exv10w3






Exhibit 10.3




PACIFIC SUNWEAR OF CALIFORNIA, INC.

EXECUTIVE DEFERRED COMPENSATION PLAN




(As Amended and Restated May 30, 2001)




(This Version of the Plan Applies to Deferred Compensation Amounts that are Grandfathered for

Purposes of Section 409A of the Code)




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE I TITLE AND DEFINITIONS	 	 	2	 
	 
	 	 	 	 	 	 
	1.1 —

	 	Title
	 	 	2	 
	1.2 —

	 	Definitions
	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II PARTICIPATION	 	 	7	 
	 
	 	 	 	 	 	 
	2.1 —

	 	Participation
	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE III DEFERRAL ELECTIONS	 	 	8	 
	 
	 	 	 	 	 	 
	3.1 —

	 	Elections to Defer Compensation
	 	 	8	 
	3.2 —

	 	Investment Elections
	 	 	10	 
	3.3 —

	 	Alternative Election Methods
	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE IV ACCOUNTS	 	 	12	 
	 
	 	 	 	 	 	 
	4.1 —

	 	Deferral Account
	 	 	12	 
	4.2 —

	 	Company Contribution Account
	 	 	13	 
	 
	 	 	 	 	 	 
	ARTICLE V VESTING	 	 	16	 
	 
	 	 	 	 	 	 
	5.1 —

	 	Deferral Account
	 	 	16	 
	5.2 —

	 	Company Contribution Account
	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE VI DISTRIBUTIONS	 	 	18	 
	 
	 	 	 	 	 	 
	6.1 —

	 	Distribution of Deferred Compensation
	 	 	18	 
	6.2 —

	 	Inability to Locate Participant
	 	 	20	 
	6.3 —

	 	Payment by Trust
	 	 	20	 
	6.4 —

	 	Penalty and Hardship Distributions
	 	 	21	 
	6.5 —

	 	Loans
	 	 	22	 
	6.6 —

	 	Distributions on Disability
	 	 	22	 
	6.7 —

	 	Liability for Payment
	 	 	22	 
	 
	 	 	 	 	 	 
	ARTICLE VII DEATH BENEFITS	 	 	23	 
	 
	 	 	 	 	 	 
	7.1 —

	 	Death Before Termination of Employment
	 	 	23	 
	7.2 —

	 	Death After Termination of Employment
	 	 	23	 
	7.3 —

	 	Payment of Death Benefits
	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE VIII ARBITRATION	 	 	25	 
	 
	 	 	 	 	 	 
	8.1 —

	 	Arbitration
	 	 	25	 






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TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE IX ADMINISTRATION	 	 	28	 
	 
	 	 	 	 	 	 
	9.1 —
	 	Committee	 	 	28	 
	9.2 —
	 	Committee Action	 	 	28	 
	9.3 —
	 	Powers and Duties of the Committee	 	 	29	 
	9.4 —
	 	Construction and Interpretation	 	 	30	 
	9.5 —
	 	Information	 	 	30	 
	9.6 —
	 	Compensation, Expenses and Indemnity	 	 	30	 
	9.7 —
	 	Statements	 	 	31	 
	9.8 —
	 	Disputes	 	 	31	 
	 
	 	 	 	 	 	 
	ARTICLE X MISCELLANEOUS	 	 	33	 
	 
	 	 	 	 	 	 
	10.1 —
	 	Unsecured General Creditor	 	 	33	 
	10.2 —
	 	Restriction Against Assignment	 	 	33	 
	10.3 —
	 	Withholding	 	 	34	 
	10.4 —
	 	Amendment, Modification, Suspension or Termination	 	 	34	 
	10.5 —
	 	Governing Law	 	 	34	 
	10.6 —
	 	Receipt or Release	 	 	35	 
	10.7 —
	 	Payments on Behalf of Persons Under Incapacity	 	 	35	 
	10.8 —
	 	Headings, etc. Not Part of Agreement	 	 	35	 






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PACIFIC SUNWEAR OF CALIFORNIA, INC.




EXECUTIVE DEFERRED COMPENSATION PLAN




(As Amended and Restated May 30, 2001)1




     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;



     RESOLVED, that the Plan be, and it hereby is, amended and restated in its entirety this 30th
day of May, 2001, as follows:





 




			
	1	 	This version of the Plan only applies to deferrals of
compensation that were earned and vested prior to January 1, 2005 in accordance
with the provisions of Article V and any other provisions hereof.




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ARTICLE I




TITLE AND DEFINITIONS




1.1 — Title.




     The Plan shall be known as the Pacific Sunwear of California, Inc. Executive Deferred
Compensation Plan.



1.2 — Definitions.




     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 personal representative to be appointed, but not to exceed 180 days after the
Participant’s death), then



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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. For Plan Years beginning on or before January 19, 1999,
“Bonus” shall be determined after reduction for salary deferral contributions to any plans
qualified under Section 401(k) or 125 of the Code.



     “Change of Control” shall mean:




     (i) Approval by the shareholders of the Corporation of the dissolution or liquidation
of the Corporation;




     (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



3









 







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.



     “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.



4









 





     “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.



     “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.



     “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.



5









 





     “Payment Eligibility Date” shall mean the date as soon as administratively practical following
the date a Participant terminates employment, retires after attaining Early or Normal Retirement
Age, or dies.



     “Plan” shall mean the Pacific Sunwear of California, Inc. Executive Deferred Compensation Plan
set forth herein, now in effect, or as amended from time to time.



     “Plan Year” shall mean the 12 consecutive month period beginning on January 1, provided,
however, that the first Plan Year shall be a short year beginning on March 1, 1995 and ending on
December 31, 1995.



     “Salary” or “Salaries” shall mean the Participant’s base salary earned as an employee of the
Company. For Plan Years beginning on or before January 19, 1999, “Salary” shall be determined
after reduction for salary deferral contributions to any plans qualified under Section 401(k) or
125 of the Code.



     “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.



6









 





ARTICLE II




PARTICIPATION




2.1 — Participation.




     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.



7









 





ARTICLE III




DEFERRAL ELECTIONS




3.1 — Elections to Defer Compensation.




     (a) Election Period.




     (1) Current Employees. Each current employee who is an Eligible Employee may
elect to defer Compensation by filing with the Committee an election that conforms to the
requirements of this Section 3.1, on a form provided by the Committee, no later than
February 28, 1995. Such election will be effective for Salary earned during the period
between March 1, 1995 and December 31, 1995 and for the Bonus earned in 1995.




     (2) Other Employees. Each other employee who becomes an Eligible Employee
after March 1, 1995, or any Eligible Employee who fails to elect to defer Compensation when
first eligible, and any Eligible Employee who has terminated a prior Compensation deferral
election may elect to defer Compensation, by filing an election, on a form provided by the
Committee, on or before December 1. 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.



     (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 90%; and/or




     (2) Any percentage or dollar amount of Bonus up to 100%;


provided, however, that no election shall be effective to reduce the Compensation paid to an
employee for a calendar year to an amount which is less than the sum of: (i) the amount that the
Company is required to


8









 






withhold from such employee’s Compensation for such calendar year for purposes of federal, state
and local (if any) income and employment tax (including FICA withholding), and (ii) the amount that
the Company is required to withhold from such employee’s Compensation for such calendar year for
contributions to any employee benefit plan (other than the Plan).




     (c) Minimum Deferrals. For each year during which an Eligible Employee is a
Participant, the minimum amount that may be elected under Section 3.1(b) is $2,500.



     (d) Duration of Deferral Election. Any deferral election made under paragraph (a) of
this Section 3.1 shall remain in effect and be irrevocable, notwithstanding any change in the
Participant’s Salary or Bonus, until changed or terminated in accordance with the terms of this
paragraph (d); provided, however, that such election shall terminate for any Plan Year for which
the Participant is not an Eligible Employee. Subject to the minimum deferral requirement of
Section 3.1(c) and the limitations of Section 3.1(b), a Participant shall file a new election each
year with the Committee by December 31 (or such earlier deadline that the Committee may establish
and announce with respect to any year), for Compensation earned during the pay period beginning
after January 1 of the immediately following calendar year, and may increase, decrease or terminate
his or her Salary and/or Bonus deferral election, in accordance with the terms of this Section 3.1.



9









 





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 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.



10









 





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 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.



11









 





ARTICLE IV




ACCOUNTS




4.1 — Deferral Account.




     The Committee shall establish and maintain a Deferral Account for each Participant under the
Plan. 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 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



12









 







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.



     (d) Notwithstanding anything to the contrary in this Section 4.1, if the Committee permits
Participants to change the Funds elected by Participants pursuant to Section 3.2 more frequently
than on a monthly basis, credits pursuant to this Section 4.1 and pursuant to Section 4.2(b) shall
also be permitted to be made more frequently than effective as of the first or last day of each
month, in which case transfers between mutual fund subaccounts during the month, amounts debited
pursuant to any distributions and other debits and credits shall also be permitted to be made more
frequently than on a monthly basis (and, for purposes of clarity and without limiting the
generality of the foregoing, credits and debits may be made as of the date the amount would have
otherwise been paid, is distributed from the Plan, or the date on which a transfer occurs, as
applicable).



4.2 — Company Contribution Account.




     The Committee shall establish and maintain a Company Contribution Account for each Participant
under the Plan. Each Participant’s Company Contribution Account shall be further divided into
separate mutual fund subaccounts corresponding to the mutual fund or contract elected by the
Participant pursuant to Section 3.2. A Participant’s Company Contribution Account shall be
credited as follows:



     (a) As of the first day of each Plan Year following a bonus declaration, if any, the Committee
shall credit the mutual fund subaccounts of the Participant’s Company Contribution Account with an
amount equal to the Company Contribution Amount, if any, applicable to that Participant; that is,
the portion of the Company Contribution Amount, if any, which the Participant elected to be deemed
to be invested in a certain type of mutual fund shall be credited to the corresponding mutual fund
subaccount. A Participant’s Company Contribution Amount for any Plan Year shall be the lesser of
(i) 50% of the



13









 







Salary deferred by the Participant for the Plan Year, or (ii) the Participant’s share of the
pool of Company Contributions for that Plan Year. The pool of Company Contributions for any Plan
Year is an amount to be determined by the Board. Such pool is allocated among Participants
according to their proportional Salary amounts (before reduction for contributions to the Plan) for
the Plan Year. If the amount of the pool allocated to any Participant exceeds 50% of the Salary
deferred by the Participant for the Plan Year, then the excess shall be reallocated among the Plan
Participants to whom the allocation did not exceed 50% of the Salary deferred for the Plan Year;
such reallocation shall be repeated (if necessary) until either the entire pool is allocated for
the Plan Year, or, until each Participant has been allocated 50% of the Salary deferred by the
Participant for the Plan Year. Any amount of the pool which is not allocated after each
Participant is allocated 50% of the salary deferred for the Plan Year shall not be allocated;



     (b) As of the last day of each month, each mutual fund subaccount of a Participant’s Company
Contribution Account shall be credited with earnings or losses in an amount equal to that
determined by 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 4.2(a) and (c) and
transfers between mutual fund subaccounts that month, and the amounts debited pursuant Section
4.2(c) and 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; and,



     (c) As of the first day of each month, forfeitures that occurred during the preceding month
shall be reallocated among the Plan Participants according to their proportional Salary amounts
(before reduction for contributions to the Plan) for the Plan Year.



14









 





     (d) From time-to-time in its sole discretion, the Board may provide that additional Company
Contribution Amounts be credited to some or all Participants, according to the terms and conditions
determined by the Board.



15









 





ARTICLE V




VESTING




5.1 —  Deferral Account.




     A Participant’s Deferral Account shall be 100% vested at all times.



5.2 —  Company Contribution Account.




     (a) The portion of each Participant’s Company Contribution Account attributable to the Company
Contribution Amount and forfeitures allocated to the Participant for any Plan Year shall become
nonforfeitable at the rate of 25% for each year of vesting service completed by the Participant.
The year of vesting service begins on January 1 of the year for which the Company Contribution
Amount was made, and a year of vesting service is completed only if the Participant remains an
employee of the Company through December 31 of a year. The Company Contribution Accounts
attributable to each years’ Company Contribution Amount and forfeitures shall vest separately
according to the four-year schedule. The Committee shall determine the extent to which the
Investment Return is attributable to the Company Contribution Amount and forfeitures allocated for
any Plan Year.



     (b) When a Participant’s employment terminates (other than a termination of employment due to
a Disability or death, or upon or following the Participant’s attainment of Early Retirement Age or
Normal Retirement Age), the portion of his or her Company Contribution Account which is not vested
shall immediately be forever forfeited, and the Company shall have no obligation to the Participant
(or Beneficiary) with respect to such forfeited amount. Such forfeited amounts will be reallocated
among Participants according to their proportional Salary amounts (before reduction for
contributions to the Plan) for the Plan Year, as set forth in Section 4.2(c). Amounts attributable
to forfeitures which are reallocated to Participants shall become vested at the same rate as the
Company Contribution Amounts made for the year in which the forfeitures occurred.



16









 





     (c) A Participant shall become fully vested in the amounts credited to his or her Company
Contribution Account: if (i) his or her employment terminates due to his or her Disability or
death, (ii) his or her employment terminates upon or following the Participant’s attainment of
Early Retirement Age or Normal Retirement Age, or (iii) a Change of Control occurs.



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ARTICLE
VI

DISTRIBUTIONS




6.1 — Distribution of Deferred Compensation.




          (a) Initial Election Period. For purposes of this Section 6.1, a Participant’s
“Initial Election Period” shall mean the 30-day period following the later of March 1, 1995 or the
Eligible Employee’s date of hire. During such Initial Election Period, the Participant may elect,
on the form provided by the Committee to defer Compensation under Section 3.1, to: (1) receive
in-service distributions, as described in Section 6.1(b), or (2) receive one of the optional forms
of payment described in Section 6.1(d).




          (b) In-Service Distributions. Pursuant to Section 6.1(a), a Participant may elect to
receive one or more in-service distributions from his Account without a penalty. In-Service
Distributions shall be paid after the Eligible Employee has been a Plan Participant for at least
three years as elected by the Participant during his Initial Election Period.




     A Participant may elect to defer (such deferral period to be of one or more years) or cancel
any in-service distribution(s), provided that such election is made at least one year prior to the
beginning of the calendar year in which such distribution(s) was scheduled to be made. In the
event of a deferral, a Participant may elect to defer or cancel the deferred in-service
distribution(s) in the same manner, provided that such election is made at least one year prior to
the beginning of the calendar year in which such deferred distribution(s) were scheduled to be
made, and provided further that no Participant may make more than two deferral (and/or deferral of
deferred) distribution elections under this paragraph.



          (c) Termination of Employment. The amount credited to a Participant’s Deferral Account
and the vested portion of the amount credited to his or her Company Contribution Account shall be
paid to the Participant (or, in the case of his or her death, Beneficiary) in the form of a cash
lump sum



18









 






payment as soon as administratively practical following his or her termination of employment,
except as described herein:





     (1) If a Participant terminates employment prior to his Early Retirement Age, a
Participant may request that his or her distribution be paid in three substantially equal
annual installments. The Committee shall, in its sole discretion, determine whether such
request shall be granted. In the event such request is granted, the Participant’s Account
will not be credited with any gains or losses after the first installment has been paid;




     (2) If a Participant retires after Early or Normal Retirement Age, he will receive the
optional form of payment he elected during his Initial Election Period, as described in
Section 6.1(a), or the optional form of payment he elected pursuant to Section 6.1(d).



     (d) Optional Forms of Payment. A Participant who terminates employment after Early or
Normal Retirement Age may elect one of the following optional forms of payment provided that his or
her election is filed with the Committee at least one year prior to his or her Early or Normal
Retirement Date:




     (1) A lump sum payment to be paid on or as soon as administratively practical after the
date designated by the Participant in his or her election, or




     (2) Substantially equal annual installments over two to fifteen years, as elected by
the Participant, to begin on or as soon as administratively practical after a date
designated by the Participant in his or her election.



     (e) The unpaid portion of a Participant’s Accounts shall continue to be credited monthly (or
more frequently) with earnings pursuant to Section 4.1 of the Plan until all amounts credited to
his or her Accounts under the Plan have been distributed. If installment payments are made under
the Plan, the



19









 







Committee shall adjust the amount of the installments as it deems appropriate to take into
account investment gains or losses which occur during the period of installment payments are made.
Such adjustments shall be made so that the total payments to the Participant equal the
Participant’s Accounts, adjusted for investment gains and losses.



     (f) In the event of a Change of Control, the amounts credited to a Participant’s Account
shall, notwithstanding anything else contained herein to the contrary, be paid to the Participant
as soon as administratively practical after the Change of Control; unless prior to the Change of
Control (i) the Board determines that there shall be no payout of the amounts credited to
Participants’ Accounts, (ii) the Board provides for the continuation of the Plan following the
Change of Control, and (iii) the successor to the Corporation (if any) following the Change of
Control agrees in writing to assume the Company’s obligations under or in respect of the Plan.



6.2 — Inability to Locate Participant.




     In the event that the Committee is unable to locate a Participant or Beneficiary within two
years following the Participant’s Payment Eligibility Date, the amount allocated to the
Participant’s Deferral Account and Company Contribution Account shall be forfeited. If, after such
forfeiture, the Participant or Beneficiary later claims such benefit, such benefit shall be
reinstated without interest or earnings, provided that Section 6.2 shall still apply.



6.3 — Payment by Trust.




     The Company may cause the payment of benefits under the Plan to be made in whole or in part by
the Trustee of the Pacific Sunwear of California, Inc. Trust Agreement for Executive Deferred
Compensation Plan (the “Trust”). The Committee shall direct the Trustee to pay the Participant’s
or Beneficiary’s benefit at the time and in the amount described in Section 6.1, 6.4 or Article VII
to the



20









 







extent of the amounts allocated to Participant. In the event the amounts allocated to the
Participant are not sufficient to provide the full amount of benefit payable to the Participant,
the Company shall pay for the remainder of such benefit at the time set forth in Section 6.1.



6.4 — Penalty and Hardship Distributions.




     Notwithstanding anything in this Article VI, the Plan shall permit an in-service distribution
in either of the following events:



     (a) At any time, a Participant, at his sole discretion, may withdraw up to 100% of his vested
Account balance subject to a 10% penalty of the amount withdrawn. The 10% penalty shall be
permanently and irrevocably forfeited. The Company will pay the net amount as soon as
administratively practical after it receives the Participant’s withdrawal election. The forfeited
amount shall be the property of the Company.



     (b) A Participant may receive a hardship distribution, subject to the approval of the
Committee, if the Participant has a financial hardship. A hardship exists if the Participant
demonstrates to the satisfaction of the Committee that he has suffered a severe financial hardship
which is unforeseeable, and that he does not have other assets sufficient to satisfy the financial
need created by the hardship. A hardship includes, but is not limited to, a financial hardship as
defined in the Corporation’s Employee Savings Plan. The determination of whether a Participant has
suffered a hardship shall be made by the Committee in its sole discretion. A hardship
distribution, if made, shall be in an amount no greater than the amount needed to satisfy the
hardship, as determined by the Committee. The Company will pay the amount of the hardship
withdrawal as soon as administratively practical after it is approved by the Committee.



21









 





6.5 —  Loans.




     There shall be no loans permitted under the Plan.



6.6 —  Distributions on Disability.




     If a Participant becomes totally Disabled, such Participant’s eligibility and participation in
the Plan will continue uninterrupted. A Participant may, during his period of total Disability,
cease to make contributions to his Deferral Account until he returns to work. In the event the
Participant terminates employment while totally Disabled, such Participant will receive a lump sum
distribution of his Account as soon as administratively practical following such termination of
employment; provided, however, that such Participant may request a distribution pursuant to Section
6.1(c)(1).



6.7 — Liability for Payment .




     Each entity within the Company shall be solely liable for the payment of deferred Compensation
under the Plan (together with earnings) with respect to a Participant to the extent that such
deferred Compensation would have otherwise been payable to the Participant by that entity.




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ARTICLE VII




DEATH BENEFITS




7.1 — Death Before Termination of Employment.




     If a Participant dies on or before December 31, 2008 and at any time before he terminates
employment and his death is not attributable to suicide committed within two years of commencement
of participation hereunder, there shall be added to the Participant’s Account and paid in
accordance with Section 7.3 an amount equal to the lesser of: (i) twice the actual
deferrals of Salary and/or Bonus made by the Participant under Section 4.1 hereof (exclusive of any
earnings thereon), or (ii) $3,000,000 (three million dollars). For purposes of clarity, this
enhanced death benefit shall not apply as to any Participant whose death occurs after December 31,
2008.



7.2 — Death After Termination of Employment.




     If a Participant dies at any time after termination of employment and before his Account has
been paid in full (either in a lump sum or installment payments), his Beneficiary shall receive the
balance of the Participant’s Account as of the date of death in accordance with Section 7.3, and
shall not be entitled to the benefits described in Section 7.1.



7.3 — Payment of Death Benefits.




     The death benefit payable pursuant to Section 7.1 shall be paid in three substantially equal
annual installments, commencing as soon as administratively practical. In addition, interest on
the Account, to be paid with each installment, shall be computed in the following manner:



     (a) Subject to Section 10.1, the Company may, in its discretion, segregate a portion of its
general assets equal to the Account balance and invest such portion in one or more short term,
fixed income investment(s) such as an interest bearing bank account or a money market account, in
which event



23









 







the interest credited with respect to the account shall be equal to the actual yield on the
Company’s account.



     (b) If subsection (a) is not applicable, interest shall be credited at the prime rate of
interest as reported in the national financial press.



     The death benefit payable pursuant to Section 7.2 shall be paid to the Participant’s
Beneficiary according to the payment election made by the Participant.



     Notwithstanding the foregoing, the Committee may, in its sole and absolute discretion and at
the request of the Beneficiary, accelerate any such payments.



24









 





ARTICLE VIII




ARBITRATION




8.1 — Arbitration.




     (a) A Participant or, following the Participant’s death, a Beneficiary (collectively referred
to in this section as “Claimant”) may, if he desires, submit any claim for payment under the Plan
or any dispute regarding the interpretation of the Plan to arbitration. This right to select
arbitration shall be solely that of the Claimant, and the Claimant may decide whether or not to
arbitrate in his discretion. The “right to select arbitration” does not impose on the Claimant a
requirement to submit a dispute for arbitration. The Claimant may, in lieu of arbitration, bring
an action in appropriate civil court. The Claimant retains the right to select arbitration, even
if a civil action (including, without limitation, an action for declaratory relief) is brought by
the Company or any other fiduciary of the Plan prior to the commencement of arbitration. If
arbitration is selected by the Claimant after a civil action concerning the Claimant’s dispute has
been brought by a person other than the Claimant, the Company, the trustee of any grantor trust
that holds assets for the purpose of making benefit payments under the Plan (“Trustee”), and the
Claimant shall take such actions as are necessary or appropriate, including dismissal of the civil
action, so that the arbitration can be timely heard. Once arbitration is commenced, it may not be
discontinued without the unanimous consent of all parties to the arbitration. During the lifetime
of the Participant only he can use the arbitration procedure set forth in this section.



     (b) Any claim for arbitration may be submitted as follows: if the Claimant disagrees with an
interpretation of the Plan by the Company or any fiduciary of the Plan, or disagrees with the
calculation of his benefit under the Plan, such claim may be filed in writing with an arbitrator of
the Claimant’s choice who is selected by the method described in the next four sentences. The
first step of the selection shall consist of the Claimant submitting in writing a list of five
potential arbitrators to the Company and to the Trustee. Each of the five arbitrators must be
either (1) a member of the National Academy of Arbitrators



25









 







located in the state of the Claimant’s principal residence or (2) a retired California
Superior Court or Appellate Court judge. Within one week after receipt of the list, the Trustee
and the Company shall jointly select one of the five arbitrators as the arbitrator of the dispute
in question. If the Trustee and Company fail to select an arbitrator in a timely manner (including
failure to select an arbitrator by reason of disagreement between the Trustee and the Company as to
the arbitrator to be selected), the Claimant then shall designate one of the five arbitrators as
the arbitrator of the dispute in question.



     (c) The arbitration hearing shall be held within seven days (or as soon thereafter as
possible) after the selection of the arbitrator. No continuance of said hearing shall be allowed
without the mutual consent of the Claimant, the Trustee, and the Company. Absence from or
nonparticipation at the hearing by any party shall not prevent the issuance of an award. Hearing
procedures that will expedite the hearing may be ordered at the arbitrator’s discretion, and the
arbitrator may close the hearing in his sole discretion when he decides he has heard sufficient
evidence to justify issuance of an award.



     (d) The arbitrator’s award shall be rendered as expeditiously as possible and in no event
later than one week after the close of the hearing. In the event the arbitrator finds that the
Claimant is entitled to the benefits he claimed, the arbitrator shall order the Company and/or the
Trustee to pay such benefits, in the amounts and at such time as the arbitrator determines. The
obligation of the Trustee to pay such benefits shall not, however, exceed the assets of the trust,
and the Company shall be jointly and severally liable for any amount that the Trustee is ordered to
pay. The award of the arbitrator shall be final and binding on the parties. The Company shall
thereupon pay the Claimant immediately the amount that the arbitrator orders to be paid in the
manner described in the award. The award may be enforced in any appropriate court as soon as
possible after its rendition. If any action is brought to confirm the award, no appeal shall be
taken by any party from any decision rendered in such action.



26









 





     (e) If the arbitrator determines either that the Claimant is entitled to the claimed benefits
or that the claim by the Claimant was made in good faith, the arbitrator shall direct the Company
to pay to the Claimant, and Company agrees to pay to the Claimant in accordance with such order, an
amount equal to the Claimant’s expenses in pursuing the claim, including attorneys’ fees.



27









 





ARTICLE IX




ADMINISTRATION




9.1 — Committee.




     A committee shall be appointed by, and serve at the pleasure of, the Board of Directors. The
number of members comprising the Committee shall be determined by the Board which may from time to
time vary the number of members. A member of the Committee may resign by delivering a written
notice of resignation to the Board. The Board may remove any member by delivering a certified copy
of its resolution of removal to such member. Vacancies in the membership of the Committee shall be
filled promptly by the Board.



9.2 — Committee Action.




     The Committee shall act at meetings by affirmative vote of a majority of the members of the
Committee. Any action permitted to be taken at a meeting may be taken without a meeting if, prior
to such action, a written consent to the action is signed by all members of the Committee and such
written consent is filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely to himself or herself as a
Participant. The Chairman or any other member or members of the Committee designated by the
Chairman may execute any certificate or other written direction on behalf of the Committee.



28









 





9.3 — Powers and Duties of the Committee.




     (a) The Committee, on behalf of the Participants and their Beneficiaries, shall enforce the
Plan in accordance with its terms, shall be charged with the general administration of the Plan,
and shall have all powers necessary to accomplish its purposes, including, but not by way of
limitation, the following:



          (1) To select the funds or contracts to be the Funds in accordance with Section 3.2
hereof;




          (2) To construe and interpret the terms and provisions of the Plan;




          (3) To compute and certify to the amount and kind of benefits payable to Participants
and their Beneficiaries;




          (4) To maintain all records that may be necessary for the administration of the Plan;




          (5) To provide for the disclosure of all information and the filing or provision of all
reports and statements to Participants, Beneficiaries or governmental agencies as shall be
required by law;




          (6) To make and publish such rules for the regulation of the Plan and procedures for
the administration of the Plan as are not inconsistent with the terms hereof; and




          (7) To appoint a plan administrator or any other agent, and to delegate to them such
powers and duties in connection with the administration of the Plan as the Committee may
from time to time prescribe.




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9.4 — Construction and Interpretation.




     The Committee shall have full discretion to construe and interpret the terms and provisions of
the Plan, which interpretation or construction shall be final and binding on all parties, including
but not limited to the Company and any Participant or Beneficiary. The Committee shall administer
such terms and provisions in a uniform and nondiscriminatory manner and in full accordance with any
and all laws applicable to the Plan.



9.5 — Information.




     To enable the Committee to perform its functions, the Company shall supply full and timely
information to the Committee on all matters relating to the Compensation of all Participants, their
death or other cause of termination, and such other pertinent facts as the Committee may require.



9.6 — Compensation, Expenses and Indemnity.




     (a) The members of the Committee shall serve without compensation for their services
hereunder.



     (b) The Committee is authorized at the expense of the Company to employ such legal counsel as
it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in
connection with the administration of the Plan shall be paid by the Company.



     (c) To the extent permitted by applicable state law, the Company shall indemnify and save
harmless the Committee and each member thereof, the Board of Directors and any delegate of the
Committee who is an employee of the Company against any and all expenses, liabilities and claims,
including legal fees to defend against such liabilities and claims arising out of their discharge
in good faith of responsibilities under or incident to the Plan, other than expenses and
liabilities arising out of



30









 







willful misconduct. This indemnity shall not preclude such further indemnities as may be
available under insurance purchased by the Company or provided by the Company under any bylaw,
agreement or otherwise, as such indemnities are permitted under state law.



9.7 — Statements.




     Under procedures established by the Committee, a Participant shall receive a statement with
respect to such Participant’s Accounts on a regular basis, but no less frequently than quarterly.
In addition, the Committee may make Account information available to Participants over the
internet. However, neither the Company, the Committee, nor any other person is required to provide
such information over the internet and such persons do not guarantee the accuracy of any of such
information provided over the internet.



9.8 — Disputes .




     (a) A person who believes that he or she is being denied a benefit to which he or she is
entitled under the Plan (hereinafter referred to as “Claimant”) may file a written request for such
benefit with the Committee, setting forth his or her claim. The request must be addressed to the
Committee at the Corporation’s principal place of business.



     (b) Upon receipt of a claim, the Committee shall advise the Claimant that a reply will be
forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The
Committee may, however, extend the reply period for an additional ninety (90) days for special
circumstances.



     If the claim is denied in whole or in part, the Committee shall inform the Claimant in
writing, using language calculated to be understood by the Claimant, setting forth: (1) the
specific reason or reasons for such denial; (2) the specific reference to pertinent provisions of
the Plan on which such denial



31









 







is based; (3) a description of any additional material or information necessary for the
Claimant to perfect his or her claim and an explanation why such material or such information is
necessary; (4) appropriate information as to the steps to be taken if the Claimant wishes to submit
the claim for review; and (5) the time limits for requesting a review under subsection (c).



     (c) Within sixty (60) days after the receipt by the Claimant of the written opinion described
above, the Claimant may request in writing that the Committee review the determination. Such
request must be addressed to the Committee, at the Corporation’s principal place of business. The
Claimant or his or her duly authorized representative may, but need not, review the pertinent
documents and submit issues and comments in writing for consideration by the Committee.



     (d) Within sixty (60) days after the Committee’s receipt of a request for review, after
considering all materials presented by the Claimant, the Committee will inform the Claimant in
writing, in a manner calculated to be understood by the Claimant, of its decision setting forth the
specific reasons for the decision and containing specific references to the pertinent provisions of
the Plan on which the decision is based. If special circumstances require that the sixty (60) day
time period be extended, the Committee will so notify the Claimant and will render the decision as
soon as possible, but no later than one hundred twenty (120) days after receipt of the request for
review.



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ARTICLE X




MISCELLANEOUS




10.1 — Unsecured General Creditor.




     Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or
equitable rights, claims, or interest in any specific property or assets of the Company. No assets
of the Company shall be held under any trust, or held in any way as collateral security for the
fulfilling of the obligations of the Company under the Plan. Any and all of the Company’s assets
shall be, and remain, the general unpledged, unrestricted assets of the Company. The obligation’s
of each entity within the Company under the Plan shall be merely that of an unfunded and unsecured
promise of that entity to pay money in the future, and the rights of the Participants and
Beneficiaries shall be no greater than those of unsecured general creditors. It is the intention
of the Company that the Plan be unfunded for purposes of the Internal Revenue Code and for purposes
of Title I of ERISA.



10.2 — Restriction Against Assignment.




     The Company shall pay all amounts payable hereunder only to the person or persons designated
by the Plan and not to any other person or corporation. No part of a Participant’s Accounts shall
be liable for the debts, contracts, or engagements of any Participant, his or her Beneficiary, or
successors in interest, nor shall a Participant’s Accounts be subject to execution by levy,
attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person
have any right to alienate, anticipate, commute, pledge, encumber, or assign any benefits or
payments hereunder in any manner whatsoever. If any Participant, Beneficiary or successor in
interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge any distribution or payment from the Plan, voluntarily or involuntarily,
the Committee, in its discretion, may cancel such distribution or payment (or



33









 




any part thereof) to or for the benefit of such Participant, Beneficiary or successor in
interest in such manner as the Committee shall direct.




10.3 — Withholding.




     There shall be deducted from each payment made under the Plan or any other compensation
payable to the Participant (or Beneficiary) all taxes which are required to be withheld by the
Company in respect to such payment or the Plan. The Company shall have the right to reduce any
payment (or compensation) by the amount of cash sufficient to provide the amount of said taxes.



10.4 — Amendment, Modification, Suspension or Termination.




     The Corporation may amend, modify, suspend or terminate the Plan in whole or in part, except
that (a) no amendment, modification, suspension or termination shall have any retroactive effect to
reduce any amounts allocated to a Participant’s Accounts, and (b) Section 8.1 may not be amended
with respect to any Participant or Beneficiary following the date the Participant or Beneficiary
makes a claim for benefits under the Plan. In the event that the Plan is terminated, the amounts
credited to a Participant’s Accounts (including any previously unvested amounts) shall be
distributed to the Participant or, in the event of his or her death, his or her Beneficiary in a
lump sum within thirty (30) days following the date of termination.



10.5 — Governing Law.




     The Plan shall be construed, governed and administered in accordance with applicable federal
law and, to the extent not preempted by such federal law, the laws of the State of California. If
any provision of this instrument shall be held by a court of competent jurisdiction to be invalid
or unenforceable, the remaining provisions hereof shall continue to be fully effective.



34









 





10.6 — Receipt or Release.




     Any payment to a Participant or the Participant’s Beneficiary in accordance with the
provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against
the Committee, the Company and the Trustee. The Committee may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such
effect.



10.7 — Payments on Behalf of Persons Under Incapacity.




     In the event that any amount becomes payable under the Plan to a person who, in the sole
judgement of the Committee, is considered by reason of physical or mental condition to be unable to
give a valid receipt therefore, the Committee may direct that such payment be made to any person
found by the Committee, in its sole judgement, to have assumed the care of such person. Any
payment made pursuant to such determination shall constitute a full release and discharge of the
Committee and the Company.



10.8 — Headings, etc. Not Part of Agreement.




     Headings and subheadings in the Plan are inserted for convenience of reference only and are
not to be considered in the construction of the provisions hereof.



     IN WITNESS WHEREOF, the Corporation has caused this document to be executed by its duly
authorized officer on this 30th day of May, 2001.



	 	 	 	 	 
	 	PACIFIC SUNWEAR OF CALIFORNIA, INC.

 	 
	 	By:  	 	 
	 	 	Its:
	 
	 	 	 	 
	 




35