Document:

exv10w1

 

EXHIBIT 10.1

AMENDMENT NO. 4

Dated as of November 1, 2007

to

CREDIT AGREEMENT

Dated as of September 14, 2005

          THIS AMENDMENT NO. 4 (“Amendment”) is made as of November 1, 2007 (the “Effective
Date”) by and among Pacific Sunwear of California, Inc., a California corporation (the
“Borrower”), the financial institutions listed on the signature pages hereof and JPMorgan
Chase Bank, National Association, as Administrative Agent (the “Administrative Agent”),
under that certain Credit Agreement dated as of September 14, 2005 by and among the Borrower, the
Lenders and the Administrative Agent (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”). Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings given to them in the Credit Agreement.

          WHEREAS, the Borrower has requested that certain modifications be made to the Credit
Agreement;

          WHEREAS, the Borrower, the Lenders party hereto and the Administrative Agent have agreed to
amend the Credit Agreement on the terms and conditions set forth herein;

          NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions
contained herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Borrower, the Lenders party hereto and the Administrative Agent hereby
agree to the following amendments to the Credit Agreement.

          1.    Amendments to Credit Agreement. Effective as of the Effective Date but subject to
the satisfaction of the conditions precedent set forth in Section 2 below, the Credit
Agreement is hereby amended as follows:

          (a)    Section 2.01 of the Credit Agreement is hereby amended restate the first sentence
thereof in its entirety as follows:

     “Subject to the terms and conditions set forth herein, each Lender agrees to make
Revolving Loans to the Borrower in Dollars from time to time during the Availability Period
in an aggregate principal amount that will not result in (a) such Lender’s Revolving Credit
Exposure exceeding such Lender’s Commitment, (b) the sum of the total Revolving Credit
Exposures exceeding the total Commitments or (c) solely during the Borrower’s fiscal quarter
ending on February 2, 2008, the sum of the total outstanding Loans exceeding $75,000,000.”

 

 

          (b)    Section 6.08(a) of the Credit Agreement is hereby amended to restate clause (3) of
the proviso appearing at the end thereof to read as follows:

     “(3) solely with respect to the fiscal quarter of the Borrower ending on or about
November 3, 2007, the Borrower will not permit such ratio to be less than 1.1 to 1.0.”

          (c)    Section 6.08(a) of the Credit Agreement is hereby further amended to add the
following sentence at the end thereof:

     “Notwithstanding the foregoing, it is understood and agreed that, to the extent made or
incurred commencing with the fiscal quarter ending on November 3, 2007, those certain cash
charges not to exceed (i) $8,000,000 in respect of inventory write-downs, reserve charges
and liquidation costs and (ii) $2,000,000 in respect of severance pay and retention bonuses,
in each case exclusively in connection with the Borrower’s disposition of certain of its
currently operating 154 “demo” stores and 9 “One Thousand Steps” stores, shall be excluded
from the calculation of the fixed charge coverage ratio with respect to this Section 6.08(a)
for such period.”

          2.    Conditions of Effectiveness. The effectiveness of this Amendment is subject to the
conditions precedent that the Administrative Agent shall have received (i) counterparts of this
Amendment duly executed by the Borrower, the Required Lenders and the Administrative Agent, (ii)
counterparts of the Consent and Reaffirmation attached hereto duly executed by the Subsidiary
Guarantors and (iii) for the account of each Lender which delivers its executed signature page
hereto by such time as is requested by the Administrative Agent, an amendment fee equal to 0.05% of
such Lender’s Commitment under the Credit Agreement.

          3.    Representations and Warranties of the Borrower. The Borrower hereby represents and
warrants as follows:

          (a)    This Amendment and the Credit Agreement as amended hereby constitute legal, valid and
binding obligations of the Borrower and are enforceable against the Borrower in accordance with
their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

          (b)    As of the date hereof and giving effect to the terms of this Amendment, (i) no Default
shall have occurred and be continuing and (ii) the representations and warranties of the Borrower
set forth in the Credit Agreement, as amended hereby, are true and correct in all material respects
as of the date hereof (other than such representations and warranties as are made of a specific
earlier date, in which case such representations and warranties shall be true and correct in all
material respects as of such earlier date).

          4.    Reference to and Effect on the Credit Agreement.

          (a)    Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit
Agreement or any other Loan Document shall mean and be a reference to the Credit

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Agreement as amended hereby.

          (b)    Except as specifically amended above, the Credit Agreement and all other documents,
instruments and agreements executed and/or delivered in connection therewith shall remain in full
force and effect and are hereby ratified and confirmed.

          (c)    The execution, delivery and effectiveness of this Amendment shall not operate as a waiver
of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver
of any provision of the Credit Agreement or any other documents, instruments and agreements
executed and/or delivered in connection therewith.

          5.    Governing Law. This Amendment shall be construed in accordance with and governed
by the law of the State of New York.

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

          7.    Counterparts. This Amendment may be executed by one or more of the parties hereto
on any number of separate counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.

[Signature Pages Follow]

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          IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above
written.

	 	 	 	 	 	 	 
	 	 	PACIFIC SUNWEAR OF CALIFORNIA, INC.,	 	 
	 	 	as the Borrower	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ SALLY FRAME KASAKS
 

Sally Frame Kasaks
	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ GERALD M. CHANEY
 

Gerald M. Chaney
	 	 
	 

	 	Title:
	 	Chief Financial Officer	 	 

Signature Page to
Amendment No. 4 to 

Credit Agreement dated as of September 14, 2005 

Pacific Sunwear of California, Inc.

 

 

	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK,	 	 
	 	 	NATIONAL ASSOCIATION,	 	 
	 	 	individually as a Lender, as the Swingline Lender, as	 	 
	 	 	an Issuing Bank and as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ JAMES A. KNIGHT	 	 
	 

	 	Name:
	 	 

James A. Knight
	 	 
	 

	 	Title:
	 	Vice President	 	 

Signature Page to
Amendment No. 4 to 

Credit Agreement dated as of September 14, 2005 

Pacific Sunwear of California, Inc.

 

 

	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,	 	 
	 	 	individually as a Lender, as an Issuing Bank and as	 	 
	 	 	Syndication Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ STEPHEN J. GARVIN
 

Stephen J. Garvin
	 	 
	 

	 	Title:
	 	Managing Director	 	 

Signature Page to
Amendment No. 4 to 

Credit Agreement dated as of September 14, 2005 

Pacific Sunwear of California, Inc.

 

 

	 	 	 	 	 	 	 
	 	 	NATIONAL CITY BANK,	 	 
	 	 	individually as a Lender and as Co-Documentation	 	 
	 	 	Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ JENNIFER OBERS	 	 
	 

	 	Name:
	 	 

Jennifer Obers
	 	 
	 

	 	Title:
	 	Portfolio Manager	 	 

Signature Page to
Amendment No. 4 to 

Credit Agreement dated as of September 14, 2005 

Pacific Sunwear of California, Inc.

 

 

	 	 	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION,	 	 
	 	 	individually as a Lender and as Co-Documentation	 	 
	 	 	Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ CONAN SCHLEICHER	 	 
	 

	 	Name:
	 	 

Conan Schleicher
	 	 
	 

	 	Title:
	 	Vice President	 	 

Signature Page to
Amendment No. 4 to 

Credit Agreement dated as of September 14, 2005 

Pacific Sunwear of California, Inc.

 

 

	 	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION,	 	 
	 	 	individually as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ PHILIP K. LIEBSCHER	 	 
	 

	 	Name:

Title:
	 	 

Philip K. Liebscher

Senior Vice President
	 	 

Signature Page to
Amendment No. 4 to 

Credit Agreement dated as of September 14, 2005 

Pacific Sunwear of California, Inc.

 

 

	 	 	 	 	 	 	 
	 	 	UNION BANK OF CALIFORNIA, N.A.,
	 	 
	 	 	individually as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ MARGARET FURBANK	 	 
	 

	 	Name:
	 	 

Margaret Furbank
	 	 
	 

	 	Title:
	 	Vice President	 	 

Signature Page to
Amendment No. 4 to 

Credit Agreement dated as of September 14, 2005 

Pacific Sunwear of California, Inc.

 

 

	 	 	 	 	 	 	 
	 	 	WACHOVIA BANK,	 	 
	 	 	NATIONAL ASSOCIATION,	 	 
	 	 	individually as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ SUSAN T. GALLAGHER	 	 
	 

	 	Name:
	 	 

Susan T. Gallagher

	 	 
	 

	 	Title:
	 	Vice President	 	 

Signature Page to
Amendment No. 4 to 

Credit Agreement dated as of September 14, 2005 

Pacific Sunwear of California, Inc.

 

 

CONSENT AND REAFFIRMATION

          Each of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 4
to the Credit Agreement (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”) by and among Pacific Sunwear of California,
Inc., a California corporation (the “Borrower”) the Lenders and JPMorgan Chase Bank,
National Association, as Administrative Agent (the “Administrative Agent”), which Amendment
No. 4 is dated as of November 1, 2007 and is by and among the Borrower, the financial institutions
listed on the signature pages thereof and the Administrative Agent (the “Amendment”).
Capitalized terms used in this Consent and Reaffirmation and not defined herein shall have the
meanings given to them in the Credit Agreement. Without in any way establishing a course of
dealing by the Administrative Agent or any Lender, each of the undersigned consents to the
Amendment and reaffirms the terms and conditions of the Subsidiary Guaranty and any other Loan
Document executed by it and acknowledges and agrees that the Subsidiary Guaranty and each and every
such Loan Document executed by the undersigned in connection with the Credit Agreement remains in
full force and effect and is hereby reaffirmed, ratified and confirmed. All references to the
Credit Agreement contained in the above-referenced documents shall be a reference to the Credit
Agreement as so modified by the Amendment and as the same may from time to time hereafter be
amended, modified or restated.

Dated November 1, 2007

[Signature Pages Follow]

 

 

     IN WITNESS WHEREOF, this Consent and Reaffirmation has been duly executed as of the day and
year above written.

	 	 	 	 	 	 	 
	 	 	PACIFIC SUNWEAR STORES CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ SALLY FRAME KASAKS	 	 
	 

	 	Name:
	 	 

Sally Frame Kasaks
	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ GERALD M. CHANEY	 	 
	 

	 	Name:
	 	 

Gerald M. Chaney
	 	 
	 

	 	Title:
	 	Chief Financial Officerexv10w2

 

Exhibit 10.2

Summary of employment arrangement between Registrant and Mr. B.M. Heck, effective May 23, 2007

As Executive Chair, Mr. Heck will be compensated at the rate of $20,000 per month and will receive
standard options and restrictive stock units granted to Company directors (8,000 Options and 5,000
restricted share units) and benefits similar to executive officers of the Company. This position is
expected to require less than 40 hours per week.

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