Document:

exv10w1

Exhibit 10.1

EMULEX CORPORATION

Description of Compensation Arrangements for Certain Executive Officers

     The following is a description of the compensation arrangements for each of the Company’s
named executive officers listed in the Company’s Proxy Statement for the 2007 Annual Meeting of
Stockholders of Emulex Corporation, excepting for Mr. Michael E.
Smith, who ceased to be an employee of the Company on July 18,
2008. The compensation for these executive officers consists of base
salary and perquisites, long-term incentive compensation and annual cash bonus compensation.
Effective September 1, 2008, the following are the base salaries (on an annual basis) of the
Company’s named executive officers:

	 	 	 	 	 
	Name and Principal Position	 	New Base Salary
	Paul F. Folino
	 	$	603,827	 
	Executive Chairman
	 	 	 	 
	 
	 	 	 	 
	James M. McCluney
	 	$	585,750	 
	Chief Executive Officer and President
	 	 	 	 
	 
	 	 	 	 
	Jeffrey W. Benck
	 	$	412,110	 
	Exec. V.P. and Chief Operating Officer
	 	 	 	 
	 
	 	 	 	 
	Michael J. Rockenbach
	 	$	351,696	 
	Exec. V.P. and Chief Financial Officer
	 	 	 	 
	 
	 	 	 	 
	Marshall D. Lee
	 	$	319,304	 
	Exec. V.P., Engineering
	 	 	 	 

     Effective on September 1, 2008, the following other compensation amounts were eliminated: (a)
for Mr. Folino, an automobile allowance of $10,800 per year and an out of pocket health care
expense reimbursement of up to $5, 000 per year; (b) for Mr. McCluney, an automobile allowance of
$10,510 per year and an out of pocket health care expense reimbursement of up to $5,000 per year;
(c) for Mr. Benck, an automobile allowance of $9,600 per year and an out of pocket health care
expense reimbursement of up to $5,000 per year; (d) for Mr. Rockenbach, an automobile allowance of
$9,600 per year and an out of pocket health care expense reimbursement of up to $5,000 per year;
and (e) for Mr. Lee, an automobile allowance of $9,600 per year and an out of pocket health care
expense reimbursement of up to $5,000 per year.

 

 

     The Company does not have employment agreements with any of its executive officers but has
executed key employee retention agreements with each of its named executive officers and certain
other officers and key employees of the Company. The Company’s agreement with Mr. Folino entitles
him to receive the following payments and benefits in the event of termination of his employment by
the Company without cause or by Mr. Folino because of a demotion (as defined in such agreement)
within 2 years after a change in control of the Company: (i) a severance payment equal to the
present value of 2 times the sum of Mr. Folino’s annual salary plus the highest annual average of
any 2 of his last 3 annual bonuses; (ii) continuation for 2 years following termination of
employment of his health and life insurance, disability income and tax assistance (reduced to the
extent similar benefits are received by him from another employer); and (iii) acceleration of his
right to exercise his stock options and vesting of any restricted stock awards based on the length
of his continued employment following the grant of the option by one year upon the change in
control of the Company and full acceleration of such option exercise right and vesting of
restricted stock awards in the event of termination of his employment without cause or because of a
demotion (as defined in such agreement) within two years after the change in control.

     Mr. McCluney’s key employee retention agreement is substantially the same as Mr. Folino’s
agreement described above. Additionally, in the event that Mr. McCluney is terminated without cause
(regardless of whether a change in control has occurred), he will be entitled to severance in the
amount of one year’s base salary at the rate then in effect, any deferred incentive bonuses,
reimbursement of COBRA premiums, if any, for one year, and continued vesting of his stock options
for one year.

     The above descriptions are qualified in their entirety by the forms of Key Employee Retention
Agreements for Mr. Folino and Mr. McCluney which are incorporated herein by reference to Exhibits
10.2 and 10.1, respectively, to the Company’s Current Report on Form 8-K filed on September 6,
2006.

     The Company also has entered into similar agreements with each of the other named executive
officers which provide for benefits similar to those described above, except that the severance
payment is equal to the present value of one times the sum of the employee’s annual salary plus the
highest annual average of any 2 of the employee’s last 3 annual bonuses; and continuation for one
year following termination of employment of the employee’s health and life insurance, disability
income and tax assistance (reduced to the extent similar benefits are received by the employee from
another employer). The form of key employee retention agreement for each of the other named
executive officers is filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 2006.

     Additionally, the Company’s executive officers are entitled to participate in health and
welfare and retirement plans, perquisite, fringe benefit and other arrangements generally available
to other salaried employees. In addition, each officer is entitled to participate in the Emulex
Corporation Retirement Savings Plan, and receives group term life insurance premiums and health
care reimbursement paid with respect to the named executive.

 

 

     The Company’s executive officers are eligible for annual performance-based cash bonuses under
the Company’s Executive Bonus Plan. The Bonus Plan is intended to provide incentives to executive
officers and other participants in the form of quarterly cash bonus payments based on Company
performance against net revenue and net operating income targets established periodically and, in
certain circumstances, other specified business goals. Actual goals for measurement purposes are
the Company’s fiscal annual operating plan that is approved by the Board of Directors. In addition,
a discretionary bonus for recognition of extraordinary contributions to the success of the company
may be recommended by the Chairman or Chief Executive Officer. All bonus recommendations are
subject to the approval of the Compensation Committee. Each executive officer of the Company has a
quarterly target award opportunity expressed as a percentage of quarterly gross base salary at the
end of the quarter in question. The quarterly target award opportunity for the executives range
from 35% to 90% of quarterly base salary (the “target award percentage”). Each participant’s
quarterly bonus is weighted based upon achieving a combination of corporate performance goals. For
example, 45% of an executive officer’s bonus may be based upon achievement of net revenue
performance goals with the remaining 55% of the bonus based on achievement of net operating income
performance. Targeted quarterly bonuses are further adjusted by application of an accelerator
formula pursuant to which bonuses are increased to reward for over-achievement of targets and
decreased to minimize bonus payments for performance below targeted levels. For example, if
quarterly net revenue is 10% more than targeted net revenue, the bonus attributable to achievement
of net revenue targets for such quarter will be between 15 and 20% above the targeted bonus amount.
Similarly, if quarterly revenue is 10% less than targeted net revenue, the bonus attributable to
achievement of net revenue targets for such quarter will be decreased by 15% to 20% percent from
the targeted bonus amount. Net revenue and net operating income bonuses are treated separately
regardless of the award formula. However, no net revenue bonus or net operating income bonus will
be paid for a given quarter unless at least 80% of the corresponding net revenue or net operating
income goal, as the case may be, is achieved. In addition, no bonus payout of any kind shall be
made if net operating income is less than 50% of the applicable net operating income goal. A
participant must be an employee for the entire quarter to be eligible for a quarterly bonus.
Quarterly bonuses are generally paid 30 days following the end of each quarter. Award formulas
under the Bonus Plan are established for a fiscal year and may be modified, extended, or canceled
annually at the discretion of the Compensation Committee. The foregoing description is qualified in
its entirety by the Executive Bonus Plan which is filed as Exhibit 10.3 to the Company’s Current
Report on Form 8-K filed on September 6, 2006.

     Long term incentives are provided to the named executives in accordance with the Company’s
2005 Equity Incentive Plan which is attached as Appendix A to the Company’s Definitive Proxy
Statement for the Annual Meeting of Stockholders held on November 15, 2007. In addition, the
Company’s executive officers have previously received options pursuant to option or other equity
plans maintained by the Company prior to the adoption of the 2005 Equity Incentive Plan in 2005.exv10w1

EXHIBIT 10.1

FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER

     This
FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER dated as of August 1, 2008 (this
“Amendment”), is by and among PACIFIC SUNWEAR OF CALIFORNIA, INC., a California corporation
(the “Borrower”), JPMORGAN CHASE BANK, N.A. as administrative agent for the Lenders under
the Credit Agreement described below (in such capacity, the “Administrative Agent”) and the
Lenders party hereto.

     WHEREAS the Borrower is party to a Credit Agreement dated as of April 29, 2008, with the
Lenders and the Administrative Agent (as amended and as the same shall be further amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to
which the Lenders agreed, subject to the terms and conditions set forth therein, to make certain
Loans to the Borrower;

     WHEREAS, the Borrower has informed the Administrative Agent that in the course of reviewing
several of the Loan Parties’ retail store leases, the Borrower has discovered that certain leases
include provisions which grant Liens (collectively, “Landlord Lease Liens”) in favor of the
applicable landlords on assets of the Loan Parties to secure the Loan Parties’ obligations under
the leases;

     WHEREAS, the existence of the Landlord Lease Liens constitutes an Event of Default under
subsections (c) and (d) of Article VII of the Credit Agreement (such Event of Default, the
“Specified Event of Default”); and

     WHEREAS, the Borrower has requested and the Administrative Agent and the Lenders have agreed,
on the terms set forth herein, to waive the Specified Event of Default and to amend the Credit
Agreement as set forth herein;

     NOW, THEREFORE, in consideration of the foregoing and the agreements contained herein, the
parties hereby agree as follows:

1. Capitalized Terms. Capitalized terms used herein which are defined in the Credit
Agreement have the same meanings herein as therein, except to the extent that such meanings are
amended hereby.

2. Waiver of Specified Event of Default. Subject to the satisfaction of the terms and
conditions set forth in Section 5 hereof, the Administrative Agent and the Lenders hereby waive the
Specified Event of Default. The parties hereby acknowledge and agree that the waiver set forth in
this Section 2 is limited solely to the Specified Event of Default, solely for the periods through
and ending on the effective date of this Amendment, and that such waiver does not constitute a
waiver of any other presently existing or future Event of Default or a modification or waiver of
any provision of the Credit Agreement.

3. Amendments to Credit Agreement. Subject to the satisfaction of the terms and conditions
set forth in Section 5 hereof, the Borrower, the Lenders and the Administrative Agent agree that
the Credit Agreement shall be amended as follows:

(a) Amendment to Definition of “Permitted Encumbrances”. The definition of “Permitted
Encumbrances” set forth in Section 1.01 of the Credit Agreement is hereby amended by deleting
clause (b) of such definition in its entirety and replacing such clause with the following:

“(b) (i) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, Liens of collecting banks under the Uniform Commercial Code

 

 

on items in the course of collection, Liens and rights of set-off of banks, in each case
arising in the ordinary course of business and securing obligations that are not overdue by
more than thirty (30) days or are being contested in compliance with Section 5.04, (ii)
landlord’s Liens arising by operation of law which are subordinated to the Liens in favor of
the Administrative Agent, (iii) landlord’s Liens in Landlord Lien States arising by
operation of law and (iv) any Lien in favor of a landlord on the assets of any Loan Party
arising under the terms of the lease relating to any retail store to secure such Loan
Party’s obligations under such lease (provided that the Administrative Agent’s Liens are
senior in priority to such landlord’s Lien);”

(b) Amendment to definition of “Reserves”. The definition of “Reserves” set forth in Section 1.01
of the Credit Agreement is hereby amended and restated in its entirety and replaced with the
following:

“Reserves” means any and all reserves which the Administrative Agent deems
necessary, in its Permitted Discretion, to maintain (including, without limitation, Banking
Services Reserves, reserves for rent at any retail store location leased by any Loan Party
in any Landlord Lien State for which the applicable landlord has not executed and delivered
a Collateral Access Agreement (it being agreed that the maximum amount of any Reserve for
any retail store in any Landlord Lien State shall not exceed two month’s rent for such
location), reserves for rent with respect to any Leased Distribution Center (other than the
Kansas Distribution Facility) for which the applicable landlord has not executed and
delivered a Collateral Access Agreement (it being agreed that the maximum amount of any
Reserve for any Leased Distribution Center shall not exceed two month’s rent for such
location) and for consignee’s, warehousemen’s and bailee’s charges, reserves for rent at any
retail store leased by any Loan Party pursuant to a lease which contains provisions granting
in favor of the applicable landlord a Lien on certain assets of such Loan Party and with
respect to which the applicable landlord has not executed and delivered a Collateral Access
Agreement reasonably satisfactory to the Administrative Agent acknowledging that the Liens
granted by the applicable Loan Party to the Administrative Agent under the Loan Documents
are senior in priority to the Liens granted by such Loan Party to such landlord under such
lease (it being understood that (i) the amount of such rent reserve shall be determined from
time to time by the Administrative Agent in its Permitted Discretion, (ii) the amount of
such reserve shall be $5,000,000 as of the effective date of the First Amendment to this
Credit Agreement, which amount may be increased or decreased in the Administrative Agent’s
Permitted Discretion (including decreases in the event the Borrower delivers any Collateral
Access Agreements or amendments to leases eliminating the Liens granted to landlords), and
(iii) the maximum amount of such reserves for rent for all such leases shall not exceed the
greater of (x) $5,000,000 or (y) two months’ rent under all such leases), reserves for gift
cards, reserves for Inventory shrinkage, reserves for customs charges and shipping charges
related to any Inventory in transit, reserves for Swap Obligations, reserves for uninsured
losses of any Loan Party, reserves for uninsured, underinsured, un-indemnified or
under-indemnified liabilities or potential liabilities with respect to any litigation and
reserves for taxes, fees, assessments, and other governmental charges) with respect to the
Collateral or any Loan Party. The Administrative Agent may, in its Permitted Discretion,
implement additional reserves or adjust existing reserves from time to time upon two (2)
Business Days’ prior notice to the Borrower.

4. No Default; Representations and Warranties, etc. The Borrower represents and warrants
to the Lenders and the Administrative Agent that as of the date hereof, after giving effect to the
amendments set forth herein (a) the representations of the Borrower contained in Article III of the
Credit Agreement are true and correct in all material respects as of the date hereof as if made on
such date (except to extent that such representations and warranties expressly relate to an earlier
date, in which case they shall be true and correct in all material respects as of such date); (b)
no Default or Event of Default is continuing; and (c) the execution, delivery and performance by
the Borrower of this Amendment (i) have been duly

-2-

 

authorized by all necessary corporate and, if required, shareholder action on the part of the
Borrower, (ii) will not violate any applicable material law or regulation or the organizational
documents of the Borrower, and (iii) will not violate or result in a default under any material
indenture, agreement or other instrument binding on the Borrower or any of its assets.

5. Conditions Precedent. The effectiveness of this Amendment shall be conditioned upon the
Administrative Agent’s receipt from the Borrower and the Required Lenders of either (a) a
counterpart of this Amendment signed on behalf of such party or (b) written evidence reasonably
satisfactory to the Administrative Agent (which may include telecopy transmission of a signed
signature page of this Amendment) that such party has signed a counterpart of this Amendment.

6. Miscellaneous.

(a) The Borrower, the Lenders and the Administrative Agent hereby ratify and confirm the terms and
provisions of the Credit Agreement and the other Loan Documents and agree that, except to the
extent specifically amended hereby, the Credit Agreement, the other Loan Documents and all related
documents shall remain in full force and effect. Nothing contained herein shall constitute a
waiver of any provision of the Loan Documents, except such waivers or consents as are expressly set
forth herein.

(b) The Borrower agrees to pay all reasonable out-of-pocket costs and expenses incurred by JPMorgan
Chase Bank, N.A. and its respective Affiliates (including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent), in connection with the preparation and
administration of this Amendment or any amendments, modifications or waivers of the provisions
thereof (whether or not the transactions contemplated hereby or thereby shall be consummated).

(c) This Amendment may be executed in any number of counterparts (including by way of facsimile
transmission), each of which, when executed and delivered, shall be an original, but all
counterparts shall together constitute one instrument.

(d) This Amendment shall be governed by the laws of the State of New York and shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns.

[Signature Pages Follow]

-3-

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Credit Agreement
and Waiver to be duly executed by their respective authorized officers as of the day and year first
above written.

	 	 	 	 	 
	 	BORROWER:

PACIFIC SUNWEAR OF CALIFORNIA, INC.

 	 
	 	By:  	/s/
Michael Henry 	 
	 	 	Name:  	Michael Henry 	 
	 	 	Title:  	Sr. Vice President and Chief Financial Officer 	 
	 
	 	By:  	/s/
Sally Frame Kasaks 	 
	 	 	Name:  	Sally Frame Kasaks 	 
	 	 	Title:  	Chief Executive Officer and Chairman of the Board 	 

Signature Page to First Amendment to Credit Agreement and Waiver

 

 

	 	 	 	 	 
	 	ADMINISTRATIVE AGENT AND LENDER:

JPMORGAN CHASE BANK, N.A., individually, as

Administrative Agent, Issuing Bank, Swingline Lender

and a Lender

 	 
	 	By:  	/s/
Mark Cuccinello 	 
	 	 	Name:  	Mark Cuccinello 	 
	 	 	Title:  	Vice President 	 
	 

Signature Page to First Amendment to Credit Agreement and Waiver

 

 

	 	 	 	 	 
	 	LENDER

BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/
Stephen J. Garvin 	 
	 	 	Name:  	Stephen J. Garvin 	 
	 	 	Title:  	Managing Director 	 
	 

Signature Page to First Amendment to Credit Agreement and Waiver

 

 

	 	 	 	 	 
	 	LENDER

BRANCH BANKING AND TRUST COMPANY

 	 
	 	By:  	/s/
Roberts A. Bass 	 
	 	 	Name:  	Roberts A. Bass 	 
	 	 	Title:  	Senior Vice President 	 
	 

Signature Page to First Amendment to Credit Agreement and Waiver

 

 

	 	 	 	 	 
	 	LENDER

U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/
Conan Schleicher 	 
	 	 	Name:  	Conan Schleicher 	 
	 	 	Title:  	Vice President 	 
	 

Signature Page to First Amendment to Credit Agreement and Waiver

 

 

	 	 	 	 	 
	 	LENDER

WELLS FARGO RETAIL FINANCE, LLC

 	 
	 	By:  	/s/
Adam B. Davis 	 
	 	 	Name:  	Adam B. Davis 	 
	 	 	Title:  	Assistant Vice President 	 
	 

Signature Page to First Amendment to Credit Agreement and Waiver

 

 

	 	 	 	 	 
	 	LENDER

PNC BANK, N.A.

 	 
	 	By:  	/s/
Sandra Sha Kenyon 	 
	 	 	Name:  	Sandra Sha Kenyon 	 
	 	 	Title:  	Vice President 	 
	 

Signature Page to First Amendment to Credit Agreement and Waiver

 

 

	 	 	 	 	 
	 	LENDER

UPS CAPITAL CORPORATION

 	 
	 	By:  	/s/
John P. Holloway 	 
	 	 	Name:  	John P. Holloway 	 
	 	 	Title:  	Director, Portfolio Management 	 
	 

Signature Page to First Amendment to Credit Agreement and Waiver

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