AMENDMENT TO TERM LOAN AND REVOLVING CREDIT AGREEMENT

 

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                                                                     EXHIBIT 4.2

 

 

                                    FIRST AMENDMENT dated as of February 19,

                           2004 (this "Amendment"), to the $750,000,000 Amended

                            and Restated Revolving Credit Agreement dated as of

                           March 31, 2003 (the "Credit Agreement"), among THE

                           GOODYEAR TIRE & RUBBER COMPANY, an Ohio corporation

                           (the "Borrower"); the lenders party thereto (together

                           with their successors and permitted assigns

                           thereunder, the "Lenders"); and JPMORGAN CHASE BANK,

                           a New York banking corporation, as administrative

                           agent for the Lenders (in such capacity, the

                           "Administrative Agent").

 

            WHEREAS, pursuant to the terms and conditions of the Credit

Agreement, the Lenders have extended and agreed to extend credit to the

Borrower; and

 

            WHEREAS, the Borrower has requested, and the Majority Lenders are

willing to agree, that certain provisions of the Credit Agreement and of the

Security Documents be amended on the terms and subject to the conditions set

forth herein.

 

            NOW, THEREFORE, in consideration of the foregoing and for other good

and valuable consideration, the receipt of which is hereby acknowledged, the

parties hereto hereby agree as follows:

 

            SECTION 1. Defined Terms. Capitalized terms used and not defined

herein shall have the meanings given to them in the Credit Agreement or, if not

defined therein, in the Guarantee and Collateral Agreement, each as amended

hereby or pursuant hereto.

 

             SECTION 2. Amendments to Section 1.01 of the Credit Agreement.

Section 1.01 of the Credit Agreement is hereby amended as follows:

 

                  (a) The definition of "Capital Expenditures" is hereby amended

      by deleting the word "and" immediately before "(ii)" in the second

      sentence thereof and inserting immediately before the period at the end of

      such sentence "and (iii) "Capital Expenditures" in respect of any period

      shall be reduced by the amount of Customer Capital Expenditures that are

      directly paid by customers during such period and by the amount of

      reimbursements the Borrower or any Subsidiary shall have received during

      such period from customers in respect of Customer Capital Expenditures;

      provided that the aggregate amount of such reductions shall not exceed

      $50,000,000 in any fiscal year".

 

                  (b) The definition of "Consolidated Net Worth" is hereby

      amended by inserting "(including the $84,700,000 of charges incurred in

      connection with the Borrower's restatement of its financial statements

      from 1998 through the second quarter of 2003, reflected in SEC filings

      made in the fourth quarter of 2003)" immediately after the phrase

      "non-cash non-recurring charges" in clause (c)(i) of such definition.

 

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                  (c) The definition of "Consolidated Senior Secured

      Indebtedness" is hereby amended by inserting "(other than up to

      $2,500,000,000 aggregate principal amount of Senior Subordinated-Lien

      Indebtedness)" immediately after the word "Indebtedness" in clause (a) of

      such definition.

 

                  (d) The definition of "Credit Documents" is hereby amended by

      replacing the word "and" with a comma and by inserting immediately before

      the period at the end thereof "and the Lien Subordination and

      Intercreditor Agreement".

 

                  (e) The definition of "Net Cash Proceeds" is hereby amended by

      inserting immediately before the period at the end thereof "; provided,

      that the Net Cash Proceeds of any event that is not a Prepayment Event

      shall be determined as if such event were a Prepayment Event".

 

                  (f) Clause (c) of the definition of "Permitted Encumbrances"

      is hereby amended by inserting therein immediately after the phrase

      "deposits made" the phrase "(including cash deposits to secure obligations

      in respect of letters of credit provided)".

 

                  (g) Clause (f) of the definition of "Permitted Investments" is

      hereby amended by replacing the word "or" immediately before clause (ii)

      thereof with a comma and inserting immediately before the period at the

      end thereof the following:

 

                  ", (iii) investments of the type and maturity described in

                  clause (c) in any obligor organized under the laws of a

                  jurisdiction other than the United States that (A) is a branch

                  or subsidiary of a Lender or the ultimate parent company of a

                  Lender under one of the New Facilities Credit Agreements (but

                  only if such Lender meets the ratings and capital, surplus and

                  undivided profits requirements of such clause (c)) or (B)

                  carries a rating at least equivalent to the rating of the

                  sovereign nation in which it is located, and (iv) other

                  investments of the type and maturity described in clause (c)

                  in obligors organized under the laws of a jurisdiction other

                  than the United States in any country in which such Subsidiary

                  is located; provided, that the investments permitted under

                  this subclause (iv) shall not exceed $10,000,000 for all such

                  Subsidiaries in any such country or $50,000,000 in the

                  aggregate for all such Subsidiaries and all countries".

 

                  (h) The definition of "Securitization Transaction" is hereby

      amended by inserting immediately before the period at the end of the first

      sentence thereof the following:

 

                  "; provided that "Securitization Transaction" shall not

                  include (A) the sale by any Foreign Subsidiary, in the

                  ordinary course of its business, of drafts with a bank or

                  other financial institution as the maker (or otherwise

                  primarily responsible for the payment

 

                                       -2-

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                  thereof), bankers acceptances or similar instruments received

                  by such Foreign Subsidiary from a customer operating in a

                  jurisdiction other than the United States or any of its

                   territories or possessions or any political subdivision

                  thereof in satisfaction of accounts receivable or otherwise as

                  consideration for goods sold or services provided to such

                  customer or (B) the sale, in the ordinary course of business,

                  of drafts not payable on demand received by the Borrower or

                  any Subsidiary from a customer in satisfaction of accounts

                  receivable or otherwise as consideration for goods sold or

                  services provided to such customer pursuant to an arrangement

                  (1) initiated by and entered into a the request of such

                  customer, and (2) under which a financial institution has

                   agreed as part of a financing program established for and at

                  the request of such customer to buy such drafts from such

                  customer's vendors (which arrangements may be modified by the

                  Borrower or any Subsidiary to contemplate the repurchase of

                  such drafts by such customer, or other actions by such

                  customer to reinstate or to pay receivables in respect of

                  which such drafts were created, in the event of any failure by

                  such financial institution to buy such drafts)".

 

                        (i) The definition of "Security Documents" is hereby

      amended by inserting therein immediately after the phrase "document

      delivered" the phrase "in connection with the cash collateralization of

      Letters of Credit or".

 

            The following new definitions are hereby inserted in their

appropriate alphabetical positions:

 

            "Cash Collateral Requirement" means an obligation of the Borrower to

have on deposit with the Administrative Agent, to collateralize reimbursement

obligations in respect of Letters of Credit, cash in an amount equal on any date

of determination to 105% of the positive difference (if any) derived by

subtracting (i) the aggregate Regular Way Commitments from (ii) the aggregate

Revolving Credit Exposures.

 

            "Customer Capital Expenditures" shall mean all or any portion of the

purchase price of equipment or other fixed assets purchased for use in the

business of the Borrower or any Subsidiary that is paid directly, or reimbursed

to the Borrower or any Subsidiary, by customers of the Borrower or any of the

Subsidiaries that are not Affiliates of the Borrower.

 

            "Designated Debt" means Indebtedness of the Borrower that matures

during any of the calendar years 2005, 2006, 2007 and 2008.

 

            "First Amendment" means the First Amendment dated as of February 19,

2004, to this Agreement.

 

            "First Amendment Date" means February 19, 2004.

 

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            "Junior Securities" means, collectively, any Senior

Subordinated-Lien Indebtedness and any Indebtedness or preferred Equity

Interests issued under Section 6.01(q).

 

             "Lien Subordination and Intercreditor Agreement" means a Lien

Subordination and Intercreditor Agreement, to be dated on or about the first

date on which Senior Subordinated-Lien Indebtedness is incurred, issued or sold,

among the Collateral Agent, the applicable Senior Subordinated-Lien Collateral

Agent, the Borrower and the Subsidiary Guarantors, in substantially the form of

the draft made available to the Lenders prior to the First Amendment Date with

such changes as shall have been approved by the Administrative Agent.

 

            "Principal Issuing Bank" means JPMCB and any other Issuing Bank whom

the Borrower and JPMCB agree will be a Principal Issuing Bank (or any of their

Affiliates that shall act as Issuing Banks hereunder).

 

            "Regular Way Commitment" means, with respect to each Lender as of

any date of determination, the Commitment then in effect for such Lender or, if

lower, the Commitment that would then have been in effect for such Lender but

for the provisos set forth in Section 2.07(c) and (d).

 

            "Senior Subordinated-Lien Collateral Agent" means, as to any Senior

Subordinated-Lien Indebtedness, the collateral agent under the applicable Senior

Subordinated-Lien Indebtedness Security Documents.

 

            "Senior Subordinated-Lien Governing Documents" means each Indenture

or other agreement or instrument providing for the issuance or setting forth the

terms of any Senior Subordinated-Lien Indebtedness.

 

            "Senior Subordinated-Lien Indebtedness" means Indebtedness of the

Borrower issued after the First Amendment Date that (a) is secured by Liens

permitted under Section 6.02(m), but that is not secured by Liens on any

additional assets, (b) constitutes Initial Junior Indebtedness or Designated

Junior Obligations under the Lien Subordination and Intercreditor Agreement, and

the Liens securing which are subordinated under the Lien Subordination and

Intercreditor Agreement to the Liens securing the Obligations and (c) does not

contain provisions inconsistent with the provisions of Annex A to the First

Amendment.

 

            "Senior Subordinated-Lien Obligations" means, as to any Senior

Subordinated-Lien Indebtedness, (a) the principal of and all premium or

make-whole amounts, if any, and interest payable in respect of such Senior

Subordinated-Lien Indebtedness, (b) any amounts payable under Guarantees of such

Senior Subordinated-Lien Indebtedness by Subsidiaries and (c) all other amounts

payable by the Borrower or any Subsidiary under such Senior Subordinated-Lien

Indebtedness, the applicable Senior Subordinated-Lien Security Documents (to the

extent such amounts relate to such Senior Subordinated-Lien Indebtedness) or the

applicable Senior Subordinated-Lien Governing Documents.

 

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            "Senior Subordinated-Lien Security Documents" means, as to any

Senior Subordinated-Lien Indebtedness, the security agreements, pledge

agreements, mortgages and other documents creating Liens on assets of the

Borrower and the Subsidiary Guarantors to secure the applicable Senior

Subordinated-Lien Obligations.

 

            SECTION 3. Amendments to Section 1.02 of the Credit Agreement.

Section 1.02 of the Credit Agreement is hereby amended by inserting the

following at the end thereof:

 

            "For purposes of determining compliance as of any date with Section

            6.08, amounts incurred in euros during 2003 shall be translated into

            dollars at the exchange rate in effect on March 31, 2003, and

            amounts incurred in euros during any subsequent year shall be

            translated into dollars at the exchange rate determined by the

            Borrower and used in its Annual Operating Plan for such year (which

            exchange rate shall be determined reasonably and set forth in the

            first certificate delivered pursuant to Section 5.01(c) during such

            year)."

 

            SECTION 4. Amendments to Section 2.01. Section 2.01 is hereby

amended by inserting at the end of the first sentence thereof the following: "or

the aggregate outstanding amount of such Lender's Loans exceeding such Lender's

Regular Way Commitment. Notwithstanding any other provision of the Agreement, a

Loan shall not be made unless after giving effect to such Loan, the Cash

Collateral Requirement shall be satisfied".

 

            SECTION 5. Amendments to Section 2.04. Section 2.04 is hereby

amended by:

 

            (a) replacing clause (i) of the final sentence of paragraph (b)

      thereof with the following clause: "the LC Exposure shall not when taken

      together with the LC Exposure under (and as defined in) the ABL Facilities

      Agreement exceed $600,000,000";

 

            (b) inserting at the end of paragraph (b) thereof the following

      sentences: "Notwithstanding any other provision of the Agreement, a Letter

      of Credit shall not be issued, increased, renewed or extended at any time

      that the aggregate amount of the Regular Way Commitments is less than the

      aggregate amount of the Commitments unless (i) the Borrower shall at such

      time not be entitled to obtain the issuance of a letter of credit under

      the ABL Facilities Agreement in a like amount and (ii) after giving effect

      to such issuance, increase, renewal or extension, the aggregate amount of

      cash deposited with the Administrative Agent to collateralize

      reimbursement obligations in respect of Letters of Credit shall be not

      less than the Cash Collateral Requirement.";

 

            (c) adding at the end of paragraph (d) thereof the following

      sentence: "Each Lender hereby agrees that in the event any Letter of

      Credit shall be

 

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      redesignated as a Letter of Credit under (and as defined in) the ABL

      Facilities Agreement, then immediately upon the effectiveness of such

      redesignation in accordance with the terms of the ABL Facilities

      Agreement, such Lender's participation in such Letter of Credit shall

      terminate and such Letter of Credit shall cease to be a 'Letter of Credit'

      hereunder."; and

 

            (d) inserting in the first sentence of paragraph (j) thereof

      immediately after the phrase "an amount in cash" the phrase "that, when

      added to cash on deposit with the Administrative Agent in compliance with

      the Cash Collateral Requirement, shall be".

 

            SECTION 6. Amendments to Section 2.07 of the Credit Agreement.

Section 2.07 of the Credit Agreement is hereby amended and restated to read in

its entirety as follows:

 

            "SECTION 2.07 Termination of Commitments; Reductions of Commitments.

(a) Unless previously terminated, the Commitments shall terminate on the

Maturity Date.

 

            (b) The Borrower may at any time terminate, or from time to time

      reduce, the Commitments; provided that (i) each reduction of the

      Commitments shall be in an amount that is an integral multiple of

      $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not

      terminate or reduce the Commitments if, after giving effect to any

      concurrent prepayment of the Loans in accordance with Section 2.09, the

      total Revolving Credit Exposures would exceed the total Commitments.

 

            (c) In the event and on each occasion that the Borrower shall

      receive any proceeds from borrowings under the ABL Facilities Agreement

      pursuant to commitments becoming effective substantially concurrently with

      the First Amendment Date, the Regular Way Commitments and, if applicable,

      the Commitments shall be automatically reduced, substantially concurrently

      with such borrowings, by an amount equal to (i) the aggregate amount by

      which the proceeds from borrowings under the ABL Facilities Agreement

      pursuant to commitments becoming effective substantially concurrently with

      the First Amendment Date exceeds $300,000,000, net of the aggregate fees

      and out-of-pocket expenses paid by the Borrower in connection with the

      borrowings under the ABL Facilities and the related bank amendments, minus

      (ii) the aggregate amount of such proceeds (A) that shall have been

      applied to prepay Loans under and as defined in the US Term Facility

      Agreement or (B) in respect of which the Regular Way Commitments and, if

      applicable, the Commitments shall previously have been reduced pursuant to

      this paragraph; provided that the aggregate amount of the Commitments

      shall not be reduced under this paragraph (c) to an amount less than

      $250,000,000.

 

            (d) In the event and on each occasion that the Borrower shall

      receive any Net Cash Proceeds from the incurrence, issuance or sale of

      Senior Subordinated-

 

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       Lien Indebtedness, the Regular Way Commitments and, if applicable, the

      Commitments shall be automatically reduced, substantially concurrently

      with the incurrence, issuance or sale of the Senior Subordinated-Lien

      Indebtedness by the greater of zero and an amount equal to (i) 50% of the

      aggregate Net Cash Proceeds received from all incurrence, issuances and

      sales of Senior Subordinated-Lien Indebtedness minus (ii) the aggregate

      amount of the Net Cash Proceeds from all such incurrences, issuances and

      sales (A) that shall have been applied to prepay Loans under and as

      defined in the US Term Facility Agreement or (B) in respect of which the

      Regular Way Commitments and, if applicable, the Commitments shall

      previously have been reduced pursuant to this paragraph; provided that the

      aggregate amount of the Commitments shall not be reduced under this

      paragraph (d) to an amount less than $250,000,000.

 

            (e) The Borrower shall notify the Administrative Agent of any

      election to terminate or reduce the Commitments under paragraph (b) of

      this Section at least three Business Days prior to the effective date of

      such termination or reduction, specifying such election and the effective

      date thereof, and shall promptly notify the Administrative Agent of any

      required reduction of the Commitments or the Regular Way Commitments under

      paragraph (c) or (d) of this Section, specifying the effective date of

      such reduction. Promptly following receipt of any such notice, the

      Administrative Agent shall advise the Lenders of the contents thereof.

      Each notice delivered by the Borrower pursuant to this Section shall be

      irrevocable; provided that a notice of termination of the Commitments

      delivered by the Borrower pursuant to paragraph (b) above may state that

      such notice is conditioned upon the effectiveness of other credit

      facilities, in which case such notice may be revoked by the Borrower (by

      notice to the Administrative Agent on or prior to the specified effective

      date) if such condition is not satisfied. Any termination or reduction of

      the Commitments or the Regular Way Commitments shall be permanent. Each

       reduction of the Commitments or the Regular Way Commitments shall be made

      ratably among the Lenders in accordance with their respective

      Commitments."

 

            SECTION 7. Amendments to Section 2.09 of the Credit Agreement.

Section 2.09 of the Credit Agreement is hereby amended and restated to read in

its entirety as follows:

 

            "SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the

right at any time and from time to time to prepay any Borrowing in whole or in

part, subject to prior notice in accordance with paragraph (d) of this Section.

 

            (b) In the event that, after giving effect to any reduction of the

      Regular Way Commitments and, if applicable, the Commitments pursuant to

      Section 2.07, the aggregate Revolving Credit Exposures would exceed the

      aggregate Regular Way Commitments, the Borrower will, on the date of such

      reduction (i) prepay Loans in an amount sufficient to eliminate such

      excess, and (ii) if any portion of such excess remains after the repayment

      of all outstanding Loans (and any concurrent redesignation of Letters of

      Credit as Letters of Credit under and as

 

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      defined in the ABL Facilities Agreement), the Borrower will satisfy the

      Cash Collateral Requirement. Any cash so deposited (and any cash

      previously deposited in satisfaction of the Cash Collateral Requirement)

      with the Administrative Agent shall be held in an account over which the

      Administrative Agent shall have dominion and control to the exclusion of

      the Borrower and its Subsidiaries, including the exclusive right of

      withdrawal. Other than any interest earned on the investment of such

      deposits, which investment shall be in Permitted Investments and shall be

      made in the discretion of the Administrative Agent (or, at any time when

      no Default or Event of Default has occurred and is continuing, shall be

      made at the direction of the Borrower) and at the Borrower's risk and

      expense, such deposits shall not bear interest. Interest or profits, if

      any, on such investments shall accumulate in such account. Moneys in such

      account shall be applied by the Administrative Agent to reimburse each

      Issuing Bank for LC Disbursements for which it has not been reimbursed

      and, to the extent not so applied, shall be held for the satisfaction of

      the reimbursement obligations of the Borrower for the LC Exposure at such

      time or, if the maturity of the Loans has been accelerated (but subject to

      the consent of Lenders with LC Exposures representing greater than 50% of

      the total LC Exposure), be applied to satisfy other obligations of the

      Borrower under this Agreement. If the Borrower has provided cash

      collateral to satisfy the Cash Collateral Requirement, then, so long as no

      Event of Default shall exist, such cash collateral shall be released to

      the Borrower if so requested by the Borrower at any time if and to the

      extent that, after giving effect to such release, the amount of cash

      remaining on deposit with the Administrative Agent would not be less than

      the Cash Collateral Requirement.

 

            (c) If (i) under the terms of any agreement or instrument governing

      Junior Securities the Borrower is required to apply or offer to apply any

      proceeds of any sales of assets to prepay, redeem, repurchase or defease

      such Junior Securities in the event such proceeds are not applied within a

      prescribed period to one or more other permitted uses ("Alternate

      Permitted Uses"), and (ii) such Alternate Permitted Uses would include the

      prepayment of Loans under and as defined in the Credit Agreement or the US

      Term Facility Agreement and/or the deposit of cash collateral to secure

      reimbursement obligations in respect of Letters of Credit, then the

      Borrower shall within such prescribed period either (A) apply such

      proceeds to an Alternate Permitted Use not involving the prepayment of

      Indebtedness or (B) prepay Loans under and as defined in the Credit

      Agreement or the US Term Facility Agreement and/or deposit cash collateral

      to secure reimbursement obligations in respect of Letters of Credit (and,

      in connection with any prepayment of Loans or cash collateralization of

      Letters of Credit under this Agreement, reduce the Commitments), in each

      case to the extent necessary in order that the Borrower will not be

      required to apply or offer to apply such proceeds to prepay, redeem,

      repurchase or defease such Junior Securities. Any cash collateral

      deposited pursuant to this paragraph to secure reimbursement obligations

      in respect of Letters of Credit shall be held and applied in accordance

      with the provisions of paragraph (b) above.

 

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            (d) The Borrower shall notify the Administrative Agent by telephone

      (confirmed by telecopy) of any prepayment hereunder (i) in the case of

      prepayment of a Eurodollar Borrowing, not later than 3:00 p.m., New York

      City time, three Business Days before the date of prepayment or (ii) in

      the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New

      York City time, one Business Day before the date of prepayment; provided

      that if the Borrower shall be required to make any prepayment hereunder by

      reason of the receipt of Net Cash Proceeds of any Senior Subordinated-Lien

      Indebtedness, it shall not be required to notify the Administrative Agent

      of such prepayment prior to the receipt of such Net Cash Proceeds. Each

      such notice shall be irrevocable and shall specify the prepayment date and

      the principal amount of each Borrowing or portion thereof to be prepaid;

      provided that, if a notice of prepayment under paragraph (a) above is

      given in connection with a conditional notice of termination of the

      Commitments as contemplated by Section 2.07, then such notice of

      prepayment may be revoked if such notice of termination is revoked in

      accordance with Section 2.07. Promptly following receipt of any such

      notice relating to a Borrowing, the Administrative Agent shall advise the

      Lenders of the contents thereof. Each partial prepayment of any Borrowing

      shall be in an amount that would be permitted in the case of an advance of

      a Borrowing of the same Type as provided in Section 2.02. Each prepayment

      of a Borrowing shall be applied ratably to the Loans included in the

      prepaid Borrowing. Prepayments shall be accompanied by accrued interest to

      the extent required by Section 2.11."

 

            SECTION 8. Amendments to Section 5.01 of the Credit Agreement.

Paragraph (c) of Section 5.01 of the Credit A