EXHIBIT 10.1

FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND GUARANTY AGREEMENT

This FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND GUARANTY AGREEMENT, dated
as of December 19, 2007 (this “First Amendment”), to the Loan Agreement referred
to below, among COLLECTIVE BRANDS FINANCE, INC., a Nevada corporation (formerly
known as “Payless ShoeSource Finance, Inc.”, the “Borrower”), the guarantors
signatory hereto (the “Guarantors”), the Lenders (as defined in the Loan
Agreement), and WELLS FARGO RETAIL FINANCE, LLC, as administrative agent and
collateral agent for the Lenders (in such capacity, the “Administrative Agent”).

 

RECITALS

WHEREAS, the Borrower, the Guarantors, the Administrative Agent and the other
Lenders party to the Amended and Restated Loan and Guaranty Agreement dated as
of August 17, 2007 (the “Loan Agreement”), desire to amend the Loan Agreement as
set forth herein; and

NOW THEREFORE, in consideration of the premises and the covenants and agreements
contained herein and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

Section 1.           Definitions. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement.

Section 2.            Amendments. The Loan Agreement is, effective as of the
Effective Date (as defined below), hereby amended as follows:

(a)         Section 1.1 (Defined Terms) of the Loan Agreement is hereby amended
by adding the following definitions in the appropriate alphabetical order:

“Disregarded Entity” means any entity that, for U.S. federal tax purposes, is
disregarded as an entity separate from its owner or is otherwise fiscally
transparent.   

“First Amendment Effective Date” means the “Effective Date”, as defined in the
First Amendment.

“Non-Domestic Restructuring” shall mean, (i) subject to the proviso set forth
below, (A) the creation of one or more holding companies (each a “Holding
Company”) that are both Excluded Subsidiaries owned directly by a Loan Party and
Wholly-Owned Restricted Subsidiaries of the Borrower, (B) the direct or indirect
transfer, contribution, dividend or sale of the Stock of certain Wholly-Owned
Excluded Subsidiaries of the Borrower to one or more of such Holding Companies
or Payless ShoeSource Canada, Inc. (“Payless Canada”), or (ii) subject to the
proviso set forth below, an internal reorganization and recapitalization among
the Credit Parties and certain Restricted Subsidiaries organized under the laws
of the United States or Canada to be completed after the Closing Date and on or
before January 31, 2008, unless such date is extended in writing by the
Administrative Agent (which extension shall not be for more than one additional
30 day period) pursuant to which, (a) a portion of the Target’s Voting Stock
(the “Transferred Stock”) will be transferred from the Borrower to one or more
of its Wholly-Owned Restricted Subsidiaries, (b) upon the completion of such
transfers of the Transferred Stock, the Target Stockholder will be a
Wholly-Owned Domestic Subsidiary, (c) one or more of the direct or indirect
holders of the Target Stockholder will contribute the Transferred Stock to

 

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one or more Wholly-Owned Restricted Subsidiaries in exchange for a debenture,
intercompany notes, equity and/or forward subscription agreements, (d) any
dividends or distributions with respect to the Transferred Stock, to the extent
paid in cash, shall be utilized to repay the debenture and the intercompany
notes, as applicable, or any accrued or unpaid interest thereon, to make or
grant intercompany loans to Wholly-Owned Restricted Subsidiaries or to fund
dividends with no less than 75% of the proceeds thereof ultimately being
received by a Credit Party; provided, however, the foregoing transactions in
clause (i) or (ii) above shall not constitute a “Non-Domestic Restructuring”,
unless (x) after giving effect to such transactions, no Default or Event of
Default shall have occurred and be continuing and (y) the following conditions,
as applicable, shall be satisfied at all times from and after the consummation
of such transactions: (1) in the case of clause (ii) only, the Target
Stockholder shall be a Guarantor and shall, pursuant to the Pledge and Security
Agreement, pledge 100% of its ownership interest in the Transferred Stock to the
Administrative Agent and shall grant to the Administrative Agent a Lien on any
of its other assets, (2) in the case of clause (ii) only, the Borrower or
another Credit Party shall pledge 100% of the Stock of any direct Subsidiary
that is a Disregarded Entity and that holds, directly or indirectly, any Stock
in the Target Stockholder, provided that such Disregarded Entity is not an
“Investment Company” (as defined in the Investment Company Act of 1940, as
amended), (3) any intercompany note or debenture payable to any Credit Party
issued in connection with a Non-Domestic Restructuring shall be pledged to the
Administrative Agent as additional Collateral under the Pledge and Security
Agreement, (4) in connection with the consummation of a Non-Domestic
Restructuring, no Credit Party shall be required to make any cash Investment in
any Holding Company or in the Target Stockholder or any Restricted Subsidiary
that holds, directly or indirectly, any Stock in the Target other than such
amounts required by statute or for initial capitalization in an amount not to
exceed $100,000 in each instance, (5) each Holding Company, the Target
Stockholder, PSS Canada Financial Management Corp., PSS Canada Financial
Services Corp., PSS Canada Holdings Corp. and Collective Canada Holdings Corp.
shall not incur any Indebtedness (other than the intercompany Indebtedness or
debenture described above) or Liens and shall not engage in any business or
activity (other than holding the Stock of its Subsidiaries, paying taxes,
dividends, distributions, interest or other business expenses, preparing reports
to Governmental Authorities and to its equity holders and holding directors and
shareholders meetings, preparing corporate records and other corporate
activities required to maintain its separate corporate, limited liability or
limited partnership structure) and (6) each Holding Company, the Target
Stockholder and any Subsidiary of the Borrower that holds, directly or
indirectly, any Stock in the Target Stockholder shall remain Wholly-Owned
Restricted Subsidiaries of the Borrower.

“Target Stockholder” means the holder of the Transferred Stock (as defined in
the definition of Non-Domestic Restructuring) after giving effect to the
Non-Domestic Restructuring.

“Voting Stock” means Stock of any Person having ordinary power to vote in the
election of members of the board of directors, managers, trustees or other
controlling Persons, of such Person (irrespective of whether, at the time, Stock
of any other class or classes of such entity shall have or might have voting
power by reason of the happening of any contingency).

“Wholly-Owned” means, with respect to a Subsidiary of any Person, any Subsidiary
of such Person, all of the Stock of which (other than director’s qualifying
shares, as may be required by law) is owned by such Person, either directly or
indirectly through one or more Wholly-Owned Subsidiaries of such Person.

 

 

 

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(b)         The definition of “Permitted Investment” in Section 1.1 (Defined
Terms) of the Loan Agreement is hereby amended by inserting the following new
sentence immediately following clause (g) thereof:

For purposes of determining the value of any Investment outstanding for purposes
of any subclause of Section 7.10, such amount, when aggregated with the amount
of all other Investments made pursuant to such subclause, shall deemed to be the
amount of all such Investments when made, purchased or acquired on or after the
Closing Date less the amount of any returns received by the Credit Parties after
the Closing Date on such Investments (without duplication but not to exceed the
aggregate of the original amounts invested pursuant to such subclause) and, in
the case of any Investments made pursuant to clauses (e)(v) or (i)(B) of
Section 7.10, less the amount of any returns received by the Credit Parties
after the Closing Date on any Investments in Qualified Restricted Subsidiaries
identified on Schedule 7.10.

(c) Section 5.7(c) of the Loan Agreement is hereby amended by deleting the first
clause from inception through the word “showing,” and inserting the following as
a new clause thereof:

Set forth on Schedule 5.7(c) is a complete and accurate list of each Credit
Party’s direct and indirect Subsidiaries showing, as of the First Amendment
Effective Date,

(d) Section 5.10 (No Material Adverse Changes) of the Loan Agreement is hereby
amended by inserting the following clause immediately following the
parenthetical:

in the case of the Borrower and any Wholly Owned Domestic Subsidiary, or, in the
case of the financial statements of any Excluded Subsidiary, have been prepared
or maintained in accordance with generally accepted accounting principles of its
country of origin and, in addition, have been prepared for consolidation in
accordance with GAAP

(e) Section 5.14 (Investment Company Act) of the Loan Agreement is deleted in
its entirety and substituting the following in its place:

None of the Credit Parties is an “investment company,” or “promoter” or
“principal underwriter” for an “investment company,” as such terms are defined
in the Investment Company Act of 1940, as amended.

(f) Section 6.1 (Accounting System) of the Loan Agreement is hereby amended by
inserting the following parenthetical at the end of the first sentence thereof:

(or, in the case of any Restricted Subsidiary that is an Excluded Subsidiary,
such consolidated records shall be maintained in accordance with the generally
accepted accounting principles of its country of origin and, in addition, shall
have been prepared for consolidation in accordance with GAAP)

(g) Section 6.14 (Formation of Subsidiaries) of the Loan Agreement is hereby
amended by inserting the following sentence at the end of such section:

Notwithstanding the foregoing, the Loan Documents shall not require the creation
or perfection of, pledges of or security interests in, or the obtaining of title
insurance or legal opinions with respect to, any Excluded Assets, any Stock or
Stock Equivalents in, or assets of, any Restricted Subsidiary of the Parent that
was formed under the laws of the United States or any state of the United States
or the District of Columbia, all of the Stock of which is held by any Person who
is

 

 

 

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not a “United States person” under and as defined in Section 770l(a)(30) of the
IRC, or any leaseholds, commercial tort claims, motor vehicles or any other
asset subject to certificates of title or letter of credit rights (other than
any such rights constituting “supporting obligations” as defined in the Code).

(h) Section 7.1 (Indebtedness) of the Loan Agreement is hereby amended by
deleting the “and” after clause (o) thereof, replacing the period at the end of
clause (p) with “; and”, and inserting a new clause (q) immediately following
clause (p) thereof:

(q)      intercompany Indebtedness owed by any Group Member to any other Group
Member in connection with or arising from or under a Non-Domestic Restructuring.

(i) Section 7.10(e) (Investments) of the Loan Agreement is hereby amended by
inserting the new clause (vi) immediately following clause (v) thereof:

and (vi) by a Group Member in another Group Member in connection with or arising
from or under a Non-Domestic Restructuring      

(j) Section 7.3 (Restrictions on Fundamental Changes/Disposal of Assets) of the
Loan Agreement is hereby amended by deleting the “and” after clause (d) thereof,
replacing the period at the end of clause (e) with “; and”, and inserting a new
clause (f) immediately following clause (e) thereof:

(f)           any Non-Domestic Restructuring (including any Asset Sale among
Group Members in connection therewith or arising therefrom).

(k) Section 7.8 (Distributions) of the Loan Agreement is hereby amended by
deleting the “and” after clause (ii) thereof, replacing the period at the end of
clause (iii) with “; and”, and inserting a new clause (iv) immediately following
clause (iii) thereof:

(iv)        any Group Member may make Restricted Payments to another Group
Member in connection with or arising from or under a Non-Domestic Restructuring.

(l) Section 7.11 (Transactions with Affiliates) of the Loan Agreement is hereby
amended to read in its entirety as follows:

 

Other than as set forth on Schedule 7.11 or as necessary to effect a
Non-Domestic Restructuring, the Parent shall not, nor shall it permit Borrower
or any Restricted Subsidiary to effect any transaction with any of its
respective Affiliates that is not a Restricted Subsidiary on a basis less
favorable to the Borrower or such Restricted Subsidiary than would at the time
be obtainable for a comparable transaction in arms-length dealing with an
unrelated third party.

(m) Section 7.14 (Modification of Governing Documents) of the Loan Agreement is
hereby amended is hereby amended to read in its entirety as follows:

Change its capital structure (including in the terms of its outstanding Stock)
or otherwise amend its Governing Documents, except (a) for changes and
amendments that do not materially affect the rights and privileges of any
Restricted Subsidiary and do not materially affect the interests of the Secured
Parties under the Loan Documents or in the Collateral and (b) as necessary to
effect a Non-Domestic Restructuring.

 

 

 

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(n) Section 7.15 (Modification of Related Documents) of the Loan Agreement is
hereby amended is hereby amended to read in its entirety as follows:

Alter, rescind, terminate, amend, supplement, waive or otherwise modify any
provision of any Related Document (except (a) for modifications that do not
materially affect the rights and privileges of any Restricted Subsidiary under
such Related Document and that do not materially affect the interests of the
Secured Parties under the Loan Documents or in the Collateral and (b) as
necessary to effect a Non-Domestic Restructuring).

 

Section 3.

Affirmation and Acknowledgment of the Borrower.

The Borrower hereby ratifies and confirms all of its Obligations to the
Administrative Agent and the Lenders, including, without limitation, the Loans,
and the Borrower hereby affirms its absolute and unconditional promise to pay to
the Lenders all indebtedness, obligations and liabilities in respect of the
Loans and all other amounts due under the Loan Agreement and the other Loan
Documents as amended hereby. The Borrower hereby confirms that the Obligations
are and remain secured pursuant to the Loan Documents and pursuant to all other
instruments and documents executed and delivered by the Borrower as security for
the Obligations.

 

Section 4.

No Other Waivers, Amendments or Consents.

Except to the extent amended hereby, the Loan Agreement shall remain unchanged
and in full force and effect. The waiver and consents contained herein shall not
extend beyond the terms expressly set forth herein for such waiver and consents,
nor impair any right or power accruing to the Administrative Agent or the
Lenders with respect to any other Default or Event of Default or any Default or
Event of Default which occurs after the date hereof. Nothing in this First
Amendment is intended or shall be construed to be a novation of any Obligations
or any part of the Loan Agreement or any of the other Loan Documents or to
affect, modify or impair the continuity or perfection of the Lenders’ Liens
under the Loan Agreement and Loan Documents.

 

Section 5.

Representations, Warranties and Covenants.

To induce the undersigned Lenders to enter into this First Amendment, the
Borrower and the Guarantors hereby warrant, represent and covenant to and with
to the Lenders and the Administrative Agent that: (a) this First Amendment has
been duly authorized, executed and delivered by the Borrower and the Guarantors;
(b) this First Amendment and the Loan Agreement as amended hereby constitute
legal, valid and binding obligations of the Borrower and the Guarantors,
enforceable in accordance with their respective terms; (c) after giving effect
to this First Amendment, no Default or Event of Default has occurred and is
continuing as of this date; (d) no approval or consent of, or filing with, any
governmental agency or authority is required to make valid and legally binding
the execution, delivery or performance by the Borrower and the Guarantors of
this First Amendment or the Loan Agreement as amended hereby; and (e) after the
First Amendment Effective Date, the Borrower or the Guarantors shall provide
written notice to the Administrative Agent not less than three Business Days
prior to the commencement of a Non-Domestic Restructuring (excluding any
transactions in connection with a Non-Domestic Restructuring that were commenced
after the Closing Date and prior to the First Amendment Effective Date).

Section 6.            Conditions to Effectiveness. This First Amendment shall
become effective on the date (the “Effective Date”) when the following
conditions precedent shall have been satisfied:

 

 

 

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(a)          Certain Documents.       The Administrative Agent, for the benefit
of the Lenders, shall have received (a) one or more counterparts of this First
Amendment, duly executed, completed and delivered by the Borrower, the
Guarantors, the Administrative Agent and the Lenders and (b) a fully executed
amendment to the Pledge and Security Agreement, in the form attached hereto as
Exhibit A.

(b)         Representations and Warranties; No Defaults. The Administrative
Agent, for the benefit of the Lenders, shall have received a certificate of a
Responsible Officer of the Borrower certifying that both before and after giving
effect to this First Amendment:

(i)            each of the representations and warranties set forth in Article V
(Representations and Warranties) of the Loan Agreement and in the other Loan
Documents shall be true and correct in all material respects on and as of the
Effective Date with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representation and warranties shall have been
true and correct as of such earlier date; provided, however, that references
therein to the Loan Agreement shall be deemed to refer to the Loan Agreement as
amended by this First Amendment; provided, further, however, that the
representations and warranties expressly related to the accuracy of the
Schedules (other than Schedule 5.7(c)) to the Loan Agreement shall be true and
correct in all material respects as of August 17, 2007; and

(ii)          no Default or Event of Default shall have occurred and be
continuing, either on the date hereof or on the Effective Date.

 

Section 7.

Reimbursement of Expenses.

As provided in Section 16.7 (Costs and Expenses; Indemnification) of the Loan
Agreement, the Borrower hereby agrees to reimburse the Administrative Agent on
demand for all reasonable fees and reasonable out-of-pocket costs and expenses
(including without limitation the reasonable and actual fees and expenses of its
counsel) incurred by the Administrative Agent in connection with the
negotiation, documentation and consummation of this First Amendment and the
other documents executed in connection herewith and the transactions
contemplated hereby.

 

Section 8.

Governing Law.

THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO BE PERFORMED ENTIRELY WITHIN SAID
STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

 

Section 9.

Headings.

Section headings in this First Amendment are included herein for convenience of
reference only and shall not constitute a part of this First Amendment for any
other purposes.

 

Section 10.

Severability of Provisions.

Any provision of this First Amendment which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. To the extent permitted by applicable law, the

 

 

 

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Borrower and Guarantors hereby waives any provision of law that renders any
provision hereof prohibited or unenforceable in any respect.

 

Section 11.

Counterparts.

This First Amendment may be executed in any number of several counterparts, all
of which shall be deemed to constitute but one original and shall be binding
upon all parties, their successors and permitted assigns. Delivery of an
executed signature page of this First Amendment by facsimile transmission or
electronic transmission shall be as effective as delivery of a manually executed
counterpart hereof.

 

Section 12.

Entire Agreement.

The Loan Agreement as amended through this First Amendment embodies the entire
agreement between the parties hereto relating to the subject matter thereof and
supersedes all prior agreements, representations and understandings, if any,
relating to the subject matter thereof.

 

Section 13.

No Strict Construction.

The parties hereto have participated jointly in the negotiation and drafting of
this First Amendment. In the event an ambiguity or question of intent or
interpretation arises, this First Amendment shall be construed as if drafted
jointly by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this First Amendment.

 

Section 14.

Waiver of Jury Trial.

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WITH RESPECT TO THIS FIRST AMENDMENT OR ANY OTHER LOAN DOCUMENT.

 

Section 15.

No Third Party Reliance.

This First Amendment is solely for the benefit of the parties signatory hereto,
their successors and permitted assigns. No waiver, consent or amendment pursuant
to this First Amendment may be relied upon by any third parties.

 

[Signature Pages to follow]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
executed by their respective officers or representatives thereunto duly
authorized, as of the date first above written.

WELLS FARGO RETAIL FINANCE, LLC,

as Administrative Agent and Lender

 

By:     /s/ Jennifer Cann 

 

Name:

Jennifer Cann

 

Title:

Senior Vice President

 

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NATIONAL CITY BUSINESS CREDIT, INC.,

as a Lender

 

By:     /s/ Joseph Kwasny 

 

Name:

Joseph Kwasny

 

Title:

Managing Director

 

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BANK OF AMERICA, N.A.,

as a Lender

 

By:     /s/ Stephen DeMenna 

 

Name:

Stephen DeMenna

 

Title:

Managing Director

 

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JPMORGAN CHASE BANK, N.A.,

as a Lender

 

 

By:

/s/ Patrick J. Fravel

 

Name:

Patrick J. Fravel

 

Title:

Vice President

 

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WACHOVIA BANK, NATIONAL ASSOCIATION,

as a Lender

 

By:     /s/ Joe Curdy 

 

Name:

Joe Curdy

 

Title:

Director

 

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LASALLE RETAIL FINANCE, A DIVISION OF LASALLE BUSINESS CREDIT, LLC, AS AGENT FOR
STANDARD FEDERAL BANK NATIONAL ASSOCIATION,

as a Lender

 

By:     /s/ Stephen DeMenna 

 

Name:

Stephen DeMenna

 

Title:

Managing Director, Bank of America Retail Finance Group and LaSalle Retail
Finance

 

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CITICORP NORTH AMERICA, INC.,

as a Lender

 

By:     /s/ Jeffrey Nitz 

 

Name:

Jeffrey Nitz

 

Title:

Director

 

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CREDIT PARTIES:

COLLECTIVE BRANDS FINANCE, INC.,

 

as Borrower,

COLLECTIVE BRANDS, INC.,

COLLECTIVE INTERNATIONAL, LP,

 

By: Payless Collective GP, LLC, its

 

Managing Member,

COLLECTIVE LICENSING INTERNATIONAL, LLC,

DYELIGHTS, INC.,

PAYLESS COLLECTIVE GP, LLC,

PAYLESS NYC, INC.,

 

PAYLESS PURCHASING SERVICES, INC.,

PAYLESS SHOESOURCE DISTRIBUTION, INC.,

PAYLESS SHOESOURCE GOLD VALUE, INC.,

PAYLESS SHOESOURCE LEASING, LLC,

 

By: Payless ShoeSource, Inc., its sole member

PAYLESS SHOESOURCE MERCHANDISING, INC.,

PAYLESS SHOESOURCE WORLDWIDE, INC.,

PAYLESS SHOESOURCE, INC.,

PSS CANADA, INC.,

PSS DELAWARE COMPANY 2, INC.,

PSS DELAWARE COMPANY 3, INC.,

PSS DELAWARE COMPANY 4, INC.,

PSS INVESTMENT I, INC.,

PSS INVESTMENT III, INC.,

ROBEEZ LOGISTICS INC.,

ROBEEZ US HOLDINGS INC.,

ROBEEZ U.S., INC.,

SAN JOSE ACQUISITION CORP.,

 

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SAUCONY UK, INC.,

SAUCONY, INC.,

SAUCONY/ECOM, INC.,

SHOE SOURCING, INC.,

SPERRY TOP-SIDER, INC.,

S R HOLDINGS INC.,

STRIDE RITE INTERNATIONAL CORP.,

SR/ECOM, INC.,

SRCG LLC,

 

By: Stride Rite Children’s Group, Inc., its sole member

SRCG/ECOM, INC.,

SRL, INC.,

SRR, INC.,

STRIDE RITE CHILDREN’S GROUP, INC.,

STRIDE RITE INTERNATIONAL HOLDINGS, INC.,

STRIDE RITE INTERNATIONAL LLC,

 

By: Stride Rite International Holdings, Inc., its sole member

STRIDE RITE INVESTMENT CORPORATION,

STRIDE RITE LLC,

 

By: Stride Rite Children’s Group, Inc., its

sole member

STRIDE RITE SOURCING INTERNATIONAL, INC.,

STS/ECOM, INC.,

THE KEDS CORPORATION,

TOMMY HILFIGER FOOTWEAR, INC.,

KEDS LLC,

 

By: The Keds Corporation, its sole

member

EASTBOROUGH, INC.,

 

 

By:

/s/ Ullrich E. Porzig

 

Name:

Ullrich E. Porzig

 

Its:

Authorized Representative