Document:

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Exhibit 10.1

DESCRIPTION OF FISCAL 2005

CASH BONUS ARRANGEMENTS

Under the Pacific Sunwear 1999 Stock Award Plan, the Company may grant cash performance awards. In
2005, the Company established criteria for performance-based bonus awards under the 1999 Stock
Award Plan for the following executive officers:

	 	 	 
	Name	 	Title
	Greg H. Weaver

	 	Chairman of the Board and Chief Executive Officer
	Seth R. Johnson

	 	Chief Operating Officer
	Timothy M. Harmon

	 	President, Chief Merchandising Officer
	Gerald M. Chaney

	 	Senior Vice President, Chief Financial Officer
	Thomas Kennedy

	 	Division President, PacSun

In addition, the Company established a cash bonus plan for other officers and certain other
employees. In each case, all or part of the bonus awards payable are based on the achievement of
net income goals for the Company.

The Compensation Committee established the performance goals for each of the executive officers,
and recommended to the Board of Directors for its approval the performance goals for other officers
and employees. This committee also established the formulae for purposes of determining the actual
award (if any) payable to such officers and employees assuming the performance goals are achieved.

The amount of the bonus payable to each of Mr. Weaver and Mr. Johnson is based solely on the
Company’s level of net income for fiscal 2005. For each of the other participants, the primary
portion of the bonus payable is based on the Company’s net income for fiscal 2005 and the remaining
portion is discretionary based on individual performance.exv10w2

 

Exhibit 10.2

PACIFIC SUNWEAR OF CALIFORNIA, INC.

1999 STOCK AWARD PLAN

[YEAR] PERFORMANCE-BASED BONUS AWARD AGREEMENT

     THIS [YEAR] PERFORMANCE-BASED BONUS AWARD AGREEMENT (this “Agreement”) is entered into by and
between PACIFIC SUNWEAR OF CALIFORNIA, INC., a California corporation (the “Company”), and
[Executive Name] (the “Participant”) as of this ___day of ______, ___.

W I T N E S S E T H

     WHEREAS, the Company has adopted the Pacific Sunwear of California, Inc. 1999 Stock Award
Plan, as amended and restated March 27, 2003 (the “Plan”); and

     WHEREAS, the Company’s Compensation Committee (the “Committee”) has determined that the
Participant is eligible to be granted a Performance-Based Award pursuant to Section 5.2 of the Plan
and has granted the Participant a Performance-Based Award upon the terms and conditions set forth
herein and in the Plan (the “Award”); and

     WHEREAS, the Award has been granted to the Participant in addition to, and not in lieu of, any
other form of compensation otherwise payable or to be paid to the Participant;

     NOW, THEREFORE, in consideration of the mutual promises and covenants made herein and the
mutual benefits to be derived herefrom, the parties agree as follows:

	1.  	Capitalized Terms. Capitalized terms used herein and not otherwise defined herein
shall have the meaning assigned to such terms in the Plan.
	 
	2.  	Grant of Award. This Agreement evidences the Company’s grant to the Participant,
subject to the terms and conditions hereof and of the Plan, of an Award with respect to the
Company’s ___fiscal year (the “Performance Period”). The bonus payable in respect of the
Award will be calculated under Appendix A hereto if the Performance Target set forth therein
(minimum Net Income, as defined in the Plan, of the Company for the Performance Period) is
achieved. The bonus payable in respect of the Award will increase, as set forth in Appendix A
hereto, for certain levels of Net Income of the Company for the Performance Period in excess
of the minimum Net Income of the Company for that period. No bonus will be payable if such
minimum Net Income of the Company is not achieved for the Performance Period. For purposes of
determining the Participant’s bonus in accordance with Appendix A, the Participant’s “Target
Bonus” is $___. The maximum amount that will be paid pursuant to the Award shall not
exceed the limitation contained in Section 5.2(c) of the Plan.
	 
	3.  	Forfeiture of Award; Early Termination; Adjustment. Should the Participant’s
employment by the Company terminate for any reason prior to the last day of the Performance
Period, the Bonus payable in respect of the Award shall equal: (1) the amount that would
otherwise have been paid in respect of the Award had the Participant

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	  	remained an employee of the Company throughout the Performance Period, multiplied by (2) a
fraction of the numerator of which is the total number of days in the Performance Period
that the Participant was as employee of the Company and the denominator of which is 365.
Such amount shall otherwise be paid at the same time and on the same terms and conditions as
though the Participant’s employment by the Company had not terminated.
	 
	4.  	Continuance of Employment. Notwithstanding any commitment of the Participant to
remain in the service or employ of the Company (or any affiliate), the Award shall not
confer upon the Participant any right with respect to the continuation of his or her service
or employment by the Company (or any affiliate) or alter or interfere in any way with the
right of the Company (or any affiliate) at any time to terminate such service or employment or
to change the compensation of the Participant or other terms of his or her service or
employment; and neither shall these terms alter or in any way affect the rights of the Company
(or any affiliate) or the Participant under any other written employment agreement between
them, except as expressly provided herein.
	 
	5.  	Timing and Manner of Payment. Subject to any changes imposed by or allowed under the
provisions of the Plan, benefits with respect to the Award shall be calculated pursuant to
Section 2 and Appendix A. The Committee shall determine, in accordance with such provisions
and after the end of the Performance Period, the specific amount to the paid to the
Participant with respect to this Award. No payment shall be made with respect to the Award
unless and until the Committee has certified, by resolution or other appropriate action in
writing, that the amount thereof has been accurately determined in accordance with the terms,
conditions and limits of the Award and that the applicable Performance Target was, in fact,
satisfied. Any amount payable with respect to the Award shall be paid in cash as soon as
practicable following such certification by the Committee. No interest or other earnings
shall be paid on or accrue with respect to such amount for the period between the end of the
Performance Period and the date of actual payment.
	 
	6.  	Adjustments. To preserve the intended incentives and benefits of the Award, the
Committee shall (i) adjust the Performance Targets applicable to the Award to reflect any
material change in corporate capitalization, any material corporate transaction (such as a
reorganization, combination, separation, merger, acquisition, or any combination of the
foregoing), or any complete or partial liquidation of the Company, (ii) calculate Performance
Targets without regard for any change in accounting policies or practices affecting the
Company and/or the Business Criteria or the Performance Targets, and (iii) adjust Business
Criteria and Performance Targets or other features of an Award to reflect the effects of any
special charges to the Company’s earnings; in each case only to the extent consistent with the
requirements of Section 162(m) of the Code to qualify the Award as “qualified
performance-based compensation” thereunder.
	 
	7.  	Tax Withholding. The Company shall reduce any amount otherwise payable with respect
to the Award by the amount of any federal, state and/or local income and/or employment tax
withholding that may be required with respect to such payment.
	 
	8.  	Dissolution of the Company, Certain Mergers. In the event of the dissolution of the
Company or a merger, reorganization or other event in which the Company ceases to be a

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	  	publicly-traded company in respect of its Common Stock, the Committee may terminate the
Performance Period as of or immediately prior to such event and pro-rate the Target Bonus
and Performance Targets by multiplying each relevant amount by a fraction, the numerator of
which is the number of days in the shortened Performance Period and the denominator of which
is 365.
	 
	9.  	Death of the Participant. If the Participant dies prior to receiving any payment due
with respect to the Award (other than an amount deferred under a Company deferred compensation
program, the payment of which shall be governed by the terms of such program), such payment
shall be made to his designated beneficiary. A Participant’s designated beneficiary shall be
the beneficiary designated by the Participant, in a manner determined by the Committee to
receive amounts due the Participant in the event of his death. In the absence of an effective
designation, a Participant’s designated beneficiary shall be deemed to be his or her spouse,
or, if he or she has no spouse at the time of his or her death, his or her estate.
	 
	10.  	Award Non-Transferable. Except as expressly provided in Section 9 above, the Award
is non-transferable. No benefit payable with respect to the Award shall be subject in any
manner to anticipation, alienation, sale, transfer, pledge, assignment, encumbrance or charge,
and any such attempted action shall be void and no such benefit shall be in any manner liable
for or subject to debts, contracts, liabilities, engagements or torts of the Participant.
This Agreement shall, however, be binding upon any successor to all or substantially all of
the business and/or assets of the Company.
	 
	11.  	Governing Law. The interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of California, without regard to the conflict of
laws principles thereof.
	 
	12.  	Amendment. This Agreement may only be amended in writing by an instrument signed by
both parties. Adjustments pursuant to Section 6 shall not, however, be considered amendments
requiring Participant consent.
	 
	13.  	Construction. It is the intent of the Company that the Award satisfy and be
interpreted in a manner that satisfies the applicable requirements under Section 162(m) of the
Code to qualify the Award as “qualified performance-based compensation” thereunder. Any
provision, application or interpretation of the Plan inconsistent with this intent to satisfy
the standards in Section 162(m) of the Code shall be disregarded.
	 
	14.  	General Terms. The Award and any payment in respect thereof are subject to, and the
Company and the Participant agree to be bound by, the provisions of the Plan. The provisions
of the Plan are incorporated herein by this reference. Provisions of the Plan that grant
discretionary authority to the Committee or the Board shall not create any rights in the
Participant, unless such rights are expressly set forth herein.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first
written above.

PARTICIPANT
 
 
 

[Executive
Name]

PACIFIC SUNWEAR OF

CALIFORNIA, INC.

a California Corporation

By:

Name:

Title:

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APPENDIX A

[YEAR] AWARD AGREEMENT

Name of Participant: [EXECUTIVE NAME]

	 	 	 	 	 
	 	 	 	 	Percentage of Target
	 	 	 	 	Bonus Which Will be
	 	 	 	 	Paid If Specified Level
	 	 	 	 	of the Performance
	 	 	Performance	 	Target is Satisfied
	Business Criteria*	 	Target Level	 	in the Performance Period**
	Company “Net Income”

	 	 
	 	 
	(as such term is defined
	 	 	 	 
	in the Plan) in $thousands
	 	 	 	 

No portion of the Target Bonus shall be paid if the Company’s Net Income in $thousands for the
Performance Period is less than the Performance Target of $___.

	*	 	Net Income of the Company will be determined on a consolidated basis.
	 
	**	 	Amounts are not cumulative.

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