notes are set forth in the
form of Global Note attached to this certificate as Annex A.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this
17th day of March, 2000.
/s/ Robert W Tieken
----------------------------
Robert W Tieken,
Executive Vice President and
Chief Financial Officer
/s/ Stephanie W Bergeron
-----------------------------
Stephanie W Bergeron,
Vice President and Treasurer
7
<PAGE> 79
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL, inasmuch as the registered owner hereof, Cede & Co., has an
interest therein.
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.
THIS SECURITY MAY NOT BE TRANSFERRED, WHETHER IN WHOLE OR IN PART, TO, OR
REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON
OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE
REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR
IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT
TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.
THE GOODYEAR TIRE & RUBBER COMPANY
8.50% NOTE DUE 2007
CUSIP 382550 AG 6
No. GSINS1-1 $300,000,000.00
THE GOODYEAR TIRE & RUBBER COMPANY, a corporation duly organized and
existing under the laws of the State of Ohio (herein called the "Company", which
term includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to CEDE & Co., or registered assigns,
the principal sum of THREE HUNDRED MILLION DOLLARS ($300,000,000.00) on March
15, 2007, and to pay interest thereon from March 17, 2000, or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semiannually on March 15 and September 15 in each year, commencing
September 15, 2000, at the rate of 8.50% per annum, until the principal hereof
is paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the March 1 or September 1 whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Notes of this series not less than 10 days
prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and interest on this Note
will be made at the office or agency of the Company maintained for that purpose
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: March 17, 2000 THE GOODYEAR TIRE & RUBBER COMPANY
By /s/ Robert W. Tieken
----------------------------------
[Seal] Robert W. Tieken, Executive Vice President
Attest: /s/ James Boyazis
James Boyazis, Secretary
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
by
---------------------------------
Authorized Officer
<PAGE> 80
This Note is one of a duly authorized issue of securities of the Company
(herein called the "Securities"), issued and to be issued in one or more series
under an Indenture, dated as of March 1, 1999 (herein called the "Indenture"),
between the Company and The Chase Manhattan Bank, as Trustee (herein called the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all Indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Note is one of the series designated on the
face hereof as the Company's 8.50% Notes due 2007, limited in aggregate
principal amount to Three Hundred Million Dollars [$300,000,000.00] (herein
referred to as the "Notes").
The Notes are subject to redemption, as a whole at any time or in part from
time to time, at the sole election of the Company, upon not less than 30 or more
than 60 days' notice by mail to the Trustee at a Redemption Price equal to the
greater of (1) 100% of their principal amount, and (2) the sum of the present
values of the Remaining Scheduled Payments (as herein defined) thereon,
discounted to the Redemption Date, on a semiannual basis, at the Treasury Rate
(as herein defined) plus twenty-five basis points (.25%), plus accrued interest
thereon to the Redemption Date. In determining the Redemption Price and accured
interest, interest shall be calculated on the basis of a 360-day year consisting
of twelve 30 day months. As used herein, the term: (a) "Treasury Rate" means,
with respect to any Redemption Date, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such Redemption Date; (b)
"Comparable Treasury Issue" means the United States Treasury security selected
by an Independent Investment Banker as having a maturity comparable to the
remaining term of the Notes to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of such Notes; (c) "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Trustee after consultation with the Company;
(d) "Comparable Treasury Price" means, with respect to any Redemption Date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations; (e) "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and any
Redemption Date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. on the third business day preceding such Redemption
Date; (f) "Reference Treasury Dealer" means each of Chase Securities Inc., and
its successors, and, at the option of the Company, other primary U.S. Government
securities dealers in New York City selected by the Company; and (g) "Remaining
Scheduled Payments" means, with respect to any Note, the remaining scheduled
payments of the principal thereof to be redeemed and interest thereon that would
be due after the related Redemption Date but for such redemption; provided,,
however, that, if such Redemption Date is not an interest payment date with
respect to such Note, the amount of the next succeeding scheduled interest
payment thereon will be reduced by the amount of interest accrued thereon to
such Redemption Date. If money sufficient to pay the redemption price of and
accrued interest on all Notes (or the portions thereof) to be redeemed on the
Redemption Date is deposited with the Trustee on or before the Redemption Date
and certain other conditions specified in the Indenture are satisfied, on and
after such date interest will cease to accrue on such Notes (or such portions
thereof) called for redemption.
In the event of redemption of this Note in part only, a new Note or Notes
of like tenor for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness evidenced by this Security and (b) certain restrictive
covenants, in each case upon compliance by the Company with certain conditions
set forth therein, which provisions apply to this Note.
If an Event of Default with respect to the Notes of this series shall occur
and be continuing, the principal of the Notes of this Series may be declared due
and payable in the manner and with the effect provided in the Indenture. "Event
of Default" means any one of the events specified at clauses (a), (b), (d), (e)
and (f) of Section 5.01 of the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of all series to be affected (voting as a single class).
The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registerable in the Security Register, upon
surrender of this Security for registration of transfer at the office or agency
of the Company in any place where the principal of and any premium and interest
on this Security are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Notes of this series will be represented by one or more global
securities (collectively, the "Global Security") registered in the name of The
Depository Trust Company, New York, New York (the "Depositary"), or a nominee of
the Depositary. So long as the Depositary, or its nominee, is the registered
holder and owner of this Global Note, the Depositary or such nominee, as the
case may be, will be considered the sole owner and holder of the Notes for all
purposes under the Indenture. The Global Security may be transferred, in whole
and not in part, only to the Depositary or another nominee of the Depositary.
The Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Notes represented by such Global
Security to the accounts of institutions that have accounts with the Depositary
or its nominee ("participants"). Ownership of beneficial interests in a Global
Security will be limited to participants or persons that may hold interests
through participants. Ownership of interests in such Global Security will be
shown on, and the transfer of those ownership interests will be effected
through, records maintained by the Depositary (with respect to participants'
interests) and such participants (with respect to the owners of beneficial
interests in such Global Security).
The Global Security are exchangeable for Notes in definitive form of like
tenor as such Global Security in denominations of $1,000 and in any greater
amount that is an integral multiple thereof if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for this Global
Security or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, (ii) the
Company in its discretion at any time determines not to have all of the Notes of
this series represented by a Global Security and notifies the Trustee thereof,
or (iii) an Event of Default has occurred and is continuing with respect to the
Notes. Any Note that is exchangeable pursuant to the preceding sentence is
exchangeable only for Notes of this series.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
<PAGE> 1
EXHIBIT 12
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<TABLE>
<CAPTION>
3 MONTHS
ENDED TWELVE MONTHS ENDED
MARCH 31, DECEMBER 31,
---------- -------------------------------------------------------
2000 1999 1998 1997 1996 1995
------- ------- --------- ------- ------- -------
EARNINGS
<S> <C> <C> <C> <C> <C> <C>
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $100.5 $296.7 $1,002.7 $743.3 $811.5 $869.8
Add:
Amortization of previously capitalized interest 2.3 11.0 10.7 11.0 11.6 11.7
Minority interest in net income of
consolidated subsidiaries with fixed charges 17.1 42.9 33.6 45.1 45.9 30.1
Proportionate share of fixed charges of investees
accounted for by the equity method 1.4 5.5 4.8 6.5 5.1 5.3
Proportionate share of net loss of investees
accounted for by the equity method 3.0 0.3 0.2 0.1 2.7 0.5
------- ------- --------- ------- ------- -------
Total additions 23.8 59.7 49.3 62.7 65.3 47.6
Deduct:
Capitalized interest 3.3 11.8 6.6 6.2 5.4 5.1
Minority interest in net loss of consolidated subsidiaries 1.6 4.2 2.9 3.6 4.4 3.3
Undistributed proportionate share of net income
of investees accounted for by the equity method 0.3 2.2 - - - 0.2
------- ------- --------- ------- ------- -------
Total deductions 5.2 18.2 9.5 9.8 9.8 8.6
TOTAL EARNINGS $119.1 $338.2 $1,042.5 $796.2 $867.0 $908.8
======= ======= ========= ======= ======= =======
FIXED CHARGES
Interest expense $ 62.1 $179.4 $147.8 $119.5 $128.6 $135.0
Capitalized interest 3.3 11.8 6.6 6.2 5.4 5.1
Amortization of debt discount, premium or expense 0.3 0.7 1.2 0.1 0.3 0.4
Interest portion of rental expense 15.9 62.1 57.7 63.0 68.2 75.8
Proportionate share of fixed charges of investees
accounted for by the equity method 1.4 5.5 4.8 6.5 5.1 5.3
------- ------- --------- ------- ------- -------
TOTAL FIXED CHARGES $ 83.0 $259.5 $218.1 $195.3 $207.6 $221.6
======= ======= ========= ======= ======= =======
TOTAL EARNINGS BEFORE FIXED CHARGES $202.1 $597.7 $1,260.6 $991.5 $1,074.6 1,130.4
======= ======= ========= ======= ======= =======
RATIO OF EARNINGS TO FIXED CHARGES 2.43 2.30 5.78 5.08 5.18 5.10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information for The Goodyear Tire &
Rubber Company and Subsidiaries extracted from the Consolidated Statement of
Income and Retained Earnings and the Consolidated Balance Sheet and is qualified
in its entirety by reference to such financial statements.
This schedule shall not be deemed filed for purposes of Section 11 of the
Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 230
<SECURITIES> 0
<RECEIVABLES> 2,482
<ALLOWANCES> 87
<INVENTORY> 2,385
<CURRENT-ASSETS> 5,512
<PP&E> 11,294
<DEPRECIATION> 5,630
<TOTAL-ASSETS> 13,247
<CURRENT-LIABILITIES> 4,162
<BONDS> 2,279
0
0
<COMMON> 156
<OTHER-SE> 3,478
<TOTAL-LIABILITY-AND-EQUITY> 13,247
<SALES> 3,537
<TOTAL-REVENUES> 3,537
<CGS> 2,789
<TOTAL-COSTS> 2,789
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62
<INCOME-PRETAX> 101
<INCOME-TAX> 37
<INCOME-CONTINUING> 64
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64
<EPS-BASIC> .41
<EPS-DILUTED> .40
</TABLE>
