-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LKWzT1Shc8XoIAlb3Hd9lbpZxCZE4c9Svv2hTE8Hrhjfl5sNFQwOMegE0qF5ShGj aAQF+rR/Xa46MuTdlTsVlQ== 0000950152-01-505869.txt : 20020410 0000950152-01-505869.hdr.sgml : 20020410 ACCESSION NUMBER: 0000950152-01-505869 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOODYEAR TIRE & RUBBER CO /OH/ CENTRAL INDEX KEY: 0000042582 STANDARD INDUSTRIAL CLASSIFICATION: TIRES AND INNER TUBES [3011] IRS NUMBER: 340253240 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01927 FILM NUMBER: 1789164 BUSINESS ADDRESS: STREET 1: 1144 E MARKET ST CITY: AKRON STATE: OH ZIP: 44316 BUSINESS PHONE: 2167962121 MAIL ADDRESS: STREET 1: 1144 E MARKET ST CITY: AKRON STATE: OH ZIP: 44316 10-Q 1 l90768ae10-q.txt THE GOODYEAR TIRE AND RUBBER COMPANY FORM 10-Q ============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001 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 X 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 October 31, 2001: 163,137,018 ============================================================================== THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS Unaudited
(In millions, except per share) Three Months Ended Nine Months Ended September 30, September 30, 2001 2000 2001 2000 ---- ---- ---- ---- NET SALES $ 3,677.9 $ 3,619.3 $ 10,674.6 $ 10,890.7 Cost of Goods Sold 2,994.3 2,968.8 8,692.0 8,753.4 Selling, Administrative and General Expense 568.0 549.2 1,681.7 1,662.2 Rationalizations -- 1.2 79.0 5.9 Interest Expense 77.7 73.7 220.9 205.7 Other (Income) Expense 21.3 4.4 23.2 17.4 Foreign Currency Exchange (2.6) (2.9) (17.9) 0.8 Equity in Earnings of Affiliates 4.8 2.3 14.0 5.0 Minority Interest in Net Income of Subsidiaries 3.1 10.0 19.6 37.5 ----------- ----------- ----------- ----------- Income (Loss) before Income Taxes 11.3 12.6 (37.9) 202.8 United States and Foreign Taxes on Income 2.0 (4.4) (8.3) 60.5 ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ 9.3 $ 17.0 $ (29.6) $ 142.3 =========== =========== Retained Earnings at Beginning of Period 3,558.8 3,706.9 CASH DIVIDENDS (142.9) (141.2) ----------- ----------- Retained Earnings at End of Period $ 3,386.3 $ 3,708.0 ----------- ----------- NET INCOME (LOSS) PER SHARE OF COMMON STOCK - BASIC: $ 0.06 $ 0.11 $ (0.19) $ 0.91 =========== =========== =========== =========== Average Shares Outstanding 159.9 157.0 159.0 156.6 NET INCOME (LOSS) PER SHARE OF COMMON STOCK - DILUTED: $ 0.06 $ 0.11 $ (0.19) $ 0.90 =========== =========== =========== =========== Average Shares Outstanding 161.6 158.2 159.0 158.6 CASH DIVIDENDS PER SHARE $ 0.30 $ 0.30 $ 0.90 $ 0.90 =========== =========== =========== ===========
The accompanying notes are an integral part of this financial statement. -1- THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET Unaudited (In millions)
September 30, December 31, 2001 2000 ASSETS: ----------- ----------- CURRENT ASSETS: Cash and cash equivalents $ 785.4 $ 252.9 Accounts and notes receivable, less allowance - $90.7 ($93.3 in 2000) 1,907.9 2,074.7 Inventories: Raw materials 438.7 480.4 Work in process 114.9 123.5 Finished product 2,108.7 2,275.8 ----------- ----------- 2,662.3 2,879.7 Prepaid expenses and other current assets 200.4 259.9 ----------- ----------- TOTAL CURRENT ASSETS 5,556.0 5,467.2 Long Term Accounts and Notes Receivable 111.8 92.8 Investments in Affiliates, at equity 111.3 102.0 Other Assets 259.1 183.8 Goodwill 573.8 588.4 Deferred Charges 1,772.3 1,612.8 Properties and Plants, less accumulated depreciation - $6,062.0 ($5,862.6 in 2000) 5,243.2 5,521.0 ----------- ----------- TOTAL ASSETS $13,627.5 $13,568.0 =========== =========== LIABILITIES: CURRENT LIABILITIES: Accounts payable - trade $ 1,278.8 $ 1,505.2 Compensation and benefits 832.6 823.6 Other current liabilities 270.6 395.6 United States and foreign taxes 206.9 208.4 Notes payable 788.4 1,077.0 Sumitomo 1.2% Convertible Note Payable - 56.9 Long term debt due within one year 210.0 159.2 ----------- ----------- TOTAL CURRENT LIABILITIES 3,587.3 4,225.9 Long Term Debt and Capital Leases 3,202.0 2,349.6 Compensation and Benefits 2,302.6 2,310.5 Other Long Term Liabilities 369.9 334.1 Minority Equity in Subsidiaries 834.5 844.9 ----------- ----------- TOTAL LIABILITIES 10,296.3 10,065.0 SHAREHOLDERS' EQUITY: Preferred Stock, no par value: Authorized 50.0 shares, unissued - - Common Stock, no par value: Authorized 300.0 shares Outstanding shares - 163.1 (157.6 in 2000) after deducting 32.6 treasury shares (38.1 in 2000) 163.1 157.6 Capital Surplus 1,244.8 1,092.4 Retained Earnings 3,386.3 3,558.8 Accumulated Other Comprehensive Income (1,463.0) (1,305.8) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 3,331.2 3,503.0 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,627.5 $13,568.0 =========== ===========
The accompanying notes are an integral part of this financial statement. -2- THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Unaudited
(In millions) Accumulated Common Capital Retained Other Total Stock Surplus Earnings Comprehensive Shareholders' Income Equity ---------------------------------------------------------------------- Balance at December 31, 2000 $ 157.6 $ 1,092.4 $ 3,558.8 $ (1,305.8) $ 3,503.0 Comprehensive income (loss) for 2001: Net income (loss) (29.6) Foreign currency translation (150.6) Minimum pension liability 3.7 Unrealized investment gain 5.3 (net of tax of $3.3) Transition adjustment from adoption of SFAS 133 5.4 Deferred derivative loss (20.6) Less reclassification adjustment for amounts recognized in income (0.4) Total comprehensive income (loss) (186.8) Cash dividends (142.9) (142.9) Common stock issued from treasury: Domestic pension funding 4.3 95.7 100.0 Conversion of 1.2% Convertible Note Payable 1.1 55.1 56.2 Stock compensation plans 0.1 1.6 1.7 ------------------------------------------------------------------- Balance at September 30, 2001 $ 163.1 $ 1,244.8 $ 3,386.3 $ (1,463.0) $ 3,331.2 =================================================================== 09/30/01 12/31/00 Accumulated Other Comprehensive Income -------- -------- Foreign currency translation adjustment $ (1,424.5) $ (1,273.9) Minimum pension liability adjustment (18.2) (21.9) Unrealized investment loss (4.7) (10.0) Deferred derivative loss (15.6) - ------------- -------------- Total $ (1,463.0) $ (1,305.8) ============= ==============
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited
(In millions) Three Months Ended Nine Months Ended September 30, September 30, 2001 2000 2001 2000 ---- ---- ---- ---- Net Income (Loss) $ 9.3 $ 17.0 $ (29.6) $ 142.3 Other comprehensive income (loss): Foreign currency translation 8.1 (88.4) (150.6) (196.1) Minimum pension liability 0.3 0.1 3.7 0.2 FAS 133 transition amount (net of tax of $3.3) - - 5.4 - Deferred derivative gain (loss) 11.4 - (33.3) - Tax on deferred derivative gain (loss) (4.4) - 12.7 - Reclassification adjustment for amounts recognized in income (28.6) - (0.7) - Tax on derivative reclassification adjustment 10.9 - 0.3 - Unrealized investment gain (loss) (5.8) 1.3 8.6 44.8 Tax on unrealized investment gain (loss) 2.2 (0.4) (3.3) (17.0) -------------------------------- ---------------------------- Comprehensive Income (Loss) $ 3.4 $ (70.4) $ (186.8) $ (25.8) ================================ ============================
The accompanying notes are an integral part of this financial statement. -3- THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited
(In millions) Nine Months Ended September 30, 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES: ------ ------ Net Income (Loss) $(29.6) $142.3 Adjustments to reconcile net income (loss) to cash flows from operating activities: Depreciation and amortization 477.1 475.7 Rationalizations 57.1 6.4 Asset sales (13.9) (2.3) Proceeds from sale of accounts receivable 414.7 (3.2) Changes in operating assets and liabilities: Accounts and notes receivable (298.2) (367.2) Inventories 169.1 (271.4) Accounts payable-trade (203.5) (35.4) Other assets and liabilities (144.2) (98.6) ------ ------ Total adjustments 458.2 (296.0) ------ ------ TOTAL CASH FLOWS FROM OPERATING ACTIVITIES 428.6 (153.7) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (315.9) (411.1) Asset sales 40.0 38.4 Other transactions (114.3) (13.3) ------ ------ TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (390.2) (386.0) CASH FLOWS FROM FINANCING ACTIVITIES: Short term debt incurred 76.9 1,217.9 Short term debt paid (839.7) (1,469.7) Long term debt incurred 1,493.5 1,065.8 Long term debt paid (71.9) (101.0) Common stock issued 1.2 1.6 Dividends paid to Sumitomo (13.1) (27.1) Dividends paid to Goodyear shareholders (142.9) (141.2) ------ ------ TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 504.0 546.3 Effect of Exchange Rate Changes on Cash and Cash Equivalents (9.9) (11.1) ------ ------ Net Change in Cash and Cash Equivalents 532.5 (4.5) Cash and Cash Equivalents at Beginning of the Period 252.9 241.3 ------ ------ Cash and Cash Equivalents at End of the Period $785.4 $236.8 ====== ======
The accompanying notes are an integral part of this financial statement. -4- 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. ACCOUNTING POLICIES - ------------------- On January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended and interpreted (SFAS 133). DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - ------------------------------------------------------- Derivative financial instrument contracts and nonderivative instruments are utilized by the Company to manage interest rate and foreign exchange risks. The Company has established a control environment that includes policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. Company policy prohibits holding or issuing derivative financial instruments for trading purposes. To qualify for hedge accounting, hedging instruments must be designated as hedges and meet defined correlation and effectiveness criteria. These criteria require that the anticipated cash flows and/or financial statement effects of the hedging instrument substantially offset those of the position being hedged. Derivative contracts are reported at fair value on the Consolidated Balance Sheet as both current and long term Accounts Receivable or Other Liabilities. Deferred gains and losses on contracts designated as cash flow hedges are recorded in Accumulated Other Comprehensive Income (OCI). Ineffectiveness in hedging relationships is recorded as Other (Income) and Expense in the current period. INTEREST RATE CONTRACTS - Gains and losses on contracts designated as cash flow hedges are initially deferred and recorded in OCI. Amounts are transferred from OCI and recognized in income as Interest Expense in the same period that the hedged item is recognized in income. Gains and losses on contracts with no hedging designation are recorded in income in the current period as Other (Income) and Expense. FOREIGN CURRENCY CONTRACTS - Gains and losses on contracts designated as cash flow hedges are initially deferred and recorded in OCI. Amounts are transferred from OCI and recognized in income as Foreign Currency Exchange in the same period that the hedged item is recognized in income. Gains and losses on contracts with no hedging designation are recorded in income currently as Foreign Currency Exchange. The Company does not include premiums paid on forward currency contracts in its assessment of hedge effectiveness. Premiums on contracts designated as hedges are recognized in income as Foreign Currency Exchange over the life of the contract. NET INVESTMENT HEDGING - Nonderivative instruments denominated in foreign currencies are used to hedge net investments in foreign subsidiaries. Gains and losses on these instruments are deferred and recorded in OCI as Foreign Currency Translation Adjustment. These gains and losses are only recognized in income upon the complete or partial sale of the related investment or the complete liquidation of the investment. TERMINATION OF CONTRACTS - Deferred gains and losses in OCI are recognized in income as Other (Income) and Expense when contracts are terminated concurrently with the termination of the hedged position. To the extent that such position remains outstanding, deferred gains and losses in OCI are amortized to Interest Expense or Foreign Currency Exchange over the remaining life of that position. Gains and losses on contracts that the Company temporarily continues to hold after the early termination of a hedged position, or that otherwise no longer qualify for hedge accounting, are recognized in income as Other (Income) and Expense. -5- THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - --------------------------------------------- INTEREST RATE EXCHANGE CONTRACTS - -------------------------------- 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 hedge against the effects of adverse changes in 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, and are normally designated as cash flow hedges. Floating rate swaps are used to convert the fixed rates of long term borrowings into short term variable rates, and are normally designated as fair value hedges. Interest rate swap contracts are thus used by the Company to separate interest rate risk management from the debt funding decision. Certain fixed rate contracts outstanding during 2001 mature during 2001 and have no hedge designation. INTEREST RATE LOCK CONTRACTS - ---------------------------- The Company will use, when appropriate, interest rate lock contracts to hedge the risk-free rate component of anticipated long term debt issuances. These contracts are designated as cash flow hedges of forecasted transactions. Gains and losses on these contracts are amortized to income over the life of the debt. FOREIGN CURRENCY CONTRACTS - -------------------------- 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 will enter into foreign currency contracts. These contracts reduce exposure to currency movements affecting existing foreign currency-denominated assets, liabilities, firm commitments and forecasted transactions resulting primarily from trade receivables and payables, equipment acquisitions, intercompany loans and royalty agreements and forecasted purchases and sales. In addition, the principal and interest on the Company's Swiss franc bonds due 2006 and Euro300 million of the Eurobonds due 2005 are hedged by currency swap agreements. Contracts hedging the Swiss franc bonds, the Eurobonds and forecasted transactions under intercompany royalty agreements are designated as cash flow hedges. The hedged intercompany royalty transactions will occur during 2001 and 2002. Contracts hedging short-term trade receivables and payables normally have no hedging designation. Amounts are reclassified from OCI into earnings each period to offset the effects of exchange rate movements on the principal and interest of the Swiss franc bonds and the Eurobonds. Amounts are also reclassified concurrently with the recognition of intercompany royalty expense. HEDGES OF NET INVESTMENT IN FOREIGN OPERATIONS - ---------------------------------------------- In order to reduce the impact of changes in foreign exchange rates on consolidated shareholders' equity, the Company has designated certain foreign currency-denominated nonderivative instruments as hedges of its net investment in various foreign operations. On January 1, 2001, Euro100 million of the Company's 6 5/8% Eurobonds due 2005 was designated as hedging the Company's net investment in European subsidiaries which have the Euro as the functional currency. In addition, from January 1 to February 6 of 2001, the Company's Y6,536,535,767 Sumitomo 1.2% Convertible Note Payable Due August 2001 was designated as hedging the Company's net investment in Japanese subsidiaries which have the Yen as the functional currency. The Note Payable was converted into shares of the Common Stock of the Company on February 6, 2001. -6- THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (continued) - --------------------------------------------------------- RESULTS OF HEDGING ACTIVITIES - ----------------------------- Ineffectiveness and premium amortization totaled $.4 million and $1.3 million during the three and nine months ended September 30, 2001, respectively. Deferred net gains totaling $2.3 million on hedges of forecasted transactions are anticipated to be recognized in income during the twelve months ending September 30, 2002. It is not practicable to estimate the amount of deferred gains and losses that will be recognized in income resulting from the remeasurement of certain long term currency exchange and interest rate contracts. Deferred losses totaling $4.4 million and gains totaling $1.2 million were recorded as Foreign Currency Translation Adjustment during the three and nine months ended September 30, 2001, respectively, as a result of the designation of nonderivative instruments as net investment hedges. These gains and losses are only recognized in earnings upon the complete or partial sale of the related investment or the complete liquidation of the investment. RATIONALIZATIONS - ---------------- The Company recorded a rationalization charge on the Consolidated Statement of Income totaling $79.0 million ($57.1 million after tax) in the 2001 first quarter. Of this amount, $40.7 million related to future cash outflows, primarily associate severance costs and $38.3 million related to non-cash charges, primarily $33.3 million for special termination benefits and pension curtailments related to a voluntary exit program in the United States. Of the $79.0 million charge, $66.5 million continued the rationalization programs announced in the fourth quarter of 2000. These programs were for global workforce reductions and manufacturing facility consolidations including the closure of a tire plant in Latin America. The remaining $12.5 million related to the closure of the Company's manufacturing facility in Italy announced in 1999. Associate-related rationalization costs for programs started in the fourth quarter of 2000 totaled $152.0 million. Activity during 2001 is presented below: BALANCE AT 2001 BALANCE AT (In Millions) 12/31/00 CHARGES INCURRED 9/30/01 -------- ------- -------- ------- Plant downsizing and consolidation $48.0 $10.8 $ (56.8) $ 2.0 Worldwide associate reductions 25.2 48.6 (61.2) 12.6 -------- ------- -------- ------- $73.2 $59.4 $(118.0) $14.6 ======== ======= ======== ======= Under the above programs, the Company provided for the release of approximately 7,100 associates around the world, primarily production and support associates. To date, 6,300 associates have been released for which the Company incurred costs totaling $118.0 million during 2001, including 1,000 associates at a cost of $10.6 million in the third quarter. The Company plans to release approximately 800 more associates under the above program during 2001. Rationalization costs, other than associate-related costs, for these programs totaled $33.9 million and were primarily for the writeoff of equipment taken out of service, scrap removal costs and noncancellable lease costs. The Company plans to complete these actions during 2001. Activity during 2001 is presented below: BALANCE AT 2001 BALANCE AT (In Millions) 12/31/00 CHARGES INCURRED 9/30/01 - ------------- -------- ------- -------- ------- Plant downsizing and consolidation $8.8 $7.1 $(11.2) $4.7 ==== ==== ======= ==== The Company recorded a charge of $12.5 million in the first quarter of 2001 related to the closing of a manufacturing facility in Italy. This charge was for associate benefits accepted in the first quarter of 2001. This was the final charge for the program which began in 1999 and had a balance of $4.3 million at December 31, 2000. During 2001, $15.9 million of costs were incurred, including $1.9 million in the third quarter, primarily for ongoing associate severance payments. Actions taken under this plan are now complete. -7- THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS RATIONALIZATIONS (continued) - ---------------------------- The Company committed to certain rationalization actions 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 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. During 2001, the Company incurred associate-related costs of $12.4 million for the release of approximately 750 associates, including approximately 150 associates at a cost of $1.5 million in the third quarter. At September 30, 2001, the Company evaluated the remaining reserves and recorded a reversal of $3.0 million for reserves no longer needed for their originally intended purposes. The remaining balance of $8.0 million at September 30, 2001 relates to the release of approximately 50 associates and ongoing associate severance payments. The balance at September 30, 2001, for rationalization costs, other than associate-related costs, was $5.8 million. The Company intends to complete these actions by the end of the fourth quarter of 2001, except for future rental payments under noncancellable leases. 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 NINE MONTHS ENDED (In millions) SEPTEMBER 30, SEPTEMBER 30, 2001 2000 2001 2000 ----- ----- ----- ----- Average shares outstanding-basic 159.9 157.0 159.0 156.6 Stock options 1.7 - - - 1.2% Convertible Note - 1.2 - 2.0 ----- ----- ----- ----- Average shares outstanding-diluted 161.6 158.2 159.0 158.6 ===== ===== ===== ===== The average shares outstanding-diluted total for the first nine months of 2001 does not include the antidilutive impact of 2.0 million shares of potential common stock associated with stock options and .3 million shares associated with the Sumitomo 1.2% Convertible Note Payable. FINANCING ARRANGEMENTS - ---------------------- In the first quarter of 2001, the Company borrowed $800 million for a period of three years under a bank term loan agreement. The term loan is due March 30, 2004 and bears interest at a floating rate at a spread over LIBOR for interest periods of 1,2,3,6 or 12 months, as selected by the Company. In the third quarter of 2001, the Company issued $650 million of its 7.857% Notes due 2011. NONCASH INVESTING AND FINANCING ACTIVITIES - ------------------------------------------ The Consolidated Statement of Cash Flows is 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 Y13,073,070,934 pursuant to a Note Purchase Agreement dated February 25, 1999 (the "Note Agreement"). The Company's Note was convertible during the period beginning July 16, 2000 through August 15, 2000 into 2,281,115 shares of Common Stock, without par value, of the Company at a conversion price of Y5,731 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 Y13,073,070,934 (the "Sumitomo Note"). The Sumitomo Note was convertible, if not earlier redeemed, during the period beginning July 16, 2000 through August 15, 2000 into 24,254,306 shares of Common Stock, Y50 par value per share, of Sumitomo at a conversion price of Y539 per share, subject to certain adjustments. The principal amount of each Note was equivalent to $108.0 million at February 25, 1999. -8- THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NONCASH INVESTING AND FINANCING ACTIVITIES (continued) - ------------------------------------------------------ The Company converted the Sumitomo Note in its entirety on July 27, 2000 into 24,254,306 shares of Sumitomo's Common Stock, which represents 10% of Sumitomo's outstanding shares. Sumitomo converted Y6,536,535,167 principal amount of the Company's Note into 1,138,030 shares of the Company's Common Stock on August 15, 2000. Sumitomo converted the remaining Y6,536,535,767 principal amount of the Company's Note into 1,140,866 shares of the Company's Common Stock on February 6, 2001. During the third quarter of 2001, the Company issued 4.3 million shares of its common stock with a market value of approximately $100.0 million as a contribution to certain domestic pension plans. INVESTMENTS - ----------- The Company has classified the previously mentioned investment in Sumitomo Common Stock ("the Sumitomo Investment") 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 Investment was $109.6 million at September 30, 2001 compared to $100.9 million at December 31, 2000. Changes in the fair value of the Sumitomo Investment are reported in the Consolidated Balance Sheet as Accumulated Other Comprehensive Income. The Sumitomo Investment was hedged during 1999 and 2000. At September 30, 2001, the gross unrealized holding loss on the Sumitomo Investment, net of the hedge, totaled $7.4 million ($4.7 million after tax). ACCOUNTS RECEIVABLE - ------------------- During the second quarter of 2001, the Company terminated its $550 million domestic accounts receivable continuous sale program and entered into a new program. The new program involves the continuous sale of substantially all of the Company's domestic trade accounts receivable to a wholly-owned limited liability subsidiary company that is a bankruptcy-remote special purpose entity. The results of operations and financial position of the special purpose subsidiary are not included in the consolidated financial statement of the Company. The special purpose subsidiary purchases the Company's receivables with (a) the cash proceeds of borrowings from a group of five bank affiliated issuers of commercial paper, which borrowings are secured by the trade accounts receivable it acquires from the Company, (b) the cash proceeds of the Company's $98.2 million equity investment in the subsidiary and (c) a subordinated note payable to the Company in an amount equal to the total amount of trade receivables purchased by the subsidiary minus the sum of the equity of the special purpose subsidiary and the cash proceeds from the sale of the notes issued by the special purpose subsidiary to the five lenders and minus a discount. The Company retained servicing responsibilities, subordinated interests in the receivables transferred and a residual equity interest in the special purpose company. As the receivables are collected, the cash proceeds are used to purchase additional receivables. The Company pays fees under the program based on certain variable market interest rates and other agreed amounts. These fees are reported as Other (Income) and Expense. The special purpose subsidiary may borrow up to $825 million from the note purchasers. The amount that may be borrowed from time to time by the special purpose subsidiary depends on, among other things, the total uncollected balance of receivables owned by it. The borrowings are available until May, 2002, and may be extended for additional annual periods upon the agreement of the lenders. In the third quarter of 2001, a Canadian subsidiary of the Company established an accounts receivable continuous sale program, whereunder the subsidiary may receive proceeds of up to a maximum of $100 million at any one time from the sale of certain of its receivables to affiliates of certain banks. -9- THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS ACCOUNTS RECEIVABLE (continued) - ------------------------------- The following table presents certain cash flows between the Company (and its Canadian subsidiary), and the purchasers of the receivables: THREE MONTHS ENDED NINE MONTHS ENDED (In millions) SEPTEMBER 30,2001 SEPTEMBER 30,2001 ----------------- ----------------- Proceeds from new securitizations $ 53.9 $ 795.4 Proceeds from collections reinvested in previous securitizations 1,768.2 2,683.5 Servicing fees received 1.9 2.5 Reimbursement for rebates and discounts issued (67.3) (86.2) At September 30, 2001, the level of net proceeds from sales under these programs was $886.1 million. The balance of net proceeds from these and other agreements was $1,018.9 million at September 30, 2001. The balance of net proceeds under similar agreements were $604.2 million at December 31, 2000 and $563.3 million at September 30, 2000. OTHER (INCOME) AND EXPENSE - -------------------------- Other (Income) and Expense in 2001 included a gain of $17.0 million ($13.9 million after tax) resulting from the sale of land and buildings in the United Kingdom in the first quarter. Other (Income) and Expense in the third quarter of 2000 included a gain of $5.0 million ($3.2 million after tax) on the sale of land at a manufacturing facility in Mexico. 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 2001 presentation. -10- THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES SEGMENT INFORMATION Unaudited
(In millions) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2001 2000 2001 2000 ---------- ---------- ----------- ----------- SALES: North American Tire $ 1,957.2 $ 1,832.0 $ 5,409.6 $ 5,319.6 European Union Tire 770.7 759.6 2,329.7 2,436.2 Eastern Europe, Africa and Middle East Tire 181.7 215.1 523.0 599.7 Latin American Tire 246.4 263.2 754.8 785.5 Asia Tire 122.8 128.9 370.2 404.8 ---------- ---------- ----------- ----------- TOTAL TIRES 3,278.8 3,198.8 9,387.3 9,545.8 Engineered Products 267.4 282.7 867.7 910.1 Chemical Products 260.9 275.7 824.1 847.5 ---------- ---------- ----------- ----------- TOTAL SEGMENT SALES 3,807.1 3,757.2 11,079.1 11,303.4 Inter-SBU Sales (136.4) (139.6) (419.8) (422.4) Other 7.2 1.7 15.3 9.7 ---------- ---------- ----------- ----------- NET SALES $ 3,677.9 $ 3,619.3 $ 10,674.6 $ 10,890.7 ========== ========== =========== =========== INCOME: North American Tire $ 87.9 $ 60.8 $ 152.3 $ 197.1 European Union Tire 3.1 12.3 52.1 95.8 Eastern Europe, Africa and Middle East Tire 6.2 19.0 15.6 46.4 Latin American Tire 19.3 10.1 61.5 54.9 Asia Tire 5.1 3.5 15.7 19.6 ---------- ---------- ----------- ----------- TOTAL TIRES 121.6 105.7 297.2 413.8 Engineered Products (1.2) 2.3 16.7 46.6 Chemical Products 16.4 7.0 45.7 60.4 ---------- ---------- ----------- ----------- TOTAL SEGMENT INCOME (EBIT) 136.8 115.0 359.6 520.8 Rationalizations and Asset sales -- 3.8 (62.0) (0.9) Interest expense (77.7) (73.7) (220.9) (205.7) Foreign currency exchange 2.6 2.9 17.9 (0.8) Minority interest in net income (3.1) (10.0) (19.6) (37.5) of subsidiaries Inter-SBU income (9.6) (5.4) (23.0) (22.8) Other (37.7) (20.0) (89.9) (50.3) ---------- ---------- ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES $ 11.3 $ 12.6 $ (37.9) $ 202.8 ========== ========== =========== ===========
-11- THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS BUSINESS SEGMENTS - ----------------- Portions of the items reported as Rationalizations and Other (Income) and Expense on the Consolidated Statement of Income were not charged (credited) to segment operating income (EBIT) but were attributable to the Company's seven segments as follows: (In millions) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2001 2000 2001 2000 ---- ---- ---- ---- North American Tire $ -- $ -- $ 4.0 $ (.7) European Union Tire -- 1.2 6.2 7.2 Eastern Europe, Africa and Middle East Tire -- -- 8.9 -- Latin American Tire -- -- -- -- Asia Tire -- -- 3.6 -- ------- ------- ------- ------- TOTAL TIRES -- 1.2 22.7 6.5 Engineered Products -- -- 3.0 (.6) Chemical Products -- -- -- -- ------- ------- ------- ------- TOTAL SEGMENTS $ -- $ 1.2 $ 25.7 $ 5.9 ======= ======= ======= ======= 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: THREE MONTHS ENDED NINE MONTHS ENDED (In millions) SEPTEMBER 30, SEPTEMBER 30, 2001 2000 2001 2000 ---- ---- ---- ---- NET SALES: Asia Tire $122.8 $128.9 $370.2 $404.8 SPT 116.0 127.3 359.1 436.8 ------- ------ ------ ------ $238.8 $256.2 $729.3 $841.6 ======= ====== ====== ====== EBIT: Asia Tire $ 5.1 $ 3.5 $ 15.7 $ 19.6 SPT (5.9) (3.6) (19.8) (6.9) ------ ------ ------ ------ $ ( .8) $ (.1) $ (4.1) $ 12.7 ====== ====== ====== ====== -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 third quarter of 2001 were $3.68 billion, increasing 1.6% from $3.62 billion in the 2000 quarter. Net income of $9.3 million or $.06 per share was recorded in the 2001 third quarter, compared to net income of $17.0 million or $.11 per share in the 2000 period. In the nine months of 2001, sales of $10.67 billion decreased 2.0% from $10.89 billion in 2000. The net loss was $29.6 million or $.19 per share compared to net income of $142.3 million or $.90 per share in 2000. Revenues increased in the third quarter of 2001 primarily due to a change in product mix to higher priced tires and price and unit increases in the North America replacement market. Revenues decreased in the nine months of 2001 primarily due to lower tire unit sales, the adverse impact of worldwide competitive pricing pressures and the effect of currency translations on international results. The Company estimates that versus 2000, currency translation adversely affected revenues by approximately $50 million in the third quarter and $330 million for the nine months. Worldwide tire unit sales in the third quarter of 2001 were 56.7 million units, a decrease of 258.2 thousand units or .5% compared to the 2000 period. North American (U.S. and Canada) volume increased 692.4 thousand units or 2.3% in the quarter, while international unit sales decreased 950.6 thousand units or 3.5%. Worldwide replacement unit sales decreased .6% from the 2000 quarter, due to decreases in international markets. Original equipment unit sales were down .1% in the quarter, due to decreases in North America being partially offset by increases internationally. Worldwide tire unit sales in the nine months of 2001 decreased 1.7% from the 2000 period, with North American and international units lower by 2.2% and 1.0%, respectively. Cost of goods sold (CGS) was up in dollars, but decreased to 81.4% of sales in the third quarter of 2001, compared to 82.0% in the 2000 period. CGS, as a percent to sales, was favorably impacted by a change in mix to higher priced tires and price increases enacted during the third quarter of 2001. CGS reflected higher conversion costs, combined with lower levels of plant utilization. Costs in both years were favorably impacted by the effects of rationalization actions, ongoing cost containment measures and synergies realized from, among other actions, the strategic alliance with Sumitomo. CGS was down in dollars for the -13- nine months of 2001 but rose to 81.4% of sales compared to 80.4% in the nine months of 2000. CGS, for the nine months, reflected higher raw material and conversion costs combined with lower levels of plant utilization. Selling, administrative and general expense (SAG) in the third quarter of 2001 was up in dollars and was 15.4% of sales compared to 15.2% in the 2000 period, primarily due to increased costs in North America. SAG was 15.8% of sales for the nine months of 2001 compared to 15.3% in the 2000 period. The Company estimates the impact of foreign currency translation reduced the 2001 quarter's and nine month's operating income by approximately $20 million and $70 million, respectively. Revenues in future periods may continue to be adversely affected by competitive pricing pressures and changes in product mix and channels of distribution. Revenues and earnings in future periods are likely to be unfavorably impacted if the dollar strengthens versus various foreign currencies. In addition, anticipated continued lower original equipment demand, increases in energy and labor costs, which may not be recoverable in the market due to pricing pressures present in today's highly competitive market, are also expected to adversely affect earnings in future periods. Currency fluctuations and general economic and industry conditions may adversely impact sales and earnings in future periods. Interest expense of $77.7 million rose 5.4% in the 2001 third quarter compared to the third quarter last year, and 7.4% in the nine months of 2001 to $220.9 million compared to the nine months of 2000. The increase is due to higher debt levels. Other (Income) and Expense was $21.3 million net expense in the 2001 third quarter compared to $4.4 million net expense in the 2000 period. For the nine months of 2001, Other (Income) and Expense was $23.2 million net expense compared to $17.4 million net expense in 2000. The nine months of 2001 included gains in the first quarter of $17.0 million ($13.9 million after tax) resulting from the sale of land and buildings in the United Kingdom offset by $41.0 million related to commitment fees and accounts receivable sales fees. Other (Income) and Expense in the third quarter of 2000 included a gain of $5.0 million ($3.2 million after tax) on the sale of land at a manufacturing facility in Mexico, offset by $32.6 million related to commitment fees and accounts receivable sales fees. Foreign currency exchange gain of $2.6 million decreased $.3 million from last year's third quarter. For the nine months of 2001, foreign currency exchange gain was $17.9 million compared to foreign currency exchange expense of $.8 million in 2000. Foreign currency exchange in both 2001 periods benefited from the impact of currency movements on U.S. dollar denominated monetary items, primarily in Brazil. -14- For the nine months of 2001, the Company had a tax benefit at an effective tax rate of 45.4%. The Company's effective tax rate was 25.2% in 2000. RATIONALIZATION ACTIVITY - ------------------------ The Company recorded a rationalization charge on the Consolidated Statement of Income totaling $79.0 million ($57.1 million after tax) in the first quarter of 2001. The rationalization charge was primarily related to associate severance and pension costs. The Company continued in 2001 the rationalization programs announced in the fourth quarter of 2000. These programs were for global workforce reductions and manufacturing facility consolidations, including the closure of a tire plant in Latin America. Of the $79.0 million charge, $66.5 million related to the 2000 program and $12.5 million related to the closure of the Company's tire manufacturing facility in Italy announced in 1999. The Company provided for the release of approximately 7,100 associates around the world, primarily production and support associates. To date, approximately 6,300 associates have been released, for which the Company incurred costs totaling $118.0 million during the nine months of 2001, including approximately 1,000 associates at a cost of $10.6 million in the third quarter. The Company plans to release approximately 800 more associates under the program in 2001. Rationalization costs, other than for associate-related costs, totaled $33.9 million and were related to the writeoff of equipment taken out of service, scrap removal costs and noncancellable lease costs. The remaining reserve for these costs was $19.3 million at September 30, 2001. The Company will substantially complete these actions during 2001. Annual pretax savings of approximately $260 million are expected when the planned actions have been fully implemented. The Company estimates that operating costs were reduced by approximately $100 million in the nine months of 2001, including approximately $35 million in the third quarter. The Company recorded a charge of $12.5 million in the first quarter of 2001 related to the closing of a manufacturing facility in Italy. This charge was for associate benefits accepted in the first quarter of 2001. This was the final charge for the program which began in 1999 and had a balance of $4.3 million at December 31, 2000. During 2001, $15.9 million of costs were incurred, including $1.9 million in the third quarter, primarily for ongoing associate severance payments. Actions taken under this plan are now complete. -15- 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. The Company committed to certain rationalization actions related to the Dunlop businesses acquired from Sumitomo on September 1, 1999, for the purpose of optimizing market growth opportunities and maximizing cost efficiencies. In accordance with these actions, approximately 750 associates were released at a cost of $12.4 million during the nine months of 2001, including approximately 150 associates in the third quarter at a cost of $1.5 million. At September 30, 2001, the Company evaluated the remaining reserves and reversed $3.0 million to goodwill for reserves no longer needed for their originally intended purposes. The Company plans to release approximately 50 more associates under this program during 2001. The balance of the reserve for associate and other than associate-related costs at September 30, 2001 was $13.8 million. The Company expects that these actions will be completed during 2001, except for future rental payments under noncancellable leases. For further information, refer to the note to the financial statements, Rationalizations. NEW ACCOUNTING STANDARDS - ------------------------ On January 1, 2001, the Company adopted 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 assets or liabilities and measured at fair value. Changes in such fair value will impact earnings to the extent of any ineffectiveness in hedging relationships. The transition adjustment resulting from the adoption of SFAS 133 increased Shareholders' Equity by $5.4 million during 2001. On January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 140 (SFAS 140), "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". SFAS 140 requires that after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. A transfer of financial assets in which the transferor surrenders control over those assets is accounted for as a sale to the extent that consideration other than beneficial interests in the transferred assets is received in exchange. The adoption of SFAS 140 did not have a material impact on the Company's results of operations, financial position or liquidity. The Financial Accounting Standards Board has issued -16- Statement of Financial Accounting Standards No. 142 (SFAS 142), "Goodwill and Other Intangible Assets," which addresses the accounting for goodwill and other intangible assets. SFAS 142 specifies that, among other things, intangible assets with an indefinite useful life and goodwill will no longer be amortized. The standard requires goodwill and intangible assets with an indefinite useful life to be periodically tested for impairment and written down to fair value if considered impaired. The provisions of SFAS 142 are effective for fiscal years beginning after December 15, 2001, 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 142. SEGMENT INFORMATION - ------------------- Segment EBIT was $136.8 million in the third quarter of 2001, increasing 19.0% from $115.0 million in the 2000 quarter. Segment operating margin in the third quarter of 2001 was 3.6%, compared to 3.1% in the 2000 period. In the nine months, segment EBIT was $359.6 million, decreasing 31.0% from $520.8 million in the 2000 period. Segment operating margin in the nine months was 3.2% compared to 4.6% in the 2000 period. Segment EBIT does not include the previously discussed rationalizations and certain other items. For further information, refer to the note to the financial statements, Business Segments. NORTH AMERICAN TIRE - ------------------- North American Tire segment sales in the third quarter of 2001 were $1.96 billion, increasing 6.8% from $1.83 billion in the 2000 quarter. In the nine months, sales of $5.41 billion increased 1.7% from $5.32 billion in 2000. Unit sales in the 2001 third quarter were 30.2 million, increasing 2.3% from the 2000 period. Replacement unit sales increased 5.8% but original equipment volume decreased 6.7%. Unit sales in the nine months were 84.9 million, decreasing 2.2% from the 2000 period. Replacement unit sales increased 3.7% and original equipment volume decreased 14.3%. Sales in both 2001 periods reflect the favorable impact of a change in product mix to higher priced tires and price increases in the replacement market. The replacement market experienced higher volume as a result of the Ford Motor Company ("Ford") recall program. Sales were adversely affected in both 2001 periods by lower original equipment volume, resulting from production cutbacks by most manufacturers of automobiles and commercial trucks. Sales in both 2000 periods benefited from the sale of approximately 1.5 million tires related to a replacement -17- program involving approximately 6.5 million Firestone tires. On May 22, 2001, Ford announced a customer satisfaction program impacting 13 million units of a competitor's tires. In the third quarter of 2001, the Company supplied approximately 3 million tire units under the program which increased EBIT by approximately $50 million. For the nine months, the Company has supplied approximately 4 million tire units with an EBIT impact of approximately $70 million. North American Tire segment EBIT was $87.9 million in the third quarter of 2001, increasing 44.6% from EBIT of $60.8 million in the 2000 quarter. Operating margin was 4.5%, compared to 3.3% in 2000. In the nine months, EBIT was $152.3 million, decreasing 22.7% from $197.1 million in 2000. Operating margin was 2.8%, compared to 3.7% in 2000. EBIT in the third quarter was favorably impacted by the Ford tire replacement program, price increases in the replacement market, lower raw material costs and higher volume. EBIT was adversely affected by higher conversion costs as a result of lower production volumes and higher SAG costs. EBIT for the nine months decreased due to higher conversion, raw material and SAG costs and lower volume. EBIT was favorably impacted by price increases in the replacement market and a shift in mix to higher margin tires. EBIT in 2001 did not include rationalization charges, recorded in the first quarter, totaling $4.0 million. EBIT in 2000 did not include the second quarter reversal of $.7 million of rationalization reserves identified as no longer needed for their intended purposes. On October 9, 2001, the Company announced plans to lay off up to 1,400 associates at five U.S. tire manufacturing plants. This action has been made to deal with the industry's current downturn and continued economic uncertainty in the marketplace. Revenues and EBIT in the North American Tire segment may be adversely affected in future periods by the effects of continued competitive pricing conditions, lower demand by original equipment customers, changes in product mix, rising raw material and energy prices, anticipated higher wage and benefit costs and general economic conditions. EUROPEAN UNION TIRE - ------------------- European Union Tire segment sales in the third quarter of 2001 were $770.7 million, increasing 1.5% from $759.6 million in the 2000 quarter. In the nine months, sales of $2.33 billion decreased 4.4% from $2.44 billion in 2000. -18- Unit sales in the 2001 third quarter were 15.0 million, increasing .4% from the 2000 period. Replacement unit sales decreased 4.4% while original equipment volume increased 14.1%. Unit sales in the nine months were 45.6 million, increasing .8% from the 2000 period. Replacement unit sales decreased 3.0% and original equipment volume increased 9.8%. Revenues in the third quarter of 2001 increased compared to 2000 primarily due to higher volume. Revenues were adversely impacted in the 2001 third quarter by a shift in mix to lower-priced original equipment tires. For the nine months, revenues decreased compared to 2000 due to currency translation, a shift in mix towards lower-priced original equipment tires and competitive pricing. Revenues were favorably impacted by higher volume. The Company estimates that currency translation favorably affected European Union Tire segment sales by approximately $10 million in the third quarter while having an adverse impact on the nine months of $110 million compared to the 2000 period. European Union Tire segment EBIT was $3.1 million in the third quarter of 2001, decreasing 74.8% from $12.3 million in the 2000 quarter. Operating margin was 0.4%, compared to 1.6% in 2000. In the nine months, EBIT was $52.1 million, decreasing 45.6% from $95.8 million in 2000. Operating margin was 2.2%, compared to 3.9% in 2000. EBIT decreased in the 2001 quarter due to higher raw material costs and a change in mix to lower margin original equipment tires. EBIT was favorably impacted by lower SAG costs from cost containment and rationalization programs. For the nine months, EBIT decreased compared to 2000 due to higher raw material costs, a change in mix to lower margin original equipment tires, currency translation and competitive pricing. EBIT was favorably impacted by higher sales volume and lower SAG costs from cost containment and rationalization programs. The Company estimates that the effects of currency translation, especially the weak Euro versus the U.S. dollar, reduced operating income by approximately $10 million in the 2001 nine months, compared to the 2000 period. There was no significant translation impact on EBIT in the 2001 third quarter compared to the 2000 period. Rationalization charges totaling $23.2 million and the $17.0 million gain on the sale of closed manufacturing and warehouse -19- facilities in the United Kingdom, both recorded in the 2001 first quarter, were not included in EBIT for 2001. EBIT in 2000 did not include rationalization charges totaling $1.2 million in the third quarter and $7.2 million in the nine months. Revenues and EBIT in the European Union Tire segment may be adversely affected in future periods by the effects of continued competitive pricing conditions, changes in mix, rising raw material and energy prices, currency translation and general economic conditions. EASTERN EUROPE, AFRICA AND MIDDLE EAST TIRE - ------------------------------------------- Eastern Europe, Africa and Middle East Tire segment("Eastern Europe Tire") sales in the third quarter of 2001 were $181.7 million, decreasing 15.5% from $215.1 million in the 2000 quarter. In the nine months, sales of $523.0 million decreased 12.8% from $599.7 million in 2000. Unit sales in the 2001 third quarter were 3.5 million, decreasing 21.6% from the 2000 period. Replacement unit sales decreased 20.7% and original equipment volume decreased 25.8%. Unit sales in the nine months were 10.3 million, decreasing 12.0% from the 2000 period. Replacement unit sales decreased 10.8% and original equipment volume decreased 16.4%. Revenues in both 2001 periods decreased from the 2000 periods due to currency devaluations in Turkey, Poland, South Africa and Slovenia and lower volume in both the original equipment and replacement markets. The Company estimates that the effects of currency translation adversely affected Eastern Europe Tire segment sales by approximately $35 million in the third quarter and $85 million in the nine months compared to 2000. Eastern Europe Tire segment EBIT was $6.2 million in the third quarter of 2001, decreasing 67.4% from $19.0 million in the 2000 quarter. Operating margin was 3.4%, compared to 8.8% in 2000. In the nine months, EBIT was $15.6 million, decreasing 66.4% from $46.4 million in 2000. Operating margin was 3.0%, compared to 7.7% in 2000. EBIT in both 2001 periods decreased due to the economic crisis in Turkey, the effects of currency translation, lower sales volume and the effect of a labor strike in South Africa during the third quarter. EBIT was favorably impacted by reduced SAG from cost containment and rationalization programs. The Company estimates that the effects of currency translation reduced operating income by approximately $5 million in the third quarter and $25 million in the nine months. -20- EBIT in 2001 did not include first quarter rationalization charges totaling $8.9 million. Revenues and EBIT in the Eastern Europe Tire segment may be adversely affected in future periods by the effects of continued competitive pricing conditions, changes in mix, rising raw material and energy prices, continued volatile economic conditions and currency translation. LATIN AMERICAN TIRE - ------------------- Latin American Tire segment sales in the third quarter of 2001 were $246.4 million, decreasing 6.4% from $263.2 million in the 2000 quarter. In the nine months, sales of $754.8 million decreased 3.9% from $785.5 million in 2000. Unit sales in the 2001 third quarter were 4.9 million, decreasing 3.3% from the 2000 period. Replacement unit sales decreased 6.6% while original equipment volume increased 4.5%. Unit sales in the nine months were 14.8 million, increasing 1.1% from the 2000 period. Replacement unit sales decreased 7.1% and original equipment volume increased 26.2%. Revenues in both 2001 periods were adversely impacted by currency translation, particularly in Brazil, and a shift in mix to the original equipment market. Revenues, in the third quarter of 2001, were also adversely impacted by lower volume. Revenues, in both periods, benefited from price increases. Revenues, in the nine months, also benefited from higher volume. The Company estimates that currency translation reduced sales by approximately $30 million in the third quarter and $75 million in the nine months compared to 2000. Latin American Tire segment EBIT was $19.3 million in the third quarter of 2001, increasing 91.1% from $10.1 million in the 2000 quarter. Operating margin was 7.8%, compared to 3.8% in 2000. In the nine months, EBIT was $61.5 million, increasing 12.0% from $54.9 million in 2000. Operating margin was 8.1%, compared to 7.0% in 2000. EBIT in both 2001 periods reflected the favorable impact of price increases to recover the effects of currency devaluations and the benefits of cost reduction programs, rationalizations and lower raw material costs. EBIT was adversely affected by currency translation and a change in mix to lower margin original equipment tires. The Company estimates that the effects of currency translation reduced operating income by approximately $10 million in the third quarter and $25 million in the nine months. Revenues and EBIT in future periods may be adversely affected by the effects of continued competitive pricing -21- conditions, changes in mix, rising raw material and energy prices, continued volatile economic conditions and currency translation. ASIA TIRE - --------- Asia Tire segment sales in the third quarter of 2001 were $122.8 million, decreasing 4.7% from $128.9 million in the 2000 quarter. In the nine months, sales of $370.2 million decreased 8.5% from $404.8 million in 2000. Unit sales in the 2001 third quarter were 3.1 million, increasing 4.2% from the 2000 period. Replacement unit sales decreased .3% while original equipment volume increased 17.4%. Unit sales in the nine months were 9.2 million, increasing .6% from the 2000 period. Replacement unit sales decreased 3.8% while original equipment volume increased 14.2%. Revenues decreased in both 2001 periods compared to the 2000 periods, reflecting the adverse impacts of currency translation and competitive pricing pressures. The Company estimates that currency translation reduced sales by approximately $10 million in the third quarter and $35 million in the nine months compared to 2000. Asia Tire segment EBIT was $5.1 million in the third quarter of 2001, increasing 45.7% from $3.5 million in the 2000 quarter. Operating margin was 4.2%, compared to 2.7% in 2000. In the nine months, EBIT was $15.7 million, decreasing 19.9% from $19.6 million in 2000. Operating margin was 4.2%, compared to 4.8% in 2000. EBIT increased in the third quarter of 2001 due to lower SAG and conversion costs from cost containment programs, which more than offset the adverse effects of intensive price competition and currency translations. For the nine months, EBIT decreased due to the adverse effects of currency translation and intense price competition. EBIT was favorably impacted by lower SAG and conversion costs as a result of cost containment programs. The Company estimates that the effects of currency translation reduced operating income by approximately $5 million in the third quarter and $15 million in the nine months. EBIT in 2001 did not include a first quarter rationalization charge totaling $3.6 million. Revenues and EBIT in future periods may be adversely impacted by the effects of continued competitive pricing conditions, changes in mix, rising raw material and energy costs -22- and currency translation. 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 NINE MONTHS ENDED (In millions) SEPTEMBER 30, SEPTEMBER 30, 2001 2000 2001 2000 ---- ---- ---- ---- NET SALES: Asia Tire $122.8 $128.9 $370.2 $404.8 SPT 116.0 127.3 359.1 436.8 ------ ------ ------ ------ $238.8 $256.2 $729.3 $841.6 ====== ====== ====== ====== EBIT: Asia Tire $ 5.1 $ 3.5 $15.7 $ 19.6 SPT (5.9) (3.6) (19.8) (6.9) ----- ------ ----- ------ $( .8) $ ( .1) $(4.1) $ 12.7 ===== ====== ====== ====== SPT has announced a restructuring plan to be implemented during the fourth quarter of 2001. The Company anticipates that this action will adversely impact its fourth quarter Equity in Earnings of Affiliates by approximately $20 million to $25 million. ENGINEERED PRODUCTS - ------------------- Engineered Products segment sales in the third quarter of 2001 were $267.4 million, decreasing 5.4% from $282.7 million in the 2000 quarter. In the nine months, sales of $867.7 million decreased 4.7% from $910.1 million in 2000. Revenues in the third quarter were down slightly from 2000 due to lower unit sales of air springs, power transmission belts and molded products, resulting from production cutbacks by the automotive and truck industry. Revenues were favorably impacted by higher sales of conveyer belts and industrial hose products. For the nine months, revenues decreased due to unit sales decreases in the hose, air springs, power transmission belt and molded products businesses, resulting from production cutbacks by the automotive and truck industry as well as the general global economic decline and price competition. Engineered Products segment EBIT was a loss of $1.2 million -23- in the third quarter of 2001, compared to an EBIT income of $2.3 million in the 2000 quarter. Operating margin was (.4)%, compared to .8% in 2000. In the nine months, EBIT was $16.7 million, decreasing 64.2% from $46.6 million in 2000. Operating margin was 1.9%, compared to 5.1% in 2000. EBIT in the 2001 periods decreased due primarily to lower revenues, increased SAG costs and increased costs associated with reduced capacity utilization resulting from reduced demand from the automotive industry. EBIT in 2001 did not include first quarter rationalization charges totaling $3.0 million. EBIT in 2000 did not include a rationalization credit of $.6 million. Revenues and EBIT in the Engineered Products segment may be adversely affected in future periods by lower original equipment demand, competitive pricing pressures, expected continuing unfavorable economic conditions in certain markets, adverse economic conditions globally in the mining, construction and agriculture industries, increasing raw material and energy prices, anticipated higher wage and benefit costs and currency translation. CHEMICAL PRODUCTS - ----------------- Chemical Products segment sales in the third quarter of 2001 were $260.9 million, decreasing 5.4% from $275.7 million in the 2000 quarter. In the nine months, sales of $824.1 million decreased 2.8% from $847.5 million in 2000. Approximately 50% of Chemical Products segment sales were made to the Company's other segments. Chemical Products segment EBIT was $16.4 million in the third quarter of 2001, increasing significantly from $7.0 million in the 2000 quarter. Operating margin was 6.3%, compared to 2.5% in 2000. In the nine months, EBIT was $45.7 million, decreasing 24.3% from $60.4 million in 2000. Operating margin was 5.5%, compared to 7.1%. Revenues in the 2001 third quarter decreased compared to 2000 despite higher volume from third party sales, due primarily to lower prices caused by a decrease in raw material costs. In the nine months, revenues decreased due to lower volumes. EBIT in the third quarter increased primarily due to lower raw material prices. In the nine months, EBIT was down as increases in raw material and energy prices outpaced price increases, due to the competitive pricing environment and high conversion costs resulting from production cutbacks. -24- LIQUIDITY AND CAPITAL RESOURCES ------------------------------- Net cash provided by operating activities was $428.6 million during the first nine months of 2001, as reported on the Consolidated Statement of Cash Flows. Working capital requirements decreased during the period as the Company implemented inventory reduction programs and increased its sales of trade accounts receivables. During the second quarter of 2001, the Company terminated its $550 million domestic accounts receivable continuous sale program and entered into a new program. The new program involves the continuous sale of substantially all of the Company's domestic trade accounts receivable to a wholly-owned limited liability subsidiary company that is a bankruptcy-remote special purpose entity. The results of operations and financial position of the special purpose subsidiary are not included in the consolidated financial statement of the Company. The special purpose subsidiary purchases the Company's receivables with (a) the cash proceeds of borrowings from a group of five bank affiliated issuers of commercial paper, which borrowings are secured by the trade accounts receivable purchased by the Company, (b) the cash proceeds of the Company's $98.2 million equity investment in the subsidiary and (c) a subordinated note payable to the Company in an amount equal to the total amount of trade receivables purchased by the subsidiary minus the sum of the equity of the special purpose subsidiary and the cash proceeds from the sale of the notes issued by the special purpose subsidiary to the five lenders and minus a discount. The Company retained servicing responsibilities, subordinated interests in the receivables transferred and a residual equity interest in the special purpose company. As the receivables are collected, the cash proceeds are used to purchase additional receivables. The Company pays fees under the program based on certain variable market interest rates and other agreed amounts. These fees are reported as Other (Income) and Expense. The special purpose subsidiary may borrow up to $825 million from the note purchasers. The amount that may be borrowed from time to time by the special purpose subsidiary depends on, among other things, the total uncollected balance of receivables owned by it. The borrowings are available to the special purpose subsidiary until May, 2002, unless extended by the lenders for additional one-year periods. In the third quarter of 2001, a Canadian subsidiary of the Company established an accounts receivable continuous sale program, whereunder the subsidiary may receive proceeds of up to a maximum of $100 million at any one time from the sale of certain of its receivables to affiliates of certain banks. In addition, various international subsidiaries of the Company sold certain of their trade receivables at September 30, 2001. At September 30, 2001, the net proceeds of all such agreements was $1,018.9 million. Net cash inflows of $414.7 million were received in 2001 from transfers of accounts receivable under these and other programs. For further information, refer to the note to -25- the financial statements, Accounts Receivable. Net cash used in investing activities was $390.2 million during the first nine months of 2001. Capital expenditures totaled $315.9 million, and were primarily for plant modernizations and new tire molds. Capital expenditures in 2001 have been reduced in response to current economic and business conditions. THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, (In millions) 2001 2000 2001 2000 ---- ---- ---- ---- Capital Expenditures $ 94.7 $144.4 $315.9 $411.1 Depreciation and amortization $154.1 $155.5 $477.1 $475.7 Cash inflows of $40.0 million were realized in 2001 from asset sales, primarily from the sale of closed manufacturing and warehouse facilities in the United Kingdom. Net cash provided by financing activities was $504.0 million during the first nine months of 2001, which was used primarily to support the previously mentioned operating and investing activities. Consolidated Debt and the Debt to Debt and Equity Ratio for the periods indicated: (Dollars in millions) 9/30/01 12/31/00 9/30/00 -------- -------- --------- Consolidated Debt $4,200.4 $3,585.8 $4,004.4 Debt to Debt and Equity 55.8% 50.6% 53.5% Through the first nine months of 2001, the net change in cash and cash equivalents, as reported in the Consolidated Statement of Cash Flows, was an increase of $532.5 million. A portion of this cash was invested and will be retained for general corporate purposes and a portion will be used to repay debt. On February 6, 2001 Sumitomo converted the Company's 1.2% Convertible Note Due August 16, 2001 in the principal amount of (Yen)6,536,535,767 into 1,140,866 shares of the Common Stock of the Company. Consolidated Debt as stated above at September 30, 2000 and December 31, 2000 does not include the note. On March 30, 2001, the Company borrowed $800 million for a period of three years under a bank term loan agreement with 27 domestic and international banks. The term loan is due on March 30, 2004. The Company may prepay without penalty at the end of any interest period. The loan bears interest at a floating rate at a spread over LIBOR for interest periods of 1,2,3,6 or 12 months, as selected by the Company. Proceeds from the borrowing were used to repay short term debt. The Company issued $650 million of its 7.857% Notes due 2011 in the third quarter of 2001. A portion of the proceeds from the issuance of the Notes was used to repay outstanding commercial -26- paper and short term bank borrowings. The remaining portion was retained for general corporate purposes. During the third quarter of 2001, the Company issued 4.3 million shares of its common stock with a market value of approximately $100.0 million as a contribution to certain domestic pension plans. During the third quarter of 2001, the Board of Directors of the Company declared a regular quarterly dividend of $.12 per share, a reduction of $.18 per share from the $.30 per share declared and paid in each quarter of 2000 and 2001. The Board's decision to reduce the dividend was in response to current economic and business conditions. Substantial short term and long term credit sources are available to the Company globally under normal commercial practices. At September 30, 2001, the Company had short term committed and uncommitted bank credit arrangements totaling $1.9 billion, of which $1.1 billion were unused. The Company also had available long term credit arrangements at September 30, 2001, totaling $4.925 billion, of which $1.525 billion were unused. The Company is a party to two revolving credit facility agreements, consisting of a $750 million five-year revolving credit facility and a $775 million 364-day revolving credit facility. These agreements were amended in August and November, 2001. The $750 million five-year credit facility agreement is with 26 domestic and international banks and provides that the Company may borrow at any time until August 15, 2005, when the commitment terminates and any outstanding loans mature. The Company pays a commitment fee ranging from 12.5 to 25 basis points on the entire amount of the commitment (whether or not borrowed) and a usage fee on amounts borrowed (other than on a competitive bid or prime rate basis) ranging from 37.5 to 125 basis points over LIBOR (or 50 to 137.5 basis points over a defined CD rate). These fees may fluctuate quarterly within these ranges based upon the Company's leverage. During 2001, commitment fees averaged 20 basis points. The $775 million 364-day credit facility agreement is with 26 domestic and international banks and provides that the Company may borrow until August 13, 2002, on which date the facility commitment terminates, except as it may be extended on a bank by bank basis. If a bank does not extend its commitment if requested to do so, the Company may obtain from such bank a two year term loan up to the amount of such bank's commitment. The Company pays a commitment fee ranging from 10 to 20 basis points on the entire amount of the commitment (whether or not borrowed) and a usage fee on amounts borrowed (other than on a competitive bid or prime rate basis) ranging from 40 to 130 basis points over LIBOR (or 52.5 to 142.5 basis points over a defined CD rate). These fees may fluctuate quarterly within these ranges based upon the Company's -27- leverage. Under each of the facility agreements, a utilization fee of 25 basis points per annum is charged each day on which the sum of the outstanding loans exceeds 50% of the total commitment. Each of the facilities provide that the Company may obtain loans bearing interest at reserve adjusted LIBOR or a defined certificate of deposit rate, plus in each case the applicable usage fee, at rates based on the prime rate, or at rates determined on a competitive bid basis. Each facility agreement contains certain covenants which, among other things, require the Company to maintain at the end of each fiscal quarter a minimum consolidated net worth and a defined minimum interest coverage ratio. In addition, the facility agreements establish a limit on the aggregate amount of consolidated debt the Company and its subsidiaries may incur. There are no borrowings outstanding under these agreements at September 30, 2001. These revolving credit facilities support, among other things, the uncommitted short term bank facilities. The Company's long term and short term credit ratings have been placed on credit watch negative by Standard & Poor's. The Company's debt is currently rated at either the lowest or the next to lowest investment grade by the principal rating agencies (A-3/BBB by Standard & Poor's, P-3/Baa3 by Moody's Investors Services and F-3/BBB by Fitch). The Company is not able to predict future rating actions. The Company does not anticipate that its ongoing operations will require significant additional funding in the foreseeable future. Funds generated by operations, together with funds available under existing credit arrangements, are expected to be sufficient to meet the Company's currently anticipated requirements. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET 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 debt funding decisions. At September 30, 2001, the interest rate on 58% of the Company's debt was fixed by either the nature of the obligation or through the interest rate swap contracts, compared to 48% at December 31, 2000 and 45% at September 30, 2000. The Company also from time to time enters into interest -28- rate lock contracts to hedge the risk-free component of anticipated long term debt issuances. The following table presents interest rate swap contract information at September 30: (Dollars in millions) INTEREST RATE SWAP CONTRACTS - ---------------------------- 2001 2000 ---- ---- Notional principal amount $375.0 $ 75.0 Pay fixed rate 5.17% 6.24% Receive variable LIBOR 2.79% 6.88% Average years to maturity 2.2 .8 Fair value - asset (liability) $(12.2) $ .5 Pro forma fair value - asset (liability) (13.9) .1 The pro forma fair value assumes a 10% decrease in variable market interest rates at September 30, 2001 and 2000, respectively, and reflects the estimated fair value of contracts outstanding at that date under that assumption. Weighted average interest rate swap contract information follows: THREE MONTHS ENDED NINE MONTHS ENDED (Dollars in millions) SEPTEMBER 30, SEPTEMBER 30, 2001 2000 2001 2000 ---- ---- ---- ---- Notional principal $95.0 $75.0 $80.0 $75.0 Pay fixed rate 6.21% 6.24% 6.23% 6.24% Receive variable LIBOR 3.61% 6.87% 4.49% 6.48% The following table presents fixed rate debt information at September 30: (In millions) FIXED RATE DEBT 2001 2000 - --------------- ---- ---- Fair value - liability $2,388.8 $1,915.5 Pro forma fair value - liability 2,496.6 1,991.8 The pro forma fair value assumes a 100 basis point decrease in market interest rates at September 30, 2001 and 2000, 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. The precision of the model decreases as the assumed change in interest rates increases. -29- 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 enters into forward exchange contracts. These contracts reduce exposure to currency movements affecting existing foreign currency-denominated assets, liabilities, firm commitments and forecasted transactions resulting primarily from trade receivables and payables, equipment acquisitions, intercompany loans and royalty agreements and forecasted purchases and sales. In addition, the principal and interest on the Company's Swiss franc bonds due 2006 and Euro300 million of the Eurobonds due 2005 are hedged by currency swap agreements. Contracts hedging the Swiss franc bonds, the Eurobonds and forecasted transactions under intercompany royalty agreements are designated as cash flow hedges. The hedged intercompany royalty transactions will occur during 2001 and 2002. Contracts hedging short term trade receivables and payables normally have no hedging designation. The following table presents foreign exchange contract information at September 30: (In millions) FOREIGN EXCHANGE CONTRACTS - -------------------------- 2001 2000 ---- ---- Spot value (unfavorable) favorable $ 8.6 $38.4 Pro forma change in spot value 27.2 9.0 Contract maturities 10/01-03/06 10/00-03/06 Fair value asset (liability): Swiss franc swap-current $ - $24.2 Swiss franc swap-long term 10.0 8.0 Euro swaps-long term (14.6) - Other-current 13.2 6.2 The pro forma change in spot value assumes a 10% change in foreign exchange rates at September 30, 2001 and 2000, respectively, and reflects the estimated change in the spot 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. -30- 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. -31- PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. - ------ ----------------- Reference is made to the Annual Report of The Goodyear Tire & Rubber Company ("Goodyear") on Form 10-K for the year ended December 31, 2000 (the "2000 10-K"), wherein at Item 3, paragraphs (C), (D), (E), (F) and (H), pages 24, 25 and 26, Goodyear reported certain legal proceedings, to the Quarterly Report of Goodyear on Form 10-Q for the quarter ended March 31, 2001 (the "1st Quarter 10-Q"), wherein at Part II, Item 1, paragraphs (2), (3) and (4), pages 27 and 28, Goodyear reported developments in respect of certain legal proceedings, and to the Quarterly Report of Goodyear on Form 10-Q for the quarter ended June 30, 2001 (the "2nd Quarter 10-Q"), wherein at Part II, Item 1, paragraphs (1) and (2), page 29, Goodyear reported further developments in respect of certain legal proceedings. Goodyear reports the following developments in respect of the legal proceedings described at paragraphs (C), (D), (E), (F) and (H) of Item 3 of the 2000 10-K and updated at paragraphs (3) and (4) of Part II, Item 1, of the 1st Quarter 10-Q and at paragraphs (1) and (2) of Part II, Item 1, of the 2nd Quarter 10-Q: (1) At paragraph (C), page 24, of the 2000 10-K, Goodyear reported a civil action (Gregory Tire, et al. v. Goodyear, et al.) in the Judicial District Court, Dallas County, Texas, filed against it by 22 independent tire dealers or franchisees located in Texas alleging, among other things, that Goodyear in its dealings with the plaintiffs violated the Texas Deceptive Practices Act and various other Texas statutes, breached its covenants of good faith and fair dealing with the plaintiffs, breached certain contracts with the plaintiffs and committed common law fraud. The plaintiffs are seeking unspecified compensatory damages, exemplary damages equal to up to 10% of Goodyear's net worth and injunctive and other relief. In 1999, the claims of two of the plaintiffs were dismissed with prejudice. The court has ordered that the claims of each remaining plaintiff would be the subject of a separate trial. On October 29, 2001, following a trial in respect of one of the plaintiffs, the jury found in favor of Goodyear. (2) At paragraph (D), page 24, of the 2000 10-K, Goodyear reported that on August 12, 1999 the United States District Court for the Central District of California entered an order dismissing Orion Tire et al. vs. Goodyear et al., a civil action filed by Orion Tire Corporation ("Orion") and China Tire Holdings Limited ("China Tire"), and other parties whose claim had theretofore been dismissed. Orion and China Tire had alleged, among other things, that Goodyear, in connection with its 1994 acquisition of a 75% interest in a tire manufacturing facility (the "Dalian Facility") in Dalian, People's Republic of China, and a Goodyear subsidiary committed tortious interference with certain prospective economic advantages of Orion and China Tire, committed trade libel and defamation concerning Orion and China Tire and engaged in civil racketeering in respect of China Tire. The plaintiffs seek more than $1.0 billion in actual damages, and $3.0 billion in exemplary damages, together with such further relief as the court may deem appropriate. Orion and China Tire appealed the decision of the court dismissing their claims to the United States Court of Appeals for the Ninth Circuit and on October 18, 2001, the Court of Appeals reversed and vacated in part the judgment of the district court with respect to the dismissal of Orion's trade libel and defamation and intentional interference with prospective economic advantage claims and China Tire's civil racketeering claims and remanded the case to the -32- district court for further proceedings. (3) At paragraph (E), page 25, of the 2000 10-K, and at paragraph (2) of Item 1, Part II, page 27, of the 1st Quarter 10-Q, Goodyear reported various civil actions relating to Goodyear's Entran II hose installed in Heatway radiant heating systems. As previously reported, a class action complaint was filed in the District Court of Eagle County, Colorado (Anderson, et al. v. Goodyear, et al.) in November, 1998 on behalf of a putative class consisting of all persons who have or had an ownership interest in real property located in Colorado which Heatway heating systems using Entran II hose had been installed. These plaintiffs claim, among other things, breach of express warranties, breach of implied warranties of merchantability and fitness for a particular purpose, negligence and strict liability against both Heatway and Goodyear. In July of 2000, the court denied class certification. On November 7, 2001, the court, in response to plaintiffs' amended complaint and request for reconsideration of the denial of class certification, issued an order certifying a class to consist of all persons (alleged to be more than 1,000) who presently own or have owned real property located in Colorado on which Entran II hose was used in Heatway systems who have suffered or will suffer damages due to the defective nature of Entran II hose. The plaintiffs are seeking unspecified damages and other relief. (4) At paragraph (F), page 26, of the 2000 10-K, and at paragraph (3) of Item 1 of Part II, page 28, of the 1st Quarter 10-Q and paragraph (1) of Item 1 of Part II, page 29, of the 2nd Quarter 10-Q, Goodyear reported the filing of five class action complaints alleging, among other things, that certain types of load range D and E light truck and recreational tires manufactured by Goodyear did not conform to certain express and implied warranties, that Goodyear was negligent in the design and manufacture of the specified tires and that Goodyear engaged in a "silent recall" of the specified tires thereby committing an unfair and deceptive trade practice. On September 17, 2001, one of the class action complaints (Adkins et al. vs Goodyear, et al., United States District Court for the Southern District of Ohio, Western Division, Civil Action No. C-1-01-0017) was voluntarily dismissed without prejudice by the plaintiff. The other four class action proceedings remain and nineteen non-class action civil lawsuits related to deaths or serious injuries involving allegedly defective Goodyear load range E light truck tires are currently pending. (5) At paragraph (H), page 26, of the 2000 10-K, and at paragraph (4) of Item 1 of Part II, page 28, of the 1st Quarter 10-Q and paragraph (2) of Item 1 of Part II, page 29, of the 2nd Quarter 10-Q, Goodyear reported that it was one of numerous defendants in legal proceedings involving claims of individuals relating to alleged exposure to materials containing asbestos in products allegedly manufactured by Goodyear or present in Goodyear's facilities. At October 31, 2001, approximately 61,000 asbestos-related claims were pending against Goodyear. The plaintiffs allege various respiratory diseases resulting from their exposure to asbestos, including in some cases lung cancer and mesothelioma, and are seeking actual and punitive damages and other relief. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. - ------ ----------------------------------------- On September 10, 2001, Goodyear issued 4,300,000 shares of its Common Stock, without par value, to The Goodyear Tire & Rubber Company Common Trust for the -33- Collective Investment of Plan Funds as a contribution to certain of Goodyear's domestic pension plans. The fair market value of the 4,300,000 shares of Goodyear Common Stock contributed was approximately $100,000,000 on September 10, 2001. Goodyear has determined that the issuance of the shares of Goodyear Common Stock to the trust was exempt from registration under the Securities Act of 1933, as amended (the "Act"), pursuant to Section 4(2) of the Act, as a transaction by the issuer not involving a public offering. ITEM 5. OTHER INFORMATION. - ------ ----------------- On August 15, 2001, Goodyear issued $650,000,000 in principal amount of its 7.857% Notes due 2011 (the "Notes") pursuant to that certain Indenture, dated March 1, 1999 (the "Indenture"), between Goodyear and The Chase Manhattan Bank, as Trustee. The net proceeds to Goodyear from the sale of the Notes were $637,000,000, before deducting expenses payable by Goodyear which are estimated to be approximately $819,248. A portion of the net proceeds from the sale of the Notes was used to repay commercial paper as it came due and certain short term bank borrowings and the balance was retained for general corporate purposes and invested in cash equivalent securities. The terms and conditions of the Notes are set forth in the Indenture (filed as Exhibit 4.1 to Goodyear's Quarterly Report on Form 10-Q for the quarter ended March 30, 2000), as supplemented by that certain Officer's Certificate, dated August 15, 2001, which includes the form of Global Note, filed as Exhibit 4.3 to this Quarterly Report on Form 10-Q. 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 September 30, 2001. 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: November 14, 2001 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.) -34- THE GOODYEAR TIRE & RUBBER COMPANY QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2001 INDEX OF EXHIBITS
EXHIBIT EXHIBIT ------- ------- TABLE ITEM NO. * Description of Exhibit NUMBER ---------------- ---------------------- ------ 3 ARTICLES OF INCORPORTATION AND BY-LAWS ---------------------------------------------- (a) Certificate of Amended Articles of Incorporation of The Goodyear Tire & Rubber Company ("Goodyear"), dated December 20, 1954, and Certificate of Amendment to Amended Articles of Incorporation of Goodyear, dated April 6, 1993, and Certificate of Amendment to Amended Articles of Incorporation of Goodyear dated June 4, 1996, three documents comprising Goodyear's Articles of Incorporation as amended (incorporated by reference, filed as Exhibit 3.1 to Goodyear's Form 10-Q for the quarter ended June 30, 1996, File No. 1-1927). (b) Code of Regulations of Goodyear, 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 Goodyear'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 Goodyear; First Chicago Trust Company of New York as transfer agent and registrar (incorporated by reference, filed as Exhibit 4.3 to Goodyear's Form 10-Q for the quarter ended September 30, 1996, File No. 1-1927). (b) Conformed copy of Rights Agreement, dated as of June 4, 1996, between Goodyear and First Chicago Trust Company of New York, Rights Agent (incorporated by reference, filed as Exhibit 1 to Goodyear's Registration Statement on Form 8-A dated June 11, 1996 and as Exhibit 4(a) to Goodyear's Form 8-K dated June 4, 1996, File No. 1-1927).
- ---------- *Pursuant to Item 601 of Regulation S-K. E-1
EXHIBIT EXHIBIT ------- ------- TABLE ITEM NO. * Description of Exhibit NUMBER ---------------- ---------------------- ------ 4 (c) Conformed copy of Amendment to Rights Agreement, dated as of February 8, 2000, between Goodyear and First Chicago Trust Company of New York, Rights Agent (incorporated by reference, filed as Exhibit 4.1 to Goodyear's Form 10-K for the year ended December 31, 1999, File No. 1-1927). (d) Form of Indenture, dated as of March 15, 1996, between Goodyear 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 as Exhibit 4.1 to Goodyear's Form 10-Q for the quarter ended March 31, 1998, File No. 1-1927). (e) Form of Indenture, dated as of March 1, 1999, between Goodyear and The Chase Manhattan Bank, as Trustee, as supplemented on March 14, 2000 (incorporated by reference, filed as Exhibit 4.1 to Goodyear's Form 10-Q for the quarter ended March 31, 2000, File No. 1-1927). (g) Conformed copy of Term Loan Agreement, dated as of March 30, 2001, among Goodyear, the Lenders named therein, The Chase Manhattan Bank, as Agent, and Chase Manhattan International Limited, as London Agent (incorporated by reference, filed as Exhibit 4.1 to Goodyear's Form 10-Q for the quarter ended March 31, 2001, File No. 1-1927). (h) Conformed copy of Amended and Restated 4.1 Five Year Credit Agreement, dated as of August 14, 2001, among Goodyear, the Lenders party thereto and The Chase Manhattan Bank, as Agent. (i) Conformed copy of Amended and Restated 4.2 364-Day Credit Agreement, dated as of August 14, 2001, among Goodyear, the Lenders party thereto and The Chase Manhattan Bank, as Agent. (j) Conformed copy of Officer's Certificate 4.3 dated August 15, 2001, supplementing that certain Indenture dated as of March 1, 2001, between Goodyear and The Chase Manhattan Bank, as Trustee.
- ---------- *Pursuant to Item 601 of Regulation S-K. E-2
EXHIBIT EXHIBIT ------- ------- TABLE ITEM NO. * Description of Exhibit NUMBER ---------------- ---------------------- ------ (k) Form of First Amendment, dated as of 4.4 November 9, 2001, among Goodyear, the Lenders party thereto and The Chase Manhattan Bank, as Administrative Agent and Chase Manhattan International Limited, the London Agent. (l) Form of First Amendment, dated as of 4.5 November 9, 2001, to the Amended and Restated Five Year Revolving Credit Agreement dated as of August 14, 2001, among Goodyear, the Lenders party thereto and The Chase Manhattan Bank, as Agent. (m) Form of First Amendment, dated as of 4.6 November 9, 2001, to the Amended and Restated 364-Day Revolving Credit Agreement dated as of August 14, 2001, among Goodyear, the Lenders party thereto and The Chase Manhattan Bank, as Agent. In accordance with paragraph (iii) to Item 601(b)(4) 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 September 30, 2001 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. 12 STATEMENT RE COMPUTATION OF RATIOS ---------------------------------------------- Statement setting forth the computation of 12 Ratio of Earnings to Fixed Charges.
- ---------- *Pursuant to Item 601 of Regulation S-K. E-3 EX-4.1 3 l90768aex4-1.txt EXHIBIT 4.1 5 YEAR REVOLVING CREDIT AGREEMENT CONFORMED COPY - -------------------------------------------------------------------------------- Exhibit 4.1 AMENDED AND RESTATED FIVE-YEAR REVOLVING CREDIT AGREEMENT Dated as of August 14, 2001 among THE GOODYEAR TIRE & RUBBER COMPANY, THE LENDERS NAMED HEREIN, and THE CHASE MANHATTAN BANK as Agent J.P. MORGAN SECURITIES INC. acted as Advisor, Lead Arranger and Bookrunner - -------------------------------------------------------------------------------- [CS&M Ref. No. 6701-174]
TABLE OF CONTENTS Article Section Page ------- ------- ---- I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.02. Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . 12 II. THE CREDITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.02. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.03. Competitive Bid Procedure . . . . . . . . . . . . . . . . . . . 14 2.04. Standard Borrowing Procedure. . . . . . . . . . . . . . . . . . 16 2.05. Refinancings. . . . . . . . . . . . . . . . . . . . . . . . . . 17 2.06. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2.07. Repayment of Loans; Evidence of Debt. . . . . . . . . . . . . . 18 2.08. Interest on Loans . . . . . . . . . . . . . . . . . . . . . . . 18 2.09. Default Interest. . . . . . . . . . . . . . . . . . . . . . . . 19 2.10. Unavailability of LIBO Rate and CD Rate Quotations. . . . . . . 19 2.11. Termination, Reduction and Addition of Commitments. . . . . . . 19 2.12. Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2.13. Reserve Requirements; Change in Circumstances . . . . . . . . . 21 2.14. Change in Legality. . . . . . . . . . . . . . . . . . . . . . . 22 2.15. Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . . 23 2.16. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 2.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2.18. Termination or Assignment of Commitments. . . . . . . . . . . . 26 III. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 26 IV. CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . . . . . 27 4.01. All Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . 27 4.02. First Borrowing . . . . . . . . . . . . . . . . . . . . . . . . 27 V. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 28 VI. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 29 VII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 31 VIII. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2 IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 9.01. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 9.02. Survival of Agreement. . . . . . . . . . . . . . . . . . . . . . . 35 9.03. Binding Effect; Successors and Assigns . . . . . . . . . . . . . . 35 9.04. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . 36 9.05. Waivers; Amendment . . . . . . . . . . . . . . . . . . . . . . . . 36 9.06. Expenses; Indemnity. . . . . . . . . . . . . . . . . . . . . . . . 9.07. Interest Rate Limitation . . . . . . . . . . . . . . . . . . . . . 37 9.08. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 37 9.09. Information; Access and Confidentiality. . . . . . . . . . . . . . 37 9.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 9.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 9.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 9.13. Jurisdiction; Consent to Service of Process. . . . . . . . . . . . 38 9.14. Stamp Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 9.15. Change of Control Option . . . . . . . . . . . . . . . . . . . . . 39
Exhibit A-1 Form of Competitive Bid Request Exhibit A-2 Form of Notice of Competitive Bid Request Exhibit A-3 Form of Competitive Bid Exhibit A-4 Form of Competitive Bid Accept/Reject Letter Exhibit A-5 Form of Standard Borrowing Request Exhibit B Form of Opinion of Counsel Exhibit C Form of Schedule of Compliance Exhibit D Form of Agreement Providing for Additional Lender Exhibit E Form of Promissory Note to Facilitate Assignments to Federal Reserve Banks Exhibit F Form of 364-Day Amendment and Restatement Schedule 2.01 Commitments; Addresses for Notices, Reserve Percentages and Assessment Rates Schedule III Certain Litigation AMENDED AND RESTATED FIVE-YEAR REVOLVING CREDIT AGREEMENT dated as of August 14, 2001, among THE GOODYEAR TIRE & RUBBER COMPANY, an Ohio corporation (the "Borrower"), the lenders listed in Schedule 2.01 (the "Lenders") and THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for the Lenders (in such capacity, the "Agent"). The Borrower has requested the Lenders to extend credit to the Borrower in order to enable it to borrow on a standby revolving credit basis on and after the date hereof and at any time and from time to time prior to the Maturity Date (as herein defined) a principal amount not in excess of $750,000,000 at any time outstanding. The Borrower has also requested the Lenders to provide a procedure pursuant to which the Borrower may invite the Lenders to bid on an uncommitted basis on borrowings by the Borrower. The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions herein set forth. Accordingly, the Borrower, the Lenders and the Agent agree as follows: ARTICLE I. DEFINITIONS SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings specified below: "ABR BORROWING" shall mean a Borrowing comprised of ABR Loans. "ABR LOAN" shall mean any Standard Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II. "ADJUSTED CD RATE" shall mean, with respect to any CD Loan, the rate per annum (rounded upward, if necessary, to the nearest 1/1000th of 1%) equivalent to the sum of (i) the quotient of (x) the CD Rate with respect to the Interest Period in respect of such CD Loan, divided by (y) one minus the CD Reserve Requirement of the applicable Lender, if any, PLUS (ii) the Assessment Rate of the applicable Lender, if any. The Adjusted CD Rate shall be determined as of the first day of, and shall remain constant throughout, the applicable Interest Period. "ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar Loan, the rate per annum (expressed as a percentage rounded upward, if necessary, to the nearest 1/1000th of 1%) equivalent to the sum of (i) the quotient of (x) the LIBO Rate for the Interest Period in respect of such Eurodollar Loan, divided by (y) one minus the Eurodollar Reserve Requirement, if any. The Adjusted LIBO Rate shall be the rate appropriately determined to be in effect on the first day of, and shall remain constant throughout, such Interest Period. The Eurodollar Reserve Requirement shall be determined as at the first day of, and shall remain constant throughout, such Interest Period. "ADMINISTRATIVE FEES" shall have the meaning assigned to such term in Section 2.06(c). 2 "ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "PRIME RATE" shall mean the rate of interest per annum publicly announced from time to time by the Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced as effective. "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. If for any reason the Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Agent to obtain sufficient quotations in accordance with the terms thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "ANNUAL PERIOD" shall mean a period of four complete, consecutive fiscal quarters of the Borrower, taken together and constituting one accounting period. "APPLICABLE SPREAD" shall mean, as at the date as of which any determination in respect thereof is being or to be made, the applicable percentage set forth below under the caption "Eurodollar Spread" or "CD Spread", as the case may be, based upon the Leverage Ratio as of the last day of the relevant fiscal quarter most recently ended: 3 Category Leverage Ratio Eurodollar CD Spread Per -------- -------------- ---------- ------------- Spread Per Annum ---------- ----- Annum ----- 1 less than or equal 0.3750% 0.5000% to 25% 2 greater than 25% 0.4750% 0.6000% but less than or equal to 40% 3 greater than 40% 0.8000% 0.9250% but less than or equal to 55% 4 greater than 55% 1.0000% 1.1250% Each change in the Applicable Spread resulting from a change in the Leverage Ratio as of the end of any fiscal quarter will be effective as of the date of delivery by the Borrower of a certificate setting forth the calculation of the Leverage Ratio as at the end of such fiscal quarter, which certificate shall be delivered with the annual and/or quarterly financial statements required to be delivered under paragraph (c) of Article V. Notwithstanding the foregoing, at any time that the Borrower shall fail to deliver to the Agent such certificate by the time required under such paragraph (c), the Applicable Spread shall be deemed to be that corresponding to Category 4 until such time as the Borrower shall so deliver such certificate. "ASSESSMENT RATE" shall mean, at any date as of which any determination thereof is being or to be made and with respect to any CD Loan and the applicable Interest Period in respect of which any determination thereof is being or to be made, the aggregate of the net annual assessment rates or similar fees or charges (expressed on a per annum percentage basis, rounded upward, if necessary, to the nearest 1/1000th of 1%), if any, paid by the Lender making such Loan on its Dollar time deposits in the United States of America insured by the Federal Deposit Insurance Corporation (or any successor agency) or any other Governmental Body which has general jurisdiction over such Lender; such rates, fees or charges, if any, shall be determined by annualizing the then most recent assessment rates or similar fees or charges levied on such Lender by said Corporation or other Governmental Body with respect to such Dollar time deposits evidenced by certificates of deposit or equivalent instruments in amounts and for periods substantially equal to the applicable Interest Period. "AUTHORIZED OFFICER" shall mean (i) any of the Chairman of the Board, any Vice Chairman of the Board, any President, any Executive Vice President, any Senior Vice President, any Vice President and the Treasurer of the Borrower, and (ii) in respect of all matters relating to this Agreement other than the execution and delivery of this Agreement, the Secretary, any Assistant Treasurer or any Assistant Secretary of the Borrower and any other person designated in writing by any officer specified in clause (i) above as duly authorized to act on behalf of the Borrower hereunder. "BOARD" shall mean the Board of Governors of the Federal Reserve System of the United States. 4 "BORROWING" shall mean a group of Loans of a single Type made by the Lenders (or, in the case of a Competitive Borrowing, by the Lender or Lenders whose Competitive Bids have been accepted pursuant to Section 2.03) on a single date and as to which a single Interest Period is in effect. "BUSINESS DAY" shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City; PROVIDED, HOWEVER, that, when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market. "CD BORROWING" shall mean a Borrowing comprised of CD Loans. "CD LOAN" shall mean any Standard Loan bearing interest at a rate determined by reference to the Adjusted CD Rate in accordance with the provisions of Article II. "CD RATE" shall mean with respect to any CD Borrowing for any Interest Period, the rate of interest (expressed as an annual rate) equal to the rate specified in respect of certificates of deposit or similar instruments having a maturity which is equal or substantially equal to such Interest Period, which rate appears on the display designated as page "FEDM" on the Reuter System (or on such other display on the Reuter System as shall then display rates for the purchase at face value of certificates of deposit or equivalent instruments) at 10:00 a.m., New York City time, on the first day of such Interest Period; PROVIDED, THAT, if no rates can be obtained from page "FEDM" of the Reuter System (or such other display), CD Rate shall be equal to the rate set forth under the caption "Certificates of Deposit" in the daily statistical release published by the Federal Reserve Bank of New York entitled "Composite 3:30 p.m. Quotations for U.S. Government Securities", or any successor publication (the "Composite Quotations"), for the first day of such Interest Period in respect of certificates of deposit having a maturity substantially equal to such Interest Period; PROVIDED, FURTHER, that if no rates are available from the Reuter System or the Composite Quotations, or the Agent or the Borrower shall in good faith reasonably determine (and promptly give notice to the other party of such determination) that the CD Rate in respect of such Interest Period determined as aforesaid is materially higher (as reasonably determined by the Borrower) or lower (as reasonably determined by the Agent) than the prevailing rate of interest the Agent is required to pay to acquire funds evidenced by non-negotiable certificates of deposit in amounts of $1,000,000 or more for a period substantially equal to such Interest Period, then, in any such event, CD Rate shall mean, with respect to such Interest Period and to the applicable CD Borrowing, the arithmetic average (expressed as a percentage rounded upward, if necessary, to the nearest 1/1000th of 1%) of the offered rates (each expressed as a per annum rate) offered by leading New York City dealers in negotiable certificates of deposit at 10:30 a.m., New York City time, on the first day of such Interest Period for the purchase at face value from the Agent of negotiable certificates of deposit or equivalent instruments in amounts of $1,000,000 or more for the period of, or for a period comparable or substantially equal to, such Interest Period. "CD RESERVE REQUIREMENT" shall mean, at any date as of which any determination thereof is being or to be made and with respect to any CD Loan and the applicable Interest Period in respect of which any determination thereof is being or to be made, the amount (expressed as a decimal, rounded upward, if necessary, to six decimal 5 places) equal to the sum of (i) the aggregate of all reserve requirements (including, without duplication, all basic, supplemental, marginal and other reserves) in effect on such date (as established under Regulation D of the Board, or any other regulation of the Board which prescribes reserve requirements applicable to Dollar non-personal time deposits then in effect and applicable to the Lender making such Loan), on Dollar non-personal time deposits in the United States of the type used as a reference in determining the CD Rate and having a maturity equal or comparable to the applicable Interest Period, as and to the extent that such Lender is subject to such requirements, and (ii) the aggregate of all reserve or similar requirements of any other Governmental Body having jurisdiction over such Lender in respect of such Dollar non-personal time deposits in the United States having a maturity equal or comparable to the applicable Interest Period. "CLOSING DATE" shall mean August 14, 2001. "CODE" shall mean the Internal Revenue Code of 1986, as the same may be amended from time to time. "COMMITMENT" shall mean, with respect to each Lender, the commitment of such Lender hereunder as set forth in Schedule 2.01 hereto, as such Lender's Commitment may be permanently terminated or reduced from time to time pursuant to Section 2.11. Schedule 2.01 will be deemed to have been appropriately amended to reflect any addition of a Commitment pursuant to Section 2.11(d), assignment pursuant to Section 9.03 or termination or reduction of any Commitment. "COMPETITIVE BID" shall mean an offer by a Lender to make a Competitive Loan pursuant to Section 2.03. "COMPETITIVE BID ACCEPT/REJECT LETTER" shall mean a notification made by the Borrower pursuant to Section 2.03(d) in the form of Exhibit A-4. "COMPETITIVE BID RATE" shall mean, as to any Competitive Bid made by a Lender pursuant to Section 2.03(b), (i) in the case of a Eurodollar Loan, the Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of interest offered by the Lender making such Competitive Bid. "COMPETITIVE BID REQUEST" shall mean a request made pursuant to Section 2.03 in the form of Exhibit A-1. "COMPETITIVE BORROWING" shall mean a borrowing consisting of a Competitive Loan or concurrent Competitive Loans from the Lender or Lenders whose Competitive Bids for such Borrowing have been accepted by the Borrower under the bidding procedure described in Section 2.03. "COMPETITIVE LOAN" shall mean a Loan from a Lender to the Borrower pursuant to the bidding procedure described in Section 2.03. Each Competitive Loan shall be a Eurodollar Competitive Loan or a Fixed Rate Loan. "CONSOLIDATED" shall refer to the consolidation of the accounts of the Borrower and the Subsidiaries in accordance with generally accepted accounting principles, including principles of consolidation. 6 "CONSOLIDATED DEBT" shall mean, as at the date as of which any determination thereof is being or to be made, Debt of the Borrower and the Subsidiaries, without duplication, determined on a Consolidated basis in accordance with generally accepted accounting principles. "CONSOLIDATED FINANCIAL STATEMENTS OF THE BORROWER" shall mean the Consolidated balance sheet of the Borrower and Subsidiaries as at December 31, 2000 and 1999 and the Consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2000, and the Notes to Financial Statements in respect thereof, together with the Report of PricewaterhouseCoopers LLP, independent accountants, in respect thereof, all as set forth at pages 53 through 80, inclusive, of the Annual Report on Form 10-K for the Borrower for the year ended December 31, 2000, a copy of which has heretofore been delivered to each of the Lenders. "CONSOLIDATED INTEREST EXPENSE" shall mean, with respect to any Annual Period in respect of which a determination thereof is being or to be made, without duplication and excluding intercorporate transactions among the Borrower and the Subsidiaries, the sum of (i) Consolidated interest accrued in respect of all Consolidated Debt of the Borrower and the Subsidiaries during such Annual Period, whether or not paid and whether expensed or capitalized, calculated and determined after giving effect, as and to the extent permitted by generally accepted accounting principles, to any amounts paid or received by the Borrower or the Subsidiaries under interest rate exchange and similar agreements and arrangements which are intended to hedge or limit interest rates and expenses, PLUS (ii) amortization of debt expense and discount or premium relating to any such Debt (including and giving effect to any similar amounts paid or received by the Borrower and the Subsidiaries under any such interest rate exchange or similar agreement or arrangement) during such period, whether or not paid and whether expensed or capitalized, PLUS (iii) the portion of rental expense payable during such period pursuant to all capital lease obligations (which are recorded as Debt) representing imputed interest recorded in accordance with generally accepted accounting principles. "CONSOLIDATED NET WORTH" shall mean, as at the end of any fiscal quarter in respect of which a determination thereof is being or to be made, the Consolidated stated capital, surplus and retained earnings of the Borrower and the Subsidiaries, before (i) foreign currency translation adjustment and (ii) the effect (on such retained earnings) of the recognition of the one time charge for the "transition obligation" of the Borrower and the Subsidiaries upon the Borrower's adoption of, and under and in accordance with the applicable provisions of, Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions" in 1992. "CONSOLIDATED OPERATING INCOME" shall mean, with respect to any Annual Period in respect of which a determination thereof is being or to be made, the Consolidated net sales of the Borrower and the Subsidiaries for such Annual Period, PLUS other income, depreciation and amortization, MINUS cost of goods sold and selling, administrative and general expense properly attributable to continuing operations of the Borrower and the Subsidiaries for such Annual Period. "DEBT" shall mean and shall include, as at the date as of which any determination thereof is being or is to be made and in respect of any Person, without 7 duplication and excluding in the case of the Borrower and the Subsidiaries intercorporate debt and other intercorporate obligations solely among the Borrower and the Subsidiaries, all (i) indebtedness of such Person for borrowed money, (ii) obligations of such Person evidenced by bonds, debentures, notes or other 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, (iv) obligations of such Person as lessee under leases which obligations are, in accordance with generally accepted accounting principles, recorded as capital lease obligations, and (v) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) of such Person to purchase or otherwise acquire, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above. Whenever any determination of the amount of Debt (or of Consolidated Debt or Funded Debt) is required or permitted to be, or is otherwise being or to be, made for any purpose under this Agreement, the amount of any such Debt denominated in any currency other than Dollars shall be calculated at the Dollar Equivalent of such Debt as at the date as of which such determination of the amount of Debt is being or to be made, except that, if all or any portion of the principal amount of any such Debt which is payable in a currency other than Dollars is hedged into Dollars, the principal amount of such hedged Debt, 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. "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 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 display designated page "Spot" 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. "DOLLARS" or "$" shall mean lawful money of the United States of America. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time, and the regulations promulgated and the rulings issued thereunder. "ERISA LIABILITIES" shall mean, as at the date as of which any determination in respect thereof is being or to be made, the minimum liability with respect to Plans which would be required to be reflected at such time as a liability on the Consolidated balance sheet of the Borrower and the Subsidiaries under paragraphs 36 and 70 of Statement of Financial Accounting Standards No. 87 as such statement may from 8 time to time be amended, modified or supplemented, or under any successor statement issued in replacement thereof. "EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar Loans. "EURODOLLAR COMPETITIVE LOAN" shall mean any Competitive Loan bearing interest at a rate determined by reference to the LIBO Rate in accordance with the provisions of Article II. "EURODOLLAR LOAN" shall mean any Eurodollar Competitive Loan or Eurodollar Standard Loan. "EURODOLLAR RESERVE REQUIREMENT" shall mean, at any date as of which any determination thereof is being or to be made and with respect to any Eurodollar Loan and the applicable Interest Period in respect of which any determination thereof is being or to be made, the amount (expressed as a decimal, rounded upward, if necessary, to six decimal places) of the applicable statutory reserve or similar requirements (including, without duplication, all basic, supplemental, marginal, emergency, special and other reserves), if any, on Eurodollar deposits applicable to and imposed upon the applicable Lender from time to time under regulations issued from time to time by the Board (or any successor) for determining the minimum reserve requirement (including, without limitation, any such reserve requirements under Regulation D of the Board and any emergency, supplemental or other marginal reserve requirements), or by any other Governmental Body having jurisdiction over such Lender, applicable to such Lender with respect to liabilities or assets consisting of or including Eurocurrency liabilities (as defined in Regulation D of the Board, as in effect from time to time) having a term substantially equal to such Interest Period. "EURODOLLAR STANDARD LOAN" shall mean any Standard Loan bearing interest at a rate determined by reference to the LIBO Rate in accordance with the provisions of Article II. "EVENT OF DEFAULT" shall have the meaning assigned to such term in Article VII. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and any successor Federal statute. "EXCLUDED TAXES" shall mean, with respect to any Lender, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America (or any political subdivision thereof), or by the jurisdiction under which such Lender is organized or in which its principal office or any lending office from which it makes Loans hereunder is located, (b) any branch profit taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above, (c) any withholding tax that is imposed by the United States of America (or any political subdivision thereof) on payments to such Lender by the Borrower from an office within such jurisdiction to the extent such tax is in effect and would apply as of the date such Lender becomes a party to this Agreement or relates to payments received by a new lending office designated by such Lender and is in effect and would apply at the time such lending office is designated or (e) any withholding tax that is attributable to 9 such Lender's failure to comply with Section 2.17(e), except, in the case of clause (c) above, to the extent that (i) such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.17(a) or (ii) such withholding tax shall have resulted from the making of any payment to a location other than the office designated by the Agent for the receipt of payments of the applicable type from the Borrower. "FACILITY FEE" shall have the meaning assigned to such term in Section 2.06(a). "FACILITY FEE PERCENTAGE" shall mean, as at the date as of which any determination in respect thereof is being or to be made, the applicable percentage set forth below based upon the Leverage Ratio as of the last day of the relevant fiscal quarter: Category Leverage Ratio Facility Fee Percentage -------- -------------- ----------------------- 1 less than or equal to 25% 0.1250% 2 greater than 25% but less 0.1500% than or equal to 40% 3 greater than 40% but less 0.2000% than or equal to 55% 4 greater than 55% 0.2500% The Leverage Ratio shall be determined at the end of each fiscal quarter of the Borrower and shall be effective in respect of the entire next succeeding fiscal quarter of the Borrower. The Borrower shall deliver a certificate setting forth the calculation of the Leverage Ratio with respect to the end of each fiscal quarter, which certificate shall be delivered with the annual and quarterly financial statements required to be delivered under paragraph (c) of Article V. Notwithstanding the foregoing, at any time that the Borrower shall fail to deliver to the Agent such certificate by the time required under such paragraph (c), the Facility Fee Percentage shall be deemed to be that corresponding to Category 4 until such time as the Borrower shall so deliver such certificate. "FEES" shall mean the Facility Fee, the Utilization Fee and the Administrative Fees. "FIXED RATE BORROWING" shall mean a Borrowing comprised of Fixed Rate Loans. "FIXED RATE LOAN" shall mean any Competitive Loan bearing interest at a fixed percentage rate per annum (expressed in the form of a decimal to no more than four decimal places) specified by the Lender making such Loan in its Competitive Bid. 10 "FUNDED DEBT" shall mean and include, as at any date as of which any determination thereof is being or to be made, any Debt of the Borrower which by its terms (i) matures more than one year after the date on which it was issued, incurred, assumed or guaranteed by the Borrower, or (ii) matures one year or less after the date it was issued, incurred, guaranteed or assumed which at such date may be renewed at the sole election or option of the Borrower so as to mature more than one year after such date. "GOVERNMENTAL BODY" shall mean the United States of America, any State thereof, any other country or any political subdivision of such other country, or any department, agency, commission, board, bureau or instrumentality of the United States of America, any State thereof, any other country or political subdivision of such other country or any subdivision of any of them, and, to the extent the term is used in respect of the Agent or any Lender, any quasi-governmental body, agency or authority (including any central bank) exercising regulatory authority over the Agent or any Lender pursuant to applicable law in respect of the transactions contemplated by this Agreement. "INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes. "INTEREST PAYMENT DATE" shall mean, with respect to any Loan, the last day of the Interest Period applicable thereto and the Maturity Date and, in the case of a Eurodollar Loan or a CD Loan with an Interest Period of more than three months' duration or a Fixed Rate Loan with an Interest Period of more than 90 days' duration, each day that would have been an Interest Payment Date for such Loan had successive Interest Periods of three months' duration or 90 days' duration, as the case may be, been applicable to such Loan and, in addition, the date of any refinancing or conversion of such Loan with or to a Loan of a different Type; PROVIDED that with respect to any ABR Loan, Interest Payment Date shall mean the last day of each fiscal quarter. "INTEREST PERIOD" shall mean (a) as to any Eurodollar Borrowing, the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3, 6 or 12 months thereafter (or, in the case of a Eurodollar Competitive Borrowing, on any day that is 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 or 12 months thereafter), as the Borrower may elect, (b) as to any CD Borrowing, a period of 1, 3 or 6 months' duration, as the Borrower may elect, commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, (c) as to any ABR Borrowing, the period commencing on the date of such Borrowing and ending on the date 90 days thereafter or, if earlier, on the Maturity Date or the date of prepayment of such Borrowing and (d) as to any Fixed Rate Borrowing, the period commencing on the date of such Borrowing and ending on the date specified in the Competitive Bids in which the offers to make the Fixed Rate Loans comprising such Borrowing were extended, which shall not be earlier than seven days after the date of such Borrowing or later than the Maturity Date; PROVIDED, HOWEVER, that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of Eurodollar Loans only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period 11 shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period. "LEVERAGE RATIO" shall mean, as at the end of any fiscal quarter in respect of which a determination thereof is being or to be made, the quotient (expressed as a percentage) of (a) the sum of (i) "notes payable to banks and overdrafts", PLUS (ii) "long term debt due within one year", PLUS (iii) "long term debt and capital leases" (as each such item is reported on the Consolidated balance sheet of the Borrower and the Subsidiaries as at the end of such fiscal quarter), PLUS (iv) the net proceeds from the sale of domestic accounts receivable outstanding at the end of such fiscal quarter (determined in a manner consistent with that used in preparing the Borrower's 2000 Annual Report on Form 10-K), DIVIDED BY (b) the sum of (i) Consolidated Net Worth (without giving effect to the exclusion contained in clause (ii) of the definition of the term "Consolidated Net Worth" and without giving effect to the $499.3 million after-tax writedown of the Borrower's Oil Transportation Segment Assets in December of 1996), PLUS (ii) the sum obtained pursuant to clause (a) above. "LIBO RATE" shall mean, with respect to any Interest Period relating to a Eurodollar Loan, the rate of interest (expressed as an annual rate) equal to the British Bankers Association (the "BBA") interest settlement rate for United States Dollars (the "BBA Interest Settlement Rate for USD") for a period substantially equal to such Interest Period as quoted at page 3750 of the Telerate Service ("Telerate 3750"), or at such page or display as may replace Telerate 3750 or on such other service as may be nominated by the BBA as the information vendor for the purpose of displaying the BBA Interest Settlement Rate for USD ("BBA Interest Settlement Rate Screen"), for delivery on the first day of such Interest Period, such rate to be established from the quote on Telerate 3750 at 11:00 a.m. (or as near as practicable thereto), London time, two Business Days prior to the first day of such Interest Period (which shall be a Business Day); PROVIDED, THAT, if no rate for the relevant Interest Period is quoted on Telerate 3750, or any successor or substitute BBA Interest Settlement Rate Screen, then the LIBO Rate shall be the rate of interest equal to the arithmetic average (expressed as a percentage rounded upward, if necessary, to the nearest 1/1000th of 1%) of the rates (expressed as annual rates) at which deposits in Dollars in amounts of $5,000,000 or more for a period substantially equal to such Interest Period are offered by the LIBOR Reference Banks to prime banks in the London interbank market for delivery on the first day of such Interest Period, such rates to be established from quotes obtained at (or as near as practicable to) 12:00 noon (London time) two Business Days prior to the first day of such Interest Period (which shall be a Business Day); PROVIDED FURTHER, THAT, if with respect to any such Interest Period fewer than two LIBOR Reference Banks are offering quotations, then the LIBO Rate shall be equal to the arithmetic average (rounded upward, if necessary, to the nearest 1/1000th of 1%) of the rates (expressed as annual rates) at which the Reference Banks are offered deposits in Dollars in New York in amounts of $5,000,000 or more for delivery on the first day of such Interest Period for a period substantially equal to the Interest Period by leading banks in the New York interbank market as of 11:00 a.m. (New York time) on the first day of such Interest Period (which shall be a business day). As used herein, the term "LIBOR REFERENCE BANKS" shall mean The Chase Manhattan Bank, BNP Paribas, London, and Credit Suisse, London, Limited, and the term "REFERENCE BANKS" shall mean Bank of America N.A., Citibank, N.A., and Commerzbank Aktiengesellschaft. 12 "LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset 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. "LOAN" shall mean a Competitive Loan or a Standard Loan, whether made as a Eurodollar Loan, a CD Loan, an ABR Loan or a Fixed Rate Loan, as permitted hereby. "MAJORITY LENDERS" shall mean, at any time, Lenders having Commitments representing at least a majority of the Total Commitment. "MANUFACTURING FACILITY" shall mean any plant, other facility or equipment owned by the Borrower or a Subsidiary which is used primarily to manufacture automotive or other products, but shall not include (i) retread plants, facilities or equipment, (ii) plants, facilities or equipment which, in the opinion of the Board of Directors of the Borrower, are not of material importance to the total business conducted by the Borrower and the Subsidiaries, or (iii) plants, facilities or equipment which, in the opinion of the Board of Directors of the Borrower, are used primarily for transportation, marketing or warehousing. "MARGIN" shall mean, as to any Eurodollar Competitive Loan, the margin (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) to be added to or subtracted from the LIBO Rate in order to determine the interest rate applicable to such Loan, as specified in the Competitive Bid relating to such Loan. "MATURITY DATE" shall mean August 15, 2005. "NET INCOME" shall mean, with respect to any period in respect of which a determination is being made or to be made, consolidated net income of the Borrower and the Subsidiaries for such period determined in accordance with generally accepted accounting principles in the United States, as in effect on the Closing Date. "PERSON" shall mean any natural person, corporation, business trust, joint venture, association, company, partnership or Governmental Body. "PLAN" shall mean an employee benefit plan, other than a Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA), which (i) is (or, in the event that any such plan has been terminated within five years of a transaction described in Section 4069 of ERISA, was) maintained for employees of the Borrower (or any trade or business which would be considered as under common control with the Borrower within the meaning of Section 4001(b) of ERISA) and subject to Title IV of ERISA, and (ii) has assets having an aggregate market value in excess of $100,000,000. "REQUIRED LENDERS" shall mean, at any time, Lenders having Commitments representing at least two-thirds of the Total Commitment or, for purposes of acceleration pursuant to clause (ii) of Article VII, Lenders holding Loans representing at least two-thirds of the aggregate principal amount of the Loans outstanding. "REUTER SYSTEM" shall mean the Reuter Money Service Monitor System. 13 "SCHEDULE OF COMPLIANCE" shall mean a Schedule of Compliance, substantially in the form of Exhibit C, prepared by the Borrower and delivered to the Lenders pursuant to subsection (c) of Article V. "STANDARD BORROWING" shall mean a borrowing consisting of simultaneous Standard Loans from each of the Lenders. "STANDARD BORROWING REQUEST" shall mean a request made pursuant to Section 2.04 in the form of Exhibit A-5. "STANDARD LOANS" shall mean the revolving loans made by the Lenders to the Borrower pursuant to Section 2.04. Each Standard Loan shall be a Eurodollar Standard Loan, a CD Loan or an ABR Loan. "SUBSIDIARY" shall mean any corporation, partnership, limited liability company, joint venture, trust or estate of which (or in which) more than 50% of (i) the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (ii) the interest in the capital or profits of such partnership, limited liability company or joint venture, or (iii) the beneficial interest of such trust or estate, is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries. "SUPPLEMENTAL AMOUNT" shall mean, as at the end of any fiscal quarter of the Borrower in respect of which a determination thereof is being or to be made, the Dollar amount (if a positive number), if any, which is equal to the product of (x) the remainder obtained by subtracting $3,800,000,000 from the Consolidated Net Worth of the Borrower as at the end of such fiscal quarter, multiplied by (y) .50. "TAXES" shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Body. "364-DAY AMENDMENT" shall mean the amendment and restatement of the Borrower's 364-Day Revolving Credit Agreement substantially in the form attached hereto as Exhibit F. "TOTAL COMMITMENT" shall mean at any time the aggregate amount of the Lenders' Commitments, as in effect at such time. "TYPE", when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, "RATE" shall include the LIBO Rate, the CD Rate, the Alternate Base Rate and the Fixed Rate. "UTILIZATION FEE" shall have the meaning assigned to such term in Section 2.06(b). 14 SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with generally accepted accounting principles in the United States, as in effect on the Closing Date. ARTICLE II. THE CREDITS SECTION 2.01. COMMITMENTS. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, to make Standard Loans to the Borrower, at any time and from time to time on and after the date hereof and until the earlier of the Maturity Date or the termination of the Commitment of such Lender, in an aggregate principal amount at any time outstanding not to exceed such Lender's Commitment minus the amount by which the Competitive Loans outstanding at such time shall be deemed to have used such Commitment pursuant to Section 2.15, subject, however, to the conditions that (a) at no time shall (i) the sum of (x) the outstanding aggregate principal amount of all Standard Loans made by all Lenders plus (y) the outstanding aggregate principal amount of all Competitive Loans made by all Lenders exceed (ii) the Total Commitment and (b) at all times the outstanding aggregate principal amount of all Standard Loans made by each Lender shall equal the product of (i) the percentage which its Commitment represents of the Total Commitment times (ii) the outstanding aggregate principal amount of all Standard Loans made pursuant to Section 2.04. Each Lender's Commitment is set forth opposite its respective name in Schedule 2.01. Such Commitments may be terminated, reduced or extended from time to time pursuant to Section 2.11. Within the foregoing limits, the Borrower may borrow, pay or prepay and reborrow hereunder, on and after the Closing Date and prior to the Maturity Date, subject to the terms, conditions and limitations set forth herein. SECTION 2.02. LOANS. (a) Each Standard Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their Commitments; PROVIDED, HOWEVER, that the failure of any Lender to make any Standard Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.03. The Standard Loans or Competitive Loans comprising any Borrowing shall be in an aggregate principal amount which is an integral multiple of $1,000,000 and not less than $25,000,000 in the case of Standard Loans and $5,000,000 in the case of Competitive Loans (or an aggregate principal amount equal to the remaining balance of the available Total Commitment). (b) Each Competitive Borrowing shall be comprised entirely of Eurodollar Competitive Loans or Fixed Rate Loans, and each Standard Borrowing shall be comprised entirely of Eurodollar Standard Loans, CD Loans or ABR Loans, as the Borrower may request pursuant to Section 2.03 or 2.04, as applicable. Borrowings of more than one Type or of the same Type and having different Interest Periods may be 15 outstanding at the same time. For purposes of the foregoing, Loans of different Types and Loans having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Loans and separate Borrowings. (c) Subject to Section 2.05, each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to the Agent in New York, New York, not later than 11:30 a.m., New York City time, and the Agent shall transfer the entire amount received to the Borrower in Dollars in immediately available funds at the bank and to the account designated by the Borrower as promptly as practicable and in any event by such a time that such funds will be available for retransfer, investment or other use by the Borrower on the borrowing date or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. Competitive Loans shall be made by the Lender or Lenders whose Competitive Bids therefor are accepted pursuant to Section 2.03 in the amounts so accepted and Standard Loans shall be made by the Lenders pro rata in accordance with Section 2.15. Unless the Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Agent such Lender's portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with this paragraph (c) and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have made such portion available to the Agent, such Lender and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent at the Federal Funds Effective Rate; PROVIDED that if such Lender does not pay such principal amount to the Agent within five Business Days and the Borrower repays such principal amount on the sixth Business Day, such Lender shall be responsible for interest during such six Business Day period, provided that the Agent, if it shall first have made demand on such Lender and shall not have received payment, may recover such interest from the Borrower. If such Lender shall pay to the Agent such corresponding amount within five Business Days, such amount shall constitute such Lender's Loan as part of such Borrowing for purposes of this Agreement. (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date. SECTION 2.03. COMPETITIVE BID PROCEDURE. (a) In order to request Competitive Bids, the Borrower shall hand deliver or telecopy to the Agent a duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to be received by the Agent (i) in the case of a Eurodollar Competitive Borrowing, not later than 10:00 a.m., New York City time, four Business Days before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, one Business Day before a proposed Competitive Borrowing. No CD Loan or ABR Loan shall be requested in, or made pursuant to, a Competitive Bid Request. A Competitive Bid Request that does not conform substantially to the format of Exhibit A-1 may be rejected in the Agent's sole discretion, and the Agent shall promptly notify the Borrower of such rejection by telecopier. Such request shall in each case refer to this Agreement and specify (x) whether the Borrowing then being requested is to be a Eurodollar Borrowing or a Fixed Rate Borrowing, (y) the date of such Borrowing (which shall be a Business Day) and the aggregate principal amount thereof which shall be in a minimum principal amount of $25,000,000 and in an integral multiple of $1,000,000, 16 and (z) the Interest Period with respect thereto (which may not end after the Maturity Date). Promptly after its receipt of a Competitive Bid Request that is not rejected as aforesaid, the Agent shall invite by telecopier (in the form set forth in Exhibit A-2 hereto) the Lenders to bid, on the terms and conditions of this Agreement, to make Competitive Loans pursuant to the Competitive Bid Request. (b) Each Lender may, in its sole discretion, make one or more Competitive Bids to the Borrower responsive to a Competitive Bid Request. Each Competitive Bid by a Lender must be received by the Agent via telecopier, in the form of Exhibit A-3 hereto, (i) in the case of a Eurodollar Competitive Borrowing, not later than 9:30 a.m., New York City time, three Business Days before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on the day of a proposed Competitive Borrowing. Multiple bids will be accepted by the Agent. Competitive Bids that do not conform substantially to the format of Exhibit A-3 may be rejected by the Agent after conferring with, and upon the instruction of, the Borrower, and the Agent shall notify the Lender making such nonconforming bid of such rejection as soon as practicable. Each Competitive Bid shall refer to this Agreement and specify (x) the principal amount (which shall be in a minimum principal amount of $5,000,000 and in an integral multiple of $1,000,000 and which may equal the entire principal amount of the Competitive Borrowing requested by the Borrower) of the Competitive Loan or Loans that the Lender is willing to make to the Borrower, (y) the Competitive Bid Rate or Rates at which the Lender is prepared to make the Competitive Loan or Loans and (z) the Interest Period and the last day thereof. If any Lender shall elect not to make a Competitive Bid, such Lender shall so notify the Agent via telecopier (I) in the case of Eurodollar Competitive Loans, not later than 9:30 a.m., New York City time, three Business Days before a proposed Competitive Borrowing, and (II) in the case of Fixed Rate Loans, not later than 9:30 a.m., New York City time, on the day of a proposed Competitive Borrowing; PROVIDED, HOWEVER, that failure by any Lender to give such notice shall not cause such Lender to be obligated to make any Competitive Loan as part of such Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant to this paragraph (b) shall be irrevocable. (c) The Agent shall promptly notify the Borrower by telecopier of all the Competitive Bids made, the Competitive Bid Rate and the principal amount of each Competitive Loan in respect of which a Competitive Bid was made and the identity of the Lender that made each bid. The Agent shall send a copy of all Competitive Bids to the Borrower for its records as soon as practicable after completion of the bidding process set forth in this Section 2.03. (d) The Borrower may in its sole and absolute discretion, subject only to the provisions of this paragraph (d), accept or reject any Competitive Bid referred to in paragraph (c) above (and the Competitive Bids accepted need not be in any minimum aggregate amount except as provided below in this paragraph). The Borrower shall notify the Agent by telephone, confirmed by telecopier in the form of a Competitive Bid Accept/Reject Letter in the format of Exhibit A-4, whether and to what extent it has decided to accept or reject any of or all the bids referred to in paragraph (c) above, (x) in the case of a Eurodollar Competitive Borrowing, not later than 10:30 a.m., New York City time, three Business Days before a proposed Competitive Borrowing, and (y) in the case of a Fixed Rate Borrowing, not later than 10:30 a.m., New York City time, on the day of a proposed Competitive Borrowing; PROVIDED, HOWEVER, that (i) the failure by the Borrower to give such notice shall be deemed to be a rejection of all the bids referred to in paragraph (c) above, (ii) the Borrower shall not accept a bid made at a particular Competitive Bid Rate if the Borrower has decided to reject a bid made at a lower Competitive Bid Rate, (iii) if the Borrower shall accept a bid or bids made at a particular 17 Competitive Bid Rate but the amount of such bid or bids shall cause the total amount of bids to be accepted by the Borrower to exceed the amount that the Borrower desires to borrow, then the Borrower shall accept a portion of such bid or bids in an amount equal to the amount that the Borrower desires to borrow less the amount of all other Competitive Bids accepted with respect to such Competitive Bid Request, which acceptance, in the case of multiple bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such bid at such Competitive Bid Rate, and (iv) except pursuant to clause (iii) above, no bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of $5,000,000 and an integral multiple of $1,000,000; PROVIDED FURTHER, HOWEVER, that if a Competitive Loan must be in an amount less than $5,000,000 because of the provisions of clause (iii) above, such Competitive Loan may be for a minimum of $1,000,000 or any integral multiple thereof, and in calculating the pro rata allocation of acceptances of portions of multiple bids at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples of $1,000,000 in a manner which shall be in the discretion of the Borrower. The Borrower may accept Competitive Bids in an aggregate principal amount in excess of the principal amount specified in the relevant Competitive Bid Request. A notice given by the Borrower in the form of a Competitive Bid Accept/Reject Letter pursuant to this paragraph (d) shall be irrevocable. (e) The Agent shall promptly notify each bidding Lender whether or not its Competitive Bid has been accepted (and if so, in what amount and at what Competitive Bid Rate or Rates) by telecopy sent by the Agent, and each successful bidder will thereupon become bound, subject to the other applicable conditions hereof, to make the Competitive Loans in respect of which its Competitive Bid has been accepted. (f) A Competitive Bid Request shall not be made within five Business Days after the date of any previous Competitive Bid Request. (g) If the Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such bid directly to the Borrower one quarter of an hour earlier than the latest time at which the other Lenders are required to submit their Competitive Bids to the Agent pursuant to paragraph (b) above. (h) All notices required by this Section 2.03 shall be given in accordance with Section 9.01. SECTION 2.04. STANDARD BORROWING PROCEDURE. In order to request a Standard Borrowing, the Borrower shall hand deliver or telecopy to the Agent notice thereof in the form of Exhibit A-5 (a) in the case of a Eurodollar Standard Borrowing or a CD Borrowing, not later than 3:00 p.m., New York City time, three Business Days before a proposed Borrowing and (b) in the case of an ABR Borrowing, not later than 10:30 a.m., New York City time, on the day of a proposed Borrowing. No Fixed Rate Loan shall be requested or made pursuant to a Standard Borrowing Request. Such notice shall be irrevocable and shall in each case specify (i) whether the Borrowing then being requested is to be a Eurodollar Standard Borrowing, a CD Borrowing or an ABR Borrowing; (ii) the date of such Standard Borrowing (which shall be a Business Day) and the amount thereof; and (iii) if such Borrowing is to be a Eurodollar Standard Borrowing or CD Borrowing, the Interest Period with respect thereto. If no Interest Period with respect to any Eurodollar Standard Borrowing or CD Borrowing is specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month's duration, in the case of a Eurodollar Standard Borrowing, or one month's duration, in the case of a CD Borrowing. If the Borrower shall not have given notice in accordance with this Section 2.04 of its election to refinance a Standard Borrowing prior 18 to the end of the Interest Period in effect for such Borrowing, then the Borrower shall (unless such Borrowing is repaid at the end of such Interest Period) be deemed to have given notice of an election to refinance such Borrowing with an ABR Borrowing and the Agent will advise the Borrower that such notice has not been received (but shall not be liable to the Borrower for any unintentional omission to do so). The Agent shall promptly advise the Lenders of any notice given or deemed to have been given pursuant to this Section 2.04 and of each Lender's portion of the requested Borrowing. SECTION 2.05. REFINANCINGS. The Borrower may refinance all or any part of any Borrowing with a Borrowing of the same or a different Type made pursuant to Section 2.03 or Section 2.04, subject to the conditions and limitations set forth herein and elsewhere in this Agreement, including refinancings of Competitive Borrowings with Standard Borrowings and Standard Borrowings with Competitive Borrowings. Any Borrowing or part thereof so refinanced shall be deemed to be repaid in accordance with Section 2.07 with the proceeds of a new Borrowing hereunder and the proceeds of the new Borrowing, to the extent they do not exceed the principal amount of the Borrowing being refinanced, shall not be paid by the Lenders to the Agent or by the Agent to the Borrower pursuant to Section 2.02(c); PROVIDED, HOWEVER, that (i) if the principal amount extended by a Lender in a refinancing is greater than the principal amount extended by such Lender in the Borrowing being refinanced, then such Lender shall pay such difference to the Agent for distribution to the Lenders described in (ii) below, (ii) if the principal amount extended by a Lender in the Borrowing being refinanced is greater than the principal amount being extended by such Lender in the refinancing, the Agent shall return the difference to such Lender out of amounts received pursuant to (i) above, and (iii) to the extent any Lender fails to pay the Agent amounts due from it pursuant to (i) above, any Loan or portion thereof being refinanced with such amounts shall not be deemed repaid in accordance with Section 2.07 and shall be payable by the Borrower. SECTION 2.06. FEES. (a) The Borrower agrees to pay to each Lender, through the Agent, on each March 31, June 30, September 30 and December 31, and on the Maturity Date or on any earlier date on which the Commitment of such Lender shall have terminated and its outstanding Loans repaid, a facility fee (a "FACILITY FEE") equal to the applicable Facility Fee Percentage per annum on the amount of the Commitment of such Lender, whether used or unused, during the preceding quarter (or shorter period commencing with the date hereof or ending with the Maturity Date or the date of such termination and repayment). All Facility Fees shall be computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be. The Facility Fee due to each Lender shall commence to accrue on the date hereof and shall cease to accrue on the Maturity Date or any earlier date on which the Commitment of such Lender shall have terminated (but shall in any event accrue until all Loans made by such Lender have been repaid). (b) The Borrower agrees to pay to each Lender, through the Agent, on each March 31, June 30, September 30 and December 31 and on each date on which the Commitment of such Lender shall be terminated or reduced as provided herein, a utilization fee of 0.250% per annum (a "Utilization Fee") (i) on such Lender's pro rata portion (based on the ratio of such Lender's Commitment to the Total Commitment) of the aggregate principal amount of all of the outstanding Loans for each day during the preceding quarter (or other period commencing on the date hereof or ending with the Maturity Date or any date on which the Commitment of such Lender shall be terminated and its outstanding Loans repaid in full) on which the sum of the outstanding Loans, including Competitive Loans, exceeds 50% of the Total Commitment and (ii) after the termination of such Lender's Commitment (other than as a result of the termination of the Commitments due to the occurrence of an Event of Default under clause (a) or (b) of 19 Article VII), on the principal amount of such Lender's outstanding Loans. The Utilization Fee shall be computed on the basis of the actual number of days elapsed in a year of 360 days. The Utilization Fee due to each Lender shall be payable in arrears and shall commence to accrue on the date hereof and cease to accrue on the earlier of the Maturity Date and the date on which the Commitment of such Lender is terminated and its outstanding Loans repaid in full as provided herein. (c) The Borrower agrees to pay the Agent, for its own account, agent and administrative fees (the "Administrative Fees") at the times and in the amounts agreed upon in the letter agreement dated July 24, 2001, between the Borrower and the Agent. (d) All Fees shall be paid on the dates due, in immediately available funds, to the Agent for distribution, if and as appropriate, among the Lenders. Once paid, none of the Fees shall be refundable under any circumstances. SECTION 2.07. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The outstanding principal balance of each Competitive Loan and Standard Loan shall be payable on the last day of the Interest Period applicable to such Loan and on the Maturity Date. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid such Lender from time to time under this Agreement. (c) The Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type of each Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof. (d) The entries made in the accounts maintained pursuant to paragraphs (b) and (c) of this Section 2.07 shall, to the extent permitted by applicable law, be rebuttable evidence of the existence and amounts of the obligations therein recorded; PROVIDED, HOWEVER, that the failure of any Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans in accordance with their terms. SECTION 2.08. INTEREST ON LOANS. (a) Subject to the provisions of Section 2.09, the Loans comprising each Eurodollar Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to (i) in the case of each Eurodollar Standard Loan, the LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Spread, and (ii) in the case of each Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in effect for such Borrowing plus (or minus) the Margin offered by the Lender making such Loan and accepted by the Borrower pursuant to Section 2.03. (b) Subject to the provisions of Section 2.09, the CD Loans comprising each CD Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the CD Rate for the Interest Period in effect for such Borrowing plus the Applicable Spread. 20 (c) Subject to the provisions of Section 2.09, the ABR Loans comprising each ABR Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when determined by reference to the Prime Rate and over a year of 360 days at all other times) at a rate per annum equal to the Alternate Base Rate in effect from time to time during the Interest Period applicable to such ABR Borrowing. (d) Subject to the provisions of Section 2.09, each Fixed Rate Loan shall bear interest at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to the fixed rate of interest offered by the Lender making such Loan and accepted by the Borrower pursuant to Section 2.03. (e) Subject to the provisions of Section 2.09, interest on each Loan shall be payable on each Interest Payment Date applicable to such Loan. The LIBO Rate and Adjusted LIBO Rate, the CD Rate and Adjusted CD Rate or the Alternate Base Rate for each Interest Period or day within an Interest Period shall be determined by the Agent in accordance with the terms and conditions of this Agreement, and such determination shall be conclusive absent manifest error. SECTION 2.09. DEFAULT INTEREST. If the Borrower shall default in the payment of the principal of or interest on any Loan or any other amount becoming due hereunder, whether by scheduled maturity, notice of prepayment, acceleration or otherwise, the Borrower shall on demand from time to time from the Agent or the Majority Lenders pay interest, to the extent permitted by law, on such defaulted amount up to (but not including) the date of actual payment (after as well as before judgment) at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to the Alternate Base Rate plus 1%. SECTION 2.10. UNAVAILABILITY OF LIBO RATE AND CD RATE QUOTATIONS. (a) In the event that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing the Agent shall have determined that it is not possible to ascertain a LIBO Rate for such Interest Period as contemplated in the definition of LIBO Rate in Section 1.01, the Agent shall, as soon as practicable thereafter, give written or telecopy notice of such event to the Borrower and the Lenders, in which event any request by the Borrower for a Eurodollar Borrowing for such Interest Period shall be deemed to be a request for a CD Borrowing. (b) In the event, and on each occasion, that on the day on which the Interest Period for any CD Borrowing commences the Agent shall have determined that it is not possible to ascertain a CD Rate for such Interest Period as contemplated in the definition of CD Rate in Section 1.01, the Agent shall, as soon as practicable thereafter, give written or telecopy notice of such determination to the Borrower and the Lenders, in which event any request by the Borrower for a CD Loan for such Interest Period shall be of no force or effect and no Borrowing shall be made pursuant to such request. SECTION 2.11. TERMINATION, REDUCTION AND ADDITION OF COMMITMENTS. (a) The Commitments shall be automatically terminated on the Maturity Date. (b) Upon at least three Business Days' prior irrevocable written or telecopy notice to the Agent, the Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Total Commitment; PROVIDED, HOWEVER, that each partial reduction of the Total Commitment shall be in an integral multiple of $1,000,000 and in a minimum amount of $5,000,000. 21 (c) Each reduction in the Total Commitment hereunder shall be made ratably among the Lenders in accordance with their respective Commitments. The Borrower shall pay to the Agent for the account of the Lenders, on the date of each termination or reduction, the Facility Fees on the amount of the Commitments so terminated or reduced accrued to the date of such termination or reduction. (d) The Borrower may from time to time request that one or more additional financial institutions be added as Lenders under this Agreement with Commitments agreed upon by the Borrower and such financial institutions. In the event of any such request, such financial institutions shall become parties to and Lenders under this Agreement upon the execution of one or more agreements to that effect in the form (appropriately completed) of Exhibit D (and without any action being required on the part of any other Lender), and upon the effectiveness of any such agreement, Schedule 2.01 shall be automatically amended to reflect the Commitment of each new Lender. SECTION 2.12. PREPAYMENT. (a) The Borrower shall have the right at any time and from time to time to prepay without premium or penalty any Borrowing (including a Competitive Borrowing), in whole or in part, upon giving written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) to the Agent: (i) before 5:00 p.m., New York City time, three Business Days prior to prepayment, in the case of Eurodollar Loans, (ii) before 5:00 p.m., New York City time, two Business Days prior to prepayment, in the case of CD Loans or Fixed Rate Loans, and (iii) before 10:00 a.m., New York City time, one Business Day prior to prepayment, in the case of ABR Loans; PROVIDED, HOWEVER, that each partial prepayment of a Borrowing shall be in an amount which is an integral multiple of $1,000,000 and not less than $5,000,000. (b) On the date of any termination or reduction of the Commitments pursuant to Section 2.11(b), the Borrower shall pay or prepay so much of the outstanding Borrowings, selected at the Borrower's sole option, as shall be necessary in order that the aggregate principal amount of the Competitive Loans and Standard Loans outstanding will not exceed the Total Commitment after giving effect to such termination or reduction. (c) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Borrower to prepay such Borrowing (or portion thereof) by the amount stated therein on the date stated therein. All prepayments under this Section 2.12 shall be accompanied by accrued interest on the principal amount being prepaid to the date of payment. (d) In the event any prepayment is made in respect of any Loan (or in the event any Lender is required to transfer a Loan), other than (i) any ABR Loan and (ii) any Loan the prepayment, payment or transfer of which is made by Borrower pursuant to its right to prepay, repay or require the transfer of such Loan under Sections 2.13, 2.14, 2.17 or 9.05 or upon the Lender's exercise of its option pursuant to Section 9.14, the Borrower shall pay to such Lender, promptly upon the written request of such Lender (which request shall be accompanied by a certificate as described below), such amount as shall be necessary to reimburse such Lender for the loss, if any, reasonably incurred by such Lender as a result of such prepayment or transfer arising from inability due to general market conditions to recover the cost of deposits or other funds acquired by such Lender to fund such Loan, in the liquidation of such deposits or other funds so acquired (or from the reemployment thereof if such reemployment would 22 result in less of a funding loss to such Lender); PROVIDED, that any such funding loss shall not in any event exceed the cost incurred by such Lender to obtain such deposit or other funds, minus the fair market value thereof realizable by such Lender in the liquidation thereof. Such Lender shall use reasonable efforts to avoid or minimize any such loss. Such Lender's claim, if any, shall be accompanied by a certificate setting forth in reasonable detail (including the calculations made in determining) the reason for and the amount of such loss, which certificate shall be conclusive in the absence of manifest error. Prepayments of ABR Borrowings shall be without penalty, premium or other cost of any kind. SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a) In the event that at any time or from time to time during the term of this Agreement any Eurodollar Reserve Requirement shall be applicable to deposits acquired in respect of any Eurodollar Loan the Lender making such Eurodollar Loan shall promptly notify the Borrower in writing of any imposition of or change in or prospective imposition of or change in any Eurodollar Reserve Requirement, whether in respect of an outstanding Eurodollar Loan or any possible future Eurodollar Loan, and, for as long as such Eurodollar Reserve Requirement shall be effective, the Borrower shall, upon written request from such Lender (with a copy of such request to the Agent), pay to such Lender at the end of each Interest Period for such Eurodollar Loan, an additional amount equal to the difference between the interest accrued based upon the LIBO Rate and the interest that would have accrued had the Adjusted LIBO Rate been applicable to the Eurodollar Loan of such Lender. Each Lender represents that currently it is not subject to (and does not incur) any Eurodollar Reserve Requirement. (b) In the event that at any time or from time to time during the term of this Agreement any CD Reserve Requirement or Assessment Rate shall be applicable to deposits acquired in respect of any CD Loan the Lender making such CD Loan shall promptly notify the Borrower in writing of any imposition of or change in or prospective imposition of or change in any CD Reserve Requirement or Assessment Rate, whether in respect of an outstanding CD Loan or any possible future CD Loan, and, for as long as such CD Reserve Requirement or Assessment Rate shall be effective, the Borrower shall, upon written request from such Lender (with a copy of such request to the Agent), pay to such Lender at the end of the Interest Period for such CD Loan, an additional amount equal to the difference between the interest accrued based upon the CD Rate and the interest that would have accrued had the Adjusted CD Rate been applicable to the CD Loan of such Lender. Each Lender represents that its current CD Reserve Requirement and Assessment Rate are as set forth on Schedule 2.01. (c) Notwithstanding any other provision herein, if after the date of this Agreement, either (i) the introduction of, or any change in or in the interpretation of, any law or regulation or (ii) compliance by any Lender with any directive, guideline or request of any Governmental Body (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender, so as to increase the minimum amount of capital required to be maintained by such Lender based upon the existence of this Agreement, the Commitment of such Lender and/or any Loans made hereunder and such requirement applies equally to other agreements with, and to commitments and loans similar to the transactions contemplated by this Agreement to, all other corporate borrowers situated in the United States of America, then the Borrower shall pay to such Lender amounts sufficient to compensate such Lender, in light of such circumstances, to the extent that such Lender reasonably and equitably determines such increase in required capital over the capital of such Lender in place on the date hereof to be allocable to this Agreement, to the Commitment of such Lender (or the unused portion thereof), or to any Loans made by such Lender hereunder, 23 it being understood that in no event shall the cost allocable, and/or amount charged, to the Borrower under this paragraph (c) exceed the cost allocable, and/or amount charged, with respect to any similar agreement between such Lender and any other corporate borrower located in the United States, in each instance determined ratably with respect to the relative transactional amounts. Each Lender represents that, to its best knowledge on the date hereof it would not be required to increase its capital or to otherwise incur any increased capital costs in respect of this Agreement under existing laws, rules, regulations, directives or guidelines (whether or not currently in effect) of any Governmental Body. (d) A certificate of a Lender setting forth such amount or amounts as shall be necessary to compensate such Lender as specified in paragraph (c) above shall be delivered to the Borrower (with a copy to the Agent) and shall be conclusive absent manifest error. The Borrower shall pay each Lender the amount shown as due on any such certificate delivered by it within 10 days after the receipt of the same. No Lender shall be entitled to any compensation for any additional costs under this Section 2.13 requested by such Lender unless such Lender shall have notified the Borrower that it will request compensation for such additional costs not more than 30 days after the date such additional costs were first incurred. (e) The Borrower may at any time following its receipt from any Lender of a notice of the occurrence or prospective occurrence of any imposition of or increase in the Eurodollar Reserve Requirement, the CD Reserve Requirement, the Assessment Rate or capital requirements or costs of such Lender terminate the Commitment of such Lender and repay any outstanding Loans of such Lender (together with all accrued interest and Facility Fee and Utilization Fee, if any) on the effective date of such termination, which repayments, if any, shall be without premium, penalty or other cost of any kind and shall not be subject to the requirements of Sections 2.15 and 2.12(d). SECTION 2.14. CHANGE IN LEGALITY. (a) Notwithstanding any other provision herein, if any change in any law or regulation or in the interpretation thereof by any Governmental Body charged with the administration or interpretation thereof shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written or telecopy notice to the Borrower and to the Agent, such Lender may: (i) declare that Eurodollar Loans will not thereafter be made by such Lender hereunder, whereupon such Lender shall not submit a Competitive Bid in response to a request for Eurodollar Competitive Loans and any request by the Borrower for a Eurodollar Standard Borrowing shall, as to such Lender only, be without effect and void unless such declaration shall be subsequently withdrawn; and (ii) require (if required by law to do so) that all outstanding Eurodollar Loans made by it be converted to CD Loans, in which event all such Eurodollar Loans shall be automatically converted to CD Loans with an Interest Period agreed upon by the Borrower and such Lender as of the effective date of such notice as provided in paragraph (b) below. In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal which would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the Loans of such Lender resulting from the conversion of such Eurodollar Loans. The Borrower may in any event 24 prepay any Loan resulting from the conversion of any Eurodollar Loan under this Section within five Business Days after such conversion. (b) For purposes of this Section 2.14, a notice to the Borrower by any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day of the Interest Period currently applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by the Borrower. (c) In the event that any Lender shall (i) give Borrower any notice contemplated by, or exercise its rights under, this Section 2.14 or (ii) unless Borrower shall fail to meet the conditions set forth at Section 4.01, any Lender for any reason fails to fund any Loan, the Borrower may at any time terminate the Commitment of the Lender and repay any outstanding Loans of such Lender (together with all accrued interest and Facility Fee and Utilization Fee, if any) on the effective date of such termination, which repayment, if any, shall be without premium, penalty or other cost of any kind and shall not be subject to the requirements of Sections 2.15 and 2.12(d). SECTION 2.15. PRO RATA TREATMENT. Except as required or permitted under Section 2.11(d), 2.12, 2.13, 2.14, 2.17, 2.18, 9.05 or 9.14, each Standard Borrowing, each payment or prepayment of principal of any Standard Borrowing, each payment of interest on the Standard Loans, each payment of the Facility Fee, each payment of the Utilization Fee, each reduction of the Commitments and each refinancing of any Borrowing with a Standard Borrowing of any Type, shall be allocated pro rata among the Lenders in accordance with their respective Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Standard Loans). Each payment of principal of any Competitive Borrowing shall be allocated pro rata among the Lenders participating in such Borrowing in accordance with the respective principal amounts of their outstanding Competitive Loans comprising such Borrowing. Each payment of interest on any Competitive Borrowing shall be allocated pro rata among the Lenders participating in such Borrowing in accordance with the respective amounts of accrued and unpaid interest on their outstanding Competitive Loans comprising such Borrowing. For purposes of determining the available Commitments of the Lenders at any time, each outstanding Competitive Borrowing shall be deemed to have utilized the Commitments of the Lenders (including those Lenders which shall not have made Loans as part of such Competitive Borrowing) pro rata in accordance with such respective Commitments. Each Lender agrees that in computing such Lender's portion of any Borrowing to be made hereunder, the Agent may, in its discretion, round each Lender's percentage of such Borrowing to the next higher or lower whole dollar amount. SECTION 2.16. PAYMENTS. (a) The Borrower shall make each payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder not later than 3:00 p.m., New York City time, on the date when due in Dollars to the Agent (except as otherwise provided herein) at its offices at 270 Park Avenue, New York, New York, in immediately available funds. Any payment required to be made to the Lenders shall be deemed made when made to the Agent and shall, insofar as the obligations of the Borrower are concerned, be deemed to have been received by the Lenders at the time of receipt by the Agent (which shall promptly forward such payment to the Lenders). In the event the Lenders shall receive payments in an amount less than the amounts at the time due hereunder, the amounts received shall be applied first against the principal of Loans, second against accrued interest, third against accrued Fees, fourth against amounts due under Section 2.13 or 2.17, and fifth against any other amounts due hereunder. 25 (b) Whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in the case of a payment of principal be included in the computation of interest. SECTION 2.17. TAXES. (a) All payments by the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes, and if the Borrower shall be required to deduct any Indemnified Taxes from any such payment, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Agent or the applicable Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Body in accordance with applicable law. (b) The Borrower shall indemnify the Agent and Lender for the full amount of any Indemnified Taxes paid by such Agent or Lender on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section). A certificate as to the amount of such payment or liability setting forth in reasonable detail the circumstances giving rise thereto and the calculations used to determine in good faith such amount delivered to the Borrower by the Agent or Lender shall be conclusive absent manifest error. (c) As soon as practicable after any payment of Indemnified Taxes by the Borrower to a Governmental Body, the Borrower shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Body evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent. (d) Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the United States of America or any treaty to which the United States of America is a party, with respect to payments made to it under this Agreement shall deliver to the Borrower (with a copy to the Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. Notwithstanding anything to the contrary contained in this Section 2.17, any Lender that has not provided to the Borrower the executed documentation required to be provided to the Borrower pursuant to this Section 2.17 shall not be entitled to any payment of additional amounts pursuant to Section 2.17(a) or indemnification pursuant to Section 2.17(b) with respect to any deduction or withholding that would not have been required if such Lender had provided such documentation. (e) Each Lender, on the date it becomes a Lender hereunder, will designate lending offices for the Loans to be made by it such that, on such date, it will not be liable for any withholding tax that is imposed by the United States of America (or any political subdivision thereof) on payments to it by the Borrower from an office within such jurisdiction. (f) Each Lender represents and warrants unto, and covenants and agrees with, the Borrower that (i) such Lender is presently exempt from United States Federal withholding tax (including backup withholding, as such term is defined in the Code), and 26 from any other withholding tax, assessment, charge or other Taxes (other than Excluded Taxes) imposed by any Governmental Body, on any amount payable to it under this Agreement, and has heretofore delivered to the Borrower such evidence as may be required by law to claim or substantiate any such exemption (stating the provisions of law and/or treaty under which such exemption is claimed); (ii) such Lender will notify the Borrower promptly, so long as any amount is due under this Agreement, upon its becoming aware of the occurrence or of any prospective occurrence of any event which would result in any such withholding tax exemption not being available to such Lender; and (iii) such Lender will indemnify and hold the Borrower harmless from and against any loss, cost or liability imposed by a Governmental Body or incurred by the Borrower in defense of any claim by a Governmental Body, including all reasonable out-of-pocket expenses the Borrower may incur as a direct result of its reliance on the foregoing representations, or the failure of such Lender to give prompt notice of any event resulting in any said withholding tax exemption not being available to such Lender. (g) In no event shall the Borrower have any obligation to "gross up" amounts due under this Agreement in respect of Excluded Taxes. (h) The representations, warranties and agreements contained in this Section 2.17 shall survive the termination of this Agreement and the payment in full of the Loans. SECTION 2.18. TERMINATION OR ASSIGNMENT OF COMMITMENTS. The Borrower shall have the right (in addition to its rights pursuant to Sections 2.11(b), 2.13, 2.14, 2.17 and 9.05), at its own expense, at any time upon notice to any Lender and the Agent, (i) to terminate the Commitment of such Lender (with or without, at Borrower's sole election, replacing such terminated Commitment) or (ii) to require such Lender to transfer and assign without recourse all its interests, rights and obligations under this Agreement to another financial institution reasonably acceptable to the Agent which shall assume such obligations; PROVIDED that (x) no such assignment shall conflict with any law, rule or regulation or order of any Governmental Body applicable to such affected Lender and (y) the Borrower or the assignee, as the case may be, shall pay to the affected Lender in immediately available funds on the effective date of such termination or assignment the principal of and interest accrued to the date of payment on the Loans made by it hereunder then outstanding and accrued and unpaid Facility Fees and Utilization Fees and any amounts which Borrower had theretofore been notified were accruing in respect of such Loans under Section 2.13, which payments shall not be subject to the provisions of Section 2.15. ARTICLE III. REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to each of the Lenders that: (a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. (b) The execution, delivery and performance of this Agreement by the Borrower are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, will not violate any provision of any existing law or regulation or order or decree of any court or Governmental Body or of the Amended Articles of Incorporation or Code of Regulations of the Borrower, as each is amended to date, or of the unwaived terms of any mortgage, indenture, agreement or other instrument to which the Borrower is a party or which is 27 binding upon it or its assets, and will not result in the creation or imposition of any security interest, lien, charge or encumbrance on any of its assets pursuant to the provisions of any of the foregoing. (c) No authorization or approval or other action by, and no notice to or filing with, any Governmental Body or court is required to be made or effected by the Borrower for the due execution and delivery of this Agreement by the Borrower and for the performance by the Borrower of the obligations on its part to be performed under this Agreement. (d) This Agreement constitutes the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (e) The Consolidated Financial Statements of the Borrower and its Subsidiaries present fairly, in all material respects, the financial position of the Borrower and its Consolidated Subsidiaries at December 31, 2000 and 1999 and the Consolidated results of their operations and their Consolidated cash flows for each of the three years in the period ended December 31, 2000, in conformity with generally accepted accounting principles. (f) The Borrower is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. (g) Neither the Borrower nor any Subsidiary is a "holding company", or a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. (h) The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock, within the meaning of Regulation U of the Board. ARTICLE IV. CONDITIONS OF LENDING The obligation of each Lender to make Loans hereunder is subject to the satisfaction of the following conditions: SECTION 4.01. ALL BORROWINGS. On the date of each Borrowing, including each Borrowing in which Loans are refinanced with new Loans as contemplated by Section 2.05: (a) The Agent shall have received a notice of such Borrowing as required by Section 2.03 or Section 2.04, as applicable. (b) The representations and warranties set forth in Article III hereof shall be true and correct in all material respects on and as of the date of such Borrowing with the same effect as though made on and as of such date. 28 (c) No event shall have occurred and be continuing on and as of the date of such Borrowing, or would result from such Borrowing or from (after giving effect to) the application of the proceeds of such Borrowing, which constitutes an Event of Default. Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date of such Borrowing as to the matters specified in paragraphs (b) and (c) of this Section 4.01. SECTION 4.02. FIRST BORROWING. On the Closing Date, (a) the Agent shall have received the following (in the case of (i), (ii), (iii) and (iv), each dated the Closing Date): (i) an opinion of the General Counsel, the Associate General Counsel or an Assistant General Counsel of the Borrower addressed to the Lenders and the Agent in substantially the form of Exhibit B hereto; (ii) a certified copy of the resolutions of the Board of Directors of the Borrower authorizing the execution and delivery of this Agreement; (iii) a certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true signatures of the Authorized Officers; (iv) a certificate signed by an Authorized Officer, confirming compliance with the conditions set forth in paragraphs (b) and (c) of Section 4.01 and certifying that except for the legal proceedings identified or referred to on Schedule III (with respect to which such Authorized Officer makes no representation or warranty), there is no pending or, to the knowledge of such Authorized Officer, threatened action or proceeding affecting the Borrower or any of its Subsidiaries before any court, Governmental Body or arbitrator, which could reasonably be expected to have a material adverse effect on the business, assets or condition of the Borrower and its Subsidiaries taken as a whole; and (v) all Fees and other amounts due and payable on or prior to the Closing Date; (b) there shall not have occurred any material adverse change in the business, assets or condition of the Borrower and its Subsidiaries taken as a whole since December 31, 2000; and (c) the 364-Day Amendment shall have been approved by the Borrower, the Agent and the Required Lenders. ARTICLE V. AFFIRMATIVE COVENANTS The Borrower covenants and agrees with each Lender and the Agent that, so long as the Commitment of such Lender shall remain in effect or the principal of or interest on any Loan by such Lender shall be unpaid, unless the Majority Lenders shall otherwise consent in writing, the Borrower will: (a) INTEREST COVERAGE RATIO. Maintain, as at the end of each fiscal quarter of the Borrower, a ratio of Consolidated Operating Income for the Annual Period 29 then ended to Consolidated Interest Expense for such Annual Period then ended of not less than the ratio set forth below opposite such period: Period Ending Minimum Ratio ------------- ------------- June 30, 2001 2.60 to 1.00 September 30, 2001 2.75 to 1.00 December 31, 2001 and each Annual Period ending thereafter 3.50 to 1.00 (b) NET WORTH. Maintain, as at the end of each fiscal quarter of the Borrower, Consolidated Net Worth at an amount not less than $3,800,000,000 plus 50% of the cumulative amount of Net Income for each fiscal quarter ended after December 31, 2000 and excluding any such fiscal quarter for which Net Income shall have been negative. (c) REPORTING REQUIREMENTS. Furnish to the Agent, together with sufficient number of copies for each of the Lenders: (i) as soon as available and in any event not later than 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a conformed copy of the Borrower's Quarterly Report on Form 10-Q for such quarter as filed with the Securities and Exchange Commission, together with (1) a Schedule of Compliance, signed by an Authorized Officer setting forth computations used by the Borrower in determining compliance with the covenants contained in paragraphs (a) and (b) of this Article V and in paragraphs (a) and (b) of Article VI and (2) a certificate of an Authorized Officer stating that no Event of Default has occurred and is continuing or, if an Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower has taken and proposes to take with respect thereto; and (ii) as soon as available and in any event not later than 120 days after the end of each fiscal year of the Borrower, a conformed copy of the Borrower's Annual Report on Form 10-K for such year as filed with the Securities and Exchange Commission, together with (1) a Schedule of Compliance, signed by an Authorized Officer setting forth computations used by the Borrower in determining compliance with the covenants contained in paragraphs (a) and (b) of Article V, and in paragraphs (a) and (b) of Article VI, and (2) a certificate of an Authorized Officer stating that no Event of Default has occurred and is continuing or, if an Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower has taken and proposes to take with respect thereto; and (iii) as soon as practicable and in any event within ten Business Days after any Authorized Officer of the Borrower obtains actual knowledge of the occurrence of any Event of Default, a statement of an Authorized Officer setting forth details of such Event of Default and the action which the Borrower has taken and proposes to take with respect thereto; and (iv) promptly after the filing thereof, copies of all reports (in addition to Forms 10-K and 10-Q) filed by the Borrower with the Securities and Exchange Commission (other than annual reports on Form 11-K) pursuant to the Exchange Act; and 30 (v) such other publicly available information relating to the financial condition or business operations of the Borrower as the Agent or any Lender may from time to time reasonably request. (d) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its corporate existence; PROVIDED, that the Borrower may merge or transfer its assets in a transaction permitted by paragraph (c) of Article VI. (e) PARI PASSU WITH CERTAIN EXISTING CREDIT AGREEMENTS. Ensure that the Lenders remain pari passu with the lenders under the 364-Day Amendment and the lenders under the Borrower's Term Loan Agreement, dated as of March 30, 2001. ARTICLE VI. NEGATIVE COVENANTS The Borrower covenants and agrees with each Lender and the Agent that, so long as the Commitment of such Lender shall remain in effect or the principal of or interest on any Loan by such Lender shall be unpaid, unless the Majority Lenders shall otherwise consent in writing, the Borrower will not: (a) LIMITATION ON LIENS. Issue, assume or guarantee, or permit any Subsidiary to issue, assume or guarantee, Debt if such Debt is secured by a Lien upon any Manufacturing Facility without providing (concurrently with the issuance, assumption or guarantee of any such Debt) that the Loans shall be secured equally and ratably with such Debt; PROVIDED, HOWEVER, that the foregoing restriction shall not apply to: (i) any Lien on property if such Lien is in existence at the time of the acquisition of such property by the Borrower or a Subsidiary; (ii) any Lien on property to secure the payment of all or any part of the purchase price of such property or to secure any Debt incurred (prior to, at the time of, or within 360 days after, the acquisition by the Borrower or a Subsidiary of such property) for the purpose of, or in connection with, financing all or any part of the purchase price thereof; (iii) any Lien on property of a corporation or other entity if such Lien was in existence prior to the time such corporation or other entity is merged into or consolidated with the Borrower or a Subsidiary or prior to the time of a sale, lease or other disposition of the properties of an entity as an entirety or substantially as an entirety to the Borrower or a Subsidiary; (iv) any Lien on property in favor of the United States of America, any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, in favor of any other country or any political subdivision thereof, or in favor of any other Governmental Body, 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 the cost of construction of the property subject to such Lien; or 31 (v) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in the foregoing clauses (i) to (iv), inclusive; PROVIDED, HOWEVER, that the principal amount of Debt secured thereby shall not exceed the principal amount of Debt 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 property which secured the Lien so extended, renewed or replaced (plus improvements on such property). Notwithstanding the foregoing, (A) the Borrower or any Subsidiary may issue, assume or guarantee Debt secured by a Lien on a Manufacturing Facility of the Borrower which would otherwise be subject to the foregoing restrictions in an aggregate amount which, together with the aggregate principal amount of all other such Debt of the Borrower and the Subsidiaries secured by Liens on Manufacturing Facilities of the Borrower outstanding at the time of such issuance, assumption or guarantee (but excluding Debt permitted by the foregoing clauses (i) to (v), inclusive), does not at such time exceed fifteen percent (15%) of the Consolidated Net Worth of the Borrower as at the end of the then most recently completed fiscal year of the Borrower, and (B) the Borrower or any Subsidiary may issue, assume or guarantee Debt secured by a Lien on a Manufacturing Facility of a Subsidiary which would otherwise be subject to the foregoing restrictions in an aggregate amount which, together with the aggregate principal amount of all other such Debt of the Borrower and the Subsidiaries secured by Liens on Manufacturing Facilities of Subsidiaries outstanding at the time of such issuance, assumption or guarantee (but excluding Debt permitted by the foregoing clauses (i) to (v), inclusive), does not at such time exceed fifteen percent (15%) of the Consolidated Net Worth of the Borrower as at the end of the then most recently completed fiscal year of the Borrower. (b) LIMITATION ON DEBT. Issue, incur, assume or guarantee, or permit any Subsidiary to issue, incur, assume or guarantee, any Debt if, immediately after giving effect to the issuance, incurrence, assumption or guarantee of such Debt and after giving effect to the receipt and application of any and all proceeds thereof, the aggregate principal amount of the Consolidated Debt of the Borrower and the Subsidiaries would, at the end of any fiscal quarter of the Borrower, exceed the sum of (x) $5,000,000,000 plus (y) the Supplemental Amount, if any, at such date. For the purpose of this paragraph (b), if any such Debt is payable in a currency other than Dollars and all or any portion of the principal amount of such Debt is hedged into Dollars, then the principal amount thereof, or such portion thereof, shall be the amount of Dollars specified in, or determined pursuant to, the applicable hedging contract. (c) MERGERS, ETC. Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person; except that (i) any Subsidiary may merge into or transfer assets to or obtain assets from the Borrower, and (ii) the Borrower may merge with or acquire all or substantially all of the assets of any Person, provided in any such case that, immediately after giving effect to such proposed transaction, no Event of Default would exist and, in the case of any such merger to which the Borrower is a party, the Borrower is the surviving corporation. (d) ERISA LIABILITIES. Create or suffer to exist, as at the end of any fiscal quarter of Borrower, any ERISA Liabilities of the Borrower in an aggregate amount in excess of $750,000,000. 32 (e) NEGATIVE PLEDGE. Enter into, or permit any Subsidiary organized under the laws of the United States or any state, territory or possession thereof to enter into, any covenant or other agreement that by its terms limits the ability of the Borrower or any such Subsidiary to pledge its accounts receivable or inventory or proceeds thereof to secure indebtedness. ARTICLE VII. EVENTS OF DEFAULT So long as any Commitment shall be in effect or any amount of the principal of or accrued interest on any Borrowing shall be unpaid, in case of the occurrence and continuance of any of the following events ("Events of Default"): (a) The Borrower shall fail to pay the principal of any Loan when due and any such failure shall remain unremedied for more than two Business Days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such failure or (ii) written notice of such failure shall have been given to the Borrower by the Agent or any Lender; or (b) The Borrower shall fail to pay any Fees when due and such failure shall remain unremedied for more than ten Business Days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such failure or (ii) written notice of such failure shall have been given to the Borrower by the Agent or any Lender; or (c) The Borrower shall fail to pay interest on any Loan when due, and such failure shall remain unremedied for more than five Business Days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such failure or (ii) written notice of such failure shall have been given to the Borrower by the Agent or any Lender; or (d) Any representation or warranty made by the Borrower in this Agreement or by the Borrower (or any of its Authorized Officers) in any certificate delivered pursuant to this Agreement, or deemed to have been made pursuant to and in accordance with Section 4.01 of this Agreement, shall prove to have been incorrect in any material respect when made; PROVIDED, that if any such representation or warranty is capable of being rendered true and correct in all material respects, such event shall not constitute an Event of Default unless such incorrect representation or warranty is not rendered true and correct in all material respects within thirty days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such event or (ii) the day written notice thereof shall have been given to the Borrower by the Agent or any Lender; or (e) The Borrower shall fail to perform or observe any covenant or agreement set forth in paragraph (a) or (b) of Article V or in paragraph (b) of Article VI; or (f) The Borrower shall fail to perform or observe any other covenant or agreement set forth in this Agreement on its part to be performed or observed and such failure shall remain unremedied for more than thirty days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such failure or (ii) written notice thereof shall have been given to the Borrower by the Agent or any Lender; or 33 (g) The Borrower shall fail to pay any principal of Funded Debt of the Borrower which is then outstanding in a principal amount in excess of $25,000,000 at the scheduled maturity thereof, such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Funded Debt, and such Funded Debt is not paid within ten Business Days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such failure or (ii) written notice of such failure shall have been given to the Borrower by the holder or holders of such Funded Debt; or Funded Debt of the Borrower which is then outstanding in a principal amount in excess of $25,000,000 shall become due and payable prior to the scheduled maturity thereof as a result of the lawful acceleration thereof due to the occurrence of an event of default thereunder (other than an event of default resulting from a pledge or transfer of any margin stock, as defined in Regulation U of the Board) and such Funded Debt is not paid, or such acceleration thereof is not rescinded or annulled, within ten Business Days following such lawful acceleration thereof; or (h) The Borrower shall sell or otherwise dispose of all or substantially all of its assets; or (i) The Borrower shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower seeking to adjudicate it a debtor or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property, and, if instituted against the Borrower, is consented to by it or remains undismissed or unstayed for a period of 90 consecutive days; or the Borrower shall take any corporate action to authorize any of the actions set forth above in this clause (i); then, and in every such event (other than the entry of an order for relief with respect to the Borrower as a debtor under the Federal Bankruptcy Code), and at any time thereafter during the continuance of such event, the Agent, at the request of the Required Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein to the contrary notwithstanding; PROVIDED, that in the event of the entry of an order for relief with respect to Borrower as a debtor under the Federal Bankruptcy Code, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein to the contrary notwithstanding. ARTICLE VIII. THE AGENT 34 In order to expedite the transactions contemplated by this Agreement, The Chase Manhattan Bank is hereby appointed to act as Agent on behalf of the Lenders. Each of the Lenders hereby irrevocably authorizes the Agent to take such actions on behalf of such Lender and to exercise such powers as are specifically delegated to the Agent by the terms and provisions hereof, together with such actions and powers as are reasonably incidental thereto. The Agent is hereby expressly authorized by the Lenders, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders all payments of principal of and interest on the Loans and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to the Borrower of any Event of Default specified in this Agreement of which the Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by the Borrower pursuant to this Agreement as received by the Agent. Neither the Agent nor any of its directors, officers, employees or agents shall be liable to any Lender as such for any action taken or omitted by any of them except for its or his own gross negligence or wilful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by the Borrower of any of the terms, conditions (except delivery to the Agent of the items required by Section 4.02 to be delivered to it), covenants or agreements contained in this Agreement. The Agent shall not be responsible to the Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or other instruments or agreements. The Agent shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Lenders and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Lenders. The Agent shall, in the absence of knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper Person or Persons. Neither the Agent nor any of its directors, officers, employees or agents shall have any responsibility to the Borrower on account of the failure of or delay in performance or breach by any Lender of any of its obligations hereunder or to any Lender on account of the failure of or delay in performance or breach by any other Lender or the Borrower of any of their respective obligations hereunder or in connection herewith. The Agent may execute any and all duties hereunder by or through agents or employees and shall be entitled to rely upon the advice of legal counsel selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. The Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement unless it shall be requested in writing to do so by the Required Lenders. Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor bank, such successor shall succeed to 35 and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations hereunder. After the Agent's resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. With respect to the Loans made by it hereunder, the Agent in its individual capacity and not as Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not the Agent, and the Agent may accept deposits from, lend money to and generally engage in any kind of business with the Borrower as if it were not the Agent. Each Lender agrees (i) to reimburse the Agent, on demand, in the amount of its pro rata share (based on its Commitment, or, after the Commitments have expired or been terminated, the amount of its outstanding Loans hereunder) of any expenses incurred for the benefit of the Lenders by the Agent, including reasonable counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, which shall not have been reimbursed by the Borrower and (ii) to indemnify and hold harmless the Agent and any of its directors, officers, employees or agents, on demand, in the amount of such pro rata share, from and against any and all liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against it in its capacity as the Agent or any of them in any way relating to or arising out of this Agreement or any action taken or omitted by it or any of them under this Agreement, to the extent the same shall not have been reimbursed by the Borrower; PROVIDED that no Lender shall be liable to the Agent or any other indemnitee for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or wilful misconduct of the Agent or any of its directors, officers, employees or agents. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder. Notwithstanding any other provision herein, each Lender acknowledges that the Agent is not acting as an agent of the Borrower and that the Borrower will not be responsible for any acts or failures to act on the part of the Agent. ARTICLE IX. MISCELLANEOUS SECTION 9.01. NOTICES. Except as otherwise expressly provided herein, notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, priority mail, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to the Borrower, to it at 1144 East Market Street, Akron, Ohio 44316-0001, Attention of the Treasurer (Telecopy No. 330-796-1021 or 330-796-8836); 36 (b) if to the Agent, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Janet Belden (Telecopy No. 212-552-5658), with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention of Julie Long (Telecopy No. 212-270-5127); and (c) if to a Lender, to it at its address (or telecopy number) set forth in Schedule 2.01. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy (as evidenced by machine transmission report), or on the date five Business Days after dispatch by certified or registered mail, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01. SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not been terminated. SECTION 9.03. BINDING EFFECT; SUCCESSORS AND ASSIGNS. (a) This Agreement shall become effective when it shall have been executed by the Borrower and the Agent and when the Agent shall have received copies hereof which, when taken together, bear the signatures of each Lender, and thereafter shall be binding upon and inure to the benefit of the Borrower, the Agent and each Lender and their respective successors and assigns, except that (i) the Borrower shall not have the right to assign its rights hereunder or any interest herein or to delegate any of its duties hereunder without the prior written consent of all the Lenders and (ii) no Lender shall have the right to assign or participate its rights hereunder or any interest herein or to delegate any of its duties hereunder without the prior written consent of the Borrower and giving a written notice (also signed by the Borrower) to the Agent. (b) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include any successors and permitted assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrower, the Agent or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and permitted assigns. (c) Notwithstanding the limitations set forth in this Section 9.03, any Lender may at any time assign all or any portion of its rights under this Agreement to a Federal Reserve Bank without the prior written consent of the Borrower or the Agent; PROVIDED that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such Bank for such Lender as a party hereto. In order to facilitate such an assignment to a Federal Reserve Bank, the Borrower shall, at the request of the assigning Lender, duly execute and deliver to the assigning Lender a promissory note or notes in the form of Exhibit E hereto evidencing the Loans made to the Borrower by the assigning Lender hereunder. 37 SECTION 9.04. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 9.05. WAIVERS; AMENDMENT. (a) No failure or delay of the Agent or any Lender in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power or preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies provided by law. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Majority Lenders; PROVIDED, HOWEVER, that no such agreement shall (i) amend, modify or otherwise affect the rights or duties of the Agent hereunder without the prior written consent of the Agent, (ii) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest on any Loan or any Fees, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan or any Fees, without the prior written consent of each Lender affected thereby, (iii) change or extend the Commitment or decrease the Facility Fees or the Utilization Fee of any Lender without the prior written consent of such Lender, or (iv) amend or modify the provisions of Section 2.15, the provisions of this Section 9.05(b) or the definition of "Majority Lenders" or "Required Lenders", without the prior written consent of each Lender; PROVIDED that the provisions referred to in the preceding clauses (ii), (iii) and (iv) may be amended by the Majority Lenders; but any Lender which declines to approve any such amendment shall have the right at any time, on 10 Business Days' notice to the Borrower, to terminate its Commitment and require the Borrower to pay the principal of and interest on its outstanding Loans and Fees, and the amount of the principal and interest so paid shall be determined without giving effect to such amendment. All prepayments made pursuant to this Section 9.05(b) shall be without premium, penalty or other cost of any kind and shall not be subject to the requirements of Sections 2.15 and 2.12(d). SECTION 9.06. EXPENSES; INDEMNITY. (a) The Borrower agrees to pay (i) all reasonable out-of-pocket expenses incurred by the Agent and its affiliates, including the reasonable fees, charges and disbursements of counsel for the Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or any amendments, modifications or waivers (requested by or for the benefit of the Borrower) of the provisions hereof, and (ii) all reasonable out-of-pocket expenses incurred by the Agent or any Lender in connection with the enforcement of its rights under this Agreement. (b) The Borrower agrees to indemnify the Agent, the Lenders, their affiliates, and the respective directors, officers, employees and agents of such persons (each such person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees and expenses, arising out of any claim, litigation, investigation or proceeding relating to (i) the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby or (ii) the use by the 38 Borrower of the proceeds of the Loans; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses have resulted from the gross negligence or willful misconduct of such Indemnitee or from the breach of any obligations of such Indemnitee set forth in this Agreement. SECTION 9.07. INTEREST RATE LIMITATION. Notwithstanding anything herein to the contrary, if at any time the applicable interest rate, together with all fees and charges which are treated as interest under applicable law (collectively the "Charges"), as provided for herein, or otherwise contracted for, charged, received, taken or reserved by any Lender, shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by such Lender in accordance with applicable law, the rate of interest payable hereunder to such Lender, together with all Charges payable to such Lender, shall be limited to the Maximum Rate. SECTION 9.08. ENTIRE AGREEMENT. This Agreement and the letter agreement referred to in Section 2.06(c) constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement. Nothing in this Agreement, expressed or implied, is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Agreement. SECTION 9.09. INFORMATION; ACCESS AND CONFIDENTIALITY. So long as any Commitments shall be in effect or any Loans shall remain unpaid: (i) the Lenders, acting through their officers and other duly designated employees, shall have the right to discuss the affairs, finances and accounts of the Borrower and the Subsidiaries with senior financial officers and employees of the Borrower at such reasonable times and intervals as the Lenders shall reasonably request; and (ii) the Borrower will make available to the Lenders such other information relating to the financial condition or business operations of the Borrower and the Subsidiaries as the Lenders shall from time to time reasonably request. Notwithstanding anything herein to the contrary, in no event shall the Borrower be required to furnish to the Lenders any information pursuant to this Section 9.09 if the Borrower shall reasonably determine that the furnishing of such requested information would be in violation of any applicable law, regulation or order of any Governmental Body or if such information relates to the Borrower's strategic planning, research, development, testing, manufacturing or marketing activities and the furnishing thereof would, in the sole judgment of the Borrower reasonably exercised, adversely affect the competitive position of the Borrower. Each Lender agrees that all such information provided to such Lender (or any officer or employee of such Lender) is confidential and proprietary to the Borrower and that such Lender will not disclose (other than to the directors, officers and employees of such Lender who require such information in connection with such Lender's administration of this Agreement and who have been directed to treat such information as confidential and proprietary to the Borrower and other than to bank examiners with jurisdiction over such Lender who request such information) any such information (excluding information which becomes (i) generally available to the public other than as a result of the disclosure thereof by such Lender or its representatives or (ii) available to such Lender on a non-confidential basis from a source other than the Borrower or the Subsidiaries or any of their respective directors, officers, employees, agents or representatives, provided such source is not known to such Lender to be bound by a confidentiality agreement with the Borrower), except to the extent such Lender is, in the opinion of legal counsel to such Lender, required by law to disclose such information and then only after such Lender shall have given the Borrower at least five (5) days' prior written notice of such required disclosure 39 or, if such prior notice period is not available to such Lender under applicable law, such shorter notice period, if any, as shall in fact be available to such Lender under applicable law. SECTION 9.10. SEVERABILITY. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the legal and economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 9.11. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 9.03. SECTION 9.12. HEADINGS. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. SECTION 9.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each party to this Agreement irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment related hereto, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction. (b) Each party to this Agreement irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 9.14. STAMP TAXES. The Borrower agrees to pay, and to save the Agent and each Lender harmless from all liability for, any stamp, transfer, documentary or similar taxes, assessments or charges (herein "Stamp Taxes"), and any penalties or interest with respect thereto, which may be assessed, levied, collected or imposed, or otherwise become payable, in connection with the execution and delivery of this Agreement. The Agent and each Lender represents and warrants unto the Borrower that, at the date of this Agreement, there are not Stamp Taxes in effect which are applicable to this Agreement or any Loans which may be made hereunder and the Agent 40 and each Lender agrees that it will promptly notify the Borrower upon becoming aware of the imposition or prospective imposition of any Stamp Taxes in respect of this Agreement or any Loan made pursuant to this Agreement. The obligations of the Borrower, the Agent and each Lender under this Section 9.14 shall survive the payment of the Loans. SECTION 9.15. CHANGE OF CONTROL OPTION. (a) In the event there shall occur any Change of Control (as defined below) each Lender shall have the right, at its option exercisable at any time within six months following the Change Date (as defined below), to require the Borrower to purchase the Loans of such Lender on the Purchase Date (as defined below) at a purchase price which shall be equal to the sum of (i) the principal amount of such Loans then outstanding, plus (ii) any and all accrued and unpaid interest on such Loans and Fees to the Purchase Date (the "Purchase Price"). (b) The Borrower shall give the Lenders, through the Agent, written notice of the occurrence of a Change of Control within five Business Days following the Change Date. No failure of the Borrower to give notice of a Change of Control shall limit the right of any Lender to require the purchase of its Loans pursuant to this Section 9.15. (c) Any Lender may exercise its right to require the purchase of its Loans under this Section 9.15 by delivering to the Borrower at any time within six months after the Change Date written notice thereof, specifying the Purchase Date. The Commitment of any Lender exercising its right to require the purchase of its Loans under this Section 9.15 shall automatically terminate immediately upon the Borrower's receipt of such Lender's written notice of such exercise of its option in accordance with this Section 9.15. (d) In the event of the exercise by any Lender of its option under this Section 9.15 in the manner provided herein, the Borrower shall pay or cause to be paid to such Lender on the Purchase Date the Purchase Price (determined in accordance with paragraph (a) above) in immediately available funds. No exercise of the option granted in this Section 9.15 shall be subject to the requirements of Sections 2.15 and 2.12(d). (e) As used in this Section 9.15, the term: (1) "CHANGE DATE" means the date on which any Change of Control shall be deemed to have occurred; PROVIDED, that, if the Borrower shall fail to give timely notice of the occurrence of a Change of Control to the Lenders as provided in paragraph (b) above, for the purpose of determining the duration of the Lenders' rights to require prepayment under this Section 9.15, "CHANGE DATE" shall mean the earlier of (i) the date on which notice of a Change of Control is duly given by the Borrower to the Agent or (ii) with respect to any Lender, the date on which such Lender obtains actual knowledge of the Change of Control. (2) "CHANGE OF CONTROL" means when, and shall be deemed to have occurred at such time as, a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the then outstanding Voting Stock of the Borrower; PROVIDED, that fifty percent shall become 70% with respect to any "employee benefit plan" (as defined in Section 3(3) of ERISA) maintained by the Borrower or any Subsidiary or any trust or funding vehicle maintained for or pursuant to such "employee benefit plan". 41 (3) "PURCHASE DATE" means, with respect to any Lender, the date on which the Borrower shall purchase the Loans of such Lender pursuant to the exercise by such Lender of its option under this Section 9.15, pursuant to a notice given to the Borrower in accordance with paragraph (c) of this Section 9.15, which date shall be a Business Day not less than 90 nor more than 120 days after the date such Lender gives the Borrower written notice of such exercise. (4) "VOTING STOCK" shall mean capital stock of the Borrower of any class or classes (however designated) the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of the Board of Directors of the Borrower, it being understood that, at the date hereof, the Common Stock, without par value, of the Borrower is the only outstanding class of capital stock of the Borrower which constitutes "Voting Stock". 42 IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. THE GOODYEAR TIRE & RUBBER COMPANY, by /s/ Stephanie W. Bergeron --------------------------------- Name: Stephanie W. Bergeron Title: Vice President and Treasurer THE CHASE MANHATTAN BANK, individually and as Agent, by /s/ Julie S. Long --------------------------------- Name: Julie S. Long Title: Vice President 43 BNP PARIBAS By /s/ Rosalie C. Hawley --------------------------------- Name: Rosalie C. Hawley Title: Director By /s/ Richard L. Sted --------------------------------- Name: Richard L. Sted Title: Region Manager BANK OF AMERICA, N.A. By /s/ Matthew J. Reilly --------------------------------- Name: Matthew J. Reilly Title: Vice President CITICORP USA, INC. By /s/ Brian Ike --------------------------------- Name: Brian Ike Title: Director BANK ONE N.A. By /s/ Jean Phelan --------------------------------- Name: Jean Phelan Title: Vice President CIBC INC. By /s/ Dominic J. Sorresso --------------------------------- Name: Dominic J. Sorresso Title: Executive Director CIBC World Markets Corp., As Agent 44 COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By /s/Graham A. Warning --------------------------------- Name: Graham A. Warning Title: Assistant Treasurer By /s/ John Marlatt --------------------------------- Name: John Marlatt Title: Senior Vice President DEUTSCHE BANK AG NEW YORK BRANCH By /s/ Hans-Joseph Thiele --------------------------------- Name: Hans-Joseph Thiele Title: Director By /s/ Oliver Schwarz --------------------------------- Name: Oliver Schwarz Title: Vice President SUMITOMO MITSUI BANKING CORPORATION (F/K/A THE SUMINTOMO BANK, LIMITED) By /s/ Edward D. Henderson, Jr. --------------------------------- Name: Edward D. Henderson, Jr. Title: Senior Vice President BANK OF TOKYO-MITSUBISHI TRUST COMPANY By /s/ Paresh Shah --------------------------------- Name: Paresh Shah Title: Vice President 45 CREDIT SUISSE FIRST BOSTON By /s/ Kristin Lepri --------------------------------- Name: Krstin Lepri Title: Assistant Vice President By /s/ David L. Sawyer --------------------------------- Name: David L. Sawyer Title: Vice President THE INDUSTRIAL BANK OF JAPAN, LIMITED By /s/ Walter Wolff --------------------------------- Name: Walter Wolff Title: Joint General Manager ABN AMRO BANK, N.V. By /s/ James M. Sumoski --------------------------------- Name: James M. Sumoski Title: Vice President By /s/ Dougas R. Elliott --------------------------------- Name: Douglas R. Elliott Title: Group Vice President BANCA NAZIONALE DEL LAVORO S.p.A., NEW YORK BRANCH By /s/ Juan J. Cortes --------------------------------- Name: Juan J. Cortes Title: First Vice President By /s/ Leodardo Valentini --------------------------------- Name: Leonardo Valentini Title: First Vice President 46 ROYAL BANK OF CANADA By /s/ Gordon C. MacArthur --------------------------------- Name: Gordon C. MacArthur Title: Senior Manager SOCIETE GENERALE By /s/ Anne-Marie Dumortier --------------------------------- Name: Anne-Marie Dumortier Title: Vice President THE BANK OF NOVA SCOTIA By /s/ F.C.H. Ashby --------------------------------- Name: F.C.H. Ashby Title: Senior Manager Loan Operations CREDIT LYONNAIS CHICAGO BRANCH By /s/ Nigel R. Carter --------------------------------- Name: Nigel R. Carter Title: Vice President KEY BANK NATIONAL ASSOCIATION By /s/ Daniel W. Lally --------------------------------- Name: Daniel W. Lally Title: Assistant Vice President NATIONAL CITY BANK By /s/ Janice E. Focke --------------------------------- Name: Janice E. Focke Title: Senior Vice President 47 THE NORTHERN TRUST COMPANY By /s/ Craig Smith --------------------------------- Name: Craig Smith Title: Vice President DRESDNER BANK AG NEW YORK AND GRAND CAYMAN BRANCHES By /s/ Faraaz Kamran --------------------------------- Name: Faraaz Kamran Title: Assistant Vice President By /s/ Gabriela Fields --------------------------------- Name: Gabriela Fields Title: Associate STANDARD CHARTERED BANK By /s/ Nancy Cheng --------------------------------- Name: Nancy Cheng Title: Vice President By /s/ Robert K. Reddington --------------------------------- Name: Robert K. Reddington Title: Assistant Vice President Credit Documentation THE DAI-ICHI KANGYO BANK, LTD. By /s/ Nobuyasu Fukatsu --------------------------------- Name: Nobuyasu Fukatsu Title: General Manager 48 BARCLAYS BANK PLC By /s/ Nicholas A. Bell --------------------------------- Name: Nicholas A. Bell Title: Director Loan Transaction Management 49 SCHEDULE III THE GOODYEAR TIRE & RUBBER COMPANY CERTAIN LITIGATION NO REPRESENTATION OR WARRANTY IS MADE BY BORROWER UNDER THE AGREEMENT IN RESPECT OF THE FOLLOWING LEGAL PROCEEDINGS. I. LEGAL PROCEEDINGS IN SEC REPORTS Paragraphs (A) through (H), inclusive, of Item 3 of the Borrower's Annual Report on Form 10-K for the year ended December 31, 2000 are incorporated by reference. Paragraphs (1) through (4), inclusive, of Item 1 of Part II of the Borrower's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 are incorporated by reference. Paragraphs (1) and (2), inclusive, of Item 1 of Part II of the Borrower's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 are incorporated by reference. II. OTHER LEGAL PROCEEDINGS On June 1, 1998, a civil action, Andrews, et al. v. Goodyear, et al. (Docket No. L-5595- 98) was filed by eleven hourly employees at Goodyear's New Brunswick; New Jersey warehouse facility in the Superior Court of New Jersey, Middlesex County (Law Division), against Goodyear and four other employees of Goodyear alleging, among other things, that (i) the defendants engaged in conduct constituting discrimination on the basis of race in violation of a New Jersey law prohibiting discrimination in the workplace, (ii) Goodyear failed to promote the plaintiffs in violation of said New Jersey law, and (iii) the defendants' actions inflicted emotional distress and caused loss of consortium. The plaintiffs are seeking injunctive relief, unspecified actual damages, including back pay, punitive damages aggregating $124 million, costs and attorneys' fees. EX-4.2 4 l90768aex4-2.txt EXHIBIT 4.2 364 DAY REVOLVING CREDIT AGREEMENT CONFORMED COPY - -------------------------------------------------------------------------------- Exhibit 4.2 AMENDED AND RESTATED 364-DAY REVOLVING CREDIT AGREEMENT Dated as of August 14, 2001 among THE GOODYEAR TIRE & RUBBER COMPANY, THE LENDERS NAMED HEREIN, and THE CHASE MANHATTAN BANK as Agent ------------------------ ------------------------ J.P. MORGAN SECURITIES INC. acted as Advisor, Lead Arranger and Bookrunner - -------------------------------------------------------------------------------- [CS&M Ref. No. 6701-174] TABLE OF CONTENTS
Article Section Page ------- ------- ---- I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.02. Terms Generally . . . . . . . . . . . . . . . . . . . . . . . . 11 II. THE CREDITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.02. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.03. Competitive Bid Procedure . . . . . . . . . . . . . . . . . . . 13 2.04. Standard Borrowing Procedure. . . . . . . . . . . . . . . . . . 15 2.05. Refinancings. . . . . . . . . . . . . . . . . . . . . . . . . . 16 2.06. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 2.07. Repayment of Loans; Evidence of Debt; Conversion and Continuation of Standard Borrowings . . . . . . . . . . . . . . 17 2.08. Interest on Loans . . . . . . . . . . . . . . . . . . . . . . . 20 2.09. Default Interest. . . . . . . . . . . . . . . . . . . . . . . . 21 2.10. Unavailability of LIBO Rate and CD Rate Quotations. . . . . . . 21 2.11. Termination, Reduction, Extension and Addition of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.12. Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . 22 2.13. Reserve Requirements; Change in Circumstances . . . . . . . . . 23 2.14. Change in Legality. . . . . . . . . . . . . . . . . . . . . . . 25 2.15. Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . . 25 2.16. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 2.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 2.18. Termination or Assignment of Commitments. . . . . . . . . . . . 28 III. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 28 IV. CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . . . . . 29 4.01. All Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . 29 4.02. First Borrowing . . . . . . . . . . . . . . . . . . . . . . . . 30 V. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 30 VI. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 32 VII. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . 33 VIII. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 9.01. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 9.02. Survival of Agreement. . . . . . . . . . . . . . . . . . . . . . . 38 9.03. Binding Effect; Successors and Assigns . . . . . . . . . . . . . . 38 9.04. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . 38 9.05. Waivers; Amendment . . . . . . . . . . . . . . . . . . . . . . . . 38 9.06. Expenses; Indemnity. . . . . . . . . . . . . . . . . . . . . . . . 38 9.07. Interest Rate Limitation . . . . . . . . . . . . . . . . . . . . . 39 9.08. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 39 9.09. Information; Access and Confidentiality. . . . . . . . . . . . . . 39 9.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 9.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 9.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 9.13. Jurisdiction; Consent to Service of Process. . . . . . . . . . . . 40 9.14. Stamp Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 9.15. Change of Control Option . . . . . . . . . . . . . . . . . . . . . 41
Exhibit A-1 Form of Competitive Bid Request Exhibit A-2 Form of Notice of Competitive Bid Request Exhibit A-3 Form of Competitive Bid Exhibit A-4 Form of Competitive Bid Accept/Reject Letter Exhibit A-5 Form of Standard Borrowing Request Exhibit B Form of Opinion of Counsel Exhibit C Form of Schedule of Compliance Exhibit D Form of Agreement Providing for Additional Lender Exhibit E Form of Promissory Note to Facilitate Assignments to Federal Reserve Banks Exhibit F Form of Five-Year Amendment Schedule 2.01 Commitments; Addresses for Notices and Reserve Percentages Schedule III Certain Litigation AMENDED AND RESTATED 364-DAY REVOLVING CREDIT AGREEMENT dated as of August 14, 2001, among THE GOODYEAR TIRE & RUBBER COMPANY, an Ohio corporation (the "Borrower"), the lenders listed in Schedule 2.01 (the "Lenders") and THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for the Lenders (in such capacity, the "Agent"). The Borrower has requested the Lenders to extend credit to the Borrower in order to enable it to borrow on a standby revolving credit basis on and after the date hereof and at any time and from time to time prior to the Commitment Termination Date (as herein defined), and thereafter to have outstanding prior to the Maturity Date, a principal amount not in excess of $775,000,000 at any time outstanding. The Borrower has also requested the Lenders to provide a procedure pursuant to which the Borrower may invite the Lenders to bid on an uncommitted basis on borrowings by the Borrower. The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions herein set forth. Accordingly, the Borrower, the Lenders and the Agent agree as follows: ARTICLE I. DEFINITIONS SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings specified below: "ABR BORROWING" shall mean a Borrowing comprised of ABR Loans. "ABR LOAN" shall mean any Standard Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II. "ADJUSTED CD RATE" shall mean, with respect to any CD Loan, the rate per annum (rounded upward, if necessary, to the nearest 1/1000th of 1%) equivalent to the sum of (i) the quotient of (x) the CD Rate with respect to the Interest Period in respect of such CD Loan, divided by (y) one minus the CD Reserve Requirement of the applicable Lender, if any, PLUS (ii) the Assessment Rate of the applicable Lender, if any. The Adjusted CD Rate shall be determined as of the first day of, and shall remain constant throughout, the applicable Interest Period. "ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar Loan, the rate per annum (expressed as a percentage rounded upward, if necessary, to the nearest 1/1000th of 1%) equivalent to the sum of (i) the quotient of (x) the LIBO Rate for the Interest Period in respect of such Eurodollar Loan, divided by (y) one minus the Eurodollar Reserve Requirement, if any. The Adjusted LIBO Rate shall be the rate appropriately determined to be in effect on the first day of, and shall remain constant throughout, such Interest Period. The Eurodollar Reserve Requirement shall be determined as at the first day of, and shall remain constant throughout, such Interest Period. 2 "ADMINISTRATIVE FEES" shall have the meaning assigned to such term in Section 2.06(c). "ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "PRIME RATE" shall mean the rate of interest per annum publicly announced from time to time by the Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced as effective. "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. If for any reason the Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Agent to obtain sufficient quotations in accordance with the terms thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "ANNUAL PERIOD" shall mean a period of four complete, consecutive fiscal quarters of the Borrower, taken together and constituting one accounting period. "APPLICABLE SPREAD" shall mean, as at the date as of which any determination in respect thereof is being or to be made, the applicable percentage set forth below under the caption "Eurodollar Spread" or "CD Spread", as the case may be, based upon the Leverage Ratio as of the last day of the relevant fiscal quarter most recently ended: Category Leverage Ratio Eurodollar Spread CD Spread -------- -------------- ----------------- --------- Per Annum Per Annum --------- --------- 1 less than or equal to 25% 0.4000% 0.5250% 2 greater than 25% but less 0.5000% 0.6250% than or equal to 40% 3 greater than 40% but less 0.8500% 0.9750% than or equal to 55% 4 greater than 55% 1.0500% 1.1750% Each change in the Applicable Spread resulting from a change in the Leverage Ratio as of the end of any fiscal quarter will be effective as of the date of delivery by the Borrower of a certificate setting forth the calculation of the Leverage Ratio as at the end 3 of such fiscal quarter, which certificate shall be delivered with the annual and/or quarterly financial statements for such fiscal quarter required to be delivered under paragraph (c) of Article V. Notwithstanding the foregoing, at any time that the Borrower shall fail to deliver to the Agent such certificate by the time required under such paragraph (c), the Applicable Spread shall be deemed to be that corresponding to Category 4 until such time as the Borrower shall so deliver such certificate. "ASSESSMENT RATE" shall mean, at any date as of which any determination thereof is being or to be made and with respect to any CD Loan and the applicable Interest Period in respect of which any determination thereof is being or to be made, the aggregate of the net annual assessment rates or similar fees or charges (expressed on a per annum percentage basis, rounded upward, if necessary, to the nearest 1/1000th of 1%), if any, paid by the Lender making such Loan on its Dollar time deposits in the United States of America insured by the Federal Deposit Insurance Corporation (or any successor agency) or any other Governmental Body which has general jurisdiction over such Lender; such rates, fees or charges, if any, shall be determined by annualizing the then most recent assessment rates or similar fees or charges levied on such Lender by said Corporation or other Governmental Body with respect to such Dollar time deposits evidenced by certificates of deposit or equivalent instruments in amounts and for periods substantially equal to the applicable Interest Period. "AUTHORIZED OFFICER" shall mean (i) any of the Chairman of the Board, any Vice Chairman of the Board, any President, any Executive Vice President, any Senior Vice President, any Vice President and the Treasurer of the Borrower, and (ii) in respect of all matters relating to this Agreement other than the execution and delivery of this Agreement, the Secretary, any Assistant Treasurer or any Assistant Secretary of the Borrower and any other person designated in writing by any officer specified in clause (i) above as duly authorized to act on behalf of the Borrower hereunder. "BOARD" shall mean the Board of Governors of the Federal Reserve System of the United States. "BORROWING" shall mean a group of Loans of a single Type made by the Lenders (or, in the case of a Competitive Borrowing, by the Lender or Lenders whose Competitive Bids have been accepted pursuant to Section 2.03) on a single date and as to which a single Interest Period is in effect. "BUSINESS DAY" shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City; PROVIDED, HOWEVER, that, when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market. "CD BORROWING" shall mean a Borrowing comprised of CD Loans. "CD LOAN" shall mean any Standard Loan bearing interest at a rate determined by reference to the Adjusted CD Rate in accordance with the provisions of Article II. "CD RATE" shall mean with respect to any CD Borrowing for any Interest Period, the rate of interest (expressed as an annual rate) equal to the rate specified in 4 respect of certificates of deposit or similar instruments having a maturity which is equal or substantially equal to such Interest Period, which rate appears on the display designated as page "FEDM" on the Reuter System (or on such other display on the Reuter System as shall then display rates for the purchase at face value of certificates of deposit or equivalent instruments) at 10:00 a.m., New York City time, on the first day of such Interest Period; PROVIDED, THAT if no rates can be obtained from page "FEDM" of the Reuter System (or such other display), CD Rate shall be equal to the rate set forth under the caption "Certificates of Deposit" in the daily statistical release published by the Federal Reserve Bank of New York entitled "Composite 3:30 p.m. Quotations for U.S. Government Securities", or any successor publication (the "Composite Quotations"), for the first day of such Interest Period in respect of certificates of deposit having a maturity substantially equal to such Interest Period; PROVIDED, FURTHER, that if no rates are available from the Reuter System or the Composite Quotations, or the Agent or the Borrower shall in good faith reasonably determine (and promptly give notice to the other party of such determination) that the CD Rate in respect of such Interest Period determined as aforesaid is materially higher (as reasonably determined by the Borrower) or lower (as reasonably determined by the Agent) than the prevailing rate of interest the Agent is required to pay to acquire funds evidenced by non-negotiable certificates of deposit in amounts of $1,000,000 or more for a period substantially equal to such Interest Period, then, in any such event, CD Rate shall mean, with respect to such Interest Period and to the applicable CD Borrowing, the arithmetic average (expressed as a percentage rounded upward, if necessary, to the nearest 1/1000th of 1%) of the offered rates (each expressed as a per annum rate) offered by leading New York City dealers in negotiable certificates of deposit at 10:30 a.m., New York City time, on the first day of such Interest Period for the purchase at face value from the Agent of negotiable certificates of deposit or equivalent instruments in amounts of $1,000,000 or more for the period of, or for a period comparable or substantially equal to, such Interest Period. "CD RESERVE REQUIREMENT" shall mean, at any date as of which any determination thereof is being or to be made and with respect to any CD Loan and the applicable Interest Period in respect of which any determination thereof is being or to be made, the amount (expressed as a decimal, rounded upward, if necessary, to six decimal places) equal to the sum of (i) the aggregate of all reserve requirements (including, without duplication, all basic, supplemental, marginal and other reserves) in effect on such date (as established under Regulation D of the Board, or any other regulation of the Board which prescribes reserve requirements applicable to Dollar non-personal time deposits then in effect and applicable to the Lender making such Loan), on Dollar non-personal time deposits in the United States of the type used as a reference in determining the CD Rate and having a maturity equal or comparable to the applicable Interest Period, as and to the extent that such Lender is subject to such requirements, and (ii) the aggregate of all reserve or similar requirements of any other Governmental Body having jurisdiction over such Lender in respect of such Dollar non-personal time deposits in the United States having a maturity equal or comparable to the applicable Interest Period. "CLOSING DATE" shall mean August 14, 2001. "CODE" shall mean the Internal Revenue Code of 1986, as the same may be amended from time to time. 5 "COMMITMENT" shall mean, with respect to each Lender, the commitment of such Lender hereunder as set forth in Schedule 2.01 hereto, as such Lender's Commitment may be permanently terminated or reduced from time to time pursuant to Section 2.11. Schedule 2.01 will be deemed to have been appropriately amended to reflect any addition of a Commitment pursuant to Section 2.11(d), assignment pursuant to Section 9.03 or termination or reduction of any Commitment. "COMMITMENT TERMINATION DATE" shall mean August 13, 2002, or any date to which the Commitment Termination Date shall have been extended pursuant to Section 2.11(e). "COMPETITIVE BID" shall mean an offer by a Lender to make a Competitive Loan pursuant to Section 2.03. "COMPETITIVE BID ACCEPT/REJECT LETTER" shall mean a notification made by the Borrower pursuant to Section 2.03(d) in the form of Exhibit A-4. "COMPETITIVE BID RATE" shall mean, as to any Competitive Bid made by a Lender pursuant to Section 2.03(b), (i) in the case of a Eurodollar Loan, the Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of interest offered by the Lender making such Competitive Bid. "COMPETITIVE BID REQUEST" shall mean a request made pursuant to Section 2.03 in the form of Exhibit A-1. "COMPETITIVE BORROWING" shall mean a borrowing consisting of a Competitive Loan or concurrent Competitive Loans from the Lender or Lenders whose Competitive Bids for such Borrowing have been accepted by the Borrower under the bidding procedure described in Section 2.03. "COMPETITIVE LOAN" shall mean a Loan from a Lender to the Borrower pursuant to the bidding procedure described in Section 2.03. Each Competitive Loan shall be a Eurodollar Competitive Loan or a Fixed Rate Loan. "CONSOLIDATED" shall refer to the consolidation of the accounts of the Borrower and the Subsidiaries in accordance with generally accepted accounting principles, including principles of consolidation. "CONSOLIDATED DEBT" shall mean, as at the date as of which any determination thereof is being or to be made, Debt of the Borrower and the Subsidiaries, without duplication, determined on a Consolidated basis in accordance with generally accepted accounting principles. "CONSOLIDATED FINANCIAL STATEMENTS OF THE BORROWER" shall mean the Consolidated balance sheet of the Borrower and Subsidiaries as at December 31, 2000 and 1999 and the Consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2000, and the Notes to Financial Statements in respect thereof, together with the Report of PricewaterhouseCoopers LLP, independent accountants, in respect thereof, all as set forth at pages 53 through 80, inclusive, of the Annual Report on Form 10-K for the Borrower 6 for the year ended December 31, 2000, a copy of which has heretofore been delivered to each of the Lenders. "CONSOLIDATED INTEREST EXPENSE" shall mean, with respect to any Annual Period in respect of which a determination thereof is being or to be made, without duplication and excluding intercorporate transactions among the Borrower and the Subsidiaries, the sum of (i) Consolidated interest accrued in respect of all Consolidated Debt of the Borrower and the Subsidiaries during such Annual Period, whether or not paid and whether expensed or capitalized, calculated and determined after giving effect, as and to the extent permitted by generally accepted accounting principles, to any amounts paid or received by the Borrower or the Subsidiaries under interest rate exchange and similar agreements and arrangements which are intended to hedge or limit interest rates and expenses, PLUS (ii) amortization of debt expense and discount or premium relating to any such Debt (including and giving effect to any similar amounts paid or received by the Borrower and the Subsidiaries under any such interest rate exchange or similar agreement or arrangement) during such period, whether or not paid and whether expensed or capitalized, PLUS (iii) the portion of rental expense payable during such period pursuant to all capital lease obligations (which are recorded as Debt) representing imputed interest recorded in accordance with generally accepted accounting principles. "CONSOLIDATED NET WORTH" shall mean, as at the end of any fiscal quarter in respect of which a determination thereof is being or to be made, the Consolidated stated capital, surplus and retained earnings of the Borrower and the Subsidiaries, before (i) foreign currency translation adjustment and (ii) the effect (on such retained earnings) of the recognition of the one time charge for the "transition obligation" of the Borrower and the Subsidiaries upon the Borrower's adoption of, and under and in accordance with the applicable provisions of, Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions" in 1992. "CONSOLIDATED OPERATING INCOME" shall mean, with respect to any Annual Period in respect of which a determination thereof is being or to be made, the Consolidated net sales of the Borrower and the Subsidiaries for such Annual Period, PLUS other income, depreciation and amortization, MINUS cost of goods sold and selling, administrative and general expense properly attributable to continuing operations of the Borrower and the Subsidiaries for such Annual Period. "DEBT" shall mean and shall include, 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 Borrower and the Subsidiaries intercorporate debt and other intercorporate obligations solely among the Borrower and the Subsidiaries, all (i) indebtedness of such Person for borrowed money, (ii) obligations of such Person evidenced by bonds, debentures, notes or other 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, (iv) obligations of such Person as lessee under leases which obligations are, in accordance with generally accepted accounting principles, recorded as capital lease obligations, and (v) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) of such Person to purchase or 7 otherwise acquire, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above. Whenever any determination of the amount of Debt (or of Consolidated Debt or Funded Debt) is required or permitted to be, or is otherwise being or to be, made for any purpose under this Agreement, the amount of any such Debt denominated in any currency other than Dollars shall be calculated at the Dollar Equivalent of such Debt as at the date as of which such determination of the amount of Debt is being or to be made, except that, if all or any portion of the principal amount of any such Debt which is payable in a currency other than Dollars is hedged into Dollars, the principal amount of such hedged Debt, 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. "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 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 display designated page "Spot" 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. "DOLLARS" or "$" shall mean lawful money of the United States of America. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time, and the regulations promulgated and the rulings issued thereunder. "ERISA LIABILITIES" shall mean, as at the date as of which any determination in respect thereof is being or to be made, the minimum liability with respect to Plans which would be required to be reflected at such time as a liability on the Consolidated balance sheet of the Borrower and the Subsidiaries under paragraphs 36 and 70 of Statement of Financial Accounting Standards No. 87 as such statement may from time to time be amended, modified or supplemented, or under any successor statement issued in replacement thereof. "EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar Loans. "EURODOLLAR COMPETITIVE LOAN" shall mean any Competitive Loan bearing interest at a rate determined by reference to the LIBO Rate in accordance with the provisions of Article II. "EURODOLLAR LOAN" shall mean any Eurodollar Competitive Loan or Eurodollar Standard Loan. 8 "EURODOLLAR RESERVE REQUIREMENT" shall mean, at any date as of which any determination thereof is being or to be made and with respect to any Eurodollar Loan and the applicable Interest Period in respect of which any determination thereof is being or to be made, the amount (expressed as a decimal, rounded upward, if necessary, to six decimal places) of the applicable statutory reserve or similar requirements (including, without duplication, all basic, supplemental, marginal, emergency, special and other reserves), if any, on Eurodollar deposits applicable to and imposed upon the applicable Lender from time to time under regulations issued from time to time by the Board (or any successor) for determining the minimum reserve requirement (including, without limitation, any such reserve requirements under Regulation D of the Board and any emergency, supplemental or other marginal reserve requirements), or by any other Governmental Body having jurisdiction over such Lender, applicable to such Lender with respect to liabilities or assets consisting of or including Eurocurrency liabilities (as defined in Regulation D of the Board, as in effect from time to time) having a term substantially equal to such Interest Period. "EURODOLLAR STANDARD LOAN" shall mean any Standard Loan bearing interest at a rate determined by reference to the LIBO Rate in accordance with the provisions of Article II. "EVENT OF DEFAULT" shall have the meaning assigned to such term in Article VII. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and any successor Federal statute. "EXCLUDED TAXES" shall mean, with respect to any Lender, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America (or any political subdivision thereof), or by the jurisdiction under which such Lender is organized or in which its principal office or any lending office from which it makes Loans hereunder is located, (b) any branch profit taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above, (c) any withholding tax that is imposed by the United States of America (or any political subdivision thereof) on payments to such Lender by the Borrower from an office within such jurisdiction to the extent such tax is in effect and would apply as of the date such Lender becomes a party to this Agreement or relates to payments received by a new lending office designated by such Lender and is in effect and would apply at the time such lending office is designated or (e) any withholding tax that is attributable to such Lender's failure to comply with Section 2.17(e), except, in the case of clause (c) above, to the extent that (i) such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.17(a) or (ii) such withholding tax shall have resulted from the making of any payment to a location other than the office designated by the Agent for the receipt of payments of the applicable type from the Borrower. "FACILITY FEE" shall have the meaning assigned to such term in Section 2.06(a). "FACILITY FEE PERCENTAGE" shall mean, as at the date as of which any determination in respect thereof is being or to be made, the applicable percentage set 9 forth below based upon the Leverage Ratio as of the last day of the relevant fiscal quarter: Category Leverage Ratio Facility Fee Percentage -------- -------------- ----------------------- 1 less than or equal to 25% 0.1000% 2 greater than 25% but less 0.1250% than or equal to 40% 3 greater than 40% but less 0.1500% than or equal to 55% 4 greater than 55% 0.2000% The Leverage Ratio shall be determined at the end of each fiscal quarter of the Borrower and shall be effective in respect of the entire next succeeding fiscal quarter of the Borrower. The Borrower shall deliver a certificate setting forth the calculation of the Leverage Ratio with respect to the end of each fiscal quarter, which certificate shall be delivered with the annual and quarterly financial statements required to be delivered under paragraph (c) of Article V. Notwithstanding the foregoing, at any time that the Borrower shall fail to deliver to the Agent such certificate by the time required under such paragraph (c), the Facility Fee Percentage shall be deemed to be that corresponding to Category 4 until such time as the Borrower shall so deliver such certificate. "FEES" shall mean the Facility Fee, the Utilization Fee and the Administrative Fees. "FIVE-YEAR AMENDMENT" shall mean an amendment dated as of the date hereof to the Borrower's Five-Year Revolving Credit Agreement, dated as of August 15, 2000, as amended pursuant to an Amendment dated as of January 26, 2001, substantially in the form attached hereto as Exhibit F. "FIXED RATE BORROWING" shall mean a Borrowing comprised of Fixed Rate Loans. "FIXED RATE LOAN" shall mean any Competitive Loan bearing interest at a fixed percentage rate per annum (expressed in the form of a decimal to no more than four decimal places) specified by the Lender making such Loan in its Competitive Bid. "FUNDED DEBT" shall mean and include, as at any date as of which any determination thereof is being or to be made, any Debt of the Borrower which by its terms (i) matures more than one year after the date on which it was issued, incurred, assumed or guaranteed by the Borrower, or (ii) matures one year or less after the date it was issued, incurred, guaranteed or assumed which at such date may be renewed at the sole election or option of the Borrower so as to mature more than one year after such date. 10 "GOVERNMENTAL BODY" shall mean the United States of America, any State thereof, any other country or any political subdivision of such other country, or any department, agency, commission, board, bureau or instrumentality of the United States of America, any State thereof, any other country or political subdivision of such other country or any subdivision of any of them, and, to the extent the term is used in respect of the Agent or any Lender, any quasi-governmental body, agency or authority (including any central bank) exercising regulatory authority over the Agent or any Lender pursuant to applicable law in respect of the transactions contemplated by this Agreement. "INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes. "INTEREST PAYMENT DATE" shall mean, with respect to any Loan, the last day of the Interest Period applicable thereto and the Maturity Date and, in the case of a Eurodollar Loan or a CD Loan with an Interest Period of more than three months' duration or a Fixed Rate Loan with an Interest Period of more than 90 days' duration, each day that would have been an Interest Payment Date for such Loan had successive Interest Periods of three months' duration or 90 days' duration, as the case may be, been applicable to such Loan and, in addition, the date of any refinancing or conversion of such Loan with or to a Loan of a different Type; PROVIDED that with respect to any ABR Loan, Interest Payment Date shall mean the last day of each fiscal quarter. "INTEREST PERIOD" shall mean (a) as to any Eurodollar Borrowing, the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3, 6 or 12 months thereafter (or, in the case of a Eurodollar Competitive Borrowing, on any day that is 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 or 12 months thereafter), as the Borrower may elect, (b) as to any CD Borrowing, a period of 1, 3 or 6 months' duration, as the Borrower may elect, commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as the case may be, (c) as to any ABR Borrowing, the period commencing on the date of such Borrowing and ending on the date 90 days thereafter or, if earlier, on the Maturity Date or the date of prepayment of such Borrowing and (d) as to any Fixed Rate Borrowing, the period commencing on the date of such Borrowing and ending on the date specified in the Competitive Bids in which the offers to make the Fixed Rate Loans comprising such Borrowing were extended, which shall not be earlier than seven days after the date of such Borrowing or later than the Maturity Date; PROVIDED, HOWEVER, that if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of Eurodollar Loans only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period. "LEVERAGE RATIO" shall mean, as at the end of any fiscal quarter in respect of which a determination thereof is being or to be made, the quotient (expressed as a percentage) of (a) the sum of (i) "notes payable to banks and overdrafts", PLUS (ii) "long term debt due within one year", PLUS (iii) "long term debt and capital leases" (as each such item is reported on the Consolidated balance sheet of the Borrower and the Subsidiaries as at the end of such fiscal quarter), PLUS (iv) the net proceeds from the sale 11 of domestic accounts receivable outstanding at the end of such fiscal quarter (determined in a manner consistent with that used in preparing the Borrower's 2000 Annual Report on Form 10-K), DIVIDED by (b) the sum of (i) Consolidated Net Worth (without giving effect to the exclusion contained in clause (ii) of the definition of the term "Consolidated Net Worth" and without giving effect to the $499.3 million after-tax writedown of the Borrower's Oil Transportation Segment Assets in December of 1996), plus (ii) the sum obtained pursuant to clause (a) above. "LIBO RATE" shall mean, with respect to any Interest Period relating to a Eurodollar Loan, the rate of interest (expressed as an annual rate) equal to the British Bankers Association (the "BBA") interest settlement rate for United States Dollars (the "BBA Interest Settlement Rate for USD") for a period substantially equal to such Interest Period as quoted at page 3750 of the Telerate Service ("Telerate 3750"), or at such page or display as may replace Telerate 3750 or on such other service as may be nominated by the BBA as the information vendor for the purpose of displaying the BBA Interest Settlement Rate for USD ("BBA Interest Settlement Rate Screen"), for delivery on the first day of such Interest Period, such rate to be established from the quote on Telerate 3750 at 11:00 a.m. (or as near as practicable thereto), London time, two Business Days prior to the first day of such Interest Period (which shall be a Business Day); PROVIDED, THAT, if no rate for the relevant Interest Period is quoted on Telerate 3750, or any successor or substitute BBA Interest Settlement Rate Screen, then the LIBO Rate shall be the rate of interest equal to the arithmetic average (expressed as a percentage rounded upward, if necessary, to the nearest 1/1000th of 1%) of the rates (expressed as annual rates) at which deposits in Dollars in amounts of $5,000,000 or more for a period substantially equal to such Interest Period are offered by the LIBOR Reference Banks to prime banks in the London interbank market for delivery on the first day of such Interest Period, such rates to be established from quotes obtained at (or as near as practicable to) 12:00 noon (London time) two Business Days prior to the first day of such Interest Period (which shall be a Business Day); PROVIDED FURTHER, THAT, if with respect to any such Interest Period fewer than two LIBOR Reference Banks are offering quotations, then the LIBO Rate shall be equal to the arithmetic average (rounded upward, if necessary, to the nearest 1/1000th of 1%) of the rates (expressed as annual rates) at which the Reference Banks are offered deposits in Dollars in New York in amounts of $5,000,000 or more for delivery on the first day of such Interest Period for a period substantially equal to the Interest Period by leading banks in the New York interbank market as of 11:00 a.m. (New York time) on the first day of such Interest Period (which shall be a business day). As used herein, the term "LIBOR REFERENCE BANKS" shall mean The Chase Manhattan Bank, BNP Paribas, London, and Credit Suisse, London, Limited, and the term "REFERENCE BANKS" shall mean Bank of America N.A., Citibank, N.A., and Commerzbank Aktiengesellschaft. "LIEN" shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset 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. "LOAN" shall mean a Competitive Loan or a Standard Loan, whether made as a Eurodollar Loan, a CD Loan, an ABR Loan or a Fixed Rate Loan, as permitted hereby. 12 "MAJORITY LENDERS" shall mean, at any time, Lenders having Commitments representing at least a majority of the Total Commitment. "MANUFACTURING FACILITY" shall mean any plant, other facility or equipment owned by the Borrower or a Subsidiary which is used primarily to manufacture automotive or other products, but shall not include (i) retread plants, facilities or equipment, (ii) plants, facilities or equipment which, in the opinion of the Board of Directors of the Borrower, are not of material importance to the total business conducted by the Borrower and the Subsidiaries, or (iii) plants, facilities or equipment which, in the opinion of the Board of Directors of the Borrower, are used primarily for transportation, marketing or warehousing. "MARGIN" shall mean, as to any Eurodollar Competitive Loan, the margin (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) to be added to or subtracted from the LIBO Rate in order to determine the interest rate applicable to such Loan, as specified in the Competitive Bid relating to such Loan. "MATURITY DATE" shall mean the second anniversary of the Commitment Termination Date. "NET INCOME" shall mean, with respect to any period in respect of which a determination is being made or to be made, consolidated net income of the Borrower and the Subsidiaries for such period determined in accordance with generally accepted accounting principles in the United States, as in effect on the Closing Date. "PERSON" shall mean any natural person, corporation, business trust, joint venture, association, company, partnership or Governmental Body. "PLAN" shall mean an employee benefit plan, other than a Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA), which (i) is (or, in the event that any such plan has been terminated within five years of a transaction described in Section 4069 of ERISA, was) maintained for employees of the Borrower (or any trade or business which would be considered as under common control with the Borrower within the meaning of Section 4001(b) of ERISA) and subject to Title IV of ERISA, and (ii) has assets having an aggregate market value in excess of $100,000,000. "REQUIRED LENDERS" shall mean, at any time, Lenders having Commitments representing at least two-thirds of the Total Commitment or, for purposes of acceleration pursuant to clause (ii) of Article VII, Lenders holding Loans representing at least two-thirds of the aggregate principal amount of the Loans outstanding. "REUTER SYSTEM" shall mean the Reuter Money Service Monitor System. "SCHEDULE OF COMPLIANCE" shall mean a Schedule of Compliance, substantially in the form of Exhibit C, prepared by the Borrower and delivered to the Lenders pursuant to subsection (c) of Article V. "STANDARD BORROWING" shall mean a borrowing consisting of simultaneous Standard Loans from each of the Lenders. 13 "STANDARD BORROWING REQUEST" shall mean a request made pursuant to Section 2.04 in the form of Exhibit A-5. "STANDARD LOANS" shall mean the revolving loans made by the Lenders to the Borrower pursuant to Section 2.04. Each Standard Loan shall be a Eurodollar Standard Loan, a CD Loan or an ABR Loan. "SUBSIDIARY" shall mean any corporation, partnership, limited liability company, joint venture, trust or estate of which (or in which) more than 50% of (i) the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (ii) the interest in the capital or profits of such partnership, limited liability company or joint venture, or (iii) the beneficial interest of such trust or estate, is at the time directly or indirectly owned by the Borrower, by the Borrower and one or more other Subsidiaries, or by one or more other Subsidiaries. "SUPPLEMENTAL AMOUNT" shall mean, as at the end of any fiscal quarter of the Borrower in respect of which a determination thereof is being or to be made, the Dollar amount (if a positive number), if any, which is equal to the product of (x) the remainder obtained by subtracting $3,800,000,000 from the Consolidated Net Worth of the Borrower as at the end of such fiscal quarter, multiplied by (y) .50. "TAXES" shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Body. "TOTAL COMMITMENT" shall mean at any time the aggregate amount of the Lenders' Commitments, as in effect at such time. "TYPE", when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, "Rate" shall include the LIBO Rate, the CD Rate, the Alternate Base Rate and the Fixed Rate. "UTILIZATION FEE" shall have the meaning assigned to such term in Section 2.06(b). SECTION 1.02. TERMS GENERALLY. The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, all terms of an accounting or financial 14 nature shall be construed in accordance with generally accepted accounting principles in the United States, as in effect on the Closing Date. ARTICLE II. THE CREDITS SECTION 2.01. COMMITMENTS. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, to make Standard Loans to the Borrower, at any time and from time to time on and after the date hereof and until (and including) the Commitment Termination Date or the date of any earlier termination of the Commitment of such Lender, in an aggregate principal amount at any time outstanding not to exceed such Lender's Commitment minus the amount by which the Competitive Loans outstanding at such time shall be deemed to have used such Commitment pursuant to Section 2.15, subject, however, to the conditions that (a) at no time shall (i) the sum of (x) the outstanding aggregate principal amount of all Standard Loans made by all Lenders plus (y) the outstanding aggregate principal amount of all Competitive Loans made by all Lenders exceed (ii) the Total Commitment and (b) except as otherwise provided in Section 2.07(a), at all times the outstanding aggregate principal amount of all Standard Loans made by each Lender shall equal the product of (i) the percentage which its Commitment represents of the Total Commitment times (ii) the outstanding aggregate principal amount of all Standard Loans made pursuant to Section 2.04. Each Lender's Commitment is set forth opposite its respective name in Schedule 2.01. Such Commitments may be terminated, reduced or extended from time to time pursuant to Section 2.11. Within the foregoing limits, the Borrower may borrow, pay or prepay and reborrow hereunder, on and after the Closing Date and prior to the Commitment Termination Date, subject to the terms, conditions and limitations set forth herein. SECTION 2.02. LOANS. (a) Each Standard Loan shall, except as otherwise provided in Section 2.07(a), be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their Commitments; PROVIDED, HOWEVER, that the failure of any Lender to make any Standard Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.03. The Standard Loans or Competitive Loans comprising any Borrowing shall be in an aggregate principal amount which is an integral multiple of $1,000,000 and not less than $25,000,000 in the case of Standard Loans and $5,000,000 in the case of Competitive Loans (or an aggregate principal amount equal to the remaining balance of the available Total Commitment). (b) Each Competitive Borrowing shall be comprised entirely of Eurodollar Competitive Loans or Fixed Rate Loans, and each Standard Borrowing shall be comprised entirely of Eurodollar Standard Loans, CD Loans or ABR Loans, as the Borrower may request pursuant to Section 2.03 or 2.04, as applicable. Borrowings of more than one Type or of the same Type and having different Interest Periods may be outstanding at the same time. For purposes of the foregoing, Loans of different Types and Loans having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Loans and separate Borrowings. 15 (c) Subject to Section 2.05, each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to the Agent in New York, New York, not later than 11:30 a.m., New York City time, and the Agent shall transfer the entire amount received to the Borrower in Dollars in immediately available funds at the bank and to the account designated by the Borrower as promptly as practicable and in any event by such a time that such funds will be available for retransfer, investment or other use by the Borrower on the borrowing date or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. Competitive Loans shall be made by the Lender or Lenders whose Competitive Bids therefor are accepted pursuant to Section 2.03 in the amounts so accepted and Standard Loans shall be made by the Lenders pro rata in accordance with Section 2.15. Unless the Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Agent such Lender's portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with this paragraph (c) and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have made such portion available to the Agent, such Lender and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent at the Federal Funds Effective Rate; PROVIDED that if such Lender does not pay such principal amount to the Agent within five Business Days and the Borrower repays such principal amount on the sixth Business Day, such Lender shall be responsible for interest during such six Business Day period, provided that the Agent, if it shall first have made demand on such Lender and shall not have received payment, may recover such interest from the Borrower. If such Lender shall pay to the Agent such corresponding amount within five Business Days, such amount shall constitute such Lender's Loan as part of such Borrowing for purposes of this Agreement. (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date. SECTION 2.03. COMPETITIVE BID PROCEDURE. (a) In order to request Competitive Bids, the Borrower shall hand deliver or telecopy to the Agent a duly completed Competitive Bid Request in the form of Exhibit A-1 hereto, to be received by the Agent (i) in the case of a Eurodollar Competitive Borrowing, not later than 10:00 a.m., New York City time, four Business Days before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City time, one Business Day before a proposed Competitive Borrowing. No CD Loan or ABR Loan shall be requested in, or made pursuant to, a Competitive Bid Request. A Competitive Bid Request that does not conform substantially to the format of Exhibit A-1 may be rejected in the Agent's sole discretion, and the Agent shall promptly notify the Borrower of such rejection by telecopier. Such request shall in each case refer to this Agreement and specify (x) whether the Borrowing then being requested is to be a Eurodollar Borrowing or a Fixed Rate Borrowing, (y) the date of such Borrowing (which shall be a Business Day) and the aggregate principal amount thereof which shall be in a minimum principal amount of $25,000,000 and in an integral multiple of $1,000,000, and (z) the Interest Period with respect thereto (which may not end after the Maturity 16 Date). Promptly after its receipt of a Competitive Bid Request that is not rejected as aforesaid, the Agent shall invite by telecopier (in the form set forth in Exhibit A-2 hereto) the Lenders to bid, on the terms and conditions of this Agreement, to make Competitive Loans pursuant to the Competitive Bid Request. (b) Each Lender may, in its sole discretion, make one or more Competitive Bids to the Borrower responsive to a Competitive Bid Request. Each Competitive Bid by a Lender must be received by the Agent via telecopier, in the form of Exhibit A-3 hereto, (i) in the case of a Eurodollar Competitive Borrowing, not later than 9:30 a.m., New York City time, three Business Days before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City time, on the day of a proposed Competitive Borrowing. Multiple bids will be accepted by the Agent. Competitive Bids that do not conform substantially to the format of Exhibit A-3 may be rejected by the Agent after conferring with, and upon the instruction of, the Borrower, and the Agent shall notify the Lender making such nonconforming bid of such rejection as soon as practicable. Each Competitive Bid shall refer to this Agreement and specify (x) the principal amount (which shall be in a minimum principal amount of $5,000,000 and in an integral multiple of $1,000,000 and which may equal the entire principal amount of the Competitive Borrowing requested by the Borrower) of the Competitive Loan or Loans that the Lender is willing to make to the Borrower, (y) the Competitive Bid Rate or Rates at which the Lender is prepared to make the Competitive Loan or Loans and (z) the Interest Period and the last day thereof. If any Lender shall elect not to make a Competitive Bid, such Lender shall so notify the Agent via telecopier (I) in the case of Eurodollar Competitive Loans, not later than 9:30 a.m., New York City time, three Business Days before a proposed Competitive Borrowing, and (II) in the case of Fixed Rate Loans, not later than 9:30 a.m., New York City time, on the day of a proposed Competitive Borrowing; PROVIDED, HOWEVER, that failure by any Lender to give such notice shall not cause such Lender to be obligated to make any Competitive Loan as part of such Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant to this paragraph (b) shall be irrevocable. (c) The Agent shall promptly notify the Borrower by telecopier of all the Competitive Bids made, the Competitive Bid Rate and the principal amount of each Competitive Loan in respect of which a Competitive Bid was made and the identity of the Lender that made each bid. The Agent shall send a copy of all Competitive Bids to the Borrower for its records as soon as practicable after completion of the bidding process set forth in this Section 2.03. (d) The Borrower may in its sole and absolute discretion, subject only to the provisions of this paragraph (d), accept or reject any Competitive Bid referred to in paragraph (c) above (and the Competitive Bids accepted need not be in any minimum aggregate amount except as provided below in this paragraph). The Borrower shall notify the Agent by telephone, confirmed by telecopier in the form of a Competitive Bid Accept/Reject Letter in the format of Exhibit A-4, whether and to what extent it has decided to accept or reject any of or all the bids referred to in paragraph (c) above, (x) in the case of a Eurodollar Competitive Borrowing, not later than 10:30 a.m., New York City time, three Business Days before a proposed Competitive Borrowing, and (y) in the case of a Fixed Rate Borrowing, not later than 10:30 a.m., New York City time, on the day of a proposed Competitive Borrowing; PROVIDED, HOWEVER, that (i) the failure by the Borrower to give such notice shall be deemed to be a rejection of all the bids referred to in paragraph (c) above, (ii) the Borrower shall not accept a bid made at a particular 17 Competitive Bid Rate if the Borrower has decided to reject a bid made at a lower Competitive Bid Rate, (iii) if the Borrower shall accept a bid or bids made at a particular Competitive Bid Rate but the amount of such bid or bids shall cause the total amount of bids to be accepted by the Borrower to exceed the amount that the Borrower desires to borrow, then the Borrower shall accept a portion of such bid or bids in an amount equal to the amount that the Borrower desires to borrow less the amount of all other Competitive Bids accepted with respect to such Competitive Bid Request, which acceptance, in the case of multiple bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such bid at such Competitive Bid Rate, and (iv) except pursuant to clause (iii) above, no bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of $5,000,000 and an integral multiple of $1,000,000; PROVIDED FURTHER, HOWEVER, that if a Competitive Loan must be in an amount less than $5,000,000 because of the provisions of clause (iii) above, such Competitive Loan may be for a minimum of $1,000,000 or any integral multiple thereof, and in calculating the pro rata allocation of acceptances of portions of multiple bids at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples of $1,000,000 in a manner which shall be in the discretion of the Borrower. The Borrower may accept Competitive Bids in an aggregate principal amount in excess of the principal amount specified in the relevant Competitive Bid Request. A notice given by the Borrower in the form of a Competitive Bid Accept/Reject Letter pursuant to this paragraph (d) shall be irrevocable. (e) The Agent shall promptly notify each bidding Lender whether or not its Competitive Bid has been accepted (and if so, in what amount and at what Competitive Bid Rate or Rates) by telecopy sent by the Agent, and each successful bidder will thereupon become bound, subject to the other applicable conditions hereof, to make the Competitive Loans in respect of which its Competitive Bid has been accepted. (f) A Competitive Bid Request shall not be made within five Business Days after the date of any previous Competitive Bid Request. (g) If the Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such bid directly to the Borrower one quarter of an hour earlier than the latest time at which the other Lenders are required to submit their Competitive Bids to the Agent pursuant to paragraph (b) above. (h) All notices required by this Section 2.03 shall be given in accordance with Section 9.01. SECTION 2.04. STANDARD BORROWING PROCEDURE. In order to request a Standard Borrowing, the Borrower shall hand deliver or telecopy to the Agent notice thereof in the form of Exhibit A-5 (a) in the case of a Eurodollar Standard Borrowing or a CD Borrowing, not later than 3:00 p.m., New York City time, three Business Days before a proposed Borrowing and (b) in the case of an ABR Borrowing, not later than 10:30 a.m., New York City time, on the day of a proposed Borrowing. No Fixed Rate Loan shall be requested or made pursuant to a Standard Borrowing Request. Such notice shall be irrevocable and shall in each case specify (i) whether the Borrowing then being requested is to be a Eurodollar Standard Borrowing, a CD Borrowing or an ABR Borrowing; (ii) the date of such Standard Borrowing (which shall be a Business Day) and the amount thereof; and (iii) if such Borrowing is to be a Eurodollar Standard Borrowing or CD Borrowing, the Interest Period with respect thereto. If no Interest 18 Period with respect to any Eurodollar Standard Borrowing or CD Borrowing is specified in any such notice, then the Borrower shall be deemed to have selected an Interest Period of one month's duration, in the case of a Eurodollar Standard Borrowing, or one month's duration, in the case of a CD Borrowing. If the Borrower shall not have given notice in accordance with this Section 2.04 of its election to refinance a Standard Borrowing prior to the end of the Interest Period in effect for such Borrowing, then the Borrower shall (unless such Borrowing is repaid at the end of such Interest Period) be deemed to have given notice of an election to refinance such Borrowing with an ABR Borrowing and the Agent will advise the Borrower that such notice has not been received (but shall not be liable to the Borrower for any unintentional omission to do so). The Agent shall promptly advise the Lenders of any notice given or deemed to have been given pursuant to this Section 2.04 and of each Lender's portion of the requested Borrowing. SECTION 2.05. REFINANCINGS. The Borrower may refinance all or any part of any Borrowing with a Borrowing of the same or a different Type made pursuant to Section 2.03 or Section 2.04, subject to the conditions and limitations set forth herein and elsewhere in this Agreement, including refinancings of Competitive Borrowings with Standard Borrowings and Standard Borrowings with Competitive Borrowings. Any Borrowing or part thereof so refinanced shall be deemed to be repaid in accordance with Section 2.07 with the proceeds of a new Borrowing hereunder and the proceeds of the new Borrowing, to the extent they do not exceed the principal amount of the Borrowing being refinanced, shall not be paid by the Lenders to the Agent or by the Agent to the Borrower pursuant to Section 2.02(c); PROVIDED, HOWEVER, that (i) if the principal amount extended by a Lender in a refinancing is greater than the principal amount extended by such Lender in the Borrowing being refinanced, then such Lender shall pay such difference to the Agent for distribution to the Lenders described in (ii) below, (ii) if the principal amount extended by a Lender in the Borrowing being refinanced is greater than the principal amount being extended by such Lender in the refinancing, the Agent shall return the difference to such Lender out of amounts received pursuant to (i) above, and (iii) to the extent any Lender fails to pay the Agent amounts due from it pursuant to (i) above, any Loan or portion thereof being refinanced with such amounts shall not be deemed repaid in accordance with Section 2.07 and shall be payable by the Borrower. SECTION 2.06. FEES. (a) The Borrower agrees to pay to each Lender, through the Agent, on each March 31, June 30, September 30 and December 31, and on the Maturity Date or on any earlier date on which the Commitment of such Lender shall have terminated and its outstanding Loans repaid, a facility fee (a "FACILITY FEE") equal to the applicable Facility Fee Percentage per annum on the amount of the Commitment of such Lender, whether used or unused, or, following the Commitment Termination Date, the amount of the outstanding Loans of such Lender, during the preceding quarter (or shorter period commencing with the date hereof or ending with the Maturity Date or the date of such termination and repayment). All Facility Fees shall be computed on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be. The Facility Fee due to each Lender shall commence to accrue on the date hereof and shall cease to accrue on the Maturity Date or any earlier date on which the Commitment of such Lender shall have terminated (but shall in any event accrue until all Loans made by such Lender have been repaid). (b) The Borrower agrees to pay to each Lender, through the Agent, on each March 31, June 30, September 30 and December 31 and on each date on which the Commitment of such Lender shall be terminated or reduced as provided herein, a 19 utilization fee of 0.250% per annum (a "Utilization Fee") (i) on such Lender's pro rata portion (based on the ratio of such Lender's Commitment to the Total Commitment) of the aggregate principal amount of all of the outstanding Loans for each day during the preceding quarter (or other period commencing on the date hereof or ending with the Maturity Date or any date on which the Commitment of such Lender shall be terminated and its outstanding Loans repaid in full) on which the sum of the outstanding Loans, including Competitive Loans, exceeds 50% of the Total Commitment and (ii) after the termination of such Lender's Commitment (other than as a result of the termination of the Commitments due to the occurrence of an Event of Default under clause (a) or (b) of Article VII), on the principal amount of such Lender's outstanding Loans. The Utilization Fee shall be computed on the basis of the actual number of days elapsed in a year of 360 days. The Utilization Fee due to each Lender shall be payable in arrears and shall commence to accrue on the date hereof and cease to accrue on the earlier of the Maturity Date and the date on which the Commitment of such Lender is terminated and its outstanding Loans repaid in full as provided herein. (c) The Borrower agrees to pay the Agent, for its own account, agent and administrative fees (the "Administrative Fees") at the times and in the amounts agreed upon in the letter agreement dated July 24, 2001, between the Borrower and the Agent. (d) All Fees shall be paid on the dates due, in immediately available funds, to the Agent for distribution, if and as appropriate, among the Lenders. Once paid, none of the Fees shall be refundable under any circumstances. SECTION 2.07. REPAYMENT OF LOANS; EVIDENCE OF DEBT; CONVERSION AND CONTINUATION OF STANDARD BORROWINGS. (a) The outstanding principal balance of each Competitive Loan and Standard Loan shall be payable on the last day of the Interest Period applicable to such Loan prior to the Commitment Termination Date and on the Commitment Termination Date applicable to the Lender making such Loan; PROVIDED, HOWEVER, that if the Borrower shall, at least three Business Days prior to such Commitment Termination Date, notify the Agent and such Lender of its election to (i) extend the maturity of one or more Standard Loans made by such Lender, or of any portion or portions of the principal amounts thereof, then outstanding, (ii) obtain from such Lender one or more new Standard Loans in such amount(s) as Borrower shall elect up to the Commitment of such Lender on such notice date (which Loan or Loans shall be made by such Lender on the Commitment Termination Date and, if for less than the entire Commitment of such Lender, shall be in a minimum amount of at least $1,000,000 and shall be, to the extent permitted, in integral multiples of $1,000,000), or (iii) obtain any combination of extensions of outstanding Standard Loans and new Standard Loans having an aggregate principal amount up to the Commitment of such Lender, all such Standard Loans shall in each case (notwithstanding the Interest Period(s) in respect thereof then selected) instead mature on the Maturity Date. Notwithstanding any other provision of this Agreement, in the event of any extensions of Standard Loans or any new Standard Loans, or both, by the Borrower from any Lender pursuant to the preceding sentence of this paragraph (a) at a time when the Commitment Termination Date has been extended as to other Lenders, then from and after the Commitment Termination Date in respect of such Lender (i) Section 2.15 shall no longer apply to the Loans of such Lender, and shall apply to the Loans of the other Lenders as to which the Commitment Termination Date has been extended as if such Lender were not a party to this Agreement; (ii) insofar as the rights and obligations of such Lender are concerned, this Agreement shall operate as if it were an agreement solely between the Borrower and 20 such Lender, with the result, INTER ALIA, that (A) such Lender shall have, as to its Loans, all the rights and obligations of the "Lenders" and the "Agent", (B) such Lender shall have an independent right to accelerate its Loans as provided in Article VII, (C) the consent of such Lender shall be required in order for any amendment to or waiver of this Agreement to be applicable to such Lender (and such Lender shall not be deemed to have a Commitment or Loans outstanding for the purpose of determining or participating in any action taken by the Majority Lenders or Required Lenders or any of the rights or obligations of the other Lenders), (D) all notices provided for hereunder shall be given directly by the Borrower to such Lender or by such Lender to the Borrower, as the case may be, and (E) all payments to which such Lender is entitled shall be made directly by the Borrower to such Lender; and (iii) the Agent shall have no further responsibilities with respect to such Lender or the administration of this Agreement as it relates to such Lender (but, at the request of the Borrower or such Lender from time to time, will determine the rates of interest applicable to the Loans of such Lender). (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid such Lender from time to time under this Agreement. (c) The Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type of each Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof. (d) The entries made in the accounts maintained pursuant to paragraphs (b) and (c) of this Section 2.07 shall, to the extent permitted by applicable law, be rebuttable evidence of the existence and amounts of the obligations therein recorded; PROVIDED, HOWEVER, that the failure of any Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loans in accordance with their terms. (e) Following the Commitment Termination Date applicable to each Lender, if the Borrower shall have elected to extend the maturity of the Loan of such Lender pursuant to Section 2.07(a), the Borrower shall have the right at any time upon prior irrevocable notice to the Agent and such Lender (i) not later than 12:00 (noon), New York City time, one Business Day prior to conversion, to convert any Eurodollar Standard Loan or CD Loan by such Lender then outstanding into an ABR Loan by such Lender, and (ii) not later than 3:00 p.m., New York City time, three Business Days prior to conversion or continuation, to convert any ABR Loan or CD Loan by such Lender into a Eurodollar Standard Loan, to continue any Eurodollar Standard Loan as a Eurodollar Standard Loan for an additional Interest Period, to convert any Eurodollar Standard Loan or ABR Loan by such Lender into a CD Loan by such Lender or to continue any CD Loan by such Lender as a CD Loan by such Lender for an additional Interest Period, subject in each case to the following: (i) if less than all the outstanding principal amount of any Standard Loan shall be converted or continued, the aggregate principal amount of such Standard Loan 21 converted or continued shall be an integral multiple of $1,000,000 and not less than $1,000,000; (ii) if any Eurodollar Standard Loan or CD Loan is converted at a time other than the end of the Interest Period applicable thereto, the Borrower shall pay, upon demand, any amount due to the applicable Lender pursuant to Section 2.12(d); and (iii) no Interest Period may be selected for any Eurodollar Standard Loan or CD Loan that would end later than the Maturity Date. Each notice pursuant to this paragraph (e) shall be irrevocable and shall refer to this Agreement and specify (i) the identity and amount of the Standard Loan that the Borrower requests be converted or continued, (ii) whether such Standard Loan is to be converted to or continued as a Eurodollar Standard Loan, a CD Loan or an ABR Loan, (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day) and (iv) if such Standard Loan is to be converted to or continued as a Eurodollar Standard Loan or CD Loan, the Interest Period with respect thereto. If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Eurodollar Standard Loan or CD Loan, the Borrower shall be deemed to have selected an Interest Period of one month's duration, in the case of a Eurodollar Standard Loan, or 30 days' duration, in the case of a CD Loan. If the Borrower shall not have given notice in accordance with this paragraph to continue any Standard Loan into a subsequent Interest Period (and shall not otherwise have given notice in accordance with this paragraph to convert such Standard Loan), such Standard Loan shall, at the end of the Interest Period applicable thereto (unless repaid pursuant to the terms hereof), automatically be continued into a new Interest Period as an ABR Loan. SECTION 2.08. INTEREST ON LOANS. (a) Subject to the provisions of Section 2.09, the Loans comprising each Eurodollar Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to (i) in the case of each Eurodollar Standard Loan, the LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Spread, and (ii) in the case of each Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in effect for such Borrowing plus (or minus) the Margin offered by the Lender making such Loan and accepted by the Borrower pursuant to Section 2.03. (b) Subject to the provisions of Section 2.09, the CD Loans comprising each CD Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the CD Rate for the Interest Period in effect for such Borrowing plus the Applicable Spread. (c) Subject to the provisions of Section 2.09, the ABR Loans comprising each ABR Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when determined by reference to the Prime Rate and over a year of 360 days at all other times) at a rate per annum equal to the Alternate Base Rate in effect from time to time during the Interest Period applicable to such ABR Borrowing. (d) Subject to the provisions of Section 2.09, each Fixed Rate Loan shall bear interest at a rate per annum (computed on the basis of the actual number of days 22 elapsed over a year of 360 days) equal to the fixed rate of interest offered by the Lender making such Loan and accepted by the Borrower pursuant to Section 2.03. (e) Subject to the provisions of Section 2.09, interest on each Loan shall be payable on each Interest Payment Date applicable to such Loan. The LIBO Rate and Adjusted LIBO Rate, the CD Rate and Adjusted CD Rate or the Alternate Base Rate for each Interest Period or day within an Interest Period shall be determined by the Agent in accordance with the terms and conditions of this Agreement, and such determination shall be conclusive absent manifest error. SECTION 2.09. DEFAULT INTEREST. If the Borrower shall default in the payment of the principal of or interest on any Loan or any other amount becoming due hereunder, whether by scheduled maturity, notice of prepayment, acceleration or otherwise, the Borrower shall on demand from time to time from the Agent or the Majority Lenders pay interest, to the extent permitted by law, on such defaulted amount up to (but not including) the date of actual payment (after as well as before judgment) at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to the Alternate Base Rate plus 1%. SECTION 2.10. UNAVAILABILITY OF LIBO RATE AND CD RATE QUOTATIONS. (a) In the event that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Borrowing the Agent shall have determined that it is not possible to ascertain a LIBO Rate for such Interest Period as contemplated in the definition of LIBO Rate in Section 1.01, the Agent shall, as soon as practicable thereafter, give written or telecopy notice of such event to the Borrower and the Lenders, in which event any request by the Borrower for a Eurodollar Borrowing for such Interest Period shall be deemed to be a request for a CD Borrowing. (b) In the event, and on each occasion, that on the day on which the Interest Period for any CD Borrowing commences the Agent shall have determined that it is not possible to ascertain a CD Rate for such Interest Period as contemplated in the definition of CD Rate in Section 1.01, the Agent shall, as soon as practicable thereafter, give written or telecopy notice of such determination to the Borrower and the Lenders, in which event any request by the Borrower for a CD Loan for such Interest Period shall be of no force or effect and no Borrowing shall be made pursuant to such request. SECTION 2.11. TERMINATION, REDUCTION, EXTENSION AND ADDITION OF COMMITMENTS. (a) The Commitments shall be automatically terminated on the Commitment Termination Date. (b) Upon at least three Business Days' prior irrevocable written or telecopy notice to the Agent, the Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Total Commitment; PROVIDED, HOWEVER, that each partial reduction of the Total Commitment shall be in an integral multiple of $1,000,000 and in a minimum amount of $5,000,000. (c) Each reduction in the Total Commitment hereunder shall be made ratably among the Lenders in accordance with their respective Commitments. The Borrower shall pay to the Agent for the account of the Lenders, on the date of each termination or reduction, the Facility Fees on the amount of the Commitments so terminated or reduced accrued to the date of such termination or reduction. 23 (d) The Borrower may from time to time request that one or more additional financial institutions be added as Lenders under this Agreement with Commitments agreed upon by the Borrower and such financial institutions. In the event of any such request, such financial institutions shall become parties to and Lenders under this Agreement upon the execution of one or more agreements to that effect in the form (appropriately completed) of Exhibit D (and without any action being required on the part of any other Lender), and upon the effectiveness of any such agreement, Schedule 2.01 shall be automatically amended to reflect the Commitment of each new Lender. (e) Not later than the date 45 days prior to the first, or, if the Commitment Termination Date has previously been extended, the second or third anniversary of the date hereof, as the case may be, the Borrower may deliver to the Agent (which shall promptly transmit a copy to each Lender) a notice requesting that the Commitments then remaining in effect be extended to the date 364 days after the Commitment Termination Date at the time in effect. Within 20 days after its receipt of any such notice, each Lender shall notify the Agent of its willingness or unwillingness so to extend its Commitment. Any Lender which shall fail so to notify the Agent within such period shall be deemed to have declined to extend its Commitment. The Commitment of any Lender that shall so decline (or be deemed to have declined) to extend its Commitment pursuant to this paragraph (e) shall terminate on the Commitment Termination Date at the time in effect and the Loans, if any, of such Lender shall, subject to 2.07(a), be repaid on such date together with all interest accrued thereon and the accrued Facility Fee and Utilization Fee. Any payment made pursuant to this Section 2.11(e) shall be without premium, penalty or other cost of any kind and shall not be subject to the requirements of Sections 2.15 and 2.12(d). The Commitments of the Lenders notifying the Borrower that they are willing to extend shall be extended, effective as of the date which shall theretofore have been the Commitment Termination Date, to the date 364 days after such date. SECTION 2.12. PREPAYMENT. (a) The Borrower shall have the right at any time and from time to time to prepay without premium or penalty any Borrowing (including a Competitive Borrowing), in whole or in part, upon giving written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) to the Agent: (i) before 5:00 p.m., New York City time, three Business Days prior to prepayment, in the case of Eurodollar Loans, (ii) before 5:00 p.m., New York City time, two Business Days prior to prepayment, in the case of CD Loans or Fixed Rate Loans, and (iii) before 10:00 a.m., New York City time, one Business Day prior to prepayment, in the case of ABR Loans; PROVIDED, HOWEVER, that each partial prepayment of a Borrowing shall be in an amount which is an integral multiple of $1,000,000 and, prior to the Commitment Termination Date, not less than $5,000,000. (b) On the date of any termination or reduction of the Commitments pursuant to Section 2.11(b), the Borrower shall pay or prepay so much of the outstanding Borrowings, selected at the Borrower's sole option, as shall be necessary in order that the aggregate principal amount of the Competitive Loans and Standard Loans outstanding will not exceed the Total Commitment after giving effect to such termination or reduction. (c) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be 24 irrevocable and shall commit the Borrower to prepay such Borrowing (or portion thereof) by the amount stated therein on the date stated therein. All prepayments under this Section 2.12 shall be accompanied by accrued interest on the principal amount being prepaid to the date of payment. (d) In the event any prepayment is made in respect of any Loan (or in the event any Lender is required to transfer a Loan or the Borrower repays any Loan on the Commitment Termination Date and such date shall be prior to the end of the Interest Period applicable to such Loan), other than (i) any ABR Loan and (ii) any Loan the prepayment, payment or transfer of which is made by Borrower pursuant to its right to prepay, repay or require the transfer of such Loan under Sections 2.11(e), 2.13, 2.14, 2.17 or 9.05 or upon the Lender's exercise of its option pursuant to Section 9.14, the Borrower shall pay to such Lender, promptly upon the written request of such Lender (which request shall be accompanied by a certificate as described below), such amount as shall be necessary to reimburse such Lender for the loss, if any, reasonably incurred by such Lender as a result of such repayment, prepayment or transfer arising from inability due to general market conditions to recover the cost of deposits or other funds acquired by such Lender to fund such Loan, in the liquidation of such deposits or other funds so acquired (or from the reemployment thereof if such reemployment would result in less of a funding loss to such Lender); PROVIDED, that any such funding loss shall not in any event exceed the cost incurred by such Lender to obtain such deposit or other funds, minus the fair market value thereof realizable by such Lender in the liquidation thereof. Such Lender shall use reasonable efforts to avoid or minimize any such loss. Such Lender's claim, if any, shall be accompanied by a certificate setting forth in reasonable detail (including the calculations made in determining) the reason for and the amount of such loss, which certificate shall be conclusive in the absence of manifest error. Prepayments of ABR Borrowings shall be without penalty, premium or other cost of any kind. SECTION 2.13. RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a) In the event that at any time or from time to time during the term of this Agreement any Eurodollar Reserve Requirement shall be applicable to deposits acquired in respect of any Eurodollar Loan the Lender making such Eurodollar Loan shall promptly notify the Borrower in writing of any imposition of or change in or prospective imposition of or change in any Eurodollar Reserve Requirement, whether in respect of an outstanding Eurodollar Loan or any possible future Eurodollar Loan, and, for as long as such Eurodollar Reserve Requirement shall be effective, the Borrower shall, upon written request from such Lender (with a copy of such request to the Agent), pay to such Lender at the end of each Interest Period for such Eurodollar Loan, an additional amount equal to the difference between the interest accrued based upon the LIBO Rate and the interest that would have accrued had the Adjusted LIBO Rate been applicable to the Eurodollar Loan of such Lender. Each Lender represents that currently it is not subject to (and does not incur) any Eurodollar Reserve Requirement. (b) In the event that at any time or from time to time during the term of this Agreement any CD Reserve Requirement or Assessment Rate shall be applicable to deposits acquired in respect of any CD Loan the Lender making such CD Loan shall promptly notify the Borrower in writing of any imposition of or change in or prospective imposition of or change in any CD Reserve Requirement or Assessment Rate, whether in respect of an outstanding CD Loan or any possible future CD Loan, and, for as long as such CD Reserve Requirement or Assessment Rate shall be effective, the Borrower shall, 25 upon written request from such Lender (with a copy of such request to the Agent), pay to such Lender at the end of the Interest Period for such CD Loan, an additional amount equal to the difference between the interest accrued based upon the CD Rate and the interest that would have accrued had the Adjusted CD Rate been applicable to the CD Loan of such Lender. Each Lender represents that its current CD Reserve Requirement and Assessment Rate are as set forth on Schedule 2.01. (c) Notwithstanding any other provision herein, if after the date of this Agreement, either (i) the introduction of, or any change in or in the interpretation of, any law or regulation or (ii) compliance by any Lender with any directive, guideline or request of any Governmental Body (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender, so as to increase the minimum amount of capital required to be maintained by such Lender based upon the existence of this Agreement, the Commitment of such Lender and/or any Loans made hereunder and such requirement applies equally to other agreements with, and to commitments and loans similar to the transactions contemplated by this Agreement to, all other corporate borrowers situated in the United States of America, then the Borrower shall pay to such Lender amounts sufficient to compensate such Lender, in light of such circumstances, to the extent that such Lender reasonably and equitably determines such increase in required capital over the capital of such Lender in place on the date hereof to be allocable to this Agreement, to the Commitment of such Lender (or the unused portion thereof), or to any Loans made by such Lender hereunder, it being understood that in no event shall the cost allocable, and/or amount charged, to the Borrower under this paragraph (c) exceed the cost allocable, and/or amount charged, with respect to any similar agreement between such Lender and any other corporate borrower located in the United States, in each instance determined ratably with respect to the relative transactional amounts. Each Lender represents that, to its best knowledge on the date hereof it would not be required to increase its capital or to otherwise incur any increased capital costs in respect of this Agreement under existing laws, rules, regulations, directives or guidelines (whether or not currently in effect) of any Governmental Body. (d) A certificate of a Lender setting forth such amount or amounts as shall be necessary to compensate such Lender as specified in paragraph (c) above shall be delivered to the Borrower (with a copy to the Agent) and shall be conclusive absent manifest error. The Borrower shall pay each Lender the amount shown as due on any such certificate delivered by it within 10 days after the receipt of the same. No Lender shall be entitled to any compensation for any additional costs under this Section 2.13 requested by such Lender unless such Lender shall have notified the Borrower that it will request compensation for such additional costs not more than 30 days after the date such additional costs were first incurred. (e) The Borrower may at any time following its receipt from any Lender of a notice of the occurrence or prospective occurrence of any imposition of or increase in the Eurodollar Reserve Requirement, the CD Reserve Requirement, the Assessment Rate or capital requirements or costs of such Lender terminate the Commitment of such Lender and repay any outstanding Loans of such Lender (together with all accrued interest and Facility Fee and Utilization Fee, if any) on the effective date of such termination, which repayments, if any, shall be without premium, penalty or other cost of any kind and shall not be subject to the requirements of Sections 2.12(d) and 2.15. 26 SECTION 2.14. CHANGE IN LEGALITY. (a) Notwithstanding any other provision herein, if any change in any law or regulation or in the interpretation thereof by any Governmental Body charged with the administration or interpretation thereof shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written or telecopy notice to the Borrower and to the Agent, such Lender may: (i) declare that Eurodollar Loans will not thereafter be made by such Lender hereunder, whereupon such Lender shall not submit a Competitive Bid in response to a request for Eurodollar Competitive Loans and any request by the Borrower for a Eurodollar Standard Borrowing shall, as to such Lender only, be without effect and void unless such declaration shall be subsequently withdrawn; and (ii) require (if required by law to do so) that all outstanding Eurodollar Loans made by it be converted to CD Loans, in which event all such Eurodollar Loans shall be automatically converted to CD Loans with an Interest Period agreed upon by the Borrower and such Lender as of the effective date of such notice as provided in paragraph (b) below. In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal which would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the Loans of such Lender resulting from the conversion of such Eurodollar Loans. The Borrower may in any event prepay any Loan resulting from the conversion of any Eurodollar Loan under this Section within five Business Days after such conversion. (b) For purposes of this Section 2.14, a notice to the Borrower by any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day of the Interest Period currently applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by the Borrower. (c) In the event that any Lender shall (i) give Borrower any notice contemplated by, or exercise its rights under, this Section 2.14 or (ii) unless Borrower shall fail to meet the conditions set forth at Section 4.01, any Lender for any reason fails to fund any Loan, the Borrower may at any time terminate the Commitment of the Lender and repay any outstanding Loans of such Lender (together with all accrued interest and Facility Fee and Utilization Fee, if any) on the effective date of such termination, which repayment, if any, shall be without premium, penalty or other cost of any kind and shall not be subject to the requirements of Sections 2.15 and 2.12(d). SECTION 2.15. PRO RATA TREATMENT. Except as required or permitted under Section 2.07(a) and (e), 2.11(d) and (e), 2.12, 2.13, 2.14, 2.17, 2.18, 9.05 or 9.14, each Standard Borrowing, each payment or prepayment of principal of any Standard Borrowing, each payment of interest on the Standard Loans, each payment of the Facility Fee, each payment of the Utilization Fee, each reduction of the Commitments and each refinancing of any Borrowing with a Standard Borrowing of any Type, shall be allocated pro rata among the Lenders in accordance with their respective Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Standard Loans). Each payment of principal of 27 any Competitive Borrowing shall be allocated pro rata among the Lenders participating in such Borrowing in accordance with the respective principal amounts of their outstanding Competitive Loans comprising such Borrowing. Each payment of interest on any Competitive Borrowing shall be allocated pro rata among the Lenders participating in such Borrowing in accordance with the respective amounts of accrued and unpaid interest on their outstanding Competitive Loans comprising such Borrowing. For purposes of determining the available Commitments of the Lenders at any time, each outstanding Competitive Borrowing shall be deemed to have utilized the Commitments of the Lenders (including those Lenders which shall not have made Loans as part of such Competitive Borrowing) pro rata in accordance with such respective Commitments. Each Lender agrees that in computing such Lender's portion of any Borrowing to be made hereunder, the Agent may, in its discretion, round each Lender's percentage of such Borrowing to the next higher or lower whole dollar amount. SECTION 2.16. PAYMENTS. (a) The Borrower shall make each payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder not later than 3:00 p.m., New York City time, on the date when due in Dollars to the Agent (except as otherwise provided herein) at its offices at 270 Park Avenue, New York, New York, in immediately available funds. Except as provided in Section 2.07(a), any payment required to be made to the Lenders shall be deemed made when made to the Agent and shall, insofar as the obligations of the Borrower are concerned, be deemed to have been received by the Lenders at the time of receipt by the Agent (which shall promptly forward such payment to the Lenders). In the event the Lenders shall receive payments in an amount less than the amounts at the time due hereunder, the amounts received shall be applied first against the principal of Loans, second against accrued interest, third against accrued Fees, fourth against amounts due under Section 2.13 or 2.17, and fifth against any other amounts due hereunder. (b) Whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in the case of a payment of principal be included in the computation of interest. SECTION 2.17. TAXES. (a) All payments by the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes, and if the Borrower shall be required to deduct any Indemnified Taxes from any such payment, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Agent or the applicable Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Body in accordance with applicable law. (b) The Borrower shall indemnify the Agent and Lender for the full amount of any Indemnified Taxes paid by such Agent or Lender on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section). A certificate as to the amount of such payment or liability setting forth in reasonable detail the circumstances giving rise thereto and the calculations used to 28 determine in good faith such amount delivered to the Borrower by the Agent or Lender shall be conclusive absent manifest error. (c) As soon as practicable after any payment of Indemnified Taxes by the Borrower to a Governmental Body, the Borrower shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Body evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent. (d) Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the United States of America or any treaty to which the United States of America is a party, with respect to payments made to it under this Agreement shall deliver to the Borrower (with a copy to the Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. Notwithstanding anything to the contrary contained in this Section 2.17, any Lender that has not provided to the Borrower the executed documentation required to be provided to the Borrower pursuant to this Section 2.17 shall not be entitled to any payment of additional amounts pursuant to Section 2.17(a) or indemnification pursuant to Section 2.17(b) with respect to any deduction or withholding that would not have been required if such Lender had provided such documentation. (e) Each Lender, on the date it becomes a Lender hereunder, will designate lending offices for the Loans to be made by it such that, on such date, it will not be liable for any withholding tax that is imposed by the United States of America (or any political subdivision thereof) on payments to it by the Borrower from an office within such jurisdiction. (f) Each Lender represents and warrants unto, and covenants and agrees with, the Borrower that (i) such Lender is presently exempt from United States Federal withholding tax (including backup withholding, as such term is defined in the Code), and from any other withholding tax, assessment, charge or other Taxes (other than Excluded Taxes) imposed by any Governmental Body, on any amount payable to it under this Agreement, and has heretofore delivered to the Borrower such evidence as may be required by law to claim or substantiate any such exemption (stating the provisions of law and/or treaty under which such exemption is claimed); (ii) such Lender will notify the Borrower promptly, so long as any amount is due under this Agreement, upon its becoming aware of the occurrence or of any prospective occurrence of any event which would result in any such withholding tax exemption not being available to such Lender; and (iii) such Lender will indemnify and hold the Borrower harmless from and against any loss, cost or liability imposed by a Governmental Body or incurred by the Borrower in defense of any claim by a Governmental Body, including all reasonable out-of-pocket expenses the Borrower may incur as a direct result of its reliance on the foregoing representations, or the failure of such Lender to give prompt notice of any event resulting in any said withholding tax exemption not being available to such Lender. (g) In no event shall the Borrower have any obligation to "gross up" amounts due under this Agreement in respect of Excluded Taxes. 29 (h) The representations, warranties and agreements contained in this Section 2.17 shall survive the termination of this Agreement and the payment in full of the Loans. SECTION 2.18. TERMINATION OR ASSIGNMENT OF COMMITMENTS. The Borrower shall have the right (in addition to its rights pursuant to Sections 2.11(b), 2.11(e), 2.13, 2.14, 2.17 and 9.05), at its own expense, at any time upon notice to any Lender and the Agent, (i) to terminate the Commitment of such Lender (with or without, at Borrower's sole election, replacing such terminated Commitment) or (ii) to require such Lender to transfer and assign without recourse all its interests, rights and obligations under this Agreement to another financial institution reasonably acceptable to the Agent which shall assume such obligations; PROVIDED that (x) no such assignment shall conflict with any law, rule or regulation or order of any Governmental Body applicable to such affected Lender and (y) the Borrower or the assignee, as the case may be, shall pay to the affected Lender in immediately available funds on the effective date of such termination or assignment the principal of and interest accrued to the date of payment on the Loans made by it hereunder then outstanding and accrued and unpaid Facility Fees and Utilization Fees and any amounts which Borrower had theretofore been notified were accruing in respect of such Loans under Section 2.13, which payments shall not be subject to the provisions of Section 2.15. ARTICLE III. REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to each of the Lenders that: (a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. (b) The execution, delivery and performance of this Agreement by the Borrower are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, will not violate any provision of any existing law or regulation or order or decree of any court or Governmental Body or of the Amended Articles of Incorporation or Code of Regulations of the Borrower, as each is amended to date, or of the unwaived terms of any mortgage, indenture, agreement or other instrument to which the Borrower is a party or which is binding upon it or its assets, and will not result in the creation or imposition of any security interest, lien, charge or encumbrance on any of its assets pursuant to the provisions of any of the foregoing. (c) No authorization or approval or other action by, and no notice to or filing with, any Governmental Body or court is required to be made or effected by the Borrower for the due execution and delivery of this Agreement by the Borrower and for the performance by the Borrower of the obligations on its part to be performed under this Agreement. (d) This Agreement constitutes the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, 30 to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (e) The Consolidated Financial Statements of the Borrower and its Subsidiaries present fairly, in all material respects, the financial position of the Borrower and its Consolidated Subsidiaries at December 31, 2000 and 1999 and the Consolidated results of their operations and their Consolidated cash flows for each of the three years in the period ended December 31, 2000, in conformity with generally accepted accounting principles. (f) The Borrower is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. (g) Neither the Borrower nor any Subsidiary is a "holding company", or a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. (h) The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock, within the meaning of Regulation U of the Board. ARTICLE IV. CONDITIONS OF LENDING The obligation of each Lender to make Loans hereunder is subject to the satisfaction of the following conditions: SECTION 4.01. ALL BORROWINGS. On the date of each Borrowing, including each Borrowing in which Loans are refinanced with new Loans as contemplated by Section 2.05: (a) The Agent shall have received a notice of such Borrowing as required by Section 2.03 or Section 2.04, as applicable. (b) The representations and warranties set forth in Article III hereof shall be true and correct in all material respects on and as of the date of such Borrowing with the same effect as though made on and as of such date. (c) No event shall have occurred and be continuing on and as of the date of such Borrowing, or would result from such Borrowing or from (after giving effect to) the application of the proceeds of such Borrowing, which constitutes an Event of Default. Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date of such Borrowing as to the matters specified in paragraphs (b) and (c) of this Section 4.01. SECTION 4.02. FIRST BORROWING. On the Closing Date, 31 (a) the Agent shall have received the following (in the case of (i), (ii), (iii) and (iv), each dated the Closing Date): (i) an opinion of the General Counsel, the Associate General Counsel or an Assistant General Counsel of the Borrower addressed to the Lenders and the Agent in substantially the form of Exhibit B hereto; (ii) a certified copy of the resolutions of the Board of Directors of the Borrower authorizing the execution and delivery of this Agreement; (iii) a certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true signatures of the Authorized Officers; (iv) a certificate signed by an Authorized Officer, confirming compliance with the conditions set forth in paragraphs (b) and (c) of Section 4.01 and certifying that except for the legal proceedings identified or referred to on Schedule III (with respect to which such Authorized Officer makes no representation or warranty) there is no pending, or to the knowledge of such Authorized Officer, threatened action or proceeding affecting the Borrower or any of its Subsidiaries before any court, Governmental Body or arbitrator, which could reasonably be expected to have a material adverse effect on the business, assets or condition of the Borrower and its Subsidiaries taken as a whole; and (v) all Fees and other amounts due and payable on or prior to the Closing Date; (b) there shall not have occurred any material adverse change in the business, assets or condition of Goodyear and its Subsidiaries taken as a whole since December 31, 2000; and (c) the Five-Year Amendment shall have been approved by the Borrower, the Agent and the Required Lenders. ARTICLE V. AFFIRMATIVE COVENANTS The Borrower covenants and agrees with each Lender and the Agent that, so long as the Commitment of such Lender shall remain in effect or the principal of or interest on any Loan by such Lender shall be unpaid, unless the Majority Lenders shall otherwise consent in writing, the Borrower will: (a) INTEREST COVERAGE RATIO. Maintain, as at the end of each fiscal quarter of the Borrower, a ratio of Consolidated Operating Income for the Annual Period then ended to Consolidated Interest Expense for such Annual Period then ended of not less than the ratio set forth below opposite such period: Period Ending Minimum Ratio ------------- ------------- 32 June 30, 2001 2.60 to 1.00 September 30, 2001 2.75 to 1.00 December 31, 2001 and each Annual Period ending thereafter 3.50 to 1.00 (b) NET WORTH. Maintain, as at the end of each fiscal quarter of the Borrower, Consolidated Net Worth at an amount not less than $3,800,000,000 plus 50% of the cumulative amount of Net Income for each fiscal quarter ended after December 31, 2000 and excluding any such fiscal quarter for which Net Income shall have been negative. (c) REPORTING REQUIREMENTS. Furnish to the Agent, together with sufficient number of copies for each of the Lenders: (i) as soon as available and in any event not later than 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a conformed copy of the Borrower's Quarterly Report on Form 10-Q for such quarter as filed with the Securities and Exchange Commission, together with (1) a Schedule of Compliance, signed by an Authorized Officer setting forth computations used by the Borrower in determining compliance with the covenants contained in paragraphs (a) and (b) of this Article V and in paragraphs (a) and (b) of Article VI and (2) a certificate of an Authorized Officer stating that no Event of Default has occurred and is continuing or, if an Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower has taken and proposes to take with respect thereto; and (ii) as soon as available and in any event not later than 120 days after the end of each fiscal year of the Borrower, a conformed copy of the Borrower's Annual Report on Form 10-K for such year as filed with the Securities and Exchange Commission, together with (1) a Schedule of Compliance, signed by an Authorized Officer setting forth computations used by the Borrower in determining compliance with the covenants contained in paragraphs (a) and (b) of Article V, and in paragraphs (a) and (b) of Article VI, and (2) a certificate of an Authorized Officer stating that no Event of Default has occurred and is continuing or, if an Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower has taken and proposes to take with respect thereto; and (iii) as soon as practicable and in any event within ten Business Days after any Authorized Officer of the Borrower obtains actual knowledge of the occurrence of any Event of Default, a statement of an Authorized Officer setting forth details of such Event of Default and the action which the Borrower has taken and proposes to take with respect thereto; and (iv) promptly after the filing thereof, copies of all reports (in addition to Forms 10-K and 10-Q) filed by the Borrower with the Securities and Exchange Commission (other than annual reports on Form 11-K) pursuant to the Exchange Act; and 33 (v) such other publicly available information relating to the financial condition or business operations of the Borrower as the Agent or any Lender may from time to time reasonably request. (d) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its corporate existence; provided, that the Borrower may merge or transfer its assets in a transaction permitted by paragraph (c) of Article VI. (e) PARI PASSU WITH CERTAIN EXISTING CREDIT AGREEMENTS. Ensure that the Lenders remain pari passu with the lenders under the Borrower's Amended and Restated Five-Year Revolving Credit Agreement dated as of the date hereof, and the lenders under the Borrower's Term Loan Agreement, dated as of March 30, 2001. ARTICLE VI. NEGATIVE COVENANTS The Borrower covenants and agrees with each Lender and the Agent that, so long as the Commitment of such Lender shall remain in effect or the principal of or interest on any Loan by such Lender shall be unpaid, unless the Majority Lenders shall otherwise consent in writing, the Borrower will not: (a) LIMITATION ON LIENS. Issue, assume or guarantee, or permit any Subsidiary to issue, assume or guarantee, Debt if such Debt is secured by a Lien upon any Manufacturing Facility without providing (concurrently with the issuance, assumption or guarantee of any such Debt) that the Loans shall be secured equally and ratably with such Debt; PROVIDED, HOWEVER, that the foregoing restriction shall not apply to: (i) any Lien on property if such Lien is in existence at the time of the acquisition of such property by the Borrower or a Subsidiary; (ii) any Lien on property to secure the payment of all or any part of the purchase price of such property or to secure any Debt incurred (prior to, at the time of, or within 360 days after, the acquisition by the Borrower or a Subsidiary of such property) for the purpose of, or in connection with, financing all or any part of the purchase price thereof; (iii) any Lien on property of a corporation or other entity if such Lien was in existence prior to the time such corporation or other entity is merged into or consolidated with the Borrower or a Subsidiary or prior to the time of a sale, lease or other disposition of the properties of an entity as an entirety or substantially as an entirety to the Borrower or a Subsidiary; (iv) any Lien on property in favor of the United States of America, any State thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State thereof, in favor of any other country or any political subdivision thereof, or in favor of any other Governmental Body, 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 34 the purchase price or the cost of construction of the property subject to such Lien; or (v) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in the foregoing clauses (i) to (iv), inclusive; PROVIDED, HOWEVER, that the principal amount of Debt secured thereby shall not exceed the principal amount of Debt 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 property which secured the Lien so extended, renewed or replaced (plus improvements on such property). Notwithstanding the foregoing, (A) the Borrower or any Subsidiary may issue, assume or guarantee Debt secured by a Lien on a Manufacturing Facility of the Borrower which would otherwise be subject to the foregoing restrictions in an aggregate amount which, together with the aggregate principal amount of all other such Debt of the Borrower and the Subsidiaries secured by Liens on Manufacturing Facilities of the Borrower outstanding at the time of such issuance, assumption or guarantee (but excluding Debt permitted by the foregoing clauses (i) to (v), inclusive), does not at such time exceed fifteen percent (15%) of the Consolidated Net Worth of the Borrower as at the end of the then most recently completed fiscal year of the Borrower, and (B) the Borrower or any Subsidiary may issue, assume or guarantee Debt secured by a Lien on a Manufacturing Facility of a Subsidiary which would otherwise be subject to the foregoing restrictions in an aggregate amount which, together with the aggregate principal amount of all other such Debt of the Borrower and the Subsidiaries secured by Liens on Manufacturing Facilities of Subsidiaries outstanding at the time of such issuance, assumption or guarantee (but excluding Debt permitted by the foregoing clauses (i) to (v), inclusive), does not at such time exceed fifteen percent (15%) of the Consolidated Net Worth of the Borrower as at the end of the then most recently completed fiscal year of the Borrower. (b) LIMITATION ON DEBT. Issue, incur, assume or guarantee, or permit any Subsidiary to issue, incur, assume or guarantee, any Debt if, immediately after giving effect to the issuance, incurrence, assumption or guarantee of such Debt and after giving effect to the receipt and application of any and all proceeds thereof, the aggregate principal amount of the Consolidated Debt of the Borrower and the Subsidiaries would, at the end of any fiscal quarter of the Borrower, exceed the sum of (x) $5,000,000,000 plus (y) the Supplemental Amount, if any, at such date. For the purpose of this paragraph (b), if any such Debt is payable in a currency other than Dollars and all or any portion of the principal amount of such Debt is hedged into Dollars, then the principal amount thereof, or such portion thereof, shall be the amount of Dollars specified in, or determined pursuant to, the applicable hedging contract. (c) MERGERS, ETC. Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person; except that (i) any Subsidiary may merge into or transfer assets to or obtain assets from the Borrower, and (ii) the Borrower may merge with or acquire all or substantially all of the assets of any Person, PROVIDED in any such case that, immediately after giving effect to such proposed transaction, no 35 Event of Default would exist and, in the case of any such merger to which the Borrower is a party, the Borrower is the surviving corporation. (d) ERISA LIABILITIES. Create or suffer to exist, as at the end of any fiscal quarter of Borrower, any ERISA Liabilities of the Borrower in an aggregate amount in excess of $750,000,000. (e) NEGATIVE PLEDGE. Enter into, or permit any Subsidiary organized under the laws of the United States or any state, territory or possession thereof to enter into, any covenant or other agreement that by its terms limits the ability of the Borrower or any such Subsidiary to pledge its accounts receivable or inventory or proceeds thereof to secure indebtedness. ARTICLE VII. EVENTS OF DEFAULT So long as any Commitment shall be in effect or any amount of the principal of or accrued interest on any Borrowing shall be unpaid, in case of the occurrence and continuance of any of the following events ("Events of Default"): (a) The Borrower shall fail to pay the principal of any Loan when due, and any such failure shall remain unremedied for more than two Business Days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such failure or (ii) written notice of such failure shall have been given to the Borrower by the Agent or any Lender; or (b) The Borrower shall fail to pay any Fees when due and such failure shall remain unremedied for more than ten Business Days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such failure or (ii) written notice of such failure shall have been given to the Borrower by the Agent or any Lender; or (c) The Borrower shall fail to pay interest on any Loan when due, and such failure shall remain unremedied for more than five Business Days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such failure or (ii) written notice of such failure shall have been given to the Borrower by the Agent or any Lender; or (d) Any representation or warranty made by the Borrower in this Agreement or by the Borrower (or any of its Authorized Officers) in any certificate delivered pursuant to this Agreement, or deemed to have been made pursuant to and in accordance with Section 4.01 of this Agreement, shall prove to have been incorrect in any material respect when made; PROVIDED, that if any such representation or warranty is capable of being rendered true and correct in all material respects, such event shall not constitute an Event of Default unless such incorrect representation or warranty is not rendered true and correct in all material respects within thirty days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such event or (ii) the day written notice thereof shall have been given to the Borrower by the Agent or any Lender; or 36 (e) The Borrower shall fail to perform or observe any covenant or agreement set forth in paragraph (a) or (b) of Article V or in paragraph (b) of Article VI; or (f) The Borrower shall fail to perform or observe any other covenant or agreement set forth in this Agreement on its part to be performed or observed and such failure shall remain unremedied for more than thirty days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such failure or (ii) written notice thereof shall have been given to the Borrower by the Agent or any Lender; or (g) The Borrower shall fail to pay any principal of Funded Debt of the Borrower which is then outstanding in a principal amount in excess of $25,000,000 at the scheduled maturity thereof, such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Funded Debt, and such Funded Debt is not paid within ten Business Days after the earlier of (i) the day on which an Authorized Officer first obtains actual knowledge of such failure or (ii) written notice of such failure shall have been given to the Borrower by the holder or holders of such Funded Debt; or Funded Debt of the Borrower which is then outstanding in a principal amount in excess of $25,000,000 shall become due and payable prior to the scheduled maturity thereof as a result of the lawful acceleration thereof due to the occurrence of an event of default thereunder (other than an event of default resulting from a pledge or transfer of any margin stock, as defined in Regulation U of the Board) and such Funded Debt is not paid, or such acceleration thereof is not rescinded or annulled, within ten Business Days following such lawful acceleration thereof; or (h) The Borrower shall sell or otherwise dispose of all or substantially all of its assets; or (i) The Borrower shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower seeking to adjudicate it a debtor or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property, and, if instituted against the Borrower, is consented to by it or remains undismissed or unstayed for a period of 90 consecutive days; or the Borrower shall take any corporate action to authorize any of the actions set forth above in this clause (i); then, and in every such event (other than the entry of an order for relief with respect to the Borrower as a debtor under the Federal Bankruptcy Code), and at any time thereafter during the continuance of such event, the Agent, at the request of the Required Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest 37 thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein to the contrary notwithstanding; PROVIDED, that in the event of the entry of an order for relief with respect to Borrower as a debtor under the Federal Bankruptcy Code, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower, anything contained herein to the contrary notwithstanding. ARTICLE VIII. THE AGENT In order to expedite the transactions contemplated by this Agreement, The Chase Manhattan Bank is hereby appointed to act as Agent on behalf of the Lenders. Subject to Section 2.07(a), each of the Lenders hereby irrevocably authorizes the Agent to take such actions on behalf of such Lender and to exercise such powers as are specifically delegated to the Agent by the terms and provisions hereof, together with such actions and powers as are reasonably incidental thereto. The Agent is hereby expressly authorized by the Lenders, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders all payments of principal of and interest on the Loans and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to the Borrower of any Event of Default specified in this Agreement of which the Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by the Borrower pursuant to this Agreement as received by the Agent. Neither the Agent nor any of its directors, officers, employees or agents shall be liable to any Lender as such for any action taken or omitted by any of them except for its or his own gross negligence or wilful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by the Borrower of any of the terms, conditions (except delivery to the Agent of the items required by Section 4.02 to be delivered to it), covenants or agreements contained in this Agreement. The Agent shall not be responsible to the Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or other instruments or agreements. The Agent shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Lenders and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Lenders. The Agent shall, in the absence of knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper Person or Persons. Neither the Agent nor any of its directors, officers, employees or agents shall have any responsibility to the Borrower on account of the failure of or delay in performance or breach by any Lender of any of its obligations hereunder or to any Lender on account of the failure of or delay in performance or breach by any other Lender or the Borrower of 38 any of their respective obligations hereunder or in connection herewith. The Agent may execute any and all duties hereunder by or through agents or employees and shall be enti- tled to rely upon the advice of legal counsel selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. The Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement unless it shall be requested in writing to do so by the Required Lenders. Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor bank, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations hereunder. After the Agent's resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. With respect to the Loans made by it hereunder, the Agent in its individual capacity and not as Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not the Agent, and the Agent may accept deposits from, lend money to and generally engage in any kind of business with the Borrower as if it were not the Agent. Each Lender agrees (i) to reimburse the Agent, on demand, in the amount of its pro rata share (based on its Commitment, or, after the Commitments shall have expired or been terminated, the amount of its outstanding Loans hereunder) of any expenses incurred for the benefit of the Lenders by the Agent, including reasonable counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, which shall not have been reimbursed by the Borrower and (ii) to indemnify and hold harmless the Agent and any of its directors, officers, employees or agents, on demand, in the amount of such pro rata share, from and against any and all liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against it in its capacity as the Agent or any of them in any way relating to or arising out of this Agreement or any action taken or omitted by it or any of them under this Agreement, to the extent the same shall not have been reimbursed by the Borrower; PROVIDED that no Lender shall be liable to the Agent or any other indemnitee for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or wilful misconduct of the Agent or any of its directors, officers, employees or agents. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it 39 has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder. Notwithstanding any other provision herein, each Lender acknowledges that the Agent is not acting as an agent of the Borrower and that the Borrower will not be responsible for any acts or failures to act on the part of the Agent. ARTICLE IX. MISCELLANEOUS SECTION 9.01. NOTICES. Except as otherwise expressly provided herein, notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, priority mail, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to the Borrower, to it at 1144 East Market Street, Akron, Ohio 44316-0001, Attention of the Treasurer (Telecopy No. 330-796-1021 or 330-796-8836); (b) if to the Agent, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Janet Belden (Telecopy No. 212-552-5658), with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, Attention of Julie Long (Telecopy No. 212-270-5127); and (c) if to a Lender, to it at its address (or telecopy number) set forth in Schedule 2.01. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy (as evidenced by machine transmission report), or on the date five Business Days after dispatch by certified or registered mail, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01. SECTION 9.02. SURVIVAL OF AGREEMENT. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not been terminated. 40 SECTION 9.03. BINDING EFFECT; SUCCESSORS AND ASSIGNS. (a) This Agreement shall become effective when it shall have been executed by the Borrower and the Agent and when the Agent shall have received copies hereof which, when taken together, bear the signatures of each Lender, and thereafter shall be binding upon and inure to the benefit of the Borrower, the Agent and each Lender and their respective successors and assigns, except that (i) the Borrower shall not have the right to assign its rights hereunder or any interest herein or to delegate any of its duties hereunder without the prior written consent of all the Lenders and (ii) no Lender shall have the right to assign or participate its rights hereunder or any interest herein or to delegate any of its duties hereunder without the prior written consent of the Borrower and giving a written notice (also signed by the Borrower) to the Agent. (b) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include any successors and permitted assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrower, the Agent or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and permitted assigns. (c) Notwithstanding the limitations set forth in this Section 9.03, any Lender may at any time assign all or any portion of its rights under this Agreement to a Federal Reserve Bank without the prior written consent of the Borrower or the Agent; PROVIDED that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such Bank for such Lender as a party hereto. In order to facilitate such an assignment to a Federal Reserve Bank, the Borrower shall, at the request of the assigning Lender, duly execute and deliver to the assigning Lender a promissory note or notes in the form of Exhibit E hereto evidencing the Loans made to the Borrower by the assigning Lender hereunder. SECTION 9.04. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. SECTION 9.05. WAIVERS; AMENDMENT. (a) No failure or delay of the Agent or any Lender in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power or preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies provided by law. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Majority Lenders; PROVIDED, HOWEVER, that no such agreement shall (i) amend, modify or otherwise affect the rights or duties of the Agent hereunder without the prior written consent of the Agent, (ii) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest on any Loan or any Fees, or waive or excuse any such 41 payment or any part thereof, or decrease the rate of interest on any Loan or any Fees, without the prior written consent of each Lender affected thereby, (iii) change or extend the Commitment or decrease the Facility Fees or the Utilization Fee of any Lender without the prior written consent of such Lender, or (iv) amend or modify the provisions of Section 2.15, the provisions of this Section 9.05(b) or the definition of "Majority Lenders" or "Required Lenders", without the prior written consent of each Lender; PROVIDED that the provisions referred to in the preceding clauses (ii), (iii) and (iv) may be amended by the Majority Lenders; but any Lender which declines to approve any such amendment shall have the right at any time, on 10 Business Days' notice to the Borrower, to terminate its Commitment and require the Borrower to pay the principal of and interest on its outstanding Loans and Fees, and the amount of the principal and interest so paid shall be determined without giving effect to such amendment. All prepayments made pursuant to this Section 9.05(b) shall be without premium, penalty or other cost of any kind and shall not be subject to the requirements of Sections 2.15 and 2.12(d). SECTION 9.06. EXPENSES; INDEMNITY. (a) The Borrower agrees to pay (i) all reasonable out-of-pocket expenses incurred by the Agent and its affiliates, including the reasonable fees, charges and disbursements of counsel for the Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or any amendments, modifications or waivers (requested by or for the benefit of the Borrower) of the provisions hereof, and (ii) all reasonable out-of-pocket expenses incurred by the Agent or any Lender in connection with the enforcement of its rights under this Agreement. (b) The Borrower agrees to indemnify the Agent, the Lenders, their affiliates, and the respective directors, officers, employees and agents of such persons (each such person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees and expenses, arising out of any claim, litigation, investigation or proceeding relating to (i) the execution or delivery of this Agreement or the consummation of the transactions contemplated hereby or (ii) the use by the Borrower of the proceeds of the Loans; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses have resulted from the gross negligence or willful misconduct of such Indemnitee or from the breach of any obligations of such Indemnitee set forth in this Agreement. SECTION 9.07. INTEREST RATE LIMITATION. Notwithstanding anything herein to the contrary, if at any time the applicable interest rate, together with all fees and charges which are treated as interest under applicable law (collectively the "Charges"), as provided for herein, or otherwise contracted for, charged, received, taken or reserved by any Lender, shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by such Lender in accordance with applicable law, the rate of interest payable hereunder to such Lender, together with all Charges payable to such Lender, shall be limited to the Maximum Rate. SECTION 9.08. ENTIRE AGREEMENT. This Agreement and the letter agreement referred to in Section 2.06(c) constitute the entire contract between the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement. Nothing in this Agreement, expressed or implied, is intended to confer upon any party other than the 42 parties hereto any rights, remedies, obligations or liabilities under or by reason of this Agreement. SECTION 9.09. INFORMATION; ACCESS AND CONFIDENTIALITY. So long as any Commitments shall be in effect or any Loans shall remain unpaid: (i) the Lenders, acting through their officers and other duly designated employees, shall have the right to discuss the affairs, finances and accounts of the Borrower and the Subsidiaries with senior financial officers and employees of the Borrower at such reasonable times and intervals as the Lenders shall reasonably request; and (ii) the Borrower will make available to the Lenders such other information relating to the financial condition or business operations of the Borrower and the Subsidiaries as the Lenders shall from time to time reasonably request. Notwithstanding anything herein to the contrary, in no event shall the Borrower be required to furnish to the Lenders any information pursuant to this Section 9.09 if the Borrower shall reasonably determine that the furnishing of such requested information would be in violation of any applicable law, regulation or order of any Governmental Body or if such information relates to the Borrower's strategic planning, research, development, testing, manufacturing or marketing activities and the furnishing thereof would, in the sole judgment of the Borrower reasonably exercised, adversely affect the competitive position of the Borrower. Each Lender agrees that all such information provided to such Lender (or any officer or employee of such Lender) is confidential and proprietary to the Borrower and that such Lender will not disclose (other than to the directors, officers and employees of such Lender who require such information in connection with such Lender's administration of this Agreement and who have been directed to treat such information as confidential and proprietary to the Borrower and other than to bank examiners with jurisdiction over such Lender who request such information) any such information (excluding information which becomes (i) generally available to the public other than as a result of the disclosure thereof by such Lender or its representatives or (ii) available to such Lender on a non-confidential basis from a source other than the Borrower or the Subsidiaries or any of their respective directors, officers, employees, agents or representatives, provided such source is not known to such Lender to be bound by a confidentiality agreement with the Borrower), except to the extent such Lender is, in the opinion of legal counsel to such Lender, required by law to disclose such information and then only after such Lender shall have given the Borrower at least five (5) days' prior written notice of such required disclosure or, if such prior notice period is not available to such Lender under applicable law, such shorter notice period, if any, as shall in fact be available to such Lender under applicable law. SECTION 9.10. SEVERABILITY. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the legal and economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 9.11. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 9.03. 43 SECTION 9.12. HEADINGS. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. SECTION 9.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) Each party to this Agreement irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment related hereto, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction. (b) Each party to this Agreement irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 9.14. STAMP TAXES. The Borrower agrees to pay, and to save the Agent and each Lender harmless from all liability for, any stamp, transfer, documentary or similar taxes, assessments or charges (herein "Stamp Taxes"), and any penalties or interest with respect thereto, which may be assessed, levied, collected or imposed, or otherwise become payable, in connection with the execution and delivery of this Agreement. The Agent and each Lender represents and warrants unto the Borrower that, at the date of this Agreement, there are not Stamp Taxes in effect which are applicable to this Agreement or any Loans which may be made hereunder and the Agent and each Lender agrees that it will promptly notify the Borrower upon becoming aware of the imposition or prospective imposition of any Stamp Taxes in respect of this Agreement or any Loan made pursuant to this Agreement. The obligations of the Borrower, the Agent and each Lender under this Section 9.14 shall survive the payment of the Loans. SECTION 9.15. CHANGE OF CONTROL OPTION. (a) In the event there shall occur any Change of Control (as defined below) each Lender shall have the right, at its option exercisable at any time within six months following the Change Date (as defined below), to require the Borrower to purchase the Loans of such Lender on the Purchase Date (as defined below) at a purchase price which shall be equal to the sum of (i) the principal amount of such Loans then outstanding, PLUS (ii) any and all accrued and unpaid interest on such Loans and Fees to the Purchase Date (the "Purchase Price"). 44 (b) The Borrower shall give the Lenders, through the Agent, written notice of the occurrence of a Change of Control within five Business Days following the Change Date. No failure of the Borrower to give notice of a Change of Control shall limit the right of any Lender to require the purchase of its Loans pursuant to this Section 9.15. (c) Any Lender may exercise its right to require the purchase of its Loans under this Section 9.15 by delivering to the Borrower at any time within six months after the Change Date written notice thereof, specifying the Purchase Date. The Commitment of any Lender exercising its right to require the purchase of its Loans under this Section 9.15 shall automatically terminate immediately upon the Borrower's receipt of such Lender's written notice of such exercise of its option in accordance with this Section 9.15. (d) In the event of the exercise by any Lender of its option under this Section 9.15 in the manner provided herein, the Borrower shall pay or cause to be paid to such Lender on the Purchase Date the Purchase Price (determined in accordance with paragraph (a) above) in immediately available funds. No exercise of the option granted in this Section 9.15 shall be subject to the requirements of Sections 2.15 and 2.12(d). (e) As used in this Section 9.15, the term: (1) "CHANGE DATE" means the date on which any Change of Control shall be deemed to have occurred; PROVIDED, that, if the Borrower shall fail to give timely notice of the occurrence of a Change of Control to the Lenders as provided in paragraph (b) above, for the purpose of determining the duration of the Lenders' rights to require prepayment under this Section 9.15, "CHANGE DATE" shall mean the earlier of (i) the date on which notice of a Change of Control is duly given by the Borrower to the Agent or (ii) with respect to any Lender, the date on which such Lender obtains actual knowledge of the Change of Control. (2) "CHANGE OF CONTROL" means when, and shall be deemed to have occurred at such time as, a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the then outstanding Voting Stock of the Borrower; PROVIDED, that fifty percent shall become 70% with respect to any "employee benefit plan" (as defined in Section 3(3) of ERISA) maintained by the Borrower or any Subsidiary or any trust or funding vehicle maintained for or pursuant to such "employee benefit plan". (3) "PURCHASE DATE" means, with respect to any Lender, the date on which the Borrower shall purchase the Loans of such Lender pursuant to the exercise by such Lender of its option under this Section 9.15, pursuant to a notice given to the Borrower in accordance with paragraph (c) of this Section 9.15, which date shall be a Business Day not less than 90 nor more than 120 days after the date such Lender gives the Borrower written notice of such exercise. (4) "VOTING STOCK" shall mean capital stock of the Borrower of any class or classes (however designated) the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of the Board of Directors of the Borrower, it being understood that, at the date hereof, the 45 Common Stock, without par value, of the Borrower is the only outstanding class of capital stock of the Borrower which constitutes "Voting Stock". IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. THE GOODYEAR TIRE & RUBBER COMPANY, by /s/ Stephanie W. Bergeron --------------------------------- Name: Stephanie W. Bergeron Title: Vice President and Treasurer THE CHASE MANHATTAN BANK, individually and as Agent, by /s/ Julie S. Long --------------------------------- Name: Julie S. Long Title: Vice President BNP PARIBAS By /s/ Rosalie C. Hawley --------------------------------- Name: Rosalie C. Hawley Title: Director By /s/ Richard L. Sted --------------------------------- Name: Richard L. Sted Title: Region Manager BANK OF AMERICA, N.A. By /s/ Matthew J. Reilly --------------------------------- Name: Matthew J. Reilly Title: Vice President CITICORP USA, INC. By /s/ Brian Ike --------------------------------- Name: Brian Ike Title: Director BANK ONE N.A. By /s/ Glenn A. Currin --------------------------------- Name: Glenn A. Currin Title: First Vice President CIBC INC. By /s/ Dominic J. Sorresso --------------------------------- Name: Dominic J. Sorresso Title: Executive Director CIBC World Markets Corp., As Agent COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By /s/Graham A. Warning --------------------------------- Name: Graham A. Warning Title: Assistant Treasurer By /s/ John Marlatt --------------------------------- Name: John Marlatt Title: Senior Vice President DEUTSCHE BANK AG NEW YORK BRANCH By /s/ Hans-Joseph Thiele --------------------------------- Name: Hans-Joseph Thiele Title: Director By /s/ Oliver Schwarz --------------------------------- Name: Oliver Schwarz Title: Vice President SUMITOMO MITSUI BANKING CORPORATION (F/K/A THE SUMINTOMO BANK, LIMITED) By /s/ Edward D. Henderson, Jr. --------------------------------- Name: Edward D. Henderson, Jr. Title: Senior Vice President BANK OF TOKYO-MITSUBISHI TRUST COMPANY By /s/ Paresh Shah --------------------------------- Name: Paresh Shah Title: Vice President CREDIT SUISSE FIRST BOSTON By /s/ Kristin Lepri --------------------------------- Name: Krstin Lepri Title: Assistant Vice President By /s/ David L. Sawyer --------------------------------- Name: David L. Sawyer Title: Vice President THE INDUSTRIAL BANK OF JAPAN, LIMITED By /s/ Walter Wolff --------------------------------- Name: Walter Wolff Title: Joint General Manager ABN AMRO BANK, N.V. By /s/ James M. Sumoski --------------------------------- Name: James M. Sumoski Title: Vice President By /s/ Dougas R. Elliott --------------------------------- Name: Douglas R. Elliott Title: Group Vice President BANCA NAZIONALE DEL LAVORO S.p.A., NEW YORK BRANCH By /s/ Juan J. Cortes --------------------------------- Name: Juan J. Cortes Title: First Vice President By /s/ Leodardo Valentini --------------------------------- Name: Leonardo Valentini Title: First Vice President FIRST UNION NATIONAL BANK By /s/ Shannan S. Townsend --------------------------------- Name: Shannon S. Townsend Title: Vice President INTESABCI S.P.A. By /s/ J. Dickerhof --------------------------------- Name: J. Dickerhof Title: Vice President By /s/ C. Dougherty --------------------------------- Name: C. Dougherty Title: Vice President ROYAL BANK OF CANADA By /s/ Gordon C. MacArthur --------------------------------- Name: Gordon C. MacArthur Title: Senior Manager SOCIETE GENERALE By /s/ Anne-Marie Dumortier --------------------------------- Name: Anne-Marie Dumortier Title: Vice President THE BANK OF NOVA SCOTIA By /s/ F.C.H. Ashby --------------------------------- Name: F.C.H. Ashby Title: Senior Manager Loan Operations CREDIT LYONNAIS CHICAGO BRANCH By /s/ Nigel R. Carter --------------------------------- Name: Nigel R. Carter Title: Vice President KEY BANK NATIONAL ASSOCIATION By /s/ Daniel W. Lally --------------------------------- Name: Daniel W. Lally Title: Assistant Vice President NATIONAL CITY BANK By /s/ Janice E. Focke --------------------------------- Name: Janice E. Focke Title: Senior Vice President THE NORTHERN TRUST COMPANY By /s/ Craig Smith --------------------------------- Name: Craig Smith Title: Vice President DRESDNER BANK AG NEW YORK AND GRAND CAYMAN BRANCHES By /s/ Faraaz Kamran --------------------------------- Name: Faraaz Kamran Title: Assistant Vice President By /s/ Gabriela Fields --------------------------------- Name: Gabriela Fields Title: Associate STANDARD CHARTERED BANK By /s/ Nancy Cheng --------------------------------- Name: Nancy Cheng Title: Vice President By /s/ Robert K. Reddington --------------------------------- Name: Robert K. Reddington Title: Assistant Vice President Credit Documentation BARCLAYS BANK PLC By /s/ Nicholas A. Bell --------------------------------- Name: Nicholas A. Bell Title: Director Loan Transaction Management SCHEDULE III THE GOODYEAR TIRE & RUBBER COMPANY CERTAIN LITIGATION NO REPRESENTATION OR WARRANTY IS MADE BY BORROWER UNDER THE AGREEMENT IN RESPECT OF THE FOLLOWING LEGAL PROCEEDINGS. I. LEGAL PROCEEDINGS IN SEC REPORTS Paragraphs (A) through (H), inclusive, of Item 3 of the Borrower's Annual Report on Form 10-K for the year ended December 31, 2000 are incorporated by reference. Paragraphs (1) through (4), inclusive, of Item 1 of Part II of the Borrower's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 are incorporated by reference. Paragraphs (1) and (2), inclusive, of Item 1 of Part II of the Borrower's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 are incorporated by reference. II. OTHER LEGAL PROCEEDINGS On June 1, 1998, a civil action, Andrews, et al. v. Goodyear, et al. (Docket No. L-5595-98) was filed by eleven hourly employees at Goodyear's New Brunswick; New Jersey warehouse facility in the Superior Court of New Jersey, Middlesex County (Law Division), against Goodyear and four other employees of Goodyear alleging, among other things, that (i) the defendants engaged in conduct constituting discrimination on the basis of race in violation of a New Jersey law prohibiting discrimination in the workplace, (ii) Goodyear failed to promote the plaintiffs in violation of said New Jersey law, and (iii) the defendants' actions inflicted emotional distress and caused loss of consortium. The plaintiffs are seeking injunctive relief, unspecified actual damages, including back pay, punitive damages aggregating $124 million, costs and attorneys' fees. EX-4.3 5 l90768aex4-3.txt EXHIBIT 4.3 OFFICERS CERTIFICATE Exhibit 4.3 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 August 10, 2001 (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 7.857% Notes due 2011 (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 $650,000,000.00. 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 August 15, 2011. 5. The interest rate to be borne by the Notes shall be 7.857% per annum, payable from August 15, 2001, commencing on February 15, 2002, and on each February 15 and August 15 thereafter to and including August 15, 2011 ("Interest Payment Dates") and the Regular Record Date (as defined in the Indenture) in respect of each Interest Payment Date shall be the February 1 immediately preceding a February 15 Interest Payment Date and the August 1 immediately preceding a August 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 thirty-five basis points (.35%), 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 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 Goldman, Sachs & Co. and Salomon Smith Barney Inc.,, and each of their 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 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 thirty-five basis points (.35%), 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 securities 4 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 Goldman, Sachs & Co. and Salomon Smith Barney Inc., and each of their 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 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 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 15th day of August, 2001. /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 Annex A 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 7.857% NOTE DUE 2011 CUSIP 382550 AH 4 No. GNS3- $ 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 DOLLARS ($ ) on August 15, 2011, and to pay interest thereon from August 15, 2001, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually on February 15 and August 15 in each year, commencing February 15, 2002, at the rate of 7.857% 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 February 1 or August 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: August 15, 2001 THE GOODYEAR TIRE & RUBBER COMPANY By ---------------------------------------- [Seal] Robert W. Tieken, Executive Vice President Attest: C. Thomas Harvie, 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 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 7.857% Notes due 2011, limited in aggregate principal amount to Six Hundred And Fifty Million Dollars [$650,000,000.00] (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 thirty-five basis points (.35%), 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 Goldman, Sachs & Co. and Salomon Smith Barney Inc., and each of their 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. EX-4.4 6 l90768aex4-4.txt EXHIBIT 4.4 EXECUTION COPY-TERM LOAN AGREEMENT Exhibit 4.4 EXECUTION COPY FIRST AMENDMENT dated as of November 8, 2001 (this "AMENDMENT"), to the Term Loan Agreement dated as of March 30, 2001 (the "TERM LOAN 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"); THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE AGENT"); and CHASE MANHATTAN INTERNATIONAL LIMITED, as London agent for the Lenders (the "LONDON AGENT"). WHEREAS, pursuant to the terms and conditions of the Term Loan Agreement, the Lenders have agreed to make certain loans to the Borrower; and WHEREAS, the Borrower has requested that certain provisions of the Term Loan Agreement be modified in the manner provided for in this Amendment, and the Lenders are willing to agree to such modifications on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration the parties hereto hereby agree as follows: 1. DEFINED TERMS. Capitalized terms used and not defined herein shall have the meanings given to them in the Term Loan Agreement, as amended hereby. 2. AMENDMENT TO THE TERM LOAN AGREEMENT. Clause (a) of Article V of the Term Loan Agreement is hereby amended by deleting in its entirety the table set forth therein and inserting in its place the following table: Fiscal Quarter End Minimum Ratio ------------------ ------------- September 30, 2001 2.75 to 1.00 December 31, 2001 2.75 to 1.00 March 31, 2002 2.75 to 1.00 June 30, 2002 2.75 to 1.00 September 30, 2002 2.75 to 1.00 December 31, 2002 2.75 to 1.00 March 31, 2003 3.00 to 1.00 June 30, 2003 3.25 to 1.00 September 30, 2003 and each Fiscal Quarter End thereafter 3.50 to 1.00 2 3. NO OTHER AMENDMENTS OR WAIVERS; CONFIRMATION. Except as expressly amended hereby, the provisions of the Term Loan Agreement are and shall remain in full force and effect. Nothing herein shall be deemed to entitle the Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Term Loan Agreement in similar or different circumstances. 4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants to the Administrative Agent and the Lenders that, as of the date hereof: (a) No Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Borrower of this Amendment has been duly authorized by all necessary corporate and other action and does not and will not require any registration with, consent or approval of, notice to or action by, any person (including any Governmental Body) in order to be effective and enforceable. The Term Loan Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. (c) All representations and warranties of the Borrower set forth herein and in the Term Loan Agreement are true and correct in all material respects on and as of the date hereof. 5. AMENDMENT FEE. The Borrower agrees to pay to the Administrative Agent for the account of each Lender that executes and delivers a copy of this Amendment at or prior to 5:00 p.m., New York City time, on November 8, 2001, an amendment fee (the "AMENDMENT FEE") equal to 0.15% of such Lender's Commitment (whether then utilized or unutilized) as of November 8, 2001. The Amendment Fee shall be payable upon the effectiveness of this Amendment. 6. CONDITIONS PRECEDENT TO EFFECTIVENESS. This Amendment shall become effective as of and with effect from the date hereof, subject to the receipt by the 3 Administrative Agent of counterparts hereof duly executed and delivered by the Borrower and the Majority Lenders. 7. EXPENSES. The Borrower agree to pay or reimburse the Administrative Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent. 8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 9. COUNTERPARTS. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their duly authorized officers as of the day and year first above written. THE GOODYEAR TIRE & RUBBER COMPANY, by ____________________________________ Name: Title: THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by ____________________________________ Name: Title: CHASE MANHATTAN INTERNATIONAL LIMITED, as London Agent, by ____________________________________ Name: Title: 5 Signature page to the First Amendment dated as of November 8, 2001, to the Term Loan Agreement Name of Lender: ______________________________________________ by ___________________________________________ Name: Title: EX-4.5 7 l90768aex4-5.txt EXHIBIT 4.5 EXECUTION COPY-5 YEAR CREDIT AGREEMENT Exhibit 4.5 EXECUTION COPY FIRST AMENDMENT dated as of November 8, 2001 (this "AMENDMENT"), to the Amended and Restated Five-Year Revolving Credit Agreement dated as of August 14, 2001 (the "FIVE-YEAR cREDIT AGREEMENT"), among THE GOODYEAR TIRE & RUBBER COMPANY, an Ohio corporation (the "BORROWER"), the lenders party thereto (the "LENDERS") and THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for the Lenders (in such capacity, the "AGENT"). WHEREAS, pursuant to the terms and conditions of the Five-Year Credit Agreement, the Lenders have agreed to make certain loans to the Borrower; and WHEREAS, the Borrower has requested that certain provisions of the Five-Year Credit Agreement be modified in the manner provided for in this Amendment, and the Lenders are willing to agree to such modifications on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration the parties hereto hereby agree as follows: 1. DEFINED TERMS. Capitalized terms used and not defined herein shall have the meanings given to them in the Five-Year Credit Agreement, as amended hereby. 2. AMENDMENTS TO THE FIVE-YEAR CREDIT AGREEMENT. (a) Section 1.01 of the Five-Year Credit Agreement is hereby amended by deleting in its entirety the 2 table set forth in the definition of "Applicable Spread" and inserting in its place the following table: Category Leverage Ratio Eurodollar CD Spread -------- -------------- ---------- --------- Spread Per Per Annum ---------- --------- Annum ----- 1 less than or 0.3750% 0.5000% equal to 25% 2 greater than 25% 0.4750% 0.6000% but less than or equal to 40% 3 greater than 40% 1.0500% 1.1750% but less than or equal to 55% 4 greater than 55% 1.2500% 1.3750% (b) Clause (a) of Article V of the Five-Year Credit Agreement is hereby amended by deleting in its entirety the table set forth therein and inserting in its place the following table: Period Ending Minimum Ratio ------------- ------------- September 30, 2001 2.75 to 1.00 December 31, 2001 2.75 to 1.00 March 31, 2002 2.75 to 1.00 June 30, 2002 2.75 to 1.00 September 30, 2002 2.75 to 1.00 December 31, 2002 2.75 to 1.00 March 31, 2003 3.00 to 1.00 June 30, 2003 3.25 to 1.00 September 30, 2003 and each Annual Period ending thereafter 3.50 to 1.00 3. NO OTHER AMENDMENTS OR WAIVERS; CONFIRMATION. Except as expressly amended hereby, the provisions of the Five-Year Credit Agreement are and shall remain in full force and effect. Nothing herein shall be deemed to entitle the Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Five-Year Credit Agreement in similar or different circumstances. 3 4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants to the Agent and the Lenders that, as of the date hereof: (a) No Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Borrower of this Amendment has been duly authorized by all necessary corporate and other action and does not and will not require any registration with, consent or approval of, notice to or action by, any person (including any Governmental Body) in order to be effective and enforceable. The Five-Year Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. (c) All representations and warranties of the Borrower set forth herein and in the Five-Year Credit Agreement are true and correct in all material respects on and as of the date hereof. 5. AMENDMENT FEE. The Borrower agrees to pay to the Agent for the account of each Lender that executes and delivers a copy of this Amendment at or prior to 5:00 p.m., New York City time, on November 8, 2001, an amendment fee (the "AMENDMENT FEE") equal to 0.15% of such Lender's Commitment (whether then utilized or unutilized) as of November 8, 2001. The Amendment Fee shall be payable upon the effectiveness of this Amendment. 6. CONDITIONS PRECEDENT TO EFFECTIVENESS. This Amendment (including the pricing increases effected by Section 2(a) hereof) shall become effective as of and with effect from the date hereof, subject to the receipt by the Agent of counterparts hereof duly executed and delivered by the Borrower and the Majority Lenders. 7. EXPENSES. The Borrower agree to pay or reimburse the Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Agent. 4 8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 9. COUNTERPARTS. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their duly authorized officers as of the day and year first above written. THE GOODYEAR TIRE & RUBBER COMPANY, by ____________________________________________ Name: Title: THE CHASE MANHATTAN BANK, individually and as Agent, by ____________________________________________ Name: Title: 6 Signature page to the First Amendment dated as of November 8, 2001, to the Amended and Restated Five-Year Revolving Credit Agreement Name of Lender: __________________________________________ by ____________________________________________ Name: Title: EX-4.6 8 l90768aex4-6.txt EXHIBIT 4.6 EXECUTION COPY 364 DAY AGREEMENT Exhibit 4.6 EXECUTION COPY FIRST AMENDMENT dated as of November 8, 2001 (this "AMENDMENT"), to the Amended and Restated 364-Day Revolving Credit Agreement dated as of August 14, 2001 (the "364-DAY CREDIT AGREEMENT"), among THE GOODYEAR TIRE & RUBBER COMPANY, an Ohio corporation (the "BORROWER"), the lenders party thereto (the "LENDERS") and THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for the Lenders (in such capacity, the "AGENT"). WHEREAS, pursuant to the terms and conditions of the 364-Day Credit Agreement, the Lenders have agreed to make certain loans to the Borrower; and WHEREAS, the Borrower has requested that certain provisions of the 364-Day Credit Agreement be modified in the manner provided for in this Amendment, and the Lenders are willing to agree to such modifications on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration the parties hereto hereby agree as follows: 1. DEFINED TERMS. Capitalized terms used and not defined herein shall have the meanings given to them in the 364-Day Credit Agreement, as amended hereby. 2. AMENDMENTS TO THE 364-DAY CREDIT AGREEMENT. (a) Section 1.01 of the 364-Day Credit Agreement is hereby amended by deleting in its entirety the table set 2 forth in the definition of "Applicable Spread" and inserting in its place the following table: Category Leverage Ratio Eurodollar CD Spread -------- -------------- ---------- --------- Spread Per Per Annum ---------- --------- Annum ----- 1 less than or 0.4000% 0.5250% equal to 25% 2 greater than 25% 0.5000% 0.6250% but less than or equal to 40% 3 greater than 40% 1.1000% 1.2250% but less than or equal to 55% 4 greater than 55% 1.3000% 1.4250% (b) Clause (a) of Article V of the 364-Day Credit Agreement is hereby amended by deleting in its entirety the table set forth therein and inserting in its place the following table: Period Ending Minimum Ratio ------------- ------------- September 30, 2001 2.75 to 1.00 December 31, 2001 2.75 to 1.00 March 31, 2002 2.75 to 1.00 June 30, 2002 2.75 to 1.00 September 30, 2002 2.75 to 1.00 December 31, 2002 2.75 to 1.00 March 31, 2003 3.00 to 1.00 June 30, 2003 3.25 to 1.00 September 30, 2003 and each Annual Period ending thereafter 3.50 to 1.00 3. NO OTHER AMENDMENTS OR WAIVERS; CONFIRMATION. Except as expressly amended hereby, the provisions of the 364-Day Credit Agreement are and shall remain in full force and effect. Nothing herein shall be deemed to entitle the Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the 364-Day Credit Agreement in similar or different circumstances. 3 4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants to the Agent and the Lenders that, as of the date hereof: (a) No Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Borrower of this Amendment has been duly authorized by all necessary corporate and other action and does not and will not require any registration with, consent or approval of, notice to or action by, any person (including any Governmental Body) in order to be effective and enforceable. The 364-Day Credit Agreement as amended by this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. (c) All representations and warranties of the Borrower set forth herein and in the 364-Day Credit Agreement are true and correct in all material respects on and as of the date hereof. 5. AMENDMENT FEE. The Borrower agrees to pay to the Agent for the account of each Lender that executes and delivers a copy of this Amendment at or prior to 5:00 p.m., New York City time, on November 8, 2001, an amendment fee (the "AMENDMENT FEE") equal to 0.15% of such Lender's Commitment (whether then utilized or unutilized) as of November 8, 2001. The Amendment Fee shall be payable upon the effectiveness of this Amendment. 6. CONDITIONS PRECEDENT TO EFFECTIVENESS. This Amendment (including the pricing increases effected by Section 2(a) hereof) shall become effective as of and with effect from the date hereof, subject to the receipt by the Agent of counterparts hereof duly executed and delivered by the Borrower and the Majority Lenders. 7. EXPENSES. The Borrower agree to pay or reimburse the Agent for its out-of-pocket expenses in connection with this Amendment, including the reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel for the Agent. 4 8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 9. COUNTERPARTS. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile transmission of the relevant signature pages hereof. 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their duly authorized officers as of the day and year first above written. THE GOODYEAR TIRE & RUBBER COMPANY, by ___________________________________ Name: Title: THE CHASE MANHATTAN BANK, individually and as Agent, by ___________________________________ Name: Title: 6 Signature page to the First Amendment dated as of November 8, 2001, to the Amended and Restated 364-Day Revolving Credit Agreement Name of Lender: _______________________________________ by ____________________________________ Name: Title: EX-12 9 l90768aex12.txt EXHIBIT 12 RATIO AND EARNINGS TO FIXED CHARGES EXHIBIT 12 THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in millions)
NINE MONTHS ENDED TWELVE MONTHS ENDED SEPTEMBER 30, DECEMBER 31, --------------------------------------------------------------- 2001 2000 1999 1998 1997 1996 ---- ---- ---- ---- ---- ---- EARNINGS Income (loss) from continuing operations before income taxes $ (37.9) $ 58.8 $ 300.1 $ 930.4 $ 703.0 $ 803.0 Add: Amortization of previously capitalized interest 7.3 9.7 11.0 10.7 11.0 11.6 Minority interest in net income of consolidated subsidiaries with fixed charges 24.9 45.6 42.9 33.6 45.1 45.9 Proportionate share of fixed charges of investees accounted for by the equity method 2.4 5.7 5.5 4.8 6.5 5.1 Proportionate share of net loss of investees accounted for by the equity method 16.5 28.4 0.3 -- 0.1 2.7 ------- ------- ------- --------- ------- --------- Total additions 51.1 89.4 59.7 49.1 62.7 65.3 Deduct: Capitalized interest 5.4 12.0 11.8 6.6 6.2 5.4 Minority interest in net loss of consolidated subsidiaries 3.9 8.3 4.2 2.9 3.6 4.4 Undistributed proportionate share of net income of investees accounted for by the equity method 0.6 4.3 2.2 -- -- -- ------- ------- ------- --------- ------- --------- Total deductions 9.9 24.6 18.2 9.5 9.8 9.8 TOTAL EARNINGS $ 3.3 $ 123.6 $ 341.6 $ 970.0 $ 755.9 $ 858.5 ======= ======= ======= ========= ======= ========= FIXED CHARGES Interest expense $ 220.9 $ 282.6 $ 179.4 $ 147.8 $ 119.5 $ 128.6 Capitalized interest 5.4 12.0 11.8 6.6 6.2 5.4 Amortization of debt discount, premium or expense 5.0 1.5 0.7 1.2 0.1 0.3 Interest portion of rental expense 55.1 73.5 62.1 57.7 63.0 68.2 Proportionate share of fixed charges of investees accounted for by the equity method 2.4 5.7 5.5 4.8 6.5 5.1 ------- ------- ------- --------- ------- --------- TOTAL FIXED CHARGES $ 288.8 $ 375.3 $ 259.5 $ 218.1 $ 195.3 $ 207.6 ======= ======= ======= ========= ======= ========= TOTAL EARNINGS BEFORE FIXED CHARGES $ 292.1 $ 498.9 $ 601.1 $ 1,188.1 $ 951.2 $ 1,066.1 ======= ======= ======= ========= ======= ========= RATIO OF EARNINGS TO FIXED CHARGES 1.01 1.33 2.32 5.45 4.87 5.14
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