AMENDMENT NO. 2 TO 364-DAY CREDIT AGREEMENT dated as of July 25, 2005 and amending the 364-Day Credit Agreement dated as of July 28, 2003 among Textron Financial Corporation The Banks Listed Herein and JPMorgan Chase Bank, N.A. as Administrative Agent...

EXECUTION COPY

EXHIBIT 10.2

$500,000,000

AMENDMENT NO. 2 TO 364-DAY CREDIT AGREEMENT

dated as of July 25, 2005

and amending the 364-Day Credit Agreement

dated as of July 28, 2003

among

Textron Financial Corporation

The Banks Listed Herein

and

JPMorgan Chase Bank, N.A.
as Administrative Agent

▇.▇. ▇▇▇▇▇▇ Securities Inc.
and
Banc of America Securities LLC
as Lead Arrangers and Joint Bookrunner

Bank of America, N.A.
as Syndication Agent

Barclays Bank PLC
Citibank, N.A.
and
Deutsche Bank Securities Inc.
as Documentation Agents

AMENDMENT NO. 2 TO 364-DAY CREDIT AGREEMENT

     AMENDMENT dated as of July 25, 2005 to the 364-Day Credit Agreement dated as of July 28, 2003, as amended by Amendment No. 1 thereto dated as of July 26, 2004 (as heretofore amended, the “364-Day Credit Agreement”) among TEXTRON FINANCIAL CORPORATION (the “Borrower”), the BANKS party thereto (the “Banks”) and JPMORGAN CHASE BANK, N.A., as Administrative Agent (the “Administrative Agent”).

W I T N E S S E T H :

     WHEREAS, the parties hereto desire to amend the 364-Day Credit Agreement as set forth herein;

     NOW, THEREFORE, the parties hereto agree as follows:

     Section 1. Defined Terms; References. Unless otherwise specifically defined herein, each term used herein that is defined in the 364-Day Credit Agreement has the meaning assigned to such term in the 364-Day Credit Agreement. Each reference to “hereof”, “hereunder”, “herein” and “hereby” and each other similar reference and each reference to “this Agreement” and each other similar reference contained in the 364-Day Credit Agreement shall, after this Amendment becomes effective, refer to the 364-Day Credit Agreement as amended hereby.

     Section 2. Amendments.

     (a) The following definitions are added in alphabetical order to Section 1.01 of the 364-Day Credit Agreement:

“Documentation Agent” means each of Barclays Bank PLC, Citibank, N.A. and Deutsche Bank Securities Inc. in its capacity as documentation agent in respect of this Agreement.

“Fitch” means Fitch Ratings Ltd.

     (b) The definition of “Agent” in Section 1.01 of the 364-Day Credit Agreement is amended to read in its entirety as follows:

“Agent” means any of the Administrative Agent, the Documentation Agents and the Syndication Agent, and “Agents” means any two or more of the foregoing.

     (c) The definition of “Material Debt” in Section 1.01 of the 364-Day Credit Agreement is amended by changing the reference to the amount “$50,000,000” to “$100,000,000”.

     (d) The definition of “Non-recourse Debt” in Section 1.01 of the 364-Day Credit Agreement is amended by adding the words “of the Borrower” after the phrase “in the case of all Non-recourse Debt”.

     (e) The definition of “Permitted Securitization Obligations” in Section 1.01 of the 364-Day Credit Agreement is amended by deleting the phrase “to the extent that, in accordance with generally accepted accounting principles, such obligations would be required to be included as a liability on a consolidated balance sheet of the Borrower or its Consolidated Subsidiaries”.

     (f) The definition of “S&P” in Section 1.01 of the 364-Day Credit Agreement is amended to read in its entirety as follows:

“S&P” means Standard & Poor’s Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.

     (g) The definition of “Securitization Transaction” in Section 1.01 of the 364-Day Credit Agreement is amended by deleting the phrase “, provided that after giving effect to such transaction or series of transactions, the Receivables (or interests therein) which are the subject of such transaction or series of transactions are, in accordance with generally accepted accounting principles, no longer reflected as assets on a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries”.

     (h) The definition of “Syndication Agent” in Section 1.01 of the 364-Day Credit Agreement is amended to read in its entirety as follows:

“Syndication Agent” means Bank of America, N.A., in its capacity as syndication agent in respect of this Agreement.

     (i) The definition of “Termination Date” in Section 1.01 of the 364-Day Credit Agreement is amended by changing the date specified therein from “July 25, 2005” to “July 24, 2006”.

     (j) Section 4.04(a) of the 364-Day Credit Agreement is amended by changing the reference to the date “January 3, 2004” to “January 1, 2005” and the reference to the phrase “Borrower’s 2003 Annual Report” to “Borrower’s 2004 Annual Report”.

     (k) Sections 4.04(b) and 4.04(c) of the 364-Day Credit Agreement are amended by changing each reference to the date “March 31, 2004” to “▇▇▇▇▇ ▇▇, ▇▇▇▇”.

     (▇) Section 5.02 of the 364-Day Credit Agreement is amended by changing the reference to the phrase “S&P or Moody’s” to “S&P, Moody’s or Fitch”.

     (m) Section 5.10 of the 364-Day Credit Agreement and the definition of “Restricted Payment” in Section 1.01 of the 364-Day Credit Agreement are deleted in their entirety.

     (n) Section 5.12(i) of the 364-Day Credit Agreement is amended to read in its entirety as follows:

Liens which are granted pursuant to any Securitization Transaction and which cover only the Receivables and Receivables Related Assets or interests therein which are the subject of such Securitization Transaction; and

     (o) Section 6.01(k) of the 364-Day Credit Agreement is amended to read in its entirety as follows:

the Borrower or any of its ERISA Affiliates shall terminate or suffer the termination of (by action of the Pension Benefit Guaranty Corporation or any successor thereto) any Pension Plan, or shall suffer the appointment of or the institution of proceedings to appoint a trustee to administer any Pension Plan, or shall withdraw (under Section 4063 of ERISA) from a Pension Plan, if as of the date thereof or any subsequent date, such event results in any liability to the Pension Benefit Guaranty Corporation (or any successor thereto) or to any other Person under Section 4062, 4063, 4064 or 4069 of ERISA in an aggregate amount that could reasonably be expected to have a material adverse effect on the business, financial position or results of operations of the Borrower and its Consolidated Subsidiaries, considered as a whole;

     (p) Section 6.01(l) of the 364-Day Credit Agreement is amended to read in its entirety as follows:

the Borrower or any of its ERISA Affiliates shall withdraw from any Multiemployer Plan and the amount of withdrawal liability (determined pursuant to Sections 4201 et seq. of ERISA) to which the Borrower and its ERISA Affiliates become obligated to all Multiemployer Plans is in an aggregate amount that could reasonably be expected to have a material adverse effect on the business, financial position or results of operations of the Borrower and its Consolidated Subsidiaries, considered as a whole; or

     (q) Section 6.01(m) of the 364-Day Credit Agreement is amended by changing the reference to the amount “$50,000,000” to “$100,000,000”.

     (r) Section 7.10 of the 364-Day Credit Agreement is amended to read in its entirety as follows:

Other Agents. Nothing in this Agreement shall impose any duty or liability whatsoever on any of the Syndication Agent or the Documentation Agents in such capacity.

     (s) Section 9.05 of the 364-Day Credit Agreement is amended to read in its entirety as follows:

Amendments and Waivers. Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Banks (and, if the rights or duties of the Administrative Agent are affected thereby, by the Administrative Agent); provided that no such amendment or waiver shall:

(a) unless signed by each affected Bank, (i) increase or decrease the Commitment of any Bank (except for a ratable decrease in the Commitments of all Banks) or subject any Bank to any additional obligation, (ii) reduce the principal of or rate of interest on any Loan or any fees hereunder or (iii) postpone the date fixed for any payment of principal of or interest on any Loan or any fees hereunder or for termination of any Commitment;

(b) unless signed by all Banks, (i) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Notes, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement, (ii) amend Section 2.13 or 9.04 in a manner that would alter the pro rata sharing of payments required thereby or (iii) permit the Support Agreement to cease to be in full force and effect or alter in any way the terms of the Support Agreement; or

(c) unless signed by a Designated Lender or its Designating Bank, subject such Designated Lender to any additional obligation or affect its rights hereunder (unless the rights of all the Banks hereunder are similarly affected).

It is understood that the operation of Section 2.17 in accordance with its terms is not an amendment subject to this Section 9.05.

     Section 3. Changes in Commitments. With effect from and including the Amendment Effective Date, (i) the Commitment of each Bank shall be the amount set forth opposite the name of such Bank in the Commitment Schedule attached hereto and (ii) the Commitment Schedule attached hereto shall replace

the Commitment Schedule attached to the 364-Day Credit Agreement. On the Amendment Effective Date, any Bank party to the 364-Day Credit Agreement which is not listed in the Commitment Schedule attached hereto (each, an “Exiting Bank”) shall cease to be a Bank party to the 364-Day Credit Agreement, and all accrued fees and other amounts payable under the 364-Day Credit Agreement for the account of each Exiting Bank shall be due and payable on such date; provided that the provisions of Sections 8.03, 8.04 and 9.03 of the 364-Day Credit Agreement shall continue to inure to the benefit of each Exiting Bank after the Amendment Effective Date.

     Section 4. Changes in Pricing Schedule. The Pricing Schedule attached to the 364-Day Credit Agreement (the “Existing Pricing Schedule”) is deleted and replaced by the Pricing Schedule attached to this Amendment (the “New Pricing Schedule”). The New Pricing Schedule shall apply to interest and fees accruing under the 364-Day Credit Agreement on and after the date hereof. The Existing Pricing Schedule shall continue to apply to interest and fees accruing under the 364-Day Credit Agreement prior to the date hereof.

     Section 5. Representations of Borrower. The Borrower represents and warrants that (i) the representations and warranties of the Borrower set forth in Article 4 of the 364-Day Credit Agreement will be true on and as of the Amendment Effective Date and (ii) no Default will have occurred and be continuing on such date.

     Section 6. Effect of Amendments. Except as expressly set forth herein, the amendments contained herein shall not constitute a waiver or amendment of any term or condition of the 364-Day Credit Agreement, and all such terms and conditions shall remain in full force and effect and are hereby ratified and confirmed in all respects.

     Section 7. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

     Section 8. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

     Section 9. Effectiveness. This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”), subject to satisfaction of the following conditions:

     (a) the Administrative Agent shall have received from each of the Borrower and the Banks a counterpart hereof signed by such party or facsimile or other written confirmation (in form satisfactory to the Administrative Agent) that such party has signed a counterpart hereof; and

     (b) the Administrative Agent shall have received an opinion of the General Counsel or Assistant General Counsel of the Borrower dated as of the Amendment Effective Date, in form and substance satisfactory to the Administrative Agent.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

COMMITMENT SCHEDULE

Bank		Commitment
JPMorgan Chase Bank, N.A.		$	45,000,000
Bank of America, N.A.		$	45,000,000
Barclays Bank PLC		$	36,666,667
Citibank, N.A.		$	36,666,667
Deutsche Bank AG New York Branch		$	36,666,667
The Bank of Tokyo-Mitsubishi Trust Company		$	30,000,000
Credit Suisse First Boston, acting through its Cayman Islands Branch		$	30,000,000
HSBC Bank USA, National Association		$	30,000,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA		$	30,000,000
UBS Loan Finance LLC		$	30,000,000
Wachovia Bank, National Association		$	30,000,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Financing, Inc.		$	23,333,333
BNP Paribas		$	23,333,333
The Bank of Nova Scotia		$	23,333,333
The Bank of New York		$	16,666,667
Societe Generale		$	16,666,667
SunTrust Bank		$	16,666,667
Total		$	500,000,000

PRICING SCHEDULE

     Each of “Facility Fee Rate” and “Euro-Dollar Margin” means, for any date, the rate set forth below in the row opposite such term and in the row corresponding to the “Utilization” at such date and, under the column corresponding to the “Pricing Level” at such date:

364-Day Facility

		Level I				Level II				Level III				Level IV				Level V				Level VI
Facility Fee Rate			0.04	%			0.05	%			0.06	%			0.08	%			0.10	%			0.125	%
Euro-Dollar Margin*
Utilization £ 50%			0.135	%			0.15	%			0.19	%			0.37	%			0.525	%			0.625	%
Utilization > 50%			0.235	%			0.25	%			0.29	%			0.47	%			0.625	%			0.725	%

 

* If term-out option is utilized, Euro-Dollar Margin will increase by 0.15% and Utilization shall be deemed to be 100%.

     For purposes of this Schedule, the following terms have the following meanings, subject to the concluding paragraph of this Schedule with respect to split ratings:

     “Level I Pricing” applies at any date if, at such date, the Borrower’s long-term debt is rated A+ or higher by S&P, A1 or higher by Moody’s and A+ or higher by Fitch.

     “Level II Pricing” applies at any date if, at such date, the Borrower’s long-term debt is rated A by S&P, A2 by Moody’s and A by Fitch.

     “Level III Pricing” applies at any date if, at such date, the Borrower’s long-term debt is rated A- by S&P, A3 by Moody’s and A- by Fitch.

     “Level IV Pricing” applies at any date, if at such date, the Borrower’s long-term debt is rated BBB+ by S&P, Baa1 by Moody’s and BBB+ by Fitch.

     “Level V Pricing” applies at any date if, at such date, the Borrower’s long-term debt is rated BBB by S&P, Baa2 by Moody’s and BBB by Fitch.

     “Level VI Pricing” applies at any date if, at such date, no other Pricing Level applies.

     “Fitch” means Fitch Ratings Ltd.

     “Moody’s” means ▇▇▇▇▇’▇ Investors Service, Inc.

     “Pricing Level” refers to the determination of which of Level I, Level II, Level III, Level IV, Level V or Level VI applies at any date.

     “S&P” means Standard & Poor’s Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.

     “Utilization” means, at any date, the percentage equivalent of a fraction (i) the numerator of which is the Total Outstanding Amount at such date (after giving effect to any borrowing or payment on such date) and the denominator of which is the aggregate amount of the Commitments at such date (after giving effect to any reduction on such date). If for any reason any Loans remain outstanding after termination of the Commitments, Utilization shall be deemed to be 100%.

     The credit ratings to be utilized for purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Borrower without third-party enhancement (other than the Textron Inc. Support Agreement), and any rating assigned to any other debt security of the Borrower shall be disregarded. The rating in effect at any date is that in effect at the close of business of such date.

     If the Borrower is split-rated, then for purposes of determining the applicable Pricing Level, (a) if the S&P and Moody’s ratings are the same, all three ratings will be deemed at that level, (b) if the S&P and Moody’s ratings are not the same and the ratings differential is one level, then all three ratings will be deemed at the higher level of S&P and Moody’s and (c) if the S&P and Moody’s ratings are not the same and the ratings differential is two levels or more, then all three ratings will be deemed at a level one notch lower than the higher of S&P and Moody’s.