Document:

exv10w38

Execution Copy

Exhibit 10.38

THE TALBOTS, INC. SUPPLEMENTAL SAVINGS PLAN

Amended and Restated Effective January 1, 2009

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 
	 	 	 	PAGE
	 
	ARTICLE I

	 TITLE AND DEFINITIONS

	 	 	1	 
	ARTICLE II

	 PARTICIPATION

	 	 	4	 
	ARTICLE III

	 CONTRIBUTIONS & DEFERRAL ELECTIONS

	 	 	4	 
	ARTICLE IV

	 ACCOUNTS

	 	 	7	 
	ARTICLE V

	 VESTING

	 	 	8	 
	ARTICLE VI

	 DISTRIBUTIONS

	 	 	9	 
	ARTICLE VII

	 PAYEE DESIGNATIONS AND LIMITATIONS

	 	 	11	 
	ARTICLE VIII

	ADMINISTRATION

	 	 	12	 
	ARTICLE IX

	 MISCELLANEOUS

	 	 	13	 

 

 

THE TALBOTS, INC. SUPPLEMENTAL SAVINGS PLAN

Amended and Restated Effective January 1, 2009

     The Talbots, Inc. (the “Company”) hereby amends and restates The Talbots, Inc. Supplemental
Savings Plan (the “SSP”) effective as of January 1, 2009. The SSP was last amended and restated
effective January 1, 1993. The Company maintains the SSP for a select group of its key management
employees and highly compensated employees. The SSP is intended to, and shall be interpreted to,
comply in all respects with Section 409A of the Code and those provisions of ERISA applicable to an
unfunded plan maintained primarily to provide deferred compensation benefits for a select group of
management or highly compensated employees.

     The provisions of the SSP effective as of January 1, 1993 relating to the timing and form of
payment shall apply to Participants’ vested Accounts as of December 31, 2004 (“Grandfathered
Amounts”). These provisions are described in Appendix A of the SSP.

ARTICLE I

TITLE AND DEFINITIONS

     1.1 “Account” shall mean the bookkeeping account established under the SSP pursuant to Article
IV of the SSP. A Participant’s Account shall include his Deferral Account and his Employer
Contributions Account.

     1.2 “Administrator” shall mean the person or persons appointed by the Committee to perform
such plan administrative duties as are delegated by the Committee.

     1.3 “Base Salary” shall mean a Participant’s annual base salary, excluding incentive and
discretionary bonuses, commissions, reimbursements, severance payments and other non-regular
remuneration, received from the Employer prior to reduction for any salary deferrals under benefit
plans sponsored by the Employer, including but not limited to, plans established pursuant to
Section 125 of the Code or Section 401(k) of the Code.

     1.4 “Beneficiary” or “Beneficiaries” shall mean the person, persons or entity designated as
such pursuant to Section 7.1 of the SSP.

     1.5 “Beneficiary Designation” shall mean the forms (including electronic forms) by which an
Eligible Employee designates his Beneficiaries.

     1.6 “Board” shall mean the Board of Directors of the Company.

     1.7 “Bonus” shall mean an amount paid to the Participant by the Employer in the form of
discretionary or incentive compensation or any other bonus designated by the Committee as a bonus
for purposes of the SSP.

     1.8 “Code” shall mean the Internal Revenue Code of 1986, as amended. Any reference to the
Code shall include the regulations issued thereunder.

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     1.9 “Committee” shall mean The Talbots, Inc. Pension Committee, appointed by the Board to
administer the SSP in accordance with Article VIII of the SSP.

     1.10 “Company” shall mean The Talbots, Inc.

     1.11 “Compensation” shall mean Base Salary and Bonus that are eligible for deferral under the
SSP for a particular Plan Year pursuant to Section 3.1 of the SSP.

     1.12 “Deferral Account” shall mean the Account maintained under the SSP for the benefit of a
Participant that reflects the Participant’s deferrals and the earnings thereon. Deferral Accounts
will be maintained solely as bookkeeping entries by the Company to evidence unfunded obligations of
the Company.

     1.13 “Deferral Election” shall mean the forms (including electronic forms) by which an
Eligible Employee makes his election to defer a portion of his Compensation to the SSP.

     1.14 “Disabled” shall mean that a Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than 12 months.

     1.15 “Distributable Amount” shall mean the vested balance in the Participant’s Account.

     1.16 “Distribution Election” shall mean the forms (including electronic forms) by which an
Eligible Employee makes his election with respect to the timing and form of payment of his Account.

     1.17 “Effective Date” of the SSP shall mean June 27, 1988. The Effective Date of this
amendment and restatement is January 1, 2009.

     1.18 “Eligible Employee” shall mean an employee of the Employer who is a vice-president or
above of the Employer and as designated by the head of Human Resources of the Company as eligible
to participate in the SSP.

     1.19 “Employer” shall mean the Company and any member of its controlled group as listed in
Appendix B.

     1.20 “Employer Contributions” shall mean contributions made by the Employer on behalf of a
Participant pursuant to Section 3.2 of the SSP.

     1.21 “Employer Contributions Account” shall mean the Account maintained under the SSP for the
benefit of a Participant that reflects the Employer Contributions and the earnings thereon.

     1.22 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended. Any
reference to ERISA shall include the regulations issued thereunder.

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     1.23 “Fund” or “Funds” shall mean one or more of the investment funds selected by the
Committee pursuant to Section 3.3 of the SSP.

     1.24 “Fund Subaccount” shall mean a subaccount established under a Participant’s Account that
corresponds to a Fund elected by the Participant pursuant to Section 3.3 of the SSP.

     1.25 “Grandfathered Amount” is that portion of a Participant’s Account that is vested as of
December 31, 2004 (adjusted for gains and losses).

     1.26 “Investment Election” shall mean the forms (including electronic forms) by which a
Participant makes his election with respect to the Funds which shall act as the basis for crediting
of earnings/losses on his Account.

     1.27 “Participant” shall mean any Eligible Employee who becomes a Participant in the SSP in
accordance with Article II of the SSP. For purposes of clarification, an Eligible Employee shall
continue to be a Participant in the SSP until his Account is entirely paid or the SSP is
terminated, if earlier.

     1.28 “Payment Date” shall mean the date by which a lump sum payment shall be made or the date
by which installment payments shall commence. Unless otherwise specified, the Payment Date shall
be the first day of the seventh month following a Participant’s Separation from Service. In
general, subsequent installments shall be made in January of each succeeding Plan Year. The
Payment Date of a Scheduled Distribution shall be January of the Plan Year in which the Scheduled
Distribution is scheduled to commence.

     1.29 “Plan Year” shall mean the calendar year.

     1.30 “Retirement” shall be deemed to occur upon the Participant’s Separation from Service,
other than as a result of death, on or after the Participant’s attainment of age 55 and completion
of 10 or more Years of Service.

     1.31 “RSVP” shall mean The Talbots, Inc. Retirement Savings Voluntary Plan.

     1.32 “Scheduled Distribution” shall mean a scheduled distribution date elected by the
Participant for distribution of amounts from a specified Deferral Account, including notional
earnings thereon, as provided under Section 6.4 of the SSP.

     1.33 “Separation from Service” shall occur when the Eligible Employee dies, retires, or
otherwise has a Termination from Employment with the Employer.

     1.34 “SSP” shall mean The Talbots, Inc. Supplemental Savings Plan.

     1.35 “Termination from Employment” shall occur on the date that the Participant ceases to be
employed by the Employer for any reason other than Retirement, Disability, death or an authorized
leave of absence. Whether a Termination of Employment has occurred shall be based on the facts and
circumstances and determined in accordance with Section 409A of the Code.

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     1.36 “Unforeseeable Emergency” shall mean a severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of the Participant or of his Spouse, his
Beneficiary, or dependent (as defined in Section 152(a) of the Code), loss of a Participant’s
property due to casualty, or other similar or extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant. The circumstances that would
constitute an Unforeseeable Emergency will depend upon the facts of each case, and the
Administrator has the sole and exclusive ability to determine whether such an Unforeseeable
Emergency exists.

     1.37 “Valuation Date” shall mean the last business day of the month immediately preceding the
Payment Date. Notwithstanding the foregoing, the Valuation Date for all installment payments with
the exception of the first and final installment payments shall be September 30 of the calendar
year immediately preceding the installment payment.

     1.38 “Years of Service” shall mean the cumulative consecutive years of continuous full-time
employment with the Employer (including approved leaves of absence of six months or less or legally
protected leaves of absence), beginning on the date the Participant first began service with the
Employer, and counting each anniversary thereof. An Eligible Employee’s service with the Employer
during periods in which he is not otherwise an Eligible Employee and service with The J. Jill
Group, Inc. and J. Jill. LLC (and their successor entities) shall be taken into account under this
Section 1.38 of the SSP.

ARTICLE II

PARTICIPATION

     An Eligible Employee shall become a Participant in the SSP by filing a Deferral Election, an
Investment Election and a Beneficiary Designation, in the manner prescribed by the Administrator,
during the enrollment period. Except as otherwise set forth in Section 3.1(a), the enrollment
period shall be the period designated by the Administrator prior to the beginning of the first Plan
Year in which the Eligible Employee shall be eligible to participate in the SSP, and each
subsequent Plan Year.

ARTICLE III

CONTRIBUTIONS & DEFERRAL ELECTIONS

     3.1 Elections to Defer Compensation.

	 	(a)	 	Form of Elections. Each Eligible Employee may elect to defer
Compensation for a given Plan Year by filing a Deferral Election in the manner
prescribed by the Administrator no later than the last day of the prior Plan Year (or
such earlier date that the Administrator may specify). Such Deferral Election,
however, can only relate to Compensation that has not yet been earned. Notwithstanding
the foregoing, in the case of an Eligible Employee who first becomes eligible to
participate in the SSP after the beginning of the Plan Year, such Eligible Employee
must file a Deferral Election within thirty (30) days of the date that the Eligible
Employee first becomes eligible to participate in the SSP. Such Eligible Employee’s
Deferral Election

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	 	 	 	shall be effective as of the first day of the first administratively practicable
payroll period after the Eligible Employee files the Deferral Election.

	 	(b)	 	General Rule. The amount of Compensation which an Eligible Employee
may elect to defer is such Compensation to be earned after the time at which the
Eligible Employee files with the Administrator a Deferral Election in accordance with
Section 3.1(a) of the SSP. An Eligible Employee may elect to defer 1% to 60% (in whole
percentages) of his Compensation. An Eligible Employee’s election to defer
Compensation applies to such Eligible Employee’s base salary and bonus.
	 
	 	(c)	 	Duration of Compensation Deferral Election. An Eligible Employee’s
election to defer Compensation for Plan Year is irrevocable for that Plan Year, and
shall remain in effect until revoked or changed for a subsequent Plan Year. A
Participant may increase, decrease, terminate or recommence an election to defer
Compensation with respect to Compensation for any subsequent Plan Year by filing a
Deferral Election during the enrollment period established by the Administrator prior
to the beginning of such Plan Year, which election shall be effective on the first day
of the next following Plan Year. Notwithstanding the foregoing, in the event that a
distribution based upon an Unforeseeable Emergency is made during a Plan Year, then all
deferral elections for that Plan Year are deemed revoked on a prospective basis.
	 
	 	(d)	 	Rehires. In the case of a Participant who is rehired by the Employer
during the same Plan Year in which such Participant Separated from Service, his prior
Deferral Election shall immediately become effective, and such Participant shall
continue to be effective for the remainder of that Plan Year, regardless of whether the
Participant is an Eligible Employee on his rehire date. In the event that the
Participant is not an Eligible Employee on the date the Participant is rehired, such
Participant shall not be eligible to make deferrals to the SSP during the next Plan
Year unless such Participant is designated by the head of Human Resources of the
Company as eligible to participate in the SSP. Notwithstanding the foregoing, in the
event that an Participant is rehired by the Employer after his Account has been fully
paid and such Participant is an Eligible Employee as of the date the Participant is
rehired, such Participant must file a Deferral Election within thirty (30) days of the
date that the Participant is designated by the head of Human Resources of the Company
to be eligible to participate in the SSP.
	 
	 	 	 	If an Eligible Employee has not been eligible to participate in the SSP (other than
the accrual of earnings) at any time during the 24-month period ending on his date
of rehire, such Eligible Employee must file a Deferral Election within thirty (30)
days of the date that the Eligible Employee is designated by the head of Human
Resources of the Company to be eligible to participate in the SSP. In all other
cases, the Eligible Employee shall be eligible to participate in the SSP on the
first day of the Plan Year following the Plan Year in which such Eligible Employee
is rehired. The amount of Compensation which an Eligible Employee may elect to
defer is such

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	 	 	 	Compensation to be earned beginning on first day of the first payroll period after
the Eligible Employee files a Deferral Election.
	 
	 	(e)	 	Timing of Deferrals. Deferrals to the SSP made pursuant to a Deferral
Election shall commence on the first day of the first payroll period in each Plan Year
and shall continue until the last payroll period in the Plan Year. In the case of an
Eligible Employee who becomes a Participant during a Plan Year, deferrals to the SSP
pursuant to his Deferral Election shall commence on the first day of the first
administratively practicable payroll period after the Participant submits his Deferral
Election in accordance with Article III of the SSP.

     3.2 Employer Contributions. Each Employer shall make an Employer Contribution to the
SSP on behalf of any Participant who defers Compensation to the SSP. Employer Contributions shall
equal 50% of the first 6% of Compensation deferred to the SSP less the amount of Employer matching
contributions made on behalf of such Participant under the RSVP, if any. Employer Contributions
shall be credited to a Participant’s Employer Contributions Account no later than the last day of
the Plan Year.

     3.3 Investment Elections.

	 	(a)	 	Participant Direction. A Participant shall designate on an Investment
Election the Funds in which his Account shall be deemed to be invested for purposes of
determining the amount of earnings and losses to be credited to each Account. The
Participant may specify that all or any percentage of his Account shall be deemed to be
invested, in whole percentage increments, in one or more of the types of Funds selected
as investment alternatives under the SSP from time to time by the Committee pursuant to
Section 3.3(b) of the SSP. A Participant may change the designation made under this
Section 3.3(a) daily by filing a revised Investment Election in the manner prescribed
by the Administrator or the Administrator. The Participant’s Account shall continue to
be credited based on the performance of the Funds selected by the Participant until all
amounts have been distributed from the Account. If a Participant fails to make an
investment election under this Section 3.3 of the SSP, his Account shall be invested in
the default investment Fund selected by the Committee for such purpose.
	 
	 	(b)	 	Investment Alternatives. On a periodic basis, the Committee shall
select commercially available Funds for the applicable Plan Year and shall communicate
each of the alternative types of Funds to the Participant pursuant to Section 3.3(a) of
the SSP. The performance of each Fund that the Participant’s Account is deemed to be
invested shall be used to determine the amount of earnings or losses to be credited to
Participant’s Account under Article IV. The Participant’s choice among investments
shall be solely for purposes of calculation of the performance of the Funds that the
Participant’s Account are deemed invested. The Employer shall have no obligation to
set aside or invest amounts as directed by the Participant and, if the Employer elects
to invest amounts as directed by the Participant, the Participant shall have no more
right to such investments than any other unsecured general creditor.

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     3.4 Distribution Elections.

	 	(a)	 	Initial Distribution Election. A Participant shall designate the time
and form of distribution of deferrals and Employer Contributions, and earnings thereon,
for a Plan Year on a Distribution Election in the manner prescribed by the
Administrator. Such Distribution Election shall apply to subsequent Plan Years until
the Participant files a new Distribution Election for the forthcoming Plan Year.
	 
	 	(b)	 	Modification of Distribution Election. With respect to deferred
amounts, a Participant may make a Subsequent Election to defer payment of his Account
to a Plan Year subsequent to the Plan Year originally elected.

	 	(1)	 	The Subsequent Election must be made at least twelve (12)
months before the date on which, but for the Subsequent Election, the
Distributable Amount would have been paid or commenced to be paid pursuant to
the Participant’s original Distribution Election.
	 
	 	(2)	 	The distribution date based upon the Subsequent Election is at
least five (5) years from the date that the Distributable Amount, but for the
Subsequent Election, would have been paid or commenced to be paid pursuant to
the Participant’s original Distribution Election.

	 	 	 	For purposes of application of the above change limitations, installment payments
shall be treated as a single payment and only two (2) Subsequent Elections shall be
allowed to be made by a Participant with respect to the timing and form of payment.
Subsequent Elections shall be made in the manner prescribed by the Administrator,
and shall comply with all requirements of Section 409A of the Code.

ARTICLE IV

ACCOUNTS

     4.1 Deferral Accounts. The Administrator shall establish and maintain an Account for
each Participant under the SSP. Each Participant’s Account shall be further divided into separate
subaccounts (“Fund Subaccounts”), each of which corresponds to a Fund elected by the Participant
pursuant to Section 3.3 of the SSP. A Participant’s Account shall be credited as follows:

	 	(a)	 	On the date that Compensation is deferred to the SSP, the Administrator shall
credit the Fund Subaccounts of the Participant’s Account with an amount equal to the
deferred Compensation that the Participant elected to be deemed to be invested in a
certain Fund.
	 
	 	(b)	 	Each business day, each Fund Subaccount of a Participant’s Account shall be
credited with earnings or losses in an amount equal to that determined by multiplying
the balance credited to such Fund Subaccount as of the prior day, less

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	 	 	 	any distributions valued as of the end of the prior day, by the performance of each
Fund that the Participant’s Account is deemed to be invested.
	 
	 	(c)	 	Each Plan Year’s deferrals, and investment gains and losses, shall be accounted
for in a manner which allows separate accounting.

     4.2 Employer Contributions Account. The Administrator shall establish and maintain an
Employer Contributions Account for each Participant under the SSP. Each Participant’s Employer
Contributions Account shall be further divided into separate Fund Subaccounts corresponding to the
Fund elected by the Participant pursuant to Section 3.3(a) of the SSP. A Participant’s Employer
Contributions Account shall be credited as follows:

	 	(a)	 	On the date that Employer Contributions are made, the Employer shall credit the
Fund Subaccounts of the Participant’s Employer Contributions Account with an amount
equal to the Employer Contributions, if any, made on behalf of that Participant, that
is, the proportion of the Employer Contributions, if any, which the Participant has
elected to be deemed to be invested in a certain Fund shall be credited to the Fund
Subaccount to be invested in that Fund.
	 
	 	(b)	 	Each business day, each Fund Subaccount of a Participant’s Employer
Contributions Account shall be credited with earnings or losses in an amount equal to
that determined by multiplying the balance credited to such Fund Subaccount as of the
prior day, less any distributions valued as of the end of the prior day, by the
performance of each Fund that the Participant’s Account is deemed to be invested.

     4.3 Trust and Insurance Contracts. The Employer shall be responsible for the payment
of all benefits under the SSP. At its discretion, the Employer may establish one or more grantor
trusts and/or insurance contracts for the purpose of providing for payment of benefits under the
SSP. Such trusts shall be irrevocable, but the assets thereof shall be subject to the claims of
the Employer’s creditors. Benefits paid to the Participant from any such trust or insurance
contract shall be considered paid by the Employer for purposes of meeting the obligations of the
Employer under the SSP.

     4.4 Statement of Accounts. The Administrator shall provide each Participant with a
statement of his Accounts at least quarterly reflecting the balance in the Participant’s Account as
of the end of each calendar quarter. Such statements may be provided electronically.

ARTICLE V

VESTING 

     5.1 Vesting of Deferral Accounts. The Participant shall be fully vested at all times
in amounts credited to his Deferral Account.

     5.2 Vesting of Employer Contributions Account. Prior to the beginning of each Plan
Year, the Committee shall establish the vesting schedule for any amounts credited to the
Participant’s Employer Contributions Account for such Plan Year. In the event that the Committee
does not establish a vesting schedule for a Plan Year, the vesting schedule applicable

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to the prior Plan Year shall apply to any amounts credited to the Participant’s Employer
Contributions Account for that Plan Year.

ARTICLE VI

DISTRIBUTIONS

     6.1 Retirement or Disability Distributions. Except as otherwise provided herein, in
the event of a Participant’s Retirement or Disability, the Participant’s Account shall be paid in
accordance with the Participant’s Distribution Election. A Participant can elect to have his
Account paid upon Retirement in substantially equal installments over two (2) to ten (10) years or
in a lump sum. In the event that a Participant does not file a Distribution Election, his Account
shall be paid in a lump sum. Payment of the Participant’s Account determined as of the Valuation
Date shall commence, or be made, on the Payment Date, but in no event later than the later of (i)
December 31 of the calendar year in which the Participant has been Retired or Disabled for six (6)
months, or (ii) the fifteenth day of the third calendar month following the date in which the
Participant has been Retired or Disabled for six months.

     6.2 Termination Distributions. Except as provided in Section 6.4 of the SSP, in the
event of a Participant’s Separation from Service other than by reason of Retirement, death or
Disability, the Participant’s Account determined as of the Valuation Date shall be paid in a single
lump sum on his Payment Date following Separation from Service, but in no event later than the
later of (i) December 31 of the calendar year in which the Participant has been Separated from
Service for six (6) months, or (ii) the fifteenth day of the third calendar month following the
date in which the Participant has been Separated from Service for six months.

     6.3 Death Benefits.

	 	(a)	 	Prior to Commencement of Benefits. In the event that the Participant
dies prior to commencing payment of his Account, the Employer shall pay to the
Participant’s Beneficiary the value of the Participant’s Account determined as of the
last business day of the month in which the Participant died in a lump sum payment on
the first business day of the second month following the Participant’s death, but in no
event later than the later of (i) December 31 of the calendar year in which the
Participant died, or (ii) the fifteenth day of the third calendar month following the
date on which the Participant died.
	 
	 	(b)	 	After Commencement of Benefits. In the event that the Participant dies
after commencing payment of his Account in substantially equal installments, the value
of the remaining installments shall be paid to the Participant’s Beneficiary in a lump
sum on the first business day of the month following the Participant’s death, but in no
event later than the later of (i) December 31 of the calendar year in which the
Participant died, or (ii) the fifteenth day of the third calendar month following the
date on which the Participant died.

     6.4 Scheduled Distributions.

	 	(a)	 	Scheduled Distribution Election. A Participant shall be entitled to
elect to receive a Scheduled Distribution from his Account prior to a Separation from
Service. In

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	 	 	 	the case of a Participant who has elected to receive a Scheduled Distribution, such
Participant shall receive the related portion of his Distributable Amount (the
“Related Portion”). A Participant may elect a Scheduled Distribution to commence no
earlier than three (3) years before the beginning of the Plan Year giving rise to
the deferred Compensation included in the Distributable Amount. The Participant may
elect to have his Scheduled Distribution paid in a lump sum or substantially equal
annual installments over a period of up to five (5) years. Each Scheduled
Distribution (or an installment of such Scheduled Distribution) shall be paid on the
first business day of the calendar year as elected by the Participant, but in no
event later than January 31 of such calendar year. If the Scheduled Distribution is
paid in a lump, the Scheduled Distribution shall be valued on the last business day
of the preceding calendar year. If the Scheduled Distribution is paid as
installment payments, each payment shall be valued as of September 30 of the
preceding calendar year. The final installment payment shall be valued as of the
last business day of the preceding calendar year.
	 
	 	(b)	 	Separation from Service. In the event of a Participant’s Separation
from Service prior to commencement of a Scheduled Distribution, the Scheduled
Distribution shall be distributed in the payment form applicable to such Separation
from Service under Sections 6.1, 6.2 or 6.3 of the SSP. Notwithstanding the foregoing,
if the Participant’s Scheduled Distribution date occurs during the six month payment
delay period following Separation from Service, the Scheduled Distribution nonetheless
will be paid on the Schedule Distribution date. In the event of a Participant’s
Separation from Service for any reason after a Scheduled Distribution has commenced in
installment payments, such Scheduled Distribution payments shall continue to be made at
the same time and in the same form as they would have been paid to the Participant had
the Participant not Separated from Service.

     6.5 Unforeseeable Emergency. Upon a finding that the Participant has suffered an
Unforeseeable Emergency, the Administrator may, at the request of the Participant, accelerate
distribution of the Participant’s Account or cessation of current deferrals under the SSP in the
amount reasonably necessary to alleviate such Unforeseeable Emergency subject to the following
conditions:

	 	(a)	 	The request to take a distribution on account of an Unforeseeable Emergency
shall be made by filing the forms provided by, and filed with, the Administrator prior
to the end of any calendar month.
	 
	 	(b)	 	The amount distributed pursuant to this Section 6.5 of the SSP shall not exceed
the amount necessary to satisfy the Unforeseeable Emergency plus amounts necessary to
pay taxes reasonably anticipated as a result of the distribution, after taking into
account the extent to which such Unforeseeable Emergency is, or may be, relieved
through reimbursement or compensation by insurance or otherwise, or by liquidation of
the Participant’s assets (to the extent the liquidation of such assets would not itself
cause severe financial hardship).

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	 	(c)	 	The amount determined by the Administrator as a distribution on account of an
Unforeseeable Emergency shall be paid in a lump sum on or before the end of the 90-day
period following the date that the Unforeseeable Emergency election is approved by the
Administrator.
	 
	 	(d)	 	Upon payment due to an Unforeseeable Emergency, the Administrator shall revoke
the Participant’s deferral election for the remainder of the Plan Year in which such
distribution is made.

ARTICLE VII

PAYEE DESIGNATIONS AND LIMITATIONS

     7.1 Beneficiaries.

	 	(a)	 	Beneficiary Designation. The Participant shall have the right, at any
time, to designate any person or persons as Beneficiary (both primary and contingent)
to whom payment under the SSP shall be made in the event of the Participant’s death.
The Participant shall make this designation on the Beneficiary Designation in the
manner prescribed by the Administrator.
	 
	 	(b)	 	Absence of Valid Designation. If a Participant fails to designate a
Beneficiary as provided above or if every person designated as Beneficiary predeceases
the Participant or dies prior to complete distribution of the Participant’s Account,
then the Participant’s Account shall be paid to his estate.

     7.2 Payments to Minors. In the event any amount is payable under the SSP 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, to act as custodian, or (c) if no parent of that person
is then living, to a custodian selected by the Administrator 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 Administrator 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 sixty (60) days after the date the amount becomes payable,
payment shall be deposited with the court having jurisdiction over the estate of the minor.

     7.3 Payments on Behalf of Persons Under Incapacity. In the event that any amount
becomes payable under the SSP to a person who, in the sole judgment of the Administrator, is
considered by reason of physical or mental condition to be unable to give a valid receipt
therefore, the Administrator may direct that such payment be made to any person found by the
Administrator, in its sole judgment, to have assumed the care of such person. Any payment made
pursuant to such determination shall constitute a full release and discharge of any and all
liability of the Administrator and the Employer under the SSP.

     7.4 Inability to Locate Payee. In the event that the Administrator is unable to
locate a Participant or Beneficiary within two years following the scheduled Payment Date, the
amount

11

 

allocated to the Participant’s 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.

ARTICLE VIII

ADMINISTRATION

     8.1 Committee. The SSP shall be administered by a Committee appointed by the Board,
which shall have the exclusive right and full discretion:

	 	(a)	 	To appoint an Administrator;
	 
	 	(b)	 	To appoint agents to act on its behalf;
	 
	 	(c)	 	To select, establish and change Funds;
	 
	 	(d)	 	To interpret the SSP;
	 
	 	(e)	 	To decide any and all matters arising hereunder (including the right to remedy
possible ambiguities, inconsistencies, or admissions);
	 
	 	(f)	 	To make, amend and rescind such rules as it deems necessary for the proper
administration of the SSP; and
	 
	 	(g)	 	To make all other determinations and resolve all questions of fact necessary or
advisable for the administration of the SSP, including determinations regarding
eligibility for benefits payable under the SSP.

     All interpretations of the Committee with respect to any matter hereunder shall be final,
conclusive and binding on all persons affected thereby. A decision by one member of the Committee
shall not be final, conclusive and binding unless a majority of the Committee ratifies such
decision. No member of the Committee or agent thereof shall be liable for any determination,
decision, or action made in good faith with respect to the SSP. The Employer will indemnify and
hold harmless the members of the Committee and its agents from and against any and all liabilities,
costs, and expenses incurred by such persons as a result of any act, or omission, in connection
with the performance of such persons’ duties, responsibilities, and obligations under the SSP,
other than such liabilities, costs, and expenses as may result from the bad faith, willful
misconduct, or criminal acts of such persons.

     8.2 Claims Procedure. Any Participant, former Participant or Beneficiary, or their
authorized representative, (the “Claimant”) may file a written claim with the Administrator setting
forth the nature of the benefit claimed, the amount thereof, and the basis for claiming entitlement
to such benefit. The Administrator shall determine the validity of the claim and communicate a
decision to the Claimant promptly and, in any event, not later than ninety (90) days after the date
of the claim. If additional time is needed for the Administrator to decide the claim, including
requesting information from the Claimant, the Administrator shall be afforded an additional ninety
(90) days provided that the Claimant is notified of the extension within the first ninety (90) day
period. Every claim for benefits which is denied shall be denied by written

12

 

notice setting forth in a manner calculated to be understood by the Claimant the following
information:

	 	(a)	 	Specific reason or reasons for the denial;
	 
	 	(b)	 	Specific reference to any provisions of the SSP on which the denial is based;
	 
	 	(c)	 	Description of any additional material or information that is necessary to
perfect the claim; and
	 
	 	(d)	 	An explanation of the SSP’s appeal procedures and the right to bring a civil
action under Section 502(a) of ERISA following a denial of an appeal.

     8.3 Review Procedures. Within sixty (60) days after the receipt of a denial on a
claim, a Claimant may file a written request for review of such denial. Such review shall be
undertaken by the Committee and shall be a full and fair review. The Claimant shall have the right
to review all pertinent documents. The Committee shall issue a decision not later than sixty (60)
days after receipt of a request for review from a Claimant unless special circumstances, such as
the need to hold a hearing, require a longer period of time, in which case a decision shall be
rendered as soon as possible but not later than one hundred twenty (120) days after receipt of the
Claimant’s request for review. The decision on review shall be in writing and shall include the
following information:

	 	(a)	 	Specific reason or reasons for the denial;
	 
	 	(b)	 	Specific reference to any provisions of the SSP on which the denial is based;
	 
	 	(c)	 	A statement that the Claimant is entitled to receive, upon request and without
charge, reasonable access to, and copies of, all documents, records and other
information in the SSP’s files which is relevant to the Claimant’s claim; and
	 
	 	(d)	 	A statement that the Claimant has the right to bring a civil action under
Section 502(a) of ERISA following a denial of an appeal.

ARTICLE IX

MISCELLANEOUS

     9.1 Amendment or Termination of SSP. The Board of Directors of the Company (or a
committee of the Board authorized to amend and terminate the SSP) may, at any time, direct the
Committee to amend or terminate the SSP, except that no such amendment or termination may reduce a
Participant’s Account. If the SSP is terminated, no further amounts shall be deferred hereunder,
and amounts previously deferred or contributed to the SSP shall be fully vested and shall be paid
in accordance with the provisions of the SSP and Participants’ Distribution Elections.

     9.2 Unsecured General Creditor. The benefits paid under the SSP shall be paid from the
general funds of the Employer to the extent not paid from a trust or an insurance contract, and the
Participant and any Beneficiary or their heirs or successors shall be no more than

13

 

unsecured general creditors of the Employer with no special or prior right to any assets of
the Employer for payment of any obligations hereunder. It is the intention of the Company that the
SSP be unfunded for purposes of ERISA and the Code.

     9.3 Restriction Against Assignment. The Employer shall pay all amounts payable
hereunder only to the person or persons designated by the SSP and not to any other person or
entity. No part of a Participant’s Account shall be liable for the debts, contracts, or
engagements of any Participant, Beneficiary, or their successors in interest, nor shall a
Participant’s Account 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,
sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any
manner whatsoever. No part of a Participant’s Account shall be subject to any right of offset
against or reduction for any amount payable by the Participant or Beneficiary, whether to the
Employer or any other party, under any arrangement other than under the terms of the SSP.

     9.4 Withholding. The Participant shall make appropriate arrangements with the Employer
for satisfaction of any federal, state or local income tax withholding requirements, Social
Security and other employee tax or other requirements applicable to the granting, crediting,
vesting or payment of benefits under the SSP. There shall be deducted from each payment made under
the SSP or any other Compensation payable to the Participant (or Beneficiary) all taxes which are
required to be withheld by the Employer in respect to such payment or the SSP. The Employer shall
have the right to reduce any payment (or other Compensation) by the amount of cash sufficient to
provide the amount of said taxes.

     9.5 Receipt or Release. Any payment made in good faith to a Participant or the
Participant’s Beneficiary shall, to the extent thereof, be in full satisfaction of all claims
against the Committee, its members and the Employer. The Committee may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such
effect.

     9.6 Errors in Account Statements, Deferrals or Distributions. In the event an error
is made in an Account statement, such error shall be corrected as soon as possible following the
date such error is discovered. In the event of an error in deferral amount, consistent with and as
permitted by any correction procedures established under Section 409A of the Code, the error shall
be corrected immediately upon discovery by, in the case of an excess deferral, distribution of the
excess amount to the Participant, or, in the case of an under deferral, reduction of other
compensation payable to the Participant. In the event of an error in a distribution, the over or
under payment shall be corrected by payment to or collection from the Participant consistent with
any correction procedures established under Section 409A of the Code, immediately upon the
discovery of such error. In the event of an overpayment, the Employer may, at its discretion,
offset other amounts payable to the Participant from the Employer (including but not limited to
salary, Bonuses, expense reimbursements, severance benefits or other employee compensation benefit
arrangements to recoup the amount of such overpayment, as allowed by law and subject to compliance
with Section 409A of the Code).

14

 

     9.7 Employment Not Guaranteed. Nothing contained in the SSP nor any action taken
hereunder shall be construed as a contract of employment or as giving any Participant any right to
continue the provision of services in any capacity whatsoever to the Employer.

     9.8 Successors of the Employer. The rights and obligations of the Employer under the
SSP shall inure to the benefit of, and shall be binding upon, the successors and assigns of the
Company. In addition to any obligations imposed by law upon any successor to the Company, the
Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business or assets of the Company, to expressly
assume and agree to perform the requirements set forth in the SSP.

     9.9 Notice. Any notice or filing required or permitted to be given to the Employer or
the Participant under this Agreement shall be sufficient if in writing and hand-delivered, or sent
by registered or certified mail, in the case of the Employer, to the principal office of the
Employer, directed to the attention of the Committee, and in the case of the Participant, to the
last known address of the Participant indicated on the employment records of the Employer. Such
notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the
date shown on the postmark on the receipt for registration or certification. Notices to the
Employer may be permitted by electronic communication according to specifications established by
the Committee.

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

     9.11 Gender, Singular and Plural. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may
require. As the context may require, the singular may be read as the plural and the plural as the
singular.

     9.12 Governing Law. The SSP is intended to be an unfunded plan maintained primarily
to provide deferred compensation benefits for a select group of “management or highly compensated
employees” within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from
Parts 2, 3 and 4 of Title I of ERISA. In the event any provision of, or legal issue relating to,
the SSP is not fully preempted by federal law, such issue or provision shall be governed by the
laws of The Commonwealth of Massachusetts.

15

 

APPENDIX A

     This Appendix A shall apply to vested account balances (with earnings and losses) as of
December 31, 2004.

     At the time of a Participant’s deferral election, a Participant must also select a
distribution date and a form of payment.

     If the Participant elects an in-service withdrawal, the distribution date may be any date that
is at least two (2) years after the end of the Plan Year in which the compensation would otherwise
be payable. At least one year prior to the scheduled distribution date, a Participant may elect to
postpone the distribution date for at least two (2) years from the original distribution date. A
Participant shall be permitted to make two re-deferral elections.

     A Participant may elect to have deferred amounts paid at retirement or termination in a single
payment or in substantially equal annual installments for a period not to exceed (10) ten years.
In the event that a Participant elects installments and the portion of his Account subject to such
payment election is not more than $50,000, such portion of the Participant’s Account shall be paid
in a lump sum.

     Notwithstanding the foregoing, each distribution shall be paid or commence to be paid as soon
as administratively practicable following a Participant’s termination from employment in the form
selected by the Participant. The portion of the Participant’s Account subject to this Appendix A
shall be valued as of the last business day of the month in which the Participant’s retires or
otherwise terminates from employment.

     Notwithstanding the above, the following provisions shall apply:

	 	(a)	 	In the event of the Participant’s termination from employment for reasons other
than early, normal or postponed retirement, each as defined under The Talbots, Inc.
Pension Plan (the “Pension Plan”), full payment of all amounts due shall be accelerated
and be paid in a lump sum as soon as administratively practicable following a
Participant’s termination from employment; and
	 
	 	(b)	 	In the event that a Participant (either employed by the Employer or terminated)
satisfies the criteria under The Talbots, Inc. Retirement Savings Voluntary Plan for a
hardship withdrawal, he may request that his installment payments be accelerated and
paid in a lump sum. The Plan Administrator, in its sole and absolute discretion, may
approve or disapprove such request.

     In the event of the death of a Participant before a full distribution of the account is made,
a lump sum payment shall be made to the beneficiary designated by the Participant under the SSP to
receive such amounts. This payment shall be made as soon as administratively practicable following
notification that death has occurred. In the absence of any such designation, payment shall be
made to the personal representative, executor as administrator of the Participant’s estate.

16

 

APPENDIX B

Participating Employers

	 	•	 	The Talbots Group, Limited Partnership
	 
	 	•	 	The Talbots, Inc.
	 
	 	•	 	The Talbots Import, LLC
	 
	 	•	 	The Talbots Classics National Bank
	 
	 	•	 	The Talbots Classics Finance Company
	 
	 	•	 	J. Jill, LLC

17exv10w39

Execution Copy

Exhibit 10.39

THE TALBOTS, INC. DEFERRED COMPENSATION PLAN

Amended and Restated Effective January 1, 2009

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 
	 	 	 	PAGE
	 
	ARTICLE I
	TITLE AND DEFINITIONS

	 	 	1	 
	ARTICLE II 
	PARTICIPATION

	 	 	6	 
	ARTICLE III

	CONTRIBUTIONS & DEFERRAL ELECTIONS

	 	 	6	 
	ARTICLE IV

	ACCOUNTS

	 	 	9	 
	ARTICLE V

	VESTING

	 	 	10	 
	ARTICLE VI

	DISTRIBUTIONS

	 	 	10	 
	ARTICLE VII

	PAYEE DESIGNATIONS AND LIMITATIONS

	 	 	12	 
	ARTICLE VIII

	ADMINISTRATION

	 	 	13	 
	ARTICLE IX

	MISCELLANEOUS

	 	 	15	 

 

 

THE TALBOTS, INC. DEFERRED COMPENSATION PLAN

Amended and Restated Effective January 1, 2009

     The Talbots, Inc. (the “Company”) hereby amends and restates The Talbots, Inc. Deferred
Compensation Plan (the “DCP”) effective as of January 1, 2009. The DCP was last amended and
restated effective January 1, 1993. The Company maintains the DCP for a select group of its key
management employees as a means of sheltering a portion of income from current taxation while
accumulating resources for future investments or retirement. The DCP is intended to, and shall be
interpreted to, comply in all respects with Section 409A of the Code (“Section 409A”) and those
provisions of ERISA applicable to an unfunded plan maintained primarily to provide deferred
compensation benefits for a select group of management or highly compensated employees.

     The provisions of the DCP effective as of January 1, 1993 relating to the timing and form of
payment shall apply to Participants’ vested Accounts as of December 31, 2004 (“Grandfathered
Amounts”). These provisions are described in Appendix A of the DCP.

ARTICLE I

TITLE AND DEFINITIONS

     1.1 “Account” shall mean the bookkeeping account established under the DCP pursuant to Article
IV of the DCP. A Participant’s Account shall include his Deferral Account and his Employer
Discretionary Contributions Account.

     1.2 “Administrator” shall mean the person or persons appointed by the Committee to perform
such plan administrative duties as are delegated by the Committee.

     1.3 “Base Salary” shall mean a Participant’s annual base salary, excluding incentive and
discretionary bonuses, commissions, reimbursements, severance payments and other non-regular
remuneration, received from the Employer prior to reduction for any salary deferrals under benefit
plans sponsored by the Employer, including but not limited to, plans established pursuant to
Section 125 of the Code or Section 401(k) of the Code.

     1.4 “Beneficiary” or “Beneficiaries” shall mean the person, persons or entity designated as
such pursuant to Section 7.1 of the DCP.

     1.5 “Beneficiary Designation” shall mean the forms (including electronic forms) by which an
Eligible Employee designates his Beneficiaries.

     1.6 “Board” shall mean the Board of Directors of the Company.

     1.7 “Bonus” shall mean an amount paid to the Participant by the Employer in the form of
discretionary or incentive compensation or any other bonus designated by the Committee as a bonus
for purposes of the DCP.

1

 

     1.8 “Change in Control” shall be deemed to have occurred only upon the occurrence of both a
First Triggering Event as described in subsection (a) below and a Second Triggering Event
as described in subsection (b) below:

	 	(a)	 	First Triggering Event:

	 	(i)	 	The acquisition (including as a result of a merger) by any
person (as such term is used in Sections 3(a)(9), 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”), or persons acting in
concert (which for purposes of the DCP shall include two or more persons voting
together on a consistent basis pursuant to an agreement or understanding
between them to act in concert and/or as a group within the meaning of Sections
13(d)(3) and 14(d)(2) of the Exchange Act), other than the Company or any of
its subsidiaries, or AEON (U.S.A.), Inc. or any of its subsidiaries or
affiliates (as such term is defined in Rule 12b-2 under the Exchange Act)
(collectively, an “Acquiring Person”), of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than 25 percent (25%) of the
combined voting power of the then outstanding securities of the Company
entitled to then vote generally in the election of directors of the Company,
and no other shareholder is the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act), directly or indirectly, of a percentage of such
securities higher than that held by the Acquiring Person; or
	 
	 	(ii)	 	Individuals, who, as of January 1, 2009, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided that any individual becoming a director subsequent to
January 1, 2009, whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, as a member of
the Incumbent Board, any such individual whose initial assumption of office is
in connection with an actual or threatened election contest relating to the
election of the directors of the Company and further excluding any individual
who is an affiliate, associate (as such terms are defined in Rule 12b-2 under
the Exchange Act) or designee of an Acquiring Person having or proposing to
acquire beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing more than 10 percent (10%) of the combined voting power of the
then outstanding securities of the Company entitled to then vote generally in
the election of directors of the Company.

	 	(b)	 	Second Triggering Event:

2

 

	 	(i)	 	Any one person, or more than one person acting as a group (as
defined in Section 409A), acquires ownership of stock of the Company that,
together with stock held by such person or group, constitutes more than fifty
percent (50%) of the total fair market value or total voting power of the stock
of the Company;
	 
	 	(ii)	 	Any one person, or more than one person acting as a group (as
defined in Section 409A), acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
ownership of stock of the Company possessing thirty percent (30%) or more of
the total voting power of the stock of the Company;
	 
	 	(iii)	 	A majority of members of the Board is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the Board before the date of the appointment or election; or
	 
	 	(iv)	 	A change in the ownership of a substantial portion of the
assets of the Company that have a total gross fair market value equal to or
more than forty percent (40%) of the total gross fair market value of all of
the assets of the Company immediately before the acquisition or acquisitions.

     1.9 “Code” shall mean the Internal Revenue Code of 1986, as amended. Any reference to the
Code shall include the regulations issued thereunder.

     1.10 “Committee” shall mean The Talbots, Inc. Pension Committee, appointed by the Board to
administer the DCP in accordance with Article VIII of the DCP.

     1.11 “Company” shall mean The Talbots, Inc.

     1.12 “Compensation” shall mean Base Salary and Bonus that are eligible for deferral under the
DCP for a particular Plan Year pursuant to Section 3.1 of the DCP.

     1.13 “DCP” shall mean The Talbots, Inc. Deferred Compensation Plan.

     1.14 “Deferral Account” shall mean the Account maintained under the DCP for the benefit of a
Participant that reflects the Participant’s deferrals and the earnings thereon.

     1.15 “Deferral Election” shall mean the forms (including electronic forms) by which an
Eligible Employee makes his election to defer a portion of his Compensation to the DCP.

     1.16 “Disabled” shall mean that a Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than 12 months.

     1.17 “Distributable Amount” shall mean the vested balance in the Participant’s Account.

3

 

     1.18 “Distribution Election” shall mean the forms (including electronic forms) by which an
Eligible Employee makes his election with respect to the timing and form of payment of his Account.

     1.19 “Effective Date” of the DCP shall mean June 27, 1988. The Effective Date of this
amendment and restatement is January 1, 2009.

     1.20 “Eligible Employee” shall mean a highly compensated or management level employee of the
Employer who is designated by the head of Human Resources of the Company to be eligible to
participate in the DCP.

     1.21 “Employer” shall mean the Company and any member of its controlled group as listed in
Appendix B.

     1.22 “Employer Discretionary Contributions” shall mean contributions made by the Employer on
behalf of a Participant pursuant to Section 3.2 of the DCP.

     1.23 “Employer Discretionary Contributions Account” shall mean the Account maintained under
the DCP for the benefit of a Participant that reflects the Employer Discretionary Contributions and
the earnings thereon.

     1.24 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended. Any
reference to ERISA shall include the regulations issued thereunder.

     1.25 “Fund” or “Funds” shall mean one or more of the investment funds selected by the
Committee pursuant to Section 3.3 of the DCP.

     1.26 “Fund Subaccount” shall mean a subaccount established under a Participant’s Account that
corresponds to a Fund elected by the Participant pursuant to Section 3.3 of the DCP.

     1.27 “Grandfathered Amount” is that portion of a Participant’s Account that is vested as of
December 31, 2004 (adjusted for gains and losses).

     1.28 “Investment Election” shall mean the forms (including electronic forms) by which a
Participant makes his election with respect to the Funds which shall act as the basis for crediting
of earnings/losses on his Account.

     1.29 “Participant” shall mean any Eligible Employee who becomes a Participant in the DCP in
accordance with Article II of the DCP. For purposes of clarification, an Eligible Employee shall
continue to be a Participant in the DCP until his Account is entirely paid or the DCP is
terminated, if earlier.

     1.30 “Payment Date” shall mean the date by which a lump sum payment shall be made or the date
by which installment payments shall commence. Unless otherwise specified, the Payment Date shall
be the first day of the seventh month following a Participant’s Separation from Service. In
general, subsequent installments shall be made in January of each succeeding Plan Year. The
Payment Date of a Scheduled Distribution shall be January of the Plan Year in

4

 

which the Scheduled Distribution is scheduled to commence. For purposes of Section 9.2
(Change in Control), Payment Date shall mean the first day of the month following the Change in
Control.

     1.31 “Plan Year” shall mean the calendar year.

     1.32 “Retirement” shall be deemed to occur upon the Participant’s Separation from Service,
other than as a result of death, on or after the Participant’s attainment of age 55 and completion
of 10 or more Years of Service.

     1.33 “Scheduled Distribution” shall mean a scheduled distribution date elected by the
Participant for distribution of amounts from a specified Deferral Account, including notional
earnings thereon, as provided under Section 6.4 of the DCP.

     1.34 “Separation from Service” shall occur when the Eligible Employee dies, retires, or
otherwise has a Termination from Employment with the Employer.

     1.35 “Termination from Employment” shall occur on the date that the Participant ceases to be
employed by the Employer for any reason other than Retirement, Disability, death or an authorized
leave of absence. Whether a Termination of Employment has occurred shall be based on the facts and
circumstances and determined in accordance with Section 409A.

     1.36 “Unforeseeable Emergency” shall mean a severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of the Participant or of his spouse, his
Beneficiary, or dependent (as defined in Section 152(a) of the Code), loss of a Participant’s
property due to casualty, or other similar or extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant. The circumstances that would
constitute an Unforeseeable Emergency will depend upon the facts of each case, and the
Administrator has the sole and exclusive ability to determine whether such an Unforeseeable
Emergency exists.

     1.37 “Valuation Date” shall mean the last business day of the month immediately preceding the
Payment Date. Notwithstanding the foregoing, the Valuation Date for all installment payments with
the exception of the first and final installment payments shall be September 30 of the calendar
year immediately preceding the installment payment.

     1.38 “Years of Service” shall mean the cumulative consecutive years of continuous full-time
employment with the Employer (including approved leaves of absence of six months or less or legally
protected leaves of absence), beginning on the date the Participant first began service with the
Employer, and counting each anniversary thereof. An Eligible Employee’s service with the Employer
during periods in which he is not otherwise an Eligible Employee and service with The J. Jill
Group, Inc. and J. Jill. LLC (and their successor entities) shall be taken into account under this
Section 1.38 of the SSP.

5

 

ARTICLE II

PARTICIPATION

     An Eligible Employee shall become a Participant in the DCP by filing a Deferral Election, an
Investment Election and a Beneficiary Designation, in the manner prescribed by the Administrator,
during the enrollment period. Except as otherwise set forth in Section 3.1(a), the enrollment
period shall be the period designated by the Administrator prior to the beginning of the first Plan
Year in which the Eligible Employee shall be eligible to participate in the DCP, and each
subsequent Plan Year.

ARTICLE III

CONTRIBUTIONS & DEFERRAL ELECTIONS

     3.1 Elections to Defer Compensation.

	 	(a)	 	Form of Elections. Each Eligible Employee may elect to defer
Compensation for a given Plan Year by filing a Deferral Election in the manner
prescribed by the Administrator, no later than the last day of the prior Plan Year (or
such earlier date that the Administrator may specify). An Eligible Employee shall make
separate elections as to deferral of Base Salary and Bonus. Notwithstanding the
foregoing, in the case of an Eligible Employee who first becomes eligible to
participate in the DCP after the beginning of the Plan Year, such Eligible Employee
must file Deferral Elections within thirty (30) days of the date that the Eligible
Employee first becomes eligible to participate in the DCP (for the avoidance of any
doubt, the Eligible Employee is not eligible until the head of Human Resources of the
Company designates the Eligible Employee). Such Eligible Employee’s Deferral Election
shall be effective as of the first day of the first administratively practicable
payroll period after the Eligible Employee files the Deferral Election.
	 
	 	(b)	 	General Rule. The amount of Compensation which an Eligible Employee
may elect to defer is such Compensation to be earned beginning on the first day of the
first payroll period after the Eligible Employee files a Deferral Election in
accordance with Section 3.1(a) of the DCP. For the avoidance of any doubt, an Eligible
Employee must file a Deferral Election in accordance with Section 3.1(a) of the DCP
prior to beginning of the Plan Year (or within the 30-day period with respect to
Eligible Employee who are first eligible) in which services giving rise to the bonus
are rendered. An Eligible Employee may elect to defer 5% to 75% (in whole percentages)
of his Base Salary and 5% to 100% (in whole percentages) of his Bonus. A Participant
may elect to defer different whole percentages of his Base Salary and Bonus.
	 
	 	(c)	 	Duration of Compensation Deferral Election. An Eligible Employee’s
election to defer Compensation for a Plan Year is irrevocable for that Plan Year, and
shall remain in effect until revoked or changed for a subsequent Plan Year. A
Participant may increase, decrease, terminate or recommence an election to defer
Compensation with respect to Compensation for any subsequent Plan Year by filing a
Deferral Election during the enrollment period established by the

6

 

	 	 	 	Administrator prior to the beginning of such Plan Year, which election shall be
effective on the first day of the next following Plan Year. Notwithstanding the
foregoing, in the event that a distribution based upon an Unforeseeable Emergency is
made during a Plan Year, then all deferral elections for that Plan Year are deemed
revoked on a prospective basis.
	 
	 	(d)	 	Rehires. In the case of a Participant who is rehired by the Employer
during the same Plan Year in which such Participant Separated from Service, his prior
Deferral Election shall immediately become effective, and shall continue to be
effective for the remainder of that Plan Year, regardless of whether the Participant is
an Eligible Employee on his rehire date. In the event that the Participant is not an
Eligible Employee on the date the Participant is rehired, such Participant shall not be
eligible to make deferrals to the DCP during the next Plan Year unless such Participant
is designated by the head of Human Resources of the Company as eligible to participate
in the DCP. Notwithstanding the foregoing, in the event that an Participant is rehired
by the Employer after his Account has been fully paid and such Participant is an
Eligible Employee as of the date the Participant is rehired, such Participant must file
a Deferral Election within thirty (30) days of the date that the Participant is
designated by the head of Human Resources of the Company to be eligible to participate
in the DCP.
	 
	 	 	 	If an Eligible Employee has not been eligible to participate in the DCP (other than
the accrual of earnings) at any time during the 24-month period ending on his date
of rehire, such Eligible Employee must file a Deferral Election within thirty (30)
days of the date that the Eligible Employee is designated by the head of Human
Resources of the Company to be eligible to participate in the DCP. In all other
cases, the Eligible Employee shall be eligible to participate in the DCP on the
first day of the Plan Year following the Plan Year in which such Eligible Employee
is rehired. The amount of Compensation which an Eligible Employee may elect to
defer is such Compensation to be earned beginning on first day of the first payroll
period after the Eligible Employee files a Deferral Election.
	 
	 	(e)	 	Timing of Deferrals. Deferrals to the DCP made pursuant to a Deferral
Election shall commence on the first day of the first payroll period in each Plan Year
and shall continue until the last payroll period in the Plan Year. In the case of an
Eligible Employee who becomes a Participant during a Plan Year, deferrals to the DCP
pursuant to his Deferral Election shall commence on the first day of the first
administratively practicable payroll period after the Participant submits his Deferral
Election in accordance with Article III of the DCP.

     3.2 Employer Discretionary Contributions. Each Employer shall have the discretion to
make Employer Discretionary Contributions to the DCP on behalf of any Participant and for any
amount for any Plan Year. (Participants need not be treated similarly with respect to Employer
Discretionary Contributions.) Employer Discretionary Contributions shall be made in the complete
and sole discretion of the Employer and no Participant shall have the right to receive any Employer
Discretionary Contribution in any particular Plan Year regardless of whether Employer Discretionary
Contributions are made on behalf of other Participants.

7

 

Employer Discretionary Contributions shall be credited to a Participant’s Employer
Discretionary Contributions Account.

     3.3 Investment Elections.

	 	(a)	 	Participant Direction. A Participant shall designate on an Investment
Election the Funds in which his Account shall be deemed to be invested for purposes of
determining the amount of earnings and losses to be credited to each Account. The
Participant may specify that all or any percentage of his Account shall be deemed to be
invested, in whole percentage increments, in one or more of the types of Funds selected
as investment alternatives under the DCP from time to time by the Committee pursuant to
Section 3.3(b) of the DCP. A Participant may change the designation made under this
Section 3.3(a) daily by filing a revised Investment Election in the manner prescribed
by the Administrator. The Participant’s Account shall continue to be credited based on
the performance of the Funds selected by the Participant until all amounts have been
distributed from the Account. If a Participant fails to make an investment election
under this Section 3.3 of the DCP, his Account shall be invested in the default
investment Fund selected by the Committee for such purpose.
	 
	 	(b)	 	Investment Alternatives. On a periodic basis, the Committee shall
select commercially available Funds for the applicable Plan Year and shall communicate
each of the alternative types of Funds to the Participant pursuant to Section 3.3(a) of
the DCP. The performance of each Fund that the Participant’s Account is deemed to be
invested shall be used to determine the amount of earnings or losses to be credited to
Participant’s Account under Article IV. The Participant’s choice among investments
shall be solely for purposes of calculation of the performance of the Funds that the
Participant’s Account are deemed invested. The Employer shall have no obligation to set
aside or invest amounts as directed by the Participant and, if the Employer elects to
invest amounts as directed by the Participant, the Participant shall have no more right
to such investments than any other unsecured general creditor.

     3.4 Distribution Elections.

	 	(a)	 	Initial Distribution Election. A Participant shall designate the time
and form of distribution of deferrals and Employer Discretionary Contributions, and
earnings thereon, for a Plan Year on a Distribution Election in the manner prescribed
by the Administrator. Such Distribution Election shall apply to subsequent Plan Years
until the Participant files a new Distribution Election for the forthcoming Plan Year.
	 
	 	(b)	 	Modification of Distribution Election. With respect to deferred
amounts, a Participant may make a Subsequent Election to defer payment of his Account
to a Plan Year subsequent to the Plan Year originally elected.

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	 	(1)	 	The Subsequent Election must be made at least twelve (12)
months before the date on which, but for the Subsequent Election, the
Distributable Amount would have been paid or commenced to be paid pursuant to
the Participant’s original Distribution Election.
	 
	 	(2)	 	The distribution date based upon the Subsequent Election is at
least five (5) years from the date that the Distributable Amount, but for the
Subsequent Election, would have been paid or commenced to be paid pursuant to
the Participant’s original Distribution Election.

	 	 	 	For purposes of application of the above change limitations, installment payments
shall be treated as a single payment and only two (2) Subsequent Elections shall be
allowed to be made by a Participant with respect to the timing and form of payment.
Subsequent Elections shall be made in the manner prescribed by the Administrator,
and shall comply with all requirements of Section 409A.

ARTICLE IV

ACCOUNTS

     4.1 Deferral Accounts. The Administrator shall establish and maintain an Account for
each Participant under the DCP. Each Participant’s Account shall be further divided into separate
subaccounts (“Fund Subaccounts”), each of which corresponds to a Fund elected by the Participant
pursuant to Section 3.3 of the DCP. A Participant’s Account shall be credited as follows:

	 	(a)	 	On the date that Compensation is deferred to the DCP, the Administrator shall
credit the Fund Subaccounts of the Participant’s Account with an amount equal to the
deferred Compensation that the Participant elected to be deemed to be invested in a
certain Fund.
	 
	 	(b)	 	Each business day, each Fund Subaccount of a Participant’s Account shall be
credited with earnings or losses in an amount equal to that determined by multiplying
the balance credited to such Fund Subaccount as of the prior day, less any
distributions valued as of the end of the prior day, by the performance of the Fund
that the Participant’s Subaccount is deemed to be invested.
	 
	 	(c)	 	Each Plan Year’s deferrals, and investment gains and losses, shall be accounted
for in a manner which allows separate accounting.

     4.2 Employer Discretionary Contributions Account. The Administrator shall establish
and maintain an Employer Discretionary Contributions Account for each Participant under the DCP.
Each Participant’s Employer Discretionary Contributions Account shall be further divided into
separate Fund Subaccounts corresponding to the Fund elected by the Participant pursuant to Section
3.3(a) of the DCP. A Participant’s Employer Discretionary Contributions Account shall be credited
as follows:

	 	(a)	 	On the date that Employer Discretionary Contributions are made, the Employer
shall credit the Fund Subaccounts of the Participant’s Employer Discretionary

9

 

	 	 	 	Contributions Account with an amount equal to the Employer Discretionary
Contributions, if any, made on behalf of that Participant, that is, the proportion
of the Employer Discretionary Contributions, if any, which the Participant has
elected to be deemed to be invested in a certain Fund shall be credited to the Fund
Subaccount to be invested in that Fund.
	 
	 	(b)	 	Each business day, each Fund Subaccount of a Participant’s Employer
Discretionary Contributions Account shall be credited with earnings or losses in an
amount equal to that determined by multiplying the balance credited to such Fund
Subaccount as of the prior day, less any distributions valued as of the end of the
prior day, by the performance of each Fund that the Participant’s Account is deemed to
be invested.

     4.3 Trust and Insurance Contracts. The Employer shall be responsible for the payment
of all benefits under the DCP. At its discretion, the Employer may establish one or more grantor
trusts and/or insurance contracts for the purpose of providing for payment of benefits under the
DCP. Such trusts shall be irrevocable, but the assets thereof shall be subject to the claims of
the Employer’s creditors. Benefits paid to the Participant from any such trust or insurance
contract shall be considered paid by the Employer for purposes of meeting the obligations of the
Employer under the DCP.

     4.4 Statement of Accounts. The Administrator shall provide each Participant with a
statement of his Accounts at least quarterly reflecting the balance in the Participant’s Account as
of the end of each calendar quarter. Such statements may be provided electronically.

ARTICLE V

VESTING 

     5.1 Vesting of Deferral Accounts. The Participant shall be fully vested at all times
in amounts credited to his Deferral Account.

     5.2 Vesting of Employer Discretionary Contributions Account. Prior to the beginning
of each Plan Year, the Committee shall establish the vesting schedule for any amounts credited to
the Participant’s Employer Discretionary Contributions Account for such Plan Year. In the event
that the Committee does not establish a vesting schedule for a Plan Year, the vesting schedule
applicable to the prior Plan Year shall apply to any amounts credited to the Participant’s Employer
Discretionary Contributions Account for that Plan Year. Notwithstanding the foregoing, a
Participant (if then employed by the Employer) shall be fully vested in his Employer Discretionary
Contributions Account upon a Change in Control.

ARTICLE VI

DISTRIBUTIONS

     6.1 Retirement or Disability Distributions. Except as otherwise provided herein, in
the event of a Participant’s Retirement or Disability, the Participant’s Account shall be paid in
accordance with the Participant’s distribution election. A Participant can elect to have his
Account paid upon Retirement in substantially equal installments over two (2) to ten (10) years or
in a lump sum. In the event that a Participant does not file a Distribution Election, his

10

 

Account shall be paid in a lump sum. Payment of the Participant’s Account determined as of
the Valuation Date shall commence, or be made, on the Payment Date, but in no event later than the
later of (i) December 31 of the calendar year in which the Participant has been Retired or Disabled
for six (6) months, or (ii) the fifteenth day of the third calendar month following the date in
which the Participant has been Retired or Disabled for six months.

     6.2 Termination Distributions. Except as provided in Section 6.4 of the DCP, in the
event of a Participant’s Separation from Service other than by reason of Retirement, death or
Disability, the Participant’s Account determined as of the Valuation Date shall be paid in a single
lump sum on his Payment Date following Separation from Service, but in no event later than the
later of (i) December 31 of the calendar year in which the Participant has been Separated from
Service for six (6) months, or (ii) the fifteenth day of the third calendar month following the
date in which the Participant has been Separated from Service for six months.

     6.3 Death Benefits.

	 	(a)	 	Prior to Commencement of Benefits. In the event that the Participant
dies prior to commencing payment of his Account, the Employer shall pay to the
Participant’s Beneficiary the value of the Participant’s Account determined as of the
last business day of the month in which the Participant died in a lump sum payment on
the first business day of the second month following the Participant’s death, but in no
event later than the later of (i) December 31 of the calendar year in which the
Participant died, or (ii) the fifteenth day of the third calendar month following the
date on which the Participant died.
	 
	 	(b)	 	After Commencement of Benefits. In the event that the Participant dies
after commencing payment of his Account in substantially equal installments, the value
of the remaining installments shall be paid to the Participant’s Beneficiary in a lump
sum on the first business day of the month following the Participant’s death, but in no
event later than the later of (i) December 31 of the calendar year in which the
Participant died, or (ii) the fifteenth day of the third calendar month following the
date on which the Participant died.

     6.4 Scheduled Distributions.

	 	(a)	 	Scheduled Distribution Election. A Participant shall be entitled to
elect to receive a Scheduled Distribution from his Account prior to a Separation from
Service. In the case of a Participant who has elected to receive a Scheduled
Distribution, such Participant shall receive the related portion of his Distributable
Amount (the “Related Portion”). A Participant may elect a Scheduled Distribution to
commence no earlier than three (3) years before the beginning of the Plan Year giving
rise to the deferred Compensation included in the Distributable Amount. The Participant
may elect to have his Scheduled Distribution paid in a lump sum or substantially equal
annual installments over a period of up to five (5) years. A Participant may make a
Subsequent Election in accordance with Section 3.3 of the DCP. Each Scheduled
Distribution (or an installment of such Scheduled Distribution) shall be paid on the
first business day of the calendar year as elected

11

 

	 	 	 	by the Participant. If the Scheduled Distribution is paid in a lump, the Scheduled
Distribution shall be valued on the last business day of the preceding calendar
year. If the Scheduled Distribution is paid as installment payments, each payment
shall be valued as of September 30 of the preceding calendar year. The final
installment payment shall be valued as of the last business day of the preceding
calendar year.
	 
	 	(b)	 	Separation from Service. In the event of a Participant’s Separation
from Service prior to commencement of a Scheduled Distribution, the Scheduled
Distribution shall be distributed in the payment form applicable to such Separation
from Service under Sections 6.1, 6.2 or 6.3 of the DCP. Notwithstanding the foregoing,
if the Participant’s Scheduled Distribution date occurs during the six month payment
delay period following Separation from Service, the Scheduled Distribution nonetheless
will be paid on the Schedule Distribution date. In the event of a Participant’s
Separation from Service for any reason after a Scheduled Distribution has commenced in
installment payments, such Scheduled Distribution payments shall continue to be made at
the same time and in the same form as they would have been paid to the Participant had
the Participant not Separated from Service.

     6.5 Unforeseeable Emergency. Upon a finding that the Participant has suffered an
Unforeseeable Emergency, the Administrator may, at the request of the Participant, accelerate
distribution of the Participant’s Account or cessation of current deferrals under the DCP in the
amount reasonably necessary to alleviate such Unforeseeable Emergency subject to the following
conditions:

	 	(a)	 	The request to take a distribution on account of an Unforeseeable Emergency
shall be made by filing the forms provided by, and filed with, the Administrator.
	 
	 	(b)	 	The amount distributed pursuant to this Section 6.5 of the DCP shall not exceed
the amount necessary to satisfy the Unforeseeable Emergency plus amounts necessary to
pay taxes reasonably anticipated as a result of the distribution, after taking into
account the extent to which such Unforeseeable Emergency is, or may be, relieved
through reimbursement or compensation by insurance or otherwise, or by liquidation of
the Participant’s assets (to the extent the liquidation of such assets would not itself
cause severe financial hardship to the Participant).
	 
	 	(c)	 	The amount determined by the Administrator as a distribution on account of an
Unforeseeable Emergency shall be paid in a lump sum on or before the end of the 90-day
period following the date that the Unforeseeable Emergency election is approved by the
Administrator.
	 
	 	(d)	 	Upon payment due to an Unforeseeable Emergency, the Administrator shall revoke
the Participant’s deferral election for the remainder of the Plan Year in which such
distribution is made.

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ARTICLE VII

PAYEE DESIGNATIONS AND LIMITATIONS

     7.1 Beneficiaries.

	 	(a)	 	Beneficiary Designation. The Participant shall have the right, at any
time, to designate any person or persons as Beneficiary (both primary and contingent)
to whom payment under the DCP shall be made in the event of the Participant’s death.
The Participant shall make this designation on the Beneficiary Designation in the
manner prescribed by the Administrator.
	 
	 	(b)	 	Absence of Valid Designation. If a Participant fails to designate a
Beneficiary as provided above or if every person designated as Beneficiary predeceases
the Participant or dies prior to complete distribution of the Participant’s Account,
then the Participant’s Account shall be paid to his estate.

     7.2 Payments to Minors. In the event any amount is payable under the DCP 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, to act as custodian, or (c) if no parent of that person
is then living, to a custodian selected by the Administrator 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 Administrator 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 sixty (60) days after the date the amount becomes payable,
payment shall be deposited with the court having jurisdiction over the estate of the minor.

     7.3 Payments on Behalf of Persons Under Incapacity. In the event that any amount
becomes payable under the DCP to a person who, in the sole judgment of the Administrator, is
considered by reason of physical or mental condition to be unable to give a valid receipt
therefore, the Administrator may direct that such payment be made to any person found by the
Committee, in its sole judgment, to have assumed the care of such person. Any payment made
pursuant to such determination shall constitute a full release and discharge of any and all
liability of the Administrator and the Employer under the DCP.

     7.4 Inability to Locate Payee. In the event that the Administrator is unable to
locate a Participant or Beneficiary within two years following the scheduled Payment Date, the
amount allocated to the Participant’s 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.

ARTICLE VIII

ADMINISTRATION

     8.1 Committee. The DCP shall be administered by a Committee appointed by the Board,
which shall have the exclusive right and full discretion:

13

 

	 	(a)	 	To appoint an Administrator;
	 
	 	(b)	 	To appoint agents to act on its behalf;
	 
	 	(c)	 	To select, establish and change Funds;
	 
	 	(d)	 	To interpret the DCP;
	 
	 	(e)	 	To decide any and all matters arising hereunder (including the right to remedy
possible ambiguities, inconsistencies, or admissions);
	 
	 	(f)	 	To make, amend and rescind such rules as it deems necessary for the proper
administration of the DCP; and
	 
	 	(g)	 	To make all other determinations and resolve all questions of fact necessary or
advisable for the administration of the DCP, including determinations regarding
eligibility for benefits payable under the DCP.

     All interpretations of the Committee with respect to any matter hereunder shall be final,
conclusive and binding on all persons affected thereby. A decision by one member of the Committee
shall not be final, conclusive and binding unless a majority of the Committee ratifies such
decision. No member of the Committee or agent thereof shall be liable for any determination,
decision, or action made in good faith with respect to the DCP. The Employer will indemnify and
hold harmless the members of the Committee and its agents from and against any and all liabilities,
costs, and expenses incurred by such persons as a result of any act, or omission, in connection
with the performance of such persons’ duties, responsibilities, and obligations under the DCP,
other than such liabilities, costs, and expenses as may result from the bad faith, willful
misconduct, or criminal acts of such persons.

     8.2 Claims Procedure. Any Participant, former Participant or Beneficiary, or their
authorized representative, (the “Claimant”) may file a written claim with the Administrator setting
forth the nature of the benefit claimed, the amount thereof, and the basis for claiming entitlement
to such benefit. The Administrator shall determine the validity of the claim and communicate a
decision to the Claimant promptly and, in any event, not later than ninety (90) days after the date
of the claim. If additional time is needed for the Administrator to decide the claim, including
requesting information from the Claimant, the Administrator shall be afforded an additional ninety
(90) days provided that the Claimant is notified of the extension within the first ninety (90) day
period. Every claim for benefits which is denied shall be denied by written notice setting forth
in a manner calculated to be understood by the Claimant the following information:

	 	(a)	 	Specific reason or reasons for the denial;
	 
	 	(b)	 	Specific reference to any provisions of the DCP on which the denial is based;
	 
	 	(c)	 	Description of any additional material or information that is necessary to
perfect the claim; and

14

 

	 	(d)	 	An explanation of the DCP’s appeal procedures and the right to bring a civil
action under Section 502(a) of ERISA following a denial of an appeal.

     8.3 Review Procedures. Within sixty (60) days after the receipt of a denial on a
claim, a Claimant may file a written request for review of such denial. Such review shall be
undertaken by the Committee and shall be a full and fair review. The Claimant shall have the right
to review all pertinent documents. The Committee shall issue a decision not later than sixty (60)
days after receipt of a request for review from a Claimant unless special circumstances, such as
the need to hold a hearing, require a longer period of time, in which case a decision shall be
rendered as soon as possible but not later than one hundred twenty (120) days after receipt of the
Claimant’s request for review. The decision on review shall be in writing and shall include the
following information:

	 	(a)	 	Specific reason or reasons for the denial;
	 
	 	(b)	 	Specific reference to any provisions of the DCP on which the denial is based;
	 
	 	(c)	 	A statement that the Claimant is entitled to receive, upon request and without
charge, reasonable access to, and copies of, all documents, records and other
information in the DCP’s files which is relevant to the Claimant’s claim; and
	 
	 	(d)	 	A statement that the Claimant has the right to bring a civil action under
Section 502(a) of ERISA following a denial of an appeal.

ARTICLE IX

MISCELLANEOUS

     9.1 Amendment or Termination of DCP. The Board of Directors of the Company (or a
committee of the Board authorized to amend and terminate the DCP) may, at any time, direct the
Committee to amend or terminate the DCP, except that no such amendment or termination may reduce a
Participant’s Account. If the DCP is terminated, no further amounts shall be deferred hereunder,
and amounts previously deferred or contributed to the DCP shall be fully vested and shall be paid
in accordance with the provisions of the DCP and Participants’ Distribution Elections. Following a
Change in Control, except as expressly provided in Section 9.12 of the DCP, no provision of the DCP
may be changed, amended, modified, deleted, waived or discharged unless such provision is
specifically approved in writing by each Participant then covered by the DCP.

     9.2 Change in Control. Notwithstanding the foregoing, upon a Change in Control, a
Participant’s Account shall be paid in a lump sum on the first day of the month following the
Change in Control but in no event later than the later of (i) December 31 of the calendar year
which includes the Change in Control, or (ii) the fifteenth day of the third calendar month of the
calendar year following the Change in Control. Payment under this Section 9.2 shall be made
regardless of whether the Participant has incurred a Separation from Service. In the event that
the Participant is receiving installment payments, the remaining installment payments shall be paid
in a lump sum to the Participant on the first day of the second month following the Change in
Control but in no event later than the later of (i) December 31 of the calendar year which includes
the Change in Control, or (ii) the fifteenth day of the third calendar month of the

15

 

calendar year following the Change in Control. For purposes of this Section 9.2 of the DCP, a
Participant’s Account shall be valued as of the business day immediately prior to the date as of
which the Participant’s Account is distributed.

     9.3 Unsecured General Creditor. The benefits paid under the DCP shall be paid from the
general funds of the Employer to the extent not paid from a trust or an insurance contract, and the
Participant and any Beneficiary or their heirs or successors shall be no more than unsecured
general creditors of the Employer with no special or prior right to any assets of the Employer for
payment of any obligations hereunder. It is the intention of the Company that the DCP be unfunded
for purposes of ERISA and the Code.

     9.4 Restriction Against Assignment. The Employer shall pay all amounts payable
hereunder only to the person or persons designated by the DCP and not to any other person or
entity. No part of a Participant’s Account shall be liable for the debts, contracts, or
engagements of any Participant, Beneficiary, or their successors in interest, nor shall a
Participant’s Account 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,
sell, transfer, commute, pledge, encumber, or assign any benefits or payments hereunder in any
manner whatsoever. No part of a Participant’s Account shall be subject to any right of offset
against or reduction for any amount payable by the Participant or Beneficiary, whether to the
Employer or any other party, under any arrangement other than under the terms of the DCP.

     9.5 Withholding. The Participant shall make appropriate arrangements with the Employer
for satisfaction of any federal, state or local income tax withholding requirements, Social
Security and other employee tax or other requirements applicable to the granting, crediting,
vesting or payment of benefits under the DCP. There shall be deducted from each payment made under
the DCP or any other Compensation payable to the Participant (or Beneficiary) all taxes which are
required to be withheld by the Employer in respect to such payment or the DCP. The Employer shall
have the right to reduce any payment (or other Compensation) by the amount of cash sufficient to
provide the amount of said taxes.

     9.6 Receipt or Release. Any payment made in good faith to a Participant or the
Participant’s Beneficiary shall, to the extent thereof, be in full satisfaction of all claims
against the Committee, its members and the Employer. The Committee may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such
effect.

     9.7 Errors in Account Statements, Deferrals or Distributions. In the event an error
is made in an Account statement, such error shall be corrected as soon as possible following the
date such error is discovered. In the event of an error in deferral amount, consistent with and as
permitted by any correction procedures established under Section 409A, the error shall be corrected
immediately upon discovery by, in the case of an excess deferral, distribution of the excess amount
to the Participant, or, in the case of an under deferral, reduction of other compensation payable
to the Participant. In the event of an error in a distribution, the over or under payment shall be
corrected by payment to or collection from the Participant consistent with any correction
procedures established under Section 409A, immediately upon the discovery of such error. In the
event of an overpayment, the Employer may, at its discretion, offset other

16

 

amounts payable to the Participant from the Employer (including but not limited to salary,
bonuses, expense reimbursements, severance benefits or other employee compensation benefit
arrangements to recoup the amount of such overpayment, as allowed by law and subject to compliance
with Section 409A).

     9.8 Employment Not Guaranteed. Nothing contained in the DCP nor any action taken
hereunder shall be construed as a contract of employment or as giving any Participant any right to
continue the provision of services in any capacity whatsoever to the Employer.

     9.9 Successors of the Employer. The rights and obligations of the Employer under the
DCP shall inure to the benefit of, and shall be binding upon, the successors and assigns of the
Company. In addition to any obligations imposed by law upon any successor to the Company, the
Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business or assets of the Company, to expressly
assume and agree to perform the requirements set forth in the DCP.

     9.10 Notice. Any notice or filing required or permitted to be given to the Employer
or the Participant under this Agreement shall be sufficient if in writing and hand-delivered, or
sent by registered or certified mail, in the case of the Employer, to the principal office of the
Employer, directed to the attention of the Committee, and in the case of the Participant, to the
last known address of the Participant indicated on the employment records of the Employer. Such
notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the
date shown on the postmark on the receipt for registration or certification. Notices to the
Employer may be permitted by electronic communication according to specifications established by
the Committee.

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

     9.12 Gender, Singular and Plural. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may
require. As the context may require, the singular may be read as the plural and the plural as the
singular.

     9.13 Governing Law. The DCP is intended to be an unfunded plan maintained primarily
to provide deferred compensation benefits for a select group of “management or highly compensated
employees” within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from
Parts 2, 3 and 4 of Title I of ERISA. In the event any provision of, or legal issue relating to,
the DCP is not fully preempted by federal law, such issue or provision shall be governed by the
laws of The Commonwealth of Massachusetts without reference to conflicts in law principles.

17

 

APPENDIX A

     This Appendix A shall apply to vested account balances (with earnings and losses) as of
December 31, 2004.

     At the time of a Participant’s deferral election, a Participant must also select a
distribution date and a form of payment.

     If the Participant elects an in-service withdrawal, the distribution date may be any date that
is at least two (2) years after the end of the Plan Year in which the compensation would otherwise
be payable but not more than five (5) years after the end of the Plan Year in which the
compensation would otherwise be payable. At least one year prior to the scheduled distribution
date, a Participant may elect to postpone the distribution date for at least two (2) years from the
original distribution date. A Participant shall be permitted to make two re-deferral elections.

     A Participant may elect to have deferred amounts paid at retirement or termination in a single
payment or in substantially equal annual installments for a period not to exceed (10) ten years.
In the event that a Participant elects installments and the portion of his Account subject to such
payment election is not more than $50,000, such portion of the Participant’s Account shall be paid
in a lump sum.

     Notwithstanding the foregoing, each distribution shall be paid or commence to be paid as soon
as administratively practicable following a Participant’s termination from employment in the form
selected by the Participant. The portion of the Participant’s Account subject to this Appendix A
shall be valued as of the last business day of the month in which the Participant’s retires or
otherwise terminates from employment.

     Notwithstanding the above, the following provisions shall apply:

	 	(a)	 	In the event of the Participant’s termination from employment for reasons other
than early, normal or postponed retirement, each as defined under The Talbots, Inc.
Pension Plan (the “Pension Plan”), full payment of all amounts due shall be accelerated
and be paid in a lump sum as soon as administratively practicable following a
Participant’s termination from employment; and
	 
	 	(b)	 	In the event that a Participant (either employed by the Employer or terminated)
satisfies the criteria under The Talbots, Inc. Retirement Savings Voluntary Plan for a
hardship withdrawal, he may request that his installment payments be accelerated and
paid in a lump sum. The Plan Administrator, in its sole and absolute discretion, may
approve or disapprove such request.

     In the event of the death of a Participant before a full distribution of the account is made,
a lump sum payment shall be made to the beneficiary designated by the Participant under the DCP to
receive such amounts. This payment shall be made as soon as administratively practicable following
notification that death has occurred. In the absence of any such designation, payment shall be
made to the personal representative, executor as administrator of the Participant’s estate.

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APPENDIX B

Participating Employers

	 	•	 	The Talbots Group, Limited Partnership
	 
	 	•	 	The Talbots, Inc.
	 
	 	•	 	The Talbots Import, LLC
	 
	 	•	 	The Talbots Classics National Bank
	 
	 	•	 	The Talbots Classics Finance Company
	 
	 	•	 	J. Jill, LLC

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