PACIFIC
SUNWEAR OF CALIFORNIA, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
(As Amended
and Restated Effective December 31, 2008)
(This
Version of the Plan Applies to Deferred Compensation Amounts that
are Subject to Section 409A
of the Code)
PACIFIC
SUNWEAR OF CALIFORNIA, INC.
EXECUTIVE
DEFERRED COMPENSATION PLAN
(As Amended
and Restated Effective December 31, 2008)
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WHEREAS,
Pacific Sunwear of California, Inc. (the “Corporation”)
maintains the Pacific Sunwear of California, Inc. Executive
Deferred Compensation Plan (the “Plan”) to provide
supplemental retirement income benefits for a select group of
management and highly compensated employees through deferrals of
salary and bonuses and through the Corporation’s
contributions;
WHEREAS,
the Plan was established effective as of March 1, 1995;
and
WHEREAS,
it is believed that the amendment and restatement of the Plan is
advisable and in the best interests of the Corporation in order to
establish documentary compliance, and to permit ongoing operational
compliance, with respect to Section 409A of the Code for
amounts arising from deferrals of compensation earned or determined
after December 31, 2004, and to amounts that vested after
December 31, 2004;
RESOLVED,
that the Plan be, and it hereby is, amended and restated in its
entirety effective as of the 31st day of December, 2008, as
follows:
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This version of
the Plan applies to amounts arising from deferrals of compensation
earned or determined after December 31, 2004, and to amounts
that vested after December 31, 2004. This version of the Plan
is intended to comply with Section 409A of the
Code.
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The
Plan shall be known as the Pacific Sunwear of California, Inc.
Executive Deferred Compensation Plan.
Whenever
the following words and phrases are used in the Plan, with the
first letter capitalized, they shall have the meanings specified
below.
“Account”
or “Accounts” shall mean a Participant’s Deferral
Account and/or Company Contribution Account.
“Beneficiary”
or “Beneficiaries” shall mean the person or persons,
including a trustee, personal representative or other fiduciary,
last designated in writing by a Participant in accordance with
procedures established by the Committee to receive the benefits
specified hereunder in the event of the Participant’s death.
No beneficiary designation shall become effective until it is filed
with the Committee. If there is no Beneficiary designation in
effect, or if there is no surviving designated Beneficiary, then
the Participant’s surviving spouse shall be the Beneficiary.
If there is no surviving spouse to receive any benefits payable in
accordance with the preceding sentence, the duly appointed and
currently acting personal representative of the participant’s
estate (which shall include either the Participant’s probate
estate or living trust) shall be the Beneficiary. In any case where
there is no such personal representative of the Participant’s
estate duly appointed and acting in that capacity within
90 days after the Participant’s death (or such extended
period as the Committee determines is reasonably necessary to allow
such
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personal
representative to be appointed, but not to exceed the earlier of
(i) 180 days after the Participant’s death and
(ii) the latest date payment may be made on account of the
Participant’s death in accordance with Treasury
Regulation Section 1.409A-3(d)), then Beneficiary shall
mean the person or persons who can verify by affidavit or court
order to the satisfaction of the Committee that they are legally
entitled to receive the benefits specified hereunder. In the event
any amount is payable under the Plan to a minor, payment shall not
be made to the minor, but instead be paid (a) to that
person’s living parent(s) to act as custodian, (b) if
that person’s parents are then divorced, and one parent is
the sole custodial parent, to such custodial parent, or (c) if
no parent of that person is then living, to a custodian selected by
the Committee to hold the funds for the minor under the Uniform
Transfers or Gifts to Minors Act in effect in the jurisdiction in
which the minor resides. If no parent is living and the Committee
decides not to select another custodian to hold the funds for the
minor, then payment shall be made to the duly appointed and
currently acting guardian of the estate for the minor or, if no
guardian of the estate for the minor is duly appointed and
currently acting within 60 days after the date the amount
becomes payable, payment shall be deposited with the court having
jurisdiction over the estate of the minor.
“Board
of Directors” or “Board” shall mean the Board of
Directors of the Corporation.
“Bonus”
shall mean any cash incentive compensation earned by a Participant
from the Company in addition to the Participant’s
Salary.
“Change
of Control” shall mean:
(i)
Approval by the shareholders of the Corporation of the dissolution
or liquidation of the Corporation;
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(ii)
Approval by the shareholders of the Corporation of an agreement to
merge or consolidate, or otherwise reorganize, with or into one or
more entities other than Subsidiaries, as a result of which less
than 50% of the outstanding voting securities of the surviving or
resulting entity are, or are to be, owned by former shareholders of
the Corporation; or
(iii)
Approval by the shareholders of the Corporation of the sale of
substantially all of the Corporation’s business assets to a
person or entity which is not a Subsidiary.
“Code”
shall mean the Internal Revenue Code of 1986, as
amended.
“Committee”
shall mean the Committee appointed by the Board to administer the
Plan in accordance with Article IX.
“Company”
shall mean the Corporation and each corporation which is a member
of a controlled group of corporations (within the meaning of
Section 414(b) of the Code) of which the Corporation is a component
member.
“Company
Contribution Account” shall mean the bookkeeping account
maintained by the Committee for each Participant that is credited
with an amount equal to the Company Contribution Amount, if any,
and earnings or losses pursuant to Section 4.2.
“Company
Contribution Amount” shall equal the amount described in
Section 4.2.
“Compensation”
shall mean the Salary and Bonus that the Participant is entitled to
for services rendered to the Company.
“Corporation”
shall mean Pacific Sunwear of California, Inc. and any successor
corporation.
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“Deferral
Account” shall mean the bookkeeping account maintained by the
Committee for each Participant that is credited with amounts equal
to (1) the portion of the Participant’s Salary that he
or she elects to defer, (2) the portion of the
Participant’s Bonus that he or she elects to defer, and
(3) investment gains and losses pursuant to
Section 4.1.
“Disabled”
or “Disability” means a physical or mental state that
would qualify a Participant for disability benefits under the
Corporation’s Long Term Disability Plan, because of medically
determinable bodily injury, mental impairment or disease sustained
after the date of such person’s designation as a Participant,
as determined by the Committee. The Committee may rely on the
conclusions reached by any insurance carrier that has issued an
insurance policy to the Company covering the Participant or any
physician chosen by or otherwise acceptable to the
Committee.
“Early
Retirement Age” shall mean age 50 with 10 years of
service as determined for purposes of the Employee Savings
Plan.
“Effective
Date” shall mean March 1, 1995.
“Eligible
Employee” shall mean officers and other highly compensated
employees of the Company at the Vice President level or higher who
are selected by the Committee to participate in the
Plan.
“Employee
Savings Plan” shall mean the Pacific Sunwear of California,
Inc. Employee Savings Plan.
“Fund”
or “Funds” shall mean one or more of the investments
selected by the Committee pursuant to Section 3.2.
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“In-Service
Election” shall mean any election a Participant makes
pursuant to Section 6.1(a).
“Investment
Return” shall mean, for each Fund, an amount equal to the net
investment performance of such Fund for the applicable period, as
determined by the Committee.
“Normal
Retirement Age” shall mean age 55.
“Participant”
shall mean any Eligible Employee who elects to defer Compensation
in accordance with Section 3.1.
“Payment
Eligibility Date” shall mean the date a Participant has a
Separation from Service.
“Plan”
shall mean the Pacific Sunwear of California, Inc. Executive
Deferred Compensation Plan set forth herein, as amended from time
to time.
“Plan
Year” shall mean the 12 consecutive month period beginning on
January 1.
“Retirement”
shall mean a Participant’s Separation from Service upon or
following the Participant’s attainment of Early Retirement
Age or Normal Retirement Age.
“Qualifying
Change in Control” shall mean a Change of Control that is
also a “change in the ownership or effective control”
of the Company, or a change “in the ownership of a
substantial portion of the assets” of the Company within the
meaning of Section 409A of the Code.
“Salary”
or “Salaries” shall mean the Participant’s base
salary earned as an employee of the Company.
“Separation
from Service” shall mean, as to a particular Participant, a
termination of services provided by the Participant to the Company,
whether voluntarily or involuntarily, due to Retirement,
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while
totally Disabled or otherwise, as determined by the Committee in
accordance with Section 409A of the Code and Treasury
Regulation Section 1.409A-1(h). In determining whether a
Participant has experienced a Separation from Service, the
following provisions shall apply:
(i) For
a Participant who provides services to the Company as an employee,
except as otherwise provided in clause (iii) below, a
Separation from Service shall occur when the Participant has
experienced a termination of employment with the Company. A
Participant shall be considered to have experienced a termination
of employment for this purpose when the facts and circumstances
indicate that the Participant and the Company reasonably anticipate
that either (A) no further services will be performed by the
Participant for the Company after the applicable date, or (B) that
the level of bona fide services the Participant will perform for
the Company after such date (whether as an employee or as an
independent contractor) will permanently decrease to no more than
20% of the average level of bona fide services performed by the
Participant (whether as an employee or an independent contractor)
over the immediately preceding 36-month period (or the full period
of services to the Company if the Participant has been providing
services to the Company less than 36 months). However, if the
Participant is on military leave, sick leave, or other bona fide
leave of absence, the employment relationship between the
Participant and the Company shall be treated as continuing intact,
provided that the period of such leave does not exceed
6 months, or if longer, so long as the Participant retains a
right to reemployment with the Company under an applicable statute
or by contract. If the period of a military leave, sick leave, or
other bona fide leave of absence exceeds 6 months and the
Participant does not retain a right to reemployment under an
applicable statute or by contract, the employment relationship
shall be considered to be terminated for purposes of the Plan as of
the first day immediately following the end of such 6-month period.
In applying the provisions of this paragraph, a leave of absence
shall be considered a bona fide
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leave of
absence only if there is a reasonable expectation that the
Participant will return to perform services for the
Company.
(ii) For
a Participant who provides services to the Company as an
independent contractor, except as otherwise provided in clause
(iii) below, a Separation from Service shall occur upon the
expiration of the contract (or in the case of more than one
contract, all contracts) under which services are performed for the
Company, provided that the expiration of such contract(s) is
determined by the Committee to constitute a good-faith and complete
termination of the contractual relationship between the Participant
and the Company.
(iii) For
a Participant who provides services to the Company as both an
employee and an independent contractor, a Separation from Service
generally shall not occur until the Participant has ceased
providing services for the Company as both an employee and as an
independent contractor, as determined in accordance with the
provisions set forth in clauses (i) and (ii) above.
Similarly, if a Participant either (A) ceases providing
services for the Company as an independent contractor and begins
providing services for the Company as an employee, or
(ii) ceases providing services for the Company as an employee
and begins providing services for the Company as an independent
contractor, the Participant will not be considered to have
experienced a Separation from Service until the Participant has
ceased providing services for the Company in both capacities, as
determined in accordance with clauses (i) and
(ii) above.
Notwithstanding
the foregoing provisions in this definition, if a Participant
provides services for the Company as both an employee and as a
member of the Board, to the extent permitted by Treasury
Regulation Section 1.409A-1(h)(5) the services provided
by the Participant as a director shall not be taken into account in
determining whether the Participant has experienced a Separation
from Service as an
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employee,
and the services provided by such Participant as an employee shall
not be taken into account in determining whether the Participant
has experienced a Separation from Service as a director, for
purposes of the Plan.
“Specified
Employee” shall mean a Participant who, as of the date of the
Participant’s Separation from Service, is a “specified
employee” within the meaning of Treasury Regulation
Section 1.409A-1(i).
“Subsidiary”
shall mean any corporation or other entity a majority or more of
whose outstanding voting stock or voting power is beneficially
owned directly or indirectly by the Corporation.
“Unforeseeable
Emergency” shall mean a severe financial hardship to the
Participant resulting from an illness or accident of the
Participant, the Participant’s Beneficiary, or the
Participant’s spouse or dependent (as defined in Code
Section 152, without regard to Sections 152(b)(1), (b)(2)
and (d)(1)(B)); loss of the Participant’s property due to
casualty (including the need to rebuild a home following damage to
a home not otherwise covered by insurance, for example, not as a
result of a natural disaster); or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond
the Participant’s control.
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An
Eligible Employee shall become a Participant in the Plan by
electing to defer a portion of his or her Compensation in
accordance with Section 3.1.
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3.1 —
Elections to Defer Compensation .
(a)
Election Period . An Eligible Employee may elect to defer
Compensation for a particular Plan Year, by filing an election, on
a form provided by the Committee, on or before the December 31
immediately preceding that Plan Year (or such earlier deadline that
the Committee may establish and announce with respect to any year).
Such election will be effective for Salary earned during the pay
period beginning on or after the following January 1 and the Bonus
paid with respect to services performed in the Plan Year beginning
on the following January 1. Notwithstanding the foregoing, an
employee who first becomes an Eligible Employee during a Plan Year
and was not previously eligible to participate in this Plan, or in
any plan required to be aggregated with this Plan under Treasury
Regulation Section 1.409A-1(c)(2)(i), may elect to defer
Compensation for such Plan Year by filing an initial election, on a
form provided by the Committee, on or before the thirtieth day
after the date the employee becomes an Eligible Employee. Such
initial election will be effective for Salary earned in such Plan
Year after the date of the initial election, and for the Bonus paid
with respect to services performed in such Plan Year after the date
of the initial election (which portion of the Bonus shall be no
greater than the total Bonus paid with respect to services
performed in such Plan Year multiplied by the ratio of the number
of days remaining in such Plan Year after the initial election over
the total number of days in such Plan Year). Any such initial
election filed by a new Eligible Employee shall be irrevocable once
made.
(b)
General Rule . The amount of Compensation which an Eligible
Employee may elect to defer is as follows:
(1) Any
percentage or dollar amount of Salary up to 50%; and/or
(2) Any
percentage or dollar amount of Bonus up to 100%.
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(c)
Changes to Deferral Election . A deferral election made by
an Eligible Employee with respect to a particular Plan Year shall
become irrevocable on the deadline for the making of the related
election (and, except for initial elections described in
Section 3.1(a) above, in no case later than December 31
immediately preceding the year with respect to which the deferral
election is made). A deferral election shall be valid only as to
Compensation for the Plan Year with respect to which the deferral
election is made. An Eligible Employee must make a new deferral
election with respect to each Plan Year for which he or she elects
to make deferrals under this Plan.
3.2 —
Investment Elections .
The
Committee shall select, from time to time, one or more mutual
funds, indices, or contracts as the Funds for determining the
amount of earnings (or losses) to be credited to the
Participant’s Account. The Committee shall notify
Participants of the Funds available from time to time. The
Committee may, at any time without notice, change the number, types
and/or particular Funds available; provided that the number and
types of Funds offered shall not be materially diminished following
a Change of Control.
In
making the designation pursuant to this Section 3.2, the
Participant may specify (on a form and in a manner approved by the
Committee) that all or any whole percentage of his Account be
deemed to be invested in one or more of the Funds. Effective as of
the end of any calendar month (or more frequently as may be
approved by the Committee), a Participant may change (on a form and
in a manner approved by the Committee) the designation made under
this Section 3.2 by filing an election, on a form provided by
the Committee, prior to the applicable deadline established by the
Committee. If a Participant fails to elect a Fund under this
Section 3.2, he or she shall be deemed to have elected the
Money Market Fund (or
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such other
Fund as may be selected by the Committee as the
“default” Fund and announced to
Participants).
Although
the Participant may designate a Fund or Funds for the deemed
investment of his Account, neither the Committee nor the Company
will have any obligation to actually invest the amounts deferred
under the Plan in any particular investment. In the event that the
Company invests any funds in any commercial investment, fund or
contract used as a Fund under the Plan, title to and beneficial
ownership of such invested funds shall at all times remain that of
the Company and no Participant, Beneficiary or any other person
shall have any interest whatsoever in such invested funds. Unless
otherwise provided by the Committee, a Participant shall not be
permitted to make separate Fund elections for his Deferral Account
and for his Company Contribution Account.
3.3 —
Alternative Election Methods .
Notwithstanding
anything else contained herein to the contrary, the Committee may
require or permit Participant elections and/or consents under this
Plan to be made by means of such electronic media as the Committee
may prescribe. Reasonable efforts will be used to process
electronic media consents and elections made under this Plan.
Notwithstanding the preceding sentence or anything else in this
Plan to the contrary, neither the Company, the Committee, nor any
other person guarantees that any consent or election will be so
processed and such persons have no obligation to ensure that the
ability to make elections is available at any particular time (for
example, and without limitation, electronic media may not be
available to Participants from time to time due to factors beyond
such persons’ control). The Committee may adopt new or
alternative rules for electronic media consents and elections as it
deems appropriate in its sole and complete discretion (including,
without limitation, eliminating any electronic media system and
re-implementing a requirement of written forms, establishing the
effective date and the
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notice date
for any type of consent or election and limiting the number of any
particular elections that may be made by a Participant during any
specified period). In order to be effective, each consent and/or
election must be made on such other rules as the Committee may
prescribe.
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The
Committee shall establish and maintain a Deferral Account for each
Participant under the Plan, which may be divided into separate
subaccounts based on the Plan Year to which the deferral of
Compensation relates. Each Participant’s Deferral Account
shall be further divided into separate subaccounts (“mutual
fund subaccounts”), each of which corresponds to a mutual
fund or contract elected by the Participant pursuant to
Section 3.2. A Participant’s Deferral Account shall be
credited as follows:
(a) As
of the first day of each month, the Committee shall credit the
mutual fund subaccounts of the Participant’s Deferral Account
with an amount equal to Salary deferred by the Participant during
each pay period ending in that month in accordance with the
Participant’s election under Section 3.2; that is, the
portion of the Participant’s deferred Salary that the
Participant has elected to be deemed to be invested in a certain
type of mutual fund shall be credited to the mutual fund subaccount
corresponding to that mutual fund;
(b) As
of the first day of the month in which the Bonus or partial Bonus
would have been paid, the Committee shall credit the mutual fund
subaccounts of the Participant’s Deferral Account with an
amount equal to the portion of the Bonus deferred by the
Participant’s election under Section 3.2; that is, the
portion of the Participant’s deferred Bonus that the
Participant has elected to be deemed to be invested in a particular
type of mutual fund shall be credited to the mutual fund subaccount
corresponding to that mutual fund; and
(c) As
of the last day of each month, each mutual fund subaccount of a
Participant’s Deferral Account shall be credited with
earnings and debited with losses in an amount equal to that
determined by
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multiplying
the balance credited to such mutual fund subaccount as of the first
day of the month (for this purpose, the amounts credited pursuant
to Sections 4.1(a) and (b) and transfers between mutual
fund subaccounts that month, and the amounts debited pursuant to
any distributions and/or transfers between mutual fund subaccounts
that month, shall be deemed credited or debited as of the first day
of the month) by the Investment Return for the corresponding Fund
selected by the Committee pursuant to Section 3.2
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