Document:

exv10w10

 

Execution Copy

AMENDMENT NO. 4, WAIVER AND CONSENT TO CREDIT AGREEMENT

     THIS AMENDMENT NO. 4, WAIVER AND CONSENT dated as of November 10,2004 (this
“Amendment No. 4”), among HLI OPERATING COMPANY, INC., a Delaware corporation (the “Borrower”),
HAYES LEMMERZ INTERNATIONAL, INC., a Delaware corporation (the “Holdings”), and CITICORP NORTH
AMERICA, INC. (“CNAI”), as Administrative Agent (as defined below) on behalf of each Lender
executing a Lender Consent (as defined below) amends certain provisions of the Credit Agreement,
dated as of June 3, 2003 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among the Borrower, Holdings, the Lenders and Issuers
(in each case as defined therein) party thereto, CNAI, as administrative agent for the Lenders and
the Issuers (in such capacity, and as agent for the Secured Parties under the other Loan Documents,
the “Administrative Agent”), LEHMAN COMMERCIAL PAPER INC., as Syndication Agent for the Lenders and
the Issuers, and GENERAL ELECTRIC CAPITAL CORPORATION, as Documentation Agent for the lenders and
issuers, CITIGROUP GLOBAL MARKETS INC. and LEHMAN BROTHERS INC., as Joint Book-Running Lead
Managers and Joint Lead Arrangers.

WITNESSETH:

     WHEREAS, the Borrower has requested that the Lenders agree to amend certain provisions
of the Credit Agreement;

     WHEREAS, the Borrower and the Administrative Agent wish to enter into this
Amendment for the purpose of giving effect to such modifications in each case as more particularly
set forth herein;

     WHEREAS, pursuant to Section 11.1 (a) of the Credit Agreement, the consent of the Requisite
Lenders is required to effect the amendments set forth herein;

     NOW, THEREFORE, in consideration of the above premises, the Borrower and the
Administrative Agent, at the direction of the Lenders constituting the Requisite Lenders,
agree as follows:

ARTICLE I
DEFINITIONS

     Unless otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to such terms in the Credit Agreement.

ARTICLE II

AMENDMENT TO ARTICLE II
(DEFINED TERMS)

     Section 2.1 New Definitions. The following defined terms shall be
inserted in the correct alphabetical order in Section 1.1 (Defined Terms):

       “Amendment No. 4” means Amendment No. 4 to the Agreement dated as of November 10, 2004
among the Borrower, Holdings and the Administrative Agent on behalf of the Lenders.

       “Amendment No. 4 Effective Date” means November 10, 2004.

 

 

       “Receivables Assets” means all of the following property and following interests
in property, including any undivided interest in any pool of any such property or interests,
whether now existing or existing in the future or hereafter arising or acquired: (i)
accounts, (ii) accounts receivable, general intangibles, instruments, contract rights,
documents and chattel paper, in each case, solely to the extent created by or arising from
sales of goods, leases of goods, or the rendition of services, no matter how evidenced,
whether or not earned by performance, and including all rights to payment thereunder, (iii)
all unpaid seller’s or lessor’s rights (including, without limitation, rescission, replevin,
reclamation and stoppage in transit) relating to any of the foregoing or arising therefrom,
(iv) all rights to any goods or merchandise represented by any of the foregoing (including,
without limitation, returned or repossessed goods), (v) all reserves and credit balances
with respect to any such accounts receivable or account debtors, (vi) all letters of credit,
security or Guaranty Obligations with respect to any of the foregoing, (vii) all insurance
policies proceeds, premium refunds or reports relating to any of the foregoing, (viii) all
collection or deposit accounts relating to any of the foregoing, (ix) all books and records
relating to any of the foregoing, (x) all instruments, contract rights, chattel paper,
documents and general intangibles relating to any of the foregoing, (xi) rights against a
seller or other transferor in respect of the repurchase of accounts receivable arising as a
result of a breach of a representation or warranty; and (xii) all proceeds of any of the
foregoing.

       “Securitization Program” means, with respect to any Person, an agreement or other
arrangement or program providing for the sale, transfer or conveyance to a Securitization
SPV of Receivables Assets in exchange for the advance of funds to such Person and/or one or
more of its Subsidiaries pursuant to documentation (including customary performance
guaranties) reasonably acceptable to the Administrative Agent (including, without
limitation, an intercreditor agreement).

       “Securitization SPV” means a trust, bankruptcy remote entity or other special purpose
entity which is a Subsidiary (or, if not a Subsidiary, the common equity of which is wholly
owned, directly or indirectly, by the Borrower) and which is formed for the purpose of, and
engages in no material business other than, acting as an issuer or a depositor under a
Securitization Program or as an intermediate transferee and transferor under a
Securitization Program (and, in connection therewith, in either case, owning Receivables
Assets and pledging or transferring any interests therein).

     Section 2.2 The following defined terms listed in Section 1.1 (Defined
Terms) of the Credit Agreement are amended as follows:

     (a) Indebtedness. The definition of “Indebtedness” shall be amended by (i) adding
the phrase “(other than pursuant to a Securitization Program)” at the end of each of clause
(a) and
clause (b) thereof, and (ii) replacing the word “and” immediately before clause (j) with a
comma,
renaming clause (j) as clause (k) and inserting a new clause (j) immediately after clause (i)
thereof to
read in its entirety as follows:

       “(j) all aggregate principal amounts advanced to such Person by Persons not affiliated
with such Person and outstanding under any Securitization Program; and”

     (b) Net Cash Proceeds. The definition of “Net Cash Proceeds” shall be amended
by (i) replacing in its entirety the phrase “Section 8.4(a), (b), (c), (e), (f), (g) or (h)
(Sale of
Assets)” in
the third line thereof with the following phrase “Section 8.4(a), (b), (c), (e), (f), (g), (h)
or (k) (Sale of

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Assets)” and (ii) inserting the following parenthetical immediately after the words
“Property Loss Event” in clause (b) thereof to read in its entirety as follows:

       “(other than a Property Loss Event arising solely from any loss of or damage to
property owned by a Securitization SPV)”.

     (c) Subsidiary Guarantor. The definition of “Subsidiary Guarantor” shall be
amended by replacing in its entirety the phrase “and other than a “Non Emerging Subsidiary” in the
second line thereof with the following phrase to read in its entirety as follows:

       “, any Subsidiary that is a Securitization SPV, and any Non Emerging
Subsidiary”

ARTICLE III

AMENDMENT TO ARTICLE VI
 (REPORTING COVENANTS)

     Section 3.1 Business Plan. Clause (f) of Section 6.1 shall be amended
by inserting at the end thereof the following sentence:

       “Notwithstanding anything in this clause (f) to the contrary, solely with respect to
the forecasts covering the five Fiscal Year period beginning with the Fiscal Year ending
January 31, 2005, the Borrower shall not be required to furnish forecasts prepared by
management of the Borrower until January 15, 2005.”

ARTICLE IV

AMENDMENT TO ARTICLE VII

(AFFIRMATIVE COVENANTS)

     Section 4.1 Maintenance of Insurance. Section 7.5 (Maintenance of
Insurance) of the Credit Agreement is hereby amended by inserting the following parenthetical
immediately before the words “which is material”:

       “(other than insurance maintained by and for any Subsidiary that is a
Securitization SPV)”

     Section 4.2 Additional Collateral and Guaranties.

     (a) Section 7.1l(c) (Additional Collateral and Guaranties) of the Credit Agreement is
hereby amended by inserting the words “, any Subsidiary that is a Securitization SPV” immediately
after the words “U.S. LLC” in the second line thereof.

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ARTICLE V

AMENDMENT TO ARTICLE VIII

(NEGATIVE COVENANTS)

     Section 5.1 Indebtedness.

     (a) Section 8.1 (Indebtedness) of the Credit Agreement shall be amended by renaming
clause (o) as clause (p) and inserting a new clause (o) immediately after clause (n) thereof to
read in its entirety as follows:

       “(o) Indebtedness (i) under any Securitization Program; provided, that the
aggregate outstanding principal amount of all such Indebtedness shall not exceed
$100,000,000 (regardless of the amount of accounts receivable securitized or collateralized
thereunder), (ii) arising from intercompany loans from the Borrower or any of its
Subsidiaries that sells Receivables Assets to a Securitization SPV and (iii) consisting of
renewals, extensions, refinancings, replacements and refundings of Indebtedness permitted by
this clause (o); provided, however, that any such renewal, extension, refinancing,
replacement or refunding is on market terms and is in an aggregate outstanding principal
amount not to exceed the amount set forth in the preceding subclause (i) of this Section
8.1(o).”

     Section 5.2 Liens, Etc.

     (a) Section 8.2 (Liens, Etc.) of the Credit Agreement shall be amended by deleting the
period at the end of clause (i) thereto and replacing it with the word “; and” and inserting a new
clause (j) immediately after clause (i) thereof to read in it its entirety as follows:

       “(j) Liens arising pursuant to, or assignments in connection with, any
Securitization Program solely with respect to Receivables Assets securitized
thereunder;”

     Section 5.3 Investments.

     (a) Section 8.3 (Investments) of the Credit Agreement shall be amended by
renaming clause (n) as clause (o) and inserting a new clause (n) immediately after clause (m)
thereof to read in its entirety as follows:

       “(n) Investments by the Borrower and its Subsidiaries in a Securitization SPV
pursuant to a permitted Securitization Program consisting of Receivables Assets,
intercompany loans permitted under Section 8.1(o) and cash solely to the extent such cash
Investment is permitted by clause (o) below; and”

     Section 5.4 Sale of Assets.

     (a) Section 8.4 (Sale of Assets) of the Credit Agreement shall be amended by deleting
the word “; and” at the end of clause (i), renaming clause (j) as clause (k) and inserting a new
clause (j) immediately after clause (i) thereof to read in its entirety as follows:

       “(j) sales, leases, subleases or the transfer of Receivables Assets (or
interests therein) pursuant to a Securitization Program to the extent permitted by the
terms of this Agreement; and”

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     Section 5.5 Prepayment and Cancellation of Indebtedness.

     (a) Section 8.6 (Prepayment and Cancellation of Indebtedness) of the Credit
Agreement shall be amended by (i) deleting the parenthetical “(a)” immediately before the word
“prepay” in the second line thereof, (ii) deleting the word “and,” immediately before clause
(ix) of
Section 8.6(b) and (iii) inserting the following new clause (x) and clause (xi) immediately
after clause
(ix) in Section 8.6(b) to read in its entirety as follows:

       “(x) solely from proceeds of Receivables Assets, prepay any Indebtedness incurred
pursuant to a Securitization Program in the ordinary course or upon the acceleration of such
Indebtedness; and

       (xi) solely in connection with a permitted renewal, extension, refinancing, replacement
or refunding permitted by Section 8.1(o), otherwise prepay any Indebtedness incurred
pursuant to a Securitization Program with the proceeds from such renewal, extension,
refinancing, replacement or refunding.”

     (b) Section 8.6 (Prepayment and Cancellation of Indebtedness) of the Credit
Agreement shall be amended by inserting a new Section 8.6(c) immediately after Section 8.6(b)
thereof
to read in its entirety as follows:

       “(c) Notwithstanding anything in this Section 8.6 to the contrary, any
Securitization Program may be terminated or reduced in accordance with its terms by Holdings,
the Borrower or any of their respective Subsidiaries.”

     Section 5.6 Transactions with Affiliates.

     (a) Section 8.9 (Transactions with Affiliates) of the Credit Agreement shall be amended
by inserting the following proviso at the end thereof immediately after the words “with current
compensation levels” to read in its entirety as follows:

       “; provided, however, that the foregoing shall not prohibit transactions with any
Securitization SPV in connection with a Securitization Program, to the extent not
prohibited by the terms of this Agreement”

     Section 5.7 Limitation on Restrictions on Subsidiary Distributions; No
New Negative Pledge.

     (a) Section 8.10 (Limitation on Restrictions on Subsidiary Distributions; No New
Negative Pledge) of the Credit Agreement shall be amended by inserting the phrase “, any agreements
entered into in connection with a permitted Securitization Program,” immediately after the words
“Loan Documents” in the first line thereof.

5

 

ARTICLE VI

AMENDMENT TO SECTION 9.1
(EVENTS OF DEFAULT)

     Section 6.1 Events of Default.

       (a) Section 9.1 (Events of Default) of the Credit Agreement shall be amended by
adding the word “or” at the end of clause (m) thereof and inserting the following new clause
(n) immediately after clause (m) to read in its entirety as follows:

       ”(n) an event of termination or event of default in connection with any Securitization
Program including, without limitation, under any of the related documentation entered into
in connection therewith shall have occurred and be continuing without waiver or cure
thereof.”

ARTICLE VII

WAIVER TO SECTION 5.3

(MINIMUM FIXED CHARGE COVERAGE RATIO)

     Section 7.1 The provisions of Section 5.3 (Minimum Fixed Charge Coverage Ratio)
shall have no force and effect solely to the extent that Borrower fails to maintain the minimum
Fixed Charge Coverage Ratio required pursuant to such Section 5.3 as of the last day of each of the
following Fiscal Quarters: (i) Fiscal Quarter ending January 31, 2005, (ii) Fiscal Quarter ending
April 30, 2005, (iii) Fiscal Quarter ending July 31, 2005, (iv) Fiscal Quarter ending October 31,
2005 and (v) Fiscal Quarter ending January 31, 2006.

ARTICLE VIII

CONSENT TO RELEASE OF LIENS

     Section 8.1 Consent, (a) In accordance with Section 10.8(b)(iii) of the
Credit Agreement, as of the Amendment Effective Date (as defined herein), the Lenders party hereto
hereby consent to the release of any Lien held by the Administrative Agent for the benefit of the
Lenders and the Issuers solely against the Receivables Assets (as defined in Section 2.1 of this
Amendment No. 4 above) in connection with a Securitization Program (as defined in Section 2.1 of
this Amendment No. 4 above).

     (b) With respect to any Securitization Program permitted by the terms of the Credit
Agreement (as amended hereby), the Lenders party hereto hereby consent to and direct the
Administrative Agent to execute and deliver an intercreditor agreement, in form and substance
satisfactory to the Administrative Agent, among the Administrative Agent, the Borrower, the
relevant
Securitization SPV, and the agent under the related Securitization Program and any other
parties party
thereto.

6

 

ARTICLE IX

CONDITIONS PRECEDENT TO THE EFFECTIVENESS
OF THIS AMENDMENT NO. 4.

     Section 9.1 Effectiveness. This Amendment No. 4 shall become effective,
on the date each of the following conditions precedent is satisfied or duly waived by the Requisite
Lenders (the “Amendment Effective Date”):

     (a) Documentation. The Administrative Agent shall have received on or prior to
the Amendment Effective Date each of the following, each dated the Amendment Effective Date
unless
otherwise indicated or agreed to by the Administrative Agent, in form and substance
satisfactory to the
Administrative Agent:

       (i) this Amendment No. 4 executed by the Borrower and Holdings;

       (ii) the Consent and Agreement in the form attached hereto as Exhibit A,
executed by each of the Guarantors;

       (iii) Acknowledgment and Consents, in the form set forth hereto as Exhibit B
(each, a “Lender Consent”), executed by the Lenders constituting the Requisite Lenders; and

       (iv) such additional documentation as the Administrative Agent may
reasonably require.

     (b) Fees and Expenses. The Borrower shall have paid:

       (i) to the Administrative Agent for the account of each Lender that has
executed a Lender Consent and delivered evidence thereof satisfactory to the Administrative
Agent at or before 5:00 p.m. New York City time on November 9, 2004, an amendment fee equal
to 0.10% of the aggregate amount of the outstanding Term Loans and Revolving Credit
Commitments of each such Lender as of such date; and

       (ii) unless otherwise agreed by the Administrative Agent, all outstanding fees,
costs and expenses owing to the Administrative Agent, including the reasonable fees,
expenses and disbursements of all legal counsel for the Administrative Agent.

ARTICLE X

MISCELLANEOUS

     Section 10.1 Subsidiary Guarantors. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that as of the date hereof the Consent and
Agreement in the form attached hereto as Exhibit A sets forth the true and correct name of each
Subsidiary Guarantor.

     Section 10.2 Reference to and Effect on the Loan Documents.

     (a) On and after the Amendment Effective Date, each reference in the Credit
Agreement to “this Agreement,” “hereunder,”
“hereof,” “herein,” or words of like import, and
each
reference in the other Loan Documents to the Credit Agreement, shall mean and be a reference
to the
Credit Agreement as amended hereby, and this Amendment No. 4 and the Credit Agreement shall be
read together and construed as a single instrument. The table of contents, signature pages and
list of
Exhibits and Schedules of the Credit Agreement shall be modified as necessary to reflect the
changes
made in this Amendment No. 4 as of the Amendment Effective Date.

     (b) Except as specifically amended or waived above, all of the terms of the Credit
Agreement and all other Loan Documents shall remain unchanged and in full force and effect and
all
obligations and liabilities of the Loan Parties thereunder shall remain in full force and
effect and each of
which is hereby reaffirmed.

7

 

     (c) The execution, delivery and effectiveness of this Amendment No. 4 shall not,
except as expressly provided herein, operate as an amendment or waiver of any right, power or
remedy
of any Lender, any Issuer, or the Administrative Agent under the Credit Agreement or any Loan
Document nor constitute an amendment or waiver of any provision of the Credit Agreement or any
Loan Document.

     (d) This Amendment No. 4 is a Loan Document.

     Section 10.3 Costs and Expenses. The Borrower agrees to pay on demand in
accordance with the terms of Section 11.3 of the Credit Agreement all costs and expenses of the
Administrative Agent in connection with the preparation, reproduction, execution and delivery of
this Amendment No. 4, and all other Loan Documents entered into in connection herewith, including
the reasonable fees, expenses and disbursements of Weil, Gotshal & Manges LLP and other counsel for
the Administrative Agent with respect thereto.

     Section 10.4 Titles. The Section titles contained in this Amendment No. 4
are and shall be without substantive meaning or content of any kind whatsoever and are not a part
of the agreement between the parties hereto.

     Section 10.5 Execution in Counterparts. This Amendment No. 4 may be
executed and delivered in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an original and all of
which taken together shall constitute one and the same original agreement.

     Section 10.6 Notices. All communications and notices to the
Administrative Agent hereunder shall be given as provided in the Credit Agreement.

     Section 10.7  Severability. If any term or provision set forth in this
Amendment No. 4 shall be invalid or unenforceable, the remainder of this Amendment No. 4, or the
application of such terms or provisions to persons or circumstances, other than those to which it
is held unenforceable, shall not in any way be affected or impaired thereby.

     Section 10.8 Successors. The terms of this Amendment No. 4 shall be
binding upon, and shall inure to the benefit of, the parties hereto and their respective successors
or assigns.

     Section 10.9 Governing Law. This Amendment No. 4 shall be interpreted, and
the rights and liabilities of the parties determined, in accordance with the internal law of the
State of New York.

[SIGNATURE PAGES FOLLOW]

8

 

     IN WITNESS WHEREOF, this Amendment No. 4 has been duly executed on
the date set forth above,

	 	 	 
	

	 	HLI OPERATING COMPANY INC.,
	

	 	as Borrower
	

	 	 
	

	 	By: /s/ GARY J. FINDLING
	

	 	   Name: Gary J. Findling
	

	 	   Title: Treasurer
	

	 	 
	

	 	HAYES LEMMERZ INTERNATIONAL, INC.,
	

	 	as Holdings
	

	 	 
	

	 	By: /s/ GARY J. FINDLING
	

	 	   Name: Gary J. Findling
	

	 	   Title: Treasurer
	

	 	 
	

	 	CITICORP NORTH AMERICA INC.,
	

	 	as Administrative Agent
	

	 	 
	

	 	By: /s/ KEITH R. GERDING
	

	 	   Name: Keith R. Gerding
	

	 	   Title: Vice President

SIGNATURE PAGE TO AMENDMENT NO. 4

 

 

EXHIBIT A

CONSENT, AGREEMENT AND AFFIRMATION OF GUARANTY.

Each of the undersigned Guarantors hereby consents to the terms of the
foregoing Amendment No. 4 and agrees that the terms of this Amendment No. 4
shall not affect in any way its obligations and liabilities under any Loan
Document, all of which obligations and liabilities shall remain in full force
and effect and each of which is hereby reaffirmed,

	 	 	 
	

	 	HLI PARENT COMPANY, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — BOWLING GREEN, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — BRISTOL, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — CADILLAC, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — CALIFORNIA, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — COMMERCIAL HIGHWAY, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — EQUIPMENT & ENGINEERING, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — GEORGIA, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — HOMER, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — HOWELL, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — HUNTINGTON, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — KENTUCKY, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — LAREDO, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — MEXICO, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — MONTAGUE, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — PCA, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — PETERSBURG, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — SEDALIA, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — SOUTHFIELD, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — TECHNICAL CENTER, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — TEXAS, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — TRANSPORTATION, INC.
	

	 	HAYES LEMMERZ INTERNATIONAL — WABASH, INC.
	

	 	HLI BRAKES HOLDING COMPANY, INC.
	

	 	HLI COMMERCIAL HIGHWAY HOLDING COMPANY, INC.
	

	 	HLI POWER TRAIN HOLDING COMPANY, INC.
	

	 	HLI SUSPENSION HOLDING COMPANY, INC. (FORMERLY HAYES
LEMMERZ INTERNATIONAL — CM1, INC.)
	

	 	HLI REALTY, INC.
	

	 	HLI SERVICES HOLDING COMPANY, INC.
	

	 	HLI WHEELS HOLDING COMPANY, INC.
	

	 	HLI — SUMMERFIELD REALTY CORP.
	

	 	[HAYES LEMMERZ INTERNATIONAL IMPORT, INC.]
	

	 	[HLI NETHERLANDS HOLDINGS, INC.]
	

	 	 
	

	 	 
	

	 	By: /s/ GARY J. FINDLING
	

	 	Name: Gary J. Findling
	

	 	Title: Treasurer

GUARANTORS’ CONSENT TO AMENDMENT NO. 4

 

 

EXHIBIT B

ACKNOWLEDGEMENT AND CONSENT

	To:	 	Citicorp North America, Inc.

388 Greenwich Street

New York, New York 10013

Attention: Mr. Shapleigh Smith

Re: HLI Operating Company, Inc.

     Reference is made to the Credit Agreement, dated as of June 3, 2003 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”),
among HLI Operating Company, Inc., a Delaware corporation, as Borrower, Hayes Lemmerz
International, Inc., a Delaware corporation, as Holdings, the Lenders (as defined therein), the
Issuers (as defined therein), Citicorp North America, Inc., as administrative agent for the Lenders
and the Issuers (in such capacity, and as agent for the Secured Parties under the other Loan
Documents, the “Administrative Agent”), Lehman Commercial Paper, Inc., as syndication agent for the
Lenders and the Issuers, and General Electric Capital Corporation as documentation agent for the
Lenders and Issuers. Capitalized terms used herein and not otherwise defined herein are used herein
as defined in the Credit Agreement.

     The Borrower has requested that the Lenders consent to an amendment, waiver and consent to the
Credit Agreement on the terms described in Amendment No. 4, Waiver and Consent to the Credit
Agreement (“Amendment No. 4”), the form of which is attached hereto.

     Pursuant to Section 11.1(a) of the Credit Agreement, the undersigned Lender hereby consents
to the terms of Amendment No. 4 and authorizes the Administrative Agent to execute and deliver
Amendment No. 4 on its behalf.

	 	 	 
	

	 	Very truly yours,
	

	 	 
	

	 	
 
	

	 	(NAME OF LENDER)
	

	 	 
	

	 	By:
	

	 	
 
	

	 	Name:
	

	 	Title:

Dated as of November   , 2004

ACKNOWLEDGEMENT AND CONSENTexv10w1

 

Exhibit 10.1

December 8, 2004

Mr. Orin C. Smith

Starbucks Corporation

2401 Utah Avenue South

Seattle, WA 98134

Dear Orin:

This letter confirms the terms and conditions of your employment agreement (“Agreement”) from
November 29, 2004 through June 30, 2007.

Employment Term

From November 29, 2004 through March 31, 2005 you will serve as Starbucks president and chief
executive officer. From April 1, 2005 through June 30, 2007 (the “Term”) you agree to provide
advisory services to Starbucks; provided, however, that if this Agreement is terminated earlier as
provided below, the Term shall end on the date of such earlier termination. From April 1, 2005 on,
your title will be former ceo.

Duties

From November 29, 2004 through March 31, 2005, you will continue to perform the duties of Starbucks
president and chief executive officer. From April 1, 2005 through June 30, 2007, you will be asked
to provide reasonable advisory services from time to time on an “as needed” basis through the
chairman and chief global strategist or through the president and chief executive officer of
Starbucks, or any of their respective designees. You will not be required to provide services for
which you are not qualified. You may perform services for others on a paid consulting basis and
you may serve on the boards of directors of other companies so long as such activities do not
conflict with Starbucks Standards of Business Conduct.

Base Salary

From November 29, 2004 through March 31, 2005, you will be paid bi-weekly your full base salary as
president and chief executive officer of Starbucks, which currently annualizes to One Million One
Hundred and Ninety Thousand Dollars ($1,190,000). From April 1, 2005 through June 30, 2007, you
will be paid bi-weekly at a base salary that annualizes to Twenty Five Thousand Dollars ($25,000)
per year for your role as an advisor to Starbucks during the employment Term.

In the event that you die before June 30, 2007, Starbucks will pay your estate a single sum equal
to the unpaid salary you would have received through June 30, 2007.

 

 

Bonus

As determined in accordance with the terms of the Executive Management Bonus Plan (the “EMB Plan”),
your FY04 bonus payout will be paid to you in December 2004.

Depending upon Starbucks performance and in accordance with the terms of the EMB Plan, you will be
paid a pro rated bonus for your six months performance in FY05 as Starbucks president and chief
executive officer. The FY05 bonus will be paid to you in December 2005.

Both your FY04 and FY05 bonuses are subject to the approval of Starbucks Compensation and
Management Development Committee (the “Compensation Committee”) and of the independent members of
the Starbucks Board of Directors.

Stock Options

Subject to the approval of the Compensation Committee and of the independent members of the
Starbucks Board of Directors, you will receive in November 2004 your full stock option grant as
Starbucks president and chief executive officer of 500,000 shares. The options will be granted
pursuant to the terms of the Starbucks Corporation Amended and Restated Key Employee Stock Option
Plan – 1994, as amended (the “Key Employee Plan”). Your options will continue vesting during the
Term in accordance with the schedules set forth in your various option agreements. Any options
that are not exercisable on June 30, 2007 will automatically vest on that date. For your
convenience, Schedule 1 is attached hereto showing when your options will vest.

Benefits

From November 29, 2004 through March 31, 2005, you will enjoy all of your current benefits as
Starbucks president and chief executive officer. From April 1, 2005 through June 30, 2007, you
will opt out of all Starbucks benefit programs (including, but not limited to, medical, life
insurance, 401(k), etc.) and have no access to the Company airplane unless you are traveling with
the president and chief executive officer or the chairman and chief global strategist or if you are
invited to travel with a group of Starbucks partners on a specific business trip.

Termination

Starbucks may terminate this Agreement if you are unable to perform your duties because of physical
or mental disability. This Agreement may also be terminated “for cause” to include, but not be
limited to, your unreasonable refusal to perform your duties or any material violation of Starbucks
Standards of Business Conduct. You may also terminate this Agreement before June 30, 2007 by
providing Starbucks with written notice of your resignation. In the event you resign, then
Starbucks will pay you through the end of the workweek in which Starbucks receives notice of your
resignation.

Expenses and Administrative Support

Starbucks shall reimburse you for all reasonable and customary expenses incurred by you in
performing your duties, including, but not limited to, reasonable travel expenses. To assist you
in your advisory role, Starbucks will continue to provide an office, computer, cell phone and
administrative and secretarial assistance as you reasonably require in performance of your

2

 

Starbucks duties. In addition, you will continue to have access to the building and parking
garage. The monthly parking garage fee will be deducted from your paychecks.

Assignment

Your rights and duties under this Agreement are personal to you and are not assignable to others.
Starbucks may assign its rights under this Agreement in connection with any merger or consolidation
of Starbucks or any sale of all or any portion of Starbucks assets, provided that any such
successor or assignee expressly assumes in writing Starbucks obligations under this Agreement.

Governing Law

This Agreement will be governed by the laws of the State of Washington.

Entire Agreement

This Agreement contains the sole employment agreement between you and Starbucks and supersedes any
prior arrangements or understandings regarding your Starbucks employment.

To confirm your agreement to the terms and conditions of your employment, please countersign both
copies of this letter below and return one copy to each of us. Thank you for your continued
contributions to the Company’s success.

Warm regards,

	 	 	 
	/s/ Howard Schultz

	 	/s/ Barbara Bass
	
 

	 	
 
	Howard Schultz

	 	Barbara Bass
	chairman & chief global strategist

	 	Chair, Compensation & Management 

Development Committee

     I agree to the terms and conditions of my employment agreement as set forth in the
foregoing letter.

	 	 	 
	/s/ Orin C. Smith

	 	 
	

	 	 
	Orin C. Smith

	 	 
	 
	 	 
	December 8,
2004

	 	 
	

	 	 
	Dated

	 	 

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Schedule 1

To Orin C. Smith

Employment Agreement

ORIN C. SMITH

STOCK OPTION VESTING

Options Granted Prior to November 20, 2003 

	•	 	No retirement provision applies
	 
	•	 	Your options continue to vest according to the terms of your
agreements (i.e., over 3 years), and will all be vested by October
2005 according to the terms of those agreements
	 
	•	 	You will have 3 months from your separation/retirement date (i.e.,
September 30, 2007) to exercise your vested options — - this also
applies to all of the options that you have previously gifted
	 
	•	 	Nothing in this Employment Agreement extends your right to exercise
your options beyond the 10-year term limitation set forth in your
option agreements

Options Granted on or after November 20, 2003

	•	 	Until June 30, 2007, your stock options continue to vest according to the terms of your various option agreements
	 
	•	 	The retirement provision applies when your employment ends on June 30, 2007 (i.e., any options that are not exercisable
on that date will automatically vest)
	 
	•	 	You have 36 months from June 30, 2007 (i.e., June 30, 2010) to exercise these options

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