Document:

exv10w1

 

Exhibit 10.1

AMENDMENT NO. 1

to the

SECOND AMENDED AND RESTATED MULTICURRENCY

REVOLVING CREDIT AGREEMENT

     This AMENDMENT NO. 1, dated as of April 2, 2007 (the “Amendment”), to the SECOND
AMENDED AND RESTATED MULTICURRENCY REVOLVING CREDIT AGREEMENT is by and among (a) BORDERS GROUP,
INC. (“BGI”), a Michigan corporation, BORDERS, INC., a Colorado corporation
(“Borders”), WALDEN BOOK COMPANY, INC., a Colorado corporation (“Walden”), BGP (UK)
LIMITED, a company with limited liability organized under the laws of England (“BGP
(UK)” and together with BGI, Borders and Walden, the “Co-Borrowers”), (b) BORDERS
(UK) LIMITED, a company with limited liability organized under the laws of England (the “UK
Borrower”), (c) BORDERS AUSTRALIA PTY LIMITED, a company organized under the laws of Australia (the
“Australian Borrower”), (d) BORDERS BOOKS IRELAND LIMITED, a company with limited liability
organized under the laws of Ireland (the “Irish Borrower”), (e) any other Subsidiary of BGI
which becomes a Borrower hereunder pursuant to §5.16 (together with the Co-Borrowers, the UK
Borrower and the Australian Borrower, the “Borrowers”), (f) the lending institutions listed
from time to time on Schedule 1 (the “Lenders”), (g) BANK OF AMERICA, N.A.,
as administrative agent and as collateral agent for itself and such other lending institutions (the
“Administrative Agent”), (h) JPMORGAN CHASE BANK, N.A. and WELLS FARGO RETAIL FINANCE, LLC,
each as a syndication agent for itself and such other lending institutions (collectively, the
“Co-Syndication Agents”), (i) GENERAL ELECTRIC CAPITAL CORPORATION and LASALLE RETAIL
FINANCE, a division of LA SALLE BUSINESS CREDIT, LLC , each as documentation agent for itself and
such other lending institutions (collectively, the “Co-Documentation Agents”) and (j) BANK
OF AMERICA, N.A., as an Issuing Bank hereunder, and with BANC OF AMERICA SECURITIES LLC and
JPMORGAN SECURITIES INC., as Co-Lead Arrangers. Capitalized terms used herein and not otherwise
defined shall be defined as provided in §1.

     WHEREAS, the Borrowers, the Lenders, and the Agents are parties to that certain Second Amended
and Restated Multicurrency Revolving Credit Agreement dated as of July 31, 2006 (as amended and in
effect from time to time, the “Credit Agreement”);

     WHEREAS, at the Borrowers’ request, the Lenders and the Agents, subject to the terms and
conditions hereof, have agreed to amend the Credit Agreement as set forth herein;

     NOW, THEREFORE, the Borrowers, the Lenders and the Agents hereby agree as follows:

     §1. Defined Terms. Capitalized terms used herein without definition that are defined in the
Credit Agreement shall have the same meanings herein as in the Credit Agreement.

     §2. Amendments to the Credit Agreement. On the
Effective Date (as defined below), the Credit Agreement is hereby amended as follows:

 

 

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     (a) Amendment to §1.1 of the Credit
Agreement. The first sentence of the definition of Investments in Section 1.1 of
the Credit Agreement is hereby amended and restated in its entirety to read as follows:

     Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) by any Person for the acquisition of stock, membership
interests, partnership interests or other equity interests, other than repurchases
or redemptions of stock, membership interests, partnership interests or other equity
interests of such Person, or Indebtedness of, or for loans, advances, capital
contributions or transfers of property to, or in respect of any guaranties (or other
commitments as described under Indebtedness), or obligations of, any Person.

     (b) Amendment to §9.1 of the Credit
Agreement. Section 9.1(i) of the Credit Agreement is hereby amended and restated in
its entirety as follows:

     ”(i) unsecured Indebtedness of BGI having a maturity at least three (3) months
after the Maturity Date, in aggregate principal amount not to exceed $300,000,000;
provided that at the time of incurrence of such Indebtedness, no Default or
Event of Default has occurred and is continuing or would result therefrom; and”

     (c) Amendment to §9.4 of the Credit
Agreement. Section 9.4 of the Credit Agreement is hereby amended by adding new
subsections (d) and (e) as follows:

               ”(d) solely in connection with the issuance of the unsecured Indebtedness of BGI
permitted under §9.1(i) to be issued in April 2007, BGI and its Subsidiaries may enter into
(i) a derivatives transaction with one or more Derivatives Counterparties obligating BGI or
any of its Subsidiaries to make payments on or substantially concurrently with the date of
the issuance of such unsecured Indebtedness to such Derivatives Counterparties, if such
transaction is entered into for the purpose of hedging in connection with such unsecured
Indebtedness or reducing potential equity dilution if such unsecured Indebtedness is
converted into equity; provided that the aggregate amount of any such payment is
made with (or netted out of) the proceeds of such unsecured Indebtedness, and (ii) a
derivatives transaction with one or more Derivatives Counterparties pursuant to which BGI or
any of its Subsidiaries may be required to make a payment, but only to the extent that
either (A) after taking into account any substantially concurrent payments made by such
Derivatives Counterparty to BGI or its Subsidiaries permitted to be offset by the terms of
such derivatives or other transaction, neither BGI nor any of its Subsidiaries is obligated
to make further payments to such Derivatives Counterparty in respect of such derivatives
transaction, or (B) such payment is made in shares of Capital Stock of BGI, or to the extent
that shares of Capital Stock of BGI are exchanged generally for the right to receive cash
and/or other assets or securities, then such cash and/or other assets or securities ;
provided that this clause (B) does not permit BGI to deliver cash and/or other
assets or securities to Derivatives Counterparties except to the extent it is permitted to
deliver such cash
and/or other assets or securities to holders of shares of Capital Stock of BGI
generally; and

 

 

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               (e) solely in connection with the issuance of the unsecured Indebtedness of BGI
permitted under §9.1(i) to be issued in April 2007, BGI and its Subsidiaries may enter into
a derivatives transaction with one or more Derivatives Counterparties obligating BGI or any
of its Subsidiaries to make deliveries of its Capital Stock after the date of the issuance
of such unsecured Indebtedness to such Derivatives Counterparties as a result of any change
in market value of any Capital Stock of BGI or such Subsidiary.”

     (d) Amendment to §9.15 of the Credit
Agreement. Section 9.15 of the Credit Agreement is hereby amended and restated in
its entirety as follows:

     ”9.15 Payments of Senior Indebtedness.

     The Borrowers may, and may permit any of their Subsidiaries to, make (i)
any payment (including prepayment), redemption or repurchase of principal (whether
mandatory, voluntary, upon conversion or otherwise) in respect of the unsecured
Indebtedness of BGI permitted under §9.1(i), or (ii) any optional or voluntary
prepayment, redemption or repurchase of any Indebtedness ranking pari
passu in priority of payment with the Obligations (each such payment
described in clause (i) and (ii) above, a “Senior Indebtedness Payment”) so
long as (a) no Default or Event of Default has occurred and is continuing or would
result therefrom, and (b) BGI delivers to the Lenders on or before the date on which
it or any of its Subsidiaries agrees to or makes such Senior Indebtedness Payment a
certificate of the principal financial or accounting officer of the Borrowers
certifying as accurate and complete the monthly pro forma financial
projections attached thereto and demonstrating immediately after giving effect to
such Senior Indebtedness Payment (1) the Total Facility Usage Ratio would not exceed
90% and (2) the Total Facility Usage Ratio would not exceed 90% as determined on a
pro forma basis over the six month period immediately following the effective date
of such Senior Indebtedness Payment, in form and substance satisfactory to the
Administrative Agent, based on reasonable projections of the financial performance
of the Borrowers. BGI and its Subsidiaries may not make any Senior Indebtedness
Payments other than those payments permitted by this §9.15. Notwithstanding the
foregoing, BGI shall be permitted to make interest payments in respect of the
unsecured Indebtedness of BGI permitted under §9.1(i).”

     §3. Affirmation of the Borrowers and Guarantors. Each of the Borrowers hereby affirms its
absolute and unconditional promise to pay to each Lender, the Issuing Bank, each Swingline Lender
and the Agents the Loans, the Reimbursement Obligations and all other amounts due under the Notes,
the Credit Agreement as amended hereby and the other Loan Documents, at the times and in the
amounts provided for therein, and subject to the terms thereof. Each of the Guarantors hereby
affirms its guaranty of the Obligations in accordance with the provisions of the Guaranty. Each of
the Borrowers and the Guarantors confirms and agrees that (i) the obligations of the Borrowers to
the Lenders, the Swingline Lenders, the Issuing Bank and the Agents under the Credit Agreement as amended hereby are secured by and
entitled to the benefits of the Security Documents and (ii) all references to the term “Credit

 

 

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Agreement” in the Security Documents and the other Loan Documents shall hereafter refer to the
Credit Agreement as amended hereby.

     §4. Conditions to Effectiveness. This Amendment shall be deemed
effective as of the date hereof (the “Effective Date”) when duly executed by the Borrowers,
the Guarantors, the Administrative Agent and the Required Lenders and delivered to the
Administrative Agent.

     §5. Representations and Warranties. The Borrowers hereby represent
and warrant to the Lenders, the Agents and the Issuing Bank as follows:

     (a) Representations and Warranties in Credit
Agreement. The representations and warranties of the Borrowers and their
Subsidiaries contained in the Credit Agreement, as amended hereby, are true and correct on
the date hereof (except to the extent of changes resulting from transactions contemplated or
permitted by this Credit Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not materially adverse, and
to the extent that such representations and warranties relate expressly to an earlier date),
and no Default or Event of Default has occurred and is continuing.

     (b) Authority, No Conflicts, Etc. The execution,
delivery and performance of this Amendment and all related documents and the consummation of
the transactions contemplated hereby and thereby (a) are within the corporate (or the
equivalent company) authority of such Person, (b) have been duly authorized by all necessary
corporate (or the equivalent company) proceedings, (c) do not and will not conflict with or
result in any breach or contravention of any provision of law, statute, rule or regulation
to which any of the Borrowers or any of their Subsidiaries is subject or any judgment,
order, writ, injunction, license or permit applicable to any of the Borrowers or any of
their Subsidiaries and (d) do not conflict with any provision of the Governing Documents of,
the Senior Notes Agreement or the Senior Notes or any other agreement or other instrument
binding upon, any of the Borrowers or any of their Subsidiaries.

     (c) Enforceability of Obligations. This Amendment, the Notes
and the Credit Agreement as amended hereby constitute the legal, valid and binding
obligations of each Borrower and each of their respective Subsidiaries party thereto,
enforceable against each Borrower and each of their respective Subsidiaries, in accordance
with their respective terms, except as limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or other laws relating to or affecting creditors’
rights generally, general equitable principles (whether considered in equity or at law) and
an implied covenant of good faith and fair dealing, and except to the extent that
availability of the remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.

     §6. No Other Amendments. Except as expressly provided in this
Amendment, all of the terms, conditions and provisions of the Credit Agreement and the other Loan
Documents shall remain the same. It is declared and agreed by each of the parties hereto that the Credit
Agreement, as amended hereby, shall continue in full force and effect, and that this Amendment and
the Credit Agreement shall be read and construed as one instrument.

 

 

-5-

     §7. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by each party on a separate counterpart, each of which when so executed
and delivered shall be an original, but all of which together shall constitute one instrument. In
proving this Amendment, it shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought. Delivery of an executed
signature page of this Amendment by facsimile or electronic transmission shall be effective as
delivery of a manually executed counterpart thereof.

     §8. Governing Law. THIS AMENDMENT IS INTENDED TO TAKE EFFECT AS AN AGREEMENT
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF SAID STATE WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OR CHOICE OF
LAW.

     §9. Headings, etc. Headings or captions used in this Amendment are for convenience of
reference only and shall not define or limit the provisions hereof. This Amendment shall
constitute a “Loan Document” under the Credit Agreement.

     §10. Expenses. The Borrowers jointly and severally hereby agree to pay to the Administrative
Agent, on demand by the Administrative Agent, all reasonable out-of-pocket costs and expenses
incurred or sustained by the Administrative Agent in connection with the preparation of this
Amendment (including reasonable legal fees).

[Remainder of page intentionally left blank]

 

 

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above
written.

	 	 	 	 	 	 	 
	 	 	BORDERS GROUP, INC.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Edward W. Wilhelm
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Edward W. Wilhelm
	 

	 	 	 	Title:
	 	Senior Vice President, Finance and
Chief Financial Officer
	 
	 	 	 	 	 	 
	 	 	BORDERS, INC.

WALDEN BOOK COMPANY, INC.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Edward W. Wilhelm
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Edward W. Wilhelm
	 

	 	 	 	Title:
	 	Senior Vice President, Treasurer
and Assistant Secretary
	 
	 	 	 	 	 	 
	 	 	BGP (UK) LIMITED

BORDERS (UK) LIMITED
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Edward W. Wilhelm
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Edward W. Wilhelm
	 

	 	 	 	Title:
	 	Director
	 
	 	 	 	 	 	 
	 	 	BORDERS AUSTRALIA PTY LTD
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Edward W. Wilhelm
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Edward W. Wilhelm
	 

	 	 	 	Title:
	 	Director
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ George L. Jones
	 	 	 	 	 
	 

	 	 	 	Name:
	 	George L. Jones
	 

	 	 	 	Title:
	 	Director

 

 

	 	 	 	 	 	 	 
	 	 	BORDERS BOOKS IRELAND LIMITED
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Edward W. Wilhelm
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Edward W. Wilhelm
	 

	 	 	 	Title:	 	 

 

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., individually and as
Administrative Agent and Swingline Lender
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Kathleen A. Dimock
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Kathleen A. Dimock
	 

	 	 	 	Title:
	 	Managing Director
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A., successor by merger to
Fleet National Bank, as Issuing Bank
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/Kathleen A. Dimock
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Kathleen A. Dimock
	 

	 	 	 	Title:
	 	Managing Director

 

 

	 	 	 	 	 	 	 
	For purposes of §3 hereof:

 
PLANET MUSIC, INC.
BORDERS PROPERTIES, INC.
WALDENBOOKS PROPERTIES, INC.
BORDERS OUTLET, INC.
THE LIBRARY, LTD.
BORDERS ONLINE, INC.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Edward W. Wilhelm	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Edward W. Wilhelm
	 	 
	 

	 	Title:
	 	Senior Vice President, Treasurer
and Assistant Secretary	 	 
	 
	 	 	 	 	 	 
	BORDERS FULFILLMENT, INC.	 	 
	 
	 	 	 	 	 	 
	By::	 	/s/ Edward W. Wilhelm	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Edward W. Wilhelm	 	 
	 

	 	Title:
	 	Senior Vice President, Finance
and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	BORDERS ONLINE, LLC	 	 
	 
	 	 	 	 	 	 
	By:	 	BORDERS, INC., its Sole Member	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Edward W. Wilhelm	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Edward W. Wilhelm	 	 
	 

	 	Title:
	 	Senior Vice President, Treasurer
and Assistant Secretary	 	 

 

 

	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ David A. Lehrner
	 	 	 	 	 
	 

	 	 	 	Name:
	 	David A. Lehrner
	 

	 	 	 	Title:
	 	Vice President

 

 

	 	 	 	 	 	 	 
	 	 	WELLS FARGO RETAIL FINANCE, LLC
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Emily Abrahamson
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Emily Abrahamson
	 

	 	 	 	Title:
	 	Assistant Vice President

 

 

	 	 	 	 	 	 	 
	 	 	LASALLE RETAIL FINANCE, a Division of LaSalle Business
Credit, LLC, as Agent for LaSalle Bank Midwest National
Association
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Roger Malouf
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Roger Malouf
	 

	 	 	 	Title:
	 	AVP

 

 

	 	 	 	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL CORPORATION
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Rebecca A. Ford
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Rebecca A. Ford
	 

	 	 	 	Title:
	 	Duly Authorized Signatory

 

 

	 	 	 	 	 	 	 
	 	 	THE CIT GROUP/BUSINESS CREDIT, INC.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Matthew DeFranco
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Matthew DeFranco
	 

	 	 	 	Title:
	 	Assistant Vice President

 

 

	 	 	 	 	 	 	 
	 	 	NATIONAL CITY BUSINESS CREDIT, INC.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Joseph L. Kwasny
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Joseph L. Kwasny
	 

	 	 	 	Title:
	 	Director

 

 

	 	 	 	 	 	 	 
	 	 	BMO CAPITAL MARKETS FINANCING, INC.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Lynne Ciaccia
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Lynee Ciaccia
	 

	 	 	 	Title:
	 	Vice President

 

 

	 	 	 	 	 	 	 
	 	 	UBS AG, STAMFORD BRANCH
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Irja R. Otsa
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Irja R. Otsa
	 

	 	 	 	Title:
	 	Associate Director Banking Products

Services, US
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Mary E. Evans
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Mary E. Evans
	 

	 	 	 	Title:
	 	Associate Director Banking Products

Services, US

 

 

	 	 	 	 	 	 	 
	 	 	CHARTER ONE BANK, N.A.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ C. Timothy O’Rourke
	 	 	 	 	 
	 

	 	 	 	Name:
	 	C. Timothy O’Rourke
	 

	 	 	 	Title:
	 	Vice President

 

 

	 	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Thomas A. Majeski
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Thomas A. Majeski
	 

	 	 	 	Title:
	 	Vice President

 

 

	 	 	 	 	 	 	 
	 	 	SUNTRUST BANK
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

 

 

	 	 	 	 	 	 	 
	 	 	UNION BANK OF CALIFORNIA N.A.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Brent Housteau
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Brent Housteau
	 

	 	 	 	Title:
	 	Vice President

 

 

	 	 	 	 	 	 	 
	 	 	KEYBANK NATIONAL ASSOCIATION
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Nadine M. Eames
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Nadine M. Eames
	 

	 	 	 	Title:
	 	Vice President

 

 

	 	 	 	 	 	 	 
	 	 	COMERICA BANK
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Blake Arnett
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Blake Arnett
	 

	 	 	 	Title:
	 	Assistant Vice President

 

 

	 	 	 	 	 	 	 
	 	 	U.S. BANK, NATIONAL ASSOCIATION
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 

 

 

	 	 	 	 	 	 	 
	 	 	FORTIS CAPITAL CORP.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Timothy Streb
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Timothy Streb
	 

	 	 	 	Title:
	 	Managing Director
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Egens Vou Itercou Scholtew
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Egens Vou Itercou Scholtew
	 

	 	 	 	Title:
	 	VP

 

 

	 	 	 	 	 	 	 
	 	 	AMSOUTH BANK
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Cynthia Marinos
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Cynthia Marinos
	 

	 	 	 	Title:
	 	Attorney In Fact

 

 

	 	 	 	 	 	 	 
	 	 	FIFTH THIRD BANK, EASTERN MICHIGAN
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Brian Jelinksi
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Brian Jelinski
	 

	 	 	 	Title:
	 	Officer

 

 

	 	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:exv10w1

 

Exhibit 10.1

March 29, 2007

Mr. Douglas J. Wall

114 N Taylor Pt Dr

The Woodlands, TX 77382

Dear Doug:

As we have agreed, based on your announced resignation, your employment with Baker Hughes
Incorporated, Baker Hughes Oilfield Operations, Inc. and all other subsidiaries (hereinafter
referred to as (“Company”) will terminate effective March 30, 2007. The purpose of this letter (the
“Agreement”) is to set forth certain agreements and understandings regarding, among other things:

	 	•	 	The termination of your employment is effective March 30, 2007;
	 
	 	•	 	Certain benefits the Company has agreed to provide to you upon termination of your
employment; and
	 
	 	•	 	Your agreement to certain obligations of confidentiality and cooperation.

	1.	 	TERMINATION:
	 
	 	 	You have decided to resign from your position as Vice President of the Company and Group
President, Completion and Production, on March 30, 2007 (the “Effective Date”). Your final
payroll check for wages earned through the Effective Date will be distributed to you, net of
all required taxes and other deductions on April 13, 2007.
	 
	2.	 	SEPARATION BENEFITS:
	 
	 	 	In connection with your employment with the Company, you will receive the separation
benefits defined below.
	 
	 	 	Health and Welfare Benefits - If you were participating in medical, dental, and/or
vision coverage for yourself and any eligible dependent(s), all active coverage will end as
of the Effective Date. The Benefits Center will send you a packet regarding continuation of
benefits under COBRA (Consolidated Omnibus Benefits Reconciliation Act), and you and/or your
eligible dependent(s) may elect to continue coverage for an additional 18 months, provided
you timely enroll for coverage and make the required premium payments.
	 
	 	 	All other health and welfare benefits end as of the Effective Date.
	 
	 	 	Thrift Plan — You have the option of leaving your money in the Thrift Plan, or you
may request a distribution of your account at any time after the Effective Date.

Initials: ccd     djw

1

 

Exhibit 10.1

	 	 	Pension Plan — You are currently vested in the Pension Plan. You can contact the
Benefit Center at (866)244-3539 and speak to a Benefits Representative to discuss
eligibility requirements under the Pension Plan.
	 
	 	 	Supplemental Retirement Plan (SRP) — Your SRP account balances will be paid
according to your payment elections on file. Accordingly, your 1998-2000 and 2004-2006 SRP
account balances will be paid to you in 5 annual installments beginning in January 2008.
Your 2001-2003 and 2007 account balances will be paid to you in 10 annual installments
beginning in January 2008.
	 
	 	 	Final Expenses — The Company agrees to reimburse you for all outstanding business
expenses in accordance with Company policy. You will prepare and submit a final expense
account reimbursement request for expenses incurred prior to the Effective Date. Such
expense account reimbursement request will be reviewed and paid in accordance with Company
policy. You agree and consent to allow the Company to deduct from any payments you would
otherwise be entitled to receive any amounts that you owe to the Company as of the Effective
Date.
	 
	 	 	Perquisites — All perquisite payments terminate as of the Effective Date. You will
be allowed to retain all club memberships you currently hold; provided that, you will
retain responsibility for any transfer fees and any taxes (including personal income taxes)
associated with the transfer of the club membership to your name.
	 
	 	 	Vacation and other pay — On your last paycheck, you will receive a payment for two
weeks of pay in the amount of $15,961.54. This payment represents all accrued, but unused,
vacation accumulated in the year 2007 and all other outstanding payments that are owed to
you.
	 
	 	 	Stock Options — In accordance with the terms and conditions of the plan and your
current outstanding stock options, (1) all options immediately vest upon the Effective Date,
and (2) you have up to three years from the Effective Date, but not later than the
Expiration Date of each grant, to exercise options granted in the year 2003 and prior. You
will have five years from the Effective Date to exercise options granted in 2004 and after.
	 
	 	 	Performance Plan Awards — All target awards made under the 2005-2007 Performance
Plans, respectively, will terminate as of the Effective Date.
	 
	 	 	Restricted Stock — Your unvested Restricted Stock will be forfeited as per the
Company’s 2002 Director & Officer Long-Term Incentive Plan.
	 
	 	 	Performance Unit Awards — You will receive a prorated award based on results as
defined in the terms and conditions of Performance Unit Award Agreements provided with each
grant of Performance Units.
	 
	3.	 	COVENANTS:
	 
	 	 	You have agreed that you will provide cooperation and assistance to the Company as defined
in this letter. In consideration for your cooperation and assistance you will receive
$40,000 to be paid in your final paycheck on April 13, 2007.

Initials: ccd     djw

2

 

Exhibit 10.1

(a) Cooperation and Assistance

Definition of Cooperation — As used in this agreement, “cooperate” and “cooperation”
includes making yourself available in response to all reasonable requests by the Company or
the Securities and Exchange Commission (“SEC”) or Department of Justice (“DOJ”) for
information, whether the request is informal or formal (e.g., in response to a subpoena in a
legal proceeding), and includes fully, completely, and truthfully answering questions or
providing testimony in any related proceeding, civil or criminal (all reasonable expenses
you incur in rendering such cooperation will be reimbursed by Company).

Agreement to Cooperate — You agree, acknowledge, represent and warrant that:

     (1) you are aware that the Company is currently under investigation by the SEC and the
DOJ;

     (2) you have (i) not engaged in, nor encouraged any individual, in any way, to engage
in the destruction or secreting of any information, in any form, including but not limited
to documents and emails (“documentation”), that might be relevant to any investigation
referenced in subsection 4(c)(1) above; (ii) turned over all documentation in response to
prior requests; and (iii) responded, fully and truthfully, to all questions related to or
arising from the subject matter of any such investigation that have been posed to you by
employees, representatives of the Company, or any government agency;

     (3) for a period of two (2) years after the Effective Date, upon reasonable request,
you will cooperate fully with the Company and its Affiliates, past or present, in connection
with any internal investigation initiated by the Company, its Affiliates, and any successors
in interest, as well as with any external investigation initiated by the government or
agency or instrumentality thereof in accordance with the Company’s Internal Investigations
policy and Cooperation with Government Investigations Policy;

     (4) for a period of two (2) years after the Effective Date, upon reasonable request of
the Company, any subsidiary of the Company, or any successor-in-interest, you will provide
all documentation and information in your possession or control related to any internal or
external investigation of the Company and its Affiliates; and

     (5) after two (2) years after the Effective Date, you agree upon request to provide
continuing reasonable cooperation with the Company or any of its Affiliates in responding to
internal or governmental investigations.

(b) Confidentiality

Confidential Information — During the course of your employment with the Company,
you have had access and received Confidential Information. You are obligated to keep
confidential all such Confidential Information for a period of not less than 12 months
following the Effective Date. Moreover, you understand and acknowledge that your obligation
to maintain the confidentiality of trade secrets and other intellectual property is
unending. As an exception to this confidentiality obligation you may disclose the
Confidential Information (i) in connection with enforcing your rights under any Plan
relevant

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	 	 	to the terms of this Agreement, or if compelled by law, and in either case, you shall
provide written notice to the Company prior to the disclosure or (ii) if the Company
provides written consent prior to the disclosure.
	 
	 	 	(c) Property
	 
	 	 	Agreement to Return Company Property — Immediately prior to the Effective Date, you
will return to the Company all Company property in your possession, including but not
limited to, computers, credit cards and all files, documents and records of the Company, in
whatever medium and of whatever kind or type. You agree and hereby certify that you have
returned, or will return prior to the Effective Date, all proprietary or confidential
information or documents relating to the business and affairs of the Company and its
affiliates. You further agree that should it subsequently be determined by the Company’s
Office of the General Counsel that you have failed to return all proprietary or confidential
information and documents in your possession or control relating to the business and affairs
of the Company and its affiliates, you will be obligated to return all monies and other
benefits paid to you pursuant to this Agreement.
	 
	 	 	In addition, you authorize the Company to deduct from any final payments to you in
accordance with the terms of this Agreement, any outstanding amounts that you owe the
Company.
	 
	4.	 	MISCELLANEOUS:
	 
	 	 	Exclusive Rights and Benefits — The benefits described in this Agreement supersede,
negate and replace any other benefits owed to or offered by the Company to you. This
Agreement will be administered by the Company’s Office of the General Counsel, who will also
resolve any issues regarding the interpretation, implementation, or administration of the
benefits described above. However, this provision shall not be construed to limit your legal
rights if a disagreement exists to contest the decision of the Company’s Office of the
General Counsel.
	 
	 	 	Entire Agreement — This letter sets forth the entire agreement between you and the
Company with respect to each and every issue addressed in this letter, and that entire,
integrated agreement fully supersedes any and all prior agreements or understandings, oral
or written, between you and the Company pertaining to the subject matter of this letter.
	 
	 	 	Exclusive Choice of Law and Arbitration Agreement — This letter constitutes an
agreement that has been executed and delivered in the State of Texas, and the validity,
interpretation, performance and enforcement of that agreement shall be governed by the laws
of that State.
	 
	 	 	In the event of any dispute or controversy arising under the agreement set forth in this
letter, or concerning the substance, interpretation, performance, or enforcement of this
Agreement, or in any way relating to this Agreement (including issues relating to the
formation of the agreement and the validity of this arbitration clause), you agree to
resolve that dispute or controversy, fully and completely, through the use of final, binding
arbitration. You further agree to hold knowledge of the existence of any dispute or
controversy subject to this agreement to arbitrate, completely confidential. You understand
and agree that this confidentiality obligation extends to information concerning the fact of
any request for arbitration, any ongoing arbitration, as well as all matters discussed,
discovered, or divulged,

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Exhibit 10.1

(whether voluntarily or by compulsion) during the course of such arbitration proceeding.
Any arbitration conducted pursuant to this arbitration provision will be conducted in
accordance with the rules of the American Arbitration Association in accordance with its
rules governing employment disputes. Any arbitration proceeding resulting hereunder will be
conducted in Houston, Texas before an arbitrator selected by you and the Company by mutual
agreement, or through the American Arbitration Association. This arbitration agreement does
not limit or affect the right of the Company to seek an injunction to maintain the status
quo in the event that the Company believes that you have violated any provision of Sections
3 of this letter. This arbitration agreement does not limit your right to file an
administrative charge concerning the validity of the release set forth in Section 3 of this
letter with any appropriate state or federal agency.

Severability and Headings — The invalidity or unenforceability of a term or
provision of this Agreement shall not affect the validity or enforceability of any other
term or provision of this Agreement, which shall remain in full force and effect. Any titles
or headings in this Agreement are for convenience only and shall have no bearing on any
interpretation of this Agreement.

Please initial each page and sign below.

ENTERED INTO in Houston, Texas as of the 30th day of March, 2007.

BAKER HUGHES INCORPORATED

	 	 	 	 	 
	 	 	 
	By:  	             /s/ Chad C. Deaton
 	 	 
	 	Chad C. Deaton 	 	 
	 	Chairman and Chief Executive Officer 	 	 
	 

ENTERED INTO in Houston, Texas as of the 30th day of March, 2007.

	 	 	 	 	 
	 	 	 
	By:  	                       /s/ Douglas J. Wall
 	 	 
	 	Douglas J. Wall 	 	 
	 	 	 	 
	 

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