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RESTRICTED STOCK
AWARD AGREEMENT
THIS RESTRICTED STOCK AWARD AGREEMENT (this "Agreement") is
dated as of the 17th day of September, 1999, by and between PACIFIC SUNWEAR OF
CALIFORNIA, INC., a California corporation (the "Corporation"), and Xxxx X.
Xxxxxx (the "Participant").
W I T N E S S E T H
WHEREAS, pursuant to the Corporation's 1999 Stock Award Plan
(the "1999 Plan"), the Corporation has granted to the Participant, effective as
of September 17, 1999 (the "Award Date"), a restricted stock award (the "Award")
upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and
covenants made herein and the mutual benefits to be derived herefrom, the
parties hereto agree as follows:
1. GRANT OF AWARD. (a) The Corporation has granted to the
Participant an Award with respect to an aggregate of 50,000 shares of Restricted
Stock (as such term is defined in the 1999 Plan) at the price of $.01 per share
(the "Price"). Capitalized terms used herein without definition shall have the
meanings given to them in the Plan.
(b) The Corporation shall issue a certificate or certificates
for the shares of Restricted Stock subject to the Award, registered in the name
of the Participant, which certificate(s) shall be held by the Corporation until
the restrictions on such shares shall have lapsed and the shares shall thereby
have become vested. The Award shall vest as to 12,500 shares of Common Stock on
each of September 17, 2001, 2002, 2003 and 2004 if, at the time of the vesting
date, the Minimum Rate of Growth in EPS (as defined) has been met on the vesting
date. Minimum Rate of Growth in EPS means that EPS (as such term is defined in
Exhibit A to the 1999 Plan) has increased at a rate of 15% or more per year over
the vesting period prior to the scheduled vesting date where EPS for the
Corporation's fiscal year ended January 30, 2000 is the base year (the "Base
Year"). For example, if EPS for the Base Year is $1.00, then it is a condition
to vesting of (i) the first installment of Restricted Stock that EPS for the
Corporation's fiscal year ended on or about January 31, 2001 equal or exceed
$1.15, (ii) the second installment of Restricted Stock that EPS for the
Corporation's fiscal year ended on or about January 31, 2002 equal or exceed
$1.32, (iii) the third installment of Restricted Stock that EPS for the
Corporation's fiscal year ended on or about January 31, 2003 equal or exceed
$1.52 and (iv) the fourth installment of Restricted Stock that EPS for the
Corporation's fiscal year ended on or about January 31, 2004 equal or exceed
$1.75. In the event that audited financial statements are not available as of a
vesting date, then the determination of satisfaction or non-satisfaction of the
Minimum Rate of Growth in EPS shall be delayed until such audited financial
statements become available. Notwithstanding anything else contained herein to
the contrary, vesting shall only occur if the Corporation's Compensation
Committee certifies in writing that the applicable Minimum Rate of Growth in EPS
has been achieved. In the event that the Minimum Rate of
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Growth in EPS is not satisfied as of a scheduled vesting date, the shares
otherwise scheduled to vest on such date shall not vest but shall remain
available for vesting in the event that the Minimum Rate of Growth in EPS for a
later scheduled vesting date is achieved, in which event the shares previously
scheduled to vest as of an earlier date shall vest. The parties hereto agree
that the Minimum Rate of Growth in EPS is based on the current operations of the
Corporation and that in the event of an acquisition by the Corporation of any
business (whether by purchase of assets, stock or merger), the Minimum Rate of
Growth in EPS shall, if possible, be calculated without regard to the
acquisition and, if not possible, the parties hereto shall negotiate (in all
cases subject to the provisions of Section 162(m) of the Internal Revenue
Service Code) appropriate adjustments to the Maximum Rate of Growth in EPS. The
shares of Restricted Stock subject to the Award shall, to the extent not vested
on September 17, 2004 in connection with the Corporation's prior fiscal years,
be forfeited (subject to any greater period of time that the Corporation's
Compensation Committee may require to review the Corporation's EPS for its
fiscal year ended on or about January 31, 2004).
(c) The Participant shall execute a stock power or stock
powers, in blank, with respect to such certificate(s) and shall deliver the same
to the Corporation. The Participant, by acceptance of the Award, hereby appoints
the Corporation and each of its authorized representatives as the Participant's
attorney(s)-in-fact to effect any transfer of such shares to the Corporation as
may be required pursuant to the Plan or this Agreement and to execute such
documents as the Corporation or such representatives deem necessary or advisable
in connection with any such transfer.
2. RESTRICTED STOCK. (a) Prior to the Vesting Date(s), the
shares of Restricted Stock subject to the Award may not be sold, assigned,
transferred, pledged or otherwise disposed of or encumbered, either voluntarily
or involuntarily.
(b) The Participant shall be entitled to dividend and voting
rights with respect to the shares of Restricted Stock subject to the Award even
though such shares are not vested, provided that such rights shall terminate
immediately as to any Restricted Stock which is forfeited. Any property received
by the Participant pursuant to an adjustment in accordance with Section 6.2 of
the 1999 Plan with respect to the Restricted Stock will be subject to the
restrictions set forth in this Agreement to the same extent as the shares of
Restricted Stock to which such property relates.
3. LAPSE OF RESTRICTIONS. The shares of Restricted Stock shall
vest on the Vesting Date(s) specified in Section 1(b) hereof, subject to the
terms thereof and provided that the other restrictions, if any, set forth in
this Agreement with respect to such shares shall have lapsed on or before the
Vesting Date. Promptly after the Vesting Date, a certificate or certificates
evidencing the number of shares of Common Stock as to which the restrictions
have lapsed or such lesser number as may be permitted pursuant to Section 11
hereof shall be delivered to the Participant. The Participant shall deliver to
the Corporation any written statements required pursuant to Section 8 hereof.
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4. EFFECT OF TERMINATION OF RELATIONSHIP. (a) Upon the date
the Participant is no longer employed by the Company, by reason of death,
voluntary resignation, permanent disability or termination for cause (as those
terms are defined in that certain Amended and Restated Employment Agreement
dated January 31, 1999 between Participant and the Corporation (the "Employment
Agreement")), the Participant's shares of Restricted Stock shall be forfeited on
such date to the extent such shares have not become vested on that date.
(b) Upon forfeiture of shares of Restricted Stock pursuant to
Section 1(b) or 4(a) above, the Participant, or the Participant's Beneficiary or
Personal Representative, as the case may be, shall transfer to the Corporation
the portion of the Award not vested at the date of termination of employment,
without payment of any consideration by the Company for such transfer other than
an amount equal to the Price per share of Restricted Stock forfeited.
Notwithstanding any such transfer to the Corporation, or failure, refusal or
neglect to transfer, by the Participant, or the Participant's Beneficiary or
Personal Representative, as the case may be, such nonvested portion of the Award
shall be deemed transferred automatically to the Corporation on the date of
forfeiture.
5. NON-ASSIGNABILITY OF AWARD. As set forth in Section 1.7 of
the 1999 Plan, amounts payable pursuant to the Award shall be paid only to the
Participant or the Participant's Beneficiary or Personal Representative, as the
case may be. Amounts payable under and interests in the Award shall not subject
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge other than by will or the laws of descent and distribution regardless of
any community property or other interest therein of the Participant's spouse or
such spouse's successor in interest. In the event that the spouse of the
Participant shall have acquired a community property interest in the Option, the
Participant, or such transferees, may exercise it on behalf of the spouse of the
Participant or such spouse's successor in interest. Amounts payable under and
interests in the Award shall not, in any manner, be liable for, or subject to,
debts, contracts, liabilities, engagements or torts of the Participant or the
Participant's Beneficiary or Personal Representative.
6. ADJUSTMENTS UPON SPECIFIED CHANGES. As set forth in Section
5.2(f) of the 1999 Plan, upon the occurrence of specified events relating to the
Corporation's stock, adjustments will be made in the number and kind of shares
that may be issuable under or in the consideration payable with respect to the
Award.
7. ACCELERATION. Notwithstanding any other provisions of the
1999 Plan or this Agreement and subject to any applicable restriction imposed by
the Securities Exchange Act of 1934 and the rules thereunder, to the extent that
the Award is not then vested and has not previously terminated or been
forfeited, it shall become immediately vested (i) upon the date the Participant
is no longer employed by the Corporation by reason of termination or non-renewal
of Participant's employment by the Corporation without cause (as defined in
Section 3(e) of the Employment Agreement) or (ii) immediately prior to the
effective date of (a) the dissolution or liquidation of the Corporation, (b) the
merger or consolidation or other reorganization of the Corporation with or into
one or more entities other than a subsidiary, as a result of which less
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than 50% of the outstanding voting securities of the surviving or resulting
entity are, or are to be, owned by shareholders of the Corporation immediately
prior to such event or (c) the sale of substantially all of the Corporation's
business assets to a person or entity which is not a subsidiary. Notwithstanding
any other provisions of the 1999 Plan or this Agreement and subject to any
applicable restriction imposed by the Securities Exchange Act of 1934 and the
rules thereunder, to the extent that the Award is not then vested and has not
previously terminated or been forfeited, it shall also become immediately vested
if (i) any person or entity or group or affiliated persons or entities,
including a group which is deemed a "person" by Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), excluding
existing shareholders of the Corporation as of September 17, 1999, first
acquires in one or more transactions ownership of 50% or more of the outstanding
shares of the Common Stock of this Corporation or (ii) during any period of two
consecutive years individuals who at the beginning of such period constitute the
Board of Directors of the Corporation cease for any reason to constitute at
least a majority thereof unless, at the time of election of each new director
during such two year period, such election was approved by the vote of a
majority or more of the remaining directors (excluding Employee) who were also
directors at the beginning of the period; provided, however, that if only two
directors at the time of such vote were directors at the beginning of the
period, then the election of each new director need be approved by the vote of
only one of such two directors. Upon the occurrence of events specified in this
Section 7 where acceleration of the vesting of the Award is not permissible
under the applicable Securities and Exchange Commission rules, any such
outstanding portion of the Award will terminate and any Restricted Stock will be
forfeited and the Corporation shall thereupon pay to the Participant an amount
equal to the Price per share of Restricted Stock forfeited. "Ownership" means
beneficial or record ownership, directly or indirectly, other than (i) by a
person owning such shares merely of record (such as a member of a securities
exchange, a nominee or a securities depositary system), (ii) by a person as a
bona fide pledge of shares prior to a default and determination to exercise
powers as an owner of the shares, (iii) by a person who is not required to file
statements on Schedule 13D by virtue of Rule 13d-1(b) of the Securities and
Exchange Commission under the Exchange Act, or (iv) by a person who owns or
holds shares as an underwriter acquired in connection with an underwritten
offering pending and for purposes of their public resale or planned private
placement or by persons who were shareholders of the Corporation on or before
March 15, 1993 or their respective successors. Without limitation, the right to
acquire ownership shall not of itself constitute ownership of shares.
8. APPLICATION OF SECURITIES LAWS. (a) No shares of Common
Stock may be issued pursuant to the Award or subsequently offered for sale
unless and until any then applicable requirements of the Securities and Exchange
Commission (the "Commission"), the California Commissioner of Corporations or
any other regulatory agency having jurisdiction and any exchanges upon which the
Common Stock may be listed shall have been fully complied with. Upon the
Corporation's request, the Participant, or any other person entitled to such
shares of Common Stock pursuant to the Award, shall provide written assurance of
such compliance satisfactory to the Corporation.
(b) The Committee may impose such conditions on the Award or
on its acceleration or on the payment of any withholding obligation as may be
required to satisfy applicable regulatory requirements, including, without
limitation, Rule 16b-3 (or any successor
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rule) promulgated by the Commission pursuant to the Securities Exchange Act of
1934, as amended.
9. NOTICES. Any notice to be given to the Corporation under
the terms of this Agreement or pursuant to the 1999 Plan shall be in writing and
addressed to the Secretary of the Corporation at its principal office and any
notice to be given to the Participant shall be addressed to him or her at the
address given beneath the Participant's signature hereto, or at such other
address as either party may hereafter designate in writing to the other party.
Any such notice shall be deemed to have been duly given when enclosed in a
properly sealed envelope addressed as aforesaid, registered or certified, and
deposited (postage and registry or certification fee prepaid) in a post office
or branch post office regularly maintained by the United States Government.
10. EFFECT OF AGREEMENT. This Agreement shall inure to the
benefit of any successor or successors of the Corporation. Notwithstanding the
foregoing, this Agreement shall not be assumed by or be binding upon any
successor or successors of the Corporation unless, in accordance with Section
6.2 of the 1999 Plan, provision for assumption of the Award is made in
connection with (i) any dissolution or liquidation, (ii) upon a reorganization,
merger or consolidation of the Corporation with one or more corporations as a
result of which the Corporation is not the surviving corporation, or (iii) upon
a sale of substantially all the property of the Corporation.
11. TAX WITHHOLDING. At the time that the shares of Restricted
Stock vest or are treated as vesting under an election pursuant to Section 83(b)
of the Internal Revenue Code, the Participant may be given the opportunity to
elect to pay such amounts to the Corporation in cash or in Common Stock, in
accordance with procedures established by the Committee, as may be necessary to
meet any withholding requirements imposed by federal, state, local, or foreign
tax law with respect thereto. If such a withholding election is not permitted or
not made, the Corporation may reduce the number of shares delivered at the time
of vesting, but only in the event that a Section 83(b) election has not been
made, by such number of shares as the Corporation may deem appropriate to meet
such withholding requirements. To the extent the Participant does not provide
for the amount of any required tax withholding and the Corporation can not (or
elects not to) use a share off-set, the Corporation shall have the right to
deduct the amount of any required withholding from other amounts payable to the
Participant by the Corporation.
12. THE PLAN. The Award and all rights of the Participant
thereunder are subject to, and the Participant agrees to be bound by, all of the
terms and conditions of the provisions of the 1999 Plan, incorporated herein by
this reference. In the event of a conflict or inconsistency between the terms
and conditions of this Agreement and of the 1999 Plan, except as otherwise
expressly stated herein, the terms and conditions of the 1999 Plan shall govern.
The Participant acknowledges receipt of a copy of the 1999 Plan, which is made a
part hereof by this reference, and agrees to be bound by the terms thereof.
Unless otherwise expressly provided in other Sections of this Agreement,
provisions of the 1999 Plan that confer discretionary authority on the Committee
do not (and shall not be deemed to) create any rights in the Participant unless
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such rights are expressly set forth herein or are otherwise in the sole
discretion of the Committee so conferred by appropriate action of the Committee
under the Plan after the date hereof.
IN WITNESS WHEREOF, the Corporation has caused this Agreement
to be executed on its behalf by a duly authorized officer and the Participant
has hereunto set his or her hand as of the date and year first above written.
PACIFIC SUNWEAR OF CALIFORNIA,
INC., A CALIFORNIA CORPORATION
By:
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Title:
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PARTICIPANT
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(Signature)
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(Print Name)
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(Address)
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(City, State, Zip Code)
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(Social Security Number)
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CONSENT OF SPOUSE
In consideration of the execution of the foregoing Restricted
Stock Award Agreement by the Corporation, I, _________________, the spouse of
the Participant herein named, do hereby join with my spouse in executing the
foregoing Restricted Stock Award Agreement and do hereby agree to be bound by
all of the terms and provisions thereof and of the Plan.
DATED: , 19 .
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Signature of Spouse
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