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PSUN > SEC Filings for PSUN > Form 8-K on 26-Mar-2013All Recent SEC Filings

Show all filings for PACIFIC SUNWEAR OF CALIFORNIA INC | Request a Trial to NEW EDGAR Online Pro

Form 8-K for PACIFIC SUNWEAR OF CALIFORNIA INC


26-Mar-2013

Entry into a Material Definitive Agreement, Material Modificati


Item 1.01 Entry into a Material Definitive Agreement.

The information set forth under Item 3.03 below of this Current Report on Form 8-K is incorporated into this Item 1.01 by reference.



Item 3.03 Material Modification to Rights of Security Holders.

On March 22, 2013, the Board of Directors of Pacific Sunwear of California, Inc., a California corporation (the "Company"), declared a dividend of one right (a "Right"), payable upon certification by the NASDAQ Global Select Market (the "NASDAQ") to the Securities and Exchange Commission that the Rights have been approved for listing and registration, for each outstanding share of common stock, par value $0.01 per share ("Common Shares"), of the Company held of record at the close of business on April 1, 2013 (the "Record Time"), or issued thereafter and prior to the Separation Time (as hereinafter defined) and thereafter pursuant to options and convertible securities outstanding at the Separation Time. The Rights will be issued pursuant to a Shareholder Protection Rights Agreement, dated as of March 22, 2013 (the "Rights Agreement"), between the Company and Computershare Limited, as Rights Agent (the "Rights Agent"). Each Right entitles its registered holder to purchase from the Company, after the Separation Time, one one-hundredth of a share of Participating Preferred Stock, par value $0.01 per share ("Participating Preferred Stock"), for $10.00 (the "Exercise Price"), subject to adjustment.

The Rights will be evidenced by the Common Share certificates until the close of business on the earlier of (either, the "Separation Time") (i) the tenth business day (or such later date as the Board of Directors of the Company may from time to time fix by resolution adopted prior to the Separation Time that would otherwise have occurred) after the date on which any Person (as defined in the Rights Agreement) commences a tender or exchange offer which, if consummated, would result in such Person's becoming an Acquiring Person, as defined below and (ii) the time of the first event causing a Flip-in Date (as defined below) to occur; provided that if the foregoing results in the Separation Time being prior to the Record Time, the Separation Time shall be the Record Time; and provided further that if a tender or exchange offer referred to in clause (i) is cancelled, terminated or otherwise withdrawn prior to the Separation Time without the purchase of any shares of stock pursuant thereto, such offer shall be deemed never to have been made. A Flip-in Date will occur on any Stock Acquisition Date (as defined below) or such later date and time as the Board of Directors of the Company may from time to time fix by resolution adopted prior to the Flip-in Date that would otherwise have occurred. A Stock Acquisition Date means the earlier of (a) the first date on which the Company announces that a person or group has become an Acquiring Person (as such


term is defined in the Rights Agreement) or (b) the date and time on which any Acquiring Person has acquired more than 40% of the Company's Common Shares (in either case, the "Stock Acquisition Date"). An Acquiring Person is any Person having Beneficial Ownership (as defined in the Rights Agreement) of 20% or more of the outstanding Common Shares, which term shall not include (i) the Company, any wholly-owned subsidiary of the Company or any employee stock ownership or other employee benefit plan of the Company, (ii) any person who is the Beneficial Owner of 20% or more of the outstanding Common Shares as of the time of the first public announcement of the Rights Agreement or who shall become the Beneficial Owner of 20% or more of the outstanding Common Shares solely as a result of (A) an acquisition of Common Shares by the Company, (B) the issuance of any Common Shares upon conversion of shares of the Company's Convertible Series B Preferred Stock or (C) the exercise or exchange of Rights held by such Person following the occurrence of a Flip-in Date which has not resulted from the acquisition of Beneficial Ownership of Common Shares by such Person or any of such Person's Affiliates or Associates, until such time as such Person acquires additional Common Shares, other than through a dividend, stock split or reclassification, that, in the aggregate amount to 0.1% or more of the outstanding Common Shares, (iii) any Person who becomes the Beneficial Owner of 20% or more of the outstanding Common Shares without any plan or intent to seek or affect control of the Company if such Person promptly divests sufficient securities such that such 20% or greater Beneficial Ownership ceases or (iv) any Person who Beneficially Owns Common Shares consisting solely of (A) shares acquired pursuant to the grant or exercise of an option granted by the Company in connection with an agreement to merge with, or acquire, the Company entered into prior to a Flip-in Date, (B) shares owned by such Person and its Affiliates and Associates at the time of such grant and (C) shares, amounting to less than 1% of the outstanding Common Shares, acquired by Affiliates and Associates of such Person after the time of such grant. The Rights Agreement provides that, until the Separation Time, the Rights will be transferred with and only with the Common Shares. Common Share certificates issued after the Record Time but prior to the Separation Time shall evidence one Right for each Common Share represented thereby and shall contain a legend incorporating by reference the terms of the Rights Agreement (as such may be amended from time to time). Notwithstanding the absence of the aforementioned legend, certificates evidencing Common Shares outstanding at the Record Time shall also evidence one Right for each Common Share evidenced thereby. Promptly following the Separation Time, separate certificates evidencing the Rights ("Rights Certificates") will be delivered to holders of record of Common Shares at the Separation Time.

The Rights will not be exercisable until the Business Day (as defined in the Rights Agreement) following the Separation Time. The Rights will expire on the earliest of (i) the Exchange Time (as defined below), (ii) the close of business on March 22, 2016 if the Rights Agreement is approved by shareholders and March 22, 2014 if the Rights Agreement is not approved by shareholders prior to such date, (iii) the date on which the Rights are redeemed as described below and (iv) upon the merger of the Company into another corporation pursuant to an agreement entered into prior to a Stock Acquisition Date (in any such case, the "Expiration Time").


The Exercise Price and the number of Rights outstanding, or in certain circumstances the securities purchasable upon exercise of the Rights, are subject to adjustment from time to time to prevent dilution in the event of a Common Share dividend on, or a subdivision or a combination into a smaller number of, Common Shares, or the issuance or distribution of any securities or assets in respect of, in lieu of or in exchange for Common Shares.

In the event that prior to the Expiration Time a Flip-in Date occurs, the Company shall take such action as shall be necessary to ensure and provide, to the extent permitted by applicable law, that each Right (other than Rights Beneficially Owned by the Acquiring Person or any affiliate or associate thereof, which Rights shall become void) shall constitute the right to purchase from the Company, upon the exercise thereof in accordance with the terms of the Rights Agreement, that number of Common Shares of the Company having an aggregate Market Price (as defined in the Rights Agreement), on the Stock Acquisition Date that gave rise to the Flip-in Date, equal to twice the Exercise Price for an amount in cash equal to the then current Exercise Price. In addition, the Board of Directors of the Company may, at its option, at any time after a Flip-in Date and prior to the time that an Acquiring Person becomes the Beneficial Owner of more than 50% of the outstanding Common Shares, elect to exchange all (but not less than all) the then outstanding Rights (other than Rights Beneficially Owned by the Acquiring Person or any affiliate or associate thereof, which Rights become void) for Common Shares at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date of the Separation Time (the "Exchange Ratio"). Immediately upon such action by the Board of Directors (the "Exchange Time"), the right to exercise the Rights will terminate and each Right will thereafter represent only the right to receive a number of Common Shares equal to the Exchange Ratio.

Whenever the Company shall become obligated, as described in the preceding paragraph, to issue Common Shares upon exercise of or in exchange for Rights, the Company, at its option, may substitute therefor shares of Participating Preferred Stock, at a ratio of one one-hundredth of a share of Participating Preferred Stock for each Common Share so issuable.

In the event that prior to the Expiration Time the Company enters into, consummates or permits to occur a transaction or series of transactions after the time an Acquiring Person has become such in which, directly or indirectly,
(i) the Company shall consolidate or merge or participate in a binding statutory share exchange with any other Person if, at the time of the consolidation, merger or share exchange or at the time the Company enters into an agreement with respect to such consolidation, merger or statutory share exchange, the Acquiring Person controls the Board of Directors of the Company or is the Beneficial Owner of 90% or more of the outstanding Common Shares and either (A) any term of or arrangement concerning the treatment of shares of capital stock in such merger, consolidation or statutory share exchange relating to the Acquiring Person is not identical to the terms and arrangements relating to other holders of Common Shares or (B) the Person with whom such transaction or series of transactions occurs is the Acquiring Person or an Affiliate or Associate thereof or (ii) the Company shall sell or


otherwise transfer (or one or more of its subsidiaries shall sell or otherwise transfer) assets (A) aggregating more than 50% of the assets (measured by either book value or fair market value) or (B) generating more than 50% of the operating income or cash flow, of the Company and its subsidiaries (taken as a whole) to any other Person (other than the Company or one or more of its wholly owned subsidiaries) or to two or more such Persons which are affiliated or otherwise acting in concert, if, at the time of such sale or transfer of assets or at the time the Company (or any such subsidiary) enters into an agreement with respect to such sale or transfer, the Acquiring Person controls the Board of Directors of the Company (a "Flip-over Transaction or Event"), the Company shall take such action as shall be necessary to ensure, and shall not enter into, consummate or permit to occur such Flip-over Transaction or Event until it shall have entered into a supplemental agreement with the Person engaging in such Flip-over Transaction or Event or the parent corporation thereof (the "Flip-over Entity"), for the benefit of the holders of the Rights, providing, that upon consummation or occurrence of the Flip-over Transaction or Event
(i) each Right shall thereafter constitute the right to purchase from the Flip-over Entity, upon exercise thereof in accordance with the terms of the Rights Agreement, that number of shares of common stock of the Flip-over Entity having an aggregate Market Price on the date of consummation or occurrence of such Flip-over Transaction or Event equal to twice the Exercise Price for an amount in cash equal to the then current Exercise Price and (ii) the Flip-over Entity shall thereafter be liable for, and shall assume, by virtue of such Flip-over Transaction or Event and such supplemental agreement, all the obligations and duties of the Company pursuant to the Rights Agreement. For purposes of the foregoing description, the term "Acquiring Person" shall include any Acquiring Person and its Affiliates and Associates counted together as a single Person.

The Board of Directors of the Company may, at its option, at any time prior to the Flip-in Date redeem all (but not less than all) the then outstanding Rights at a price of $0.01 per Right) (the "Redemption Price"), as provided in the Rights Agreement. Immediately upon the action of the Board of Directors of the Company electing to redeem the Rights, without any further action and without any notice, the right to exercise the Rights will terminate and each Right will thereafter represent only the right to receive the Redemption Price in cash for each Right so held. In addition, if the Company receives a Qualified Offer (as defined below), then the Rights may be redeemed by way of shareholder action taken at a special meeting of shareholders called by the Board upon the written notice of the holders of at least 10% of Common Shares then outstanding (other than Common Shares held by the offeror or its Affiliates and Associates) for the purpose of voting on a resolution authorizing the redemption of the Rights pursuant to the provisions of the Rights Agreement. The written notice must be received by the Company not earlier than 60 nor later than 80 business days following the commencement of a Qualified Offer that has not been terminated prior thereto and that continues to be a Qualified Offer. The special meeting must be held on or prior to the 90th business day following Company's receipt of such notice. Such an action by the shareholders requires the affirmative vote of a majority of all Common Shares entitled to vote on such issue (excluding Common Shares held by the offeror and its Affiliates or Associates). If either (A) the special meeting is not held on or prior to the 90th business day following receipt of the special meeting notice, or (B) at the special meeting, the

. . .



Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Fiscal 2013 Bonus Plan

On March 22, 2013, the Board adopted the Fiscal 2013 Bonus Plan (the "Plan"). Under the Plan, participants (who range from corporate managers and other key contributors to the CEO) are eligible to receive cash bonuses equal to a percentage of their base salary. The amount of the bonus depends on a combination of: (i) the Company's achievement of pre-set "EBITDA" (earnings before interest, taxes, depreciation and amortization, but excluding one-time non-recurring charges) targets (the "EBITDA Targets"); and (ii) the participant's individual performance. The Company component of the bonus is 75% for senior executives and 60% for all other plan participants, and the individual performance component of the bonus is 25% for senior executives and 40% for all other plan participants. Unless otherwise determined by the Compensation Committee, no bonus is achieved under the Plan unless the Company meets its budgeted EBITDA Target. If that EBITDA Target is achieved, the Plan will be 50% funded and each participant will be eligible to receive up to 50% of their target bonus. If the Company achieves EBITDA equal to two times the budgeted EBITDA Target, the Plan will be 100% funded and each participant will be eligible to receive up to 100% of their target bonus. Each participant also can earn up to two times his or her target bonus if the Company achieves its highest EBITDA Target and the participant achieves the highest individual performance rating (Outstanding). The Compensation Committee of the Board has the authority under the Plan to , if circumstances so dictate, award discretionary bonuses to top performing participants even if the EBITDA Targets are not achieved, award no bonuses under the Plan even if the EBITDA Targets are achieved, and award bonuses in any form it determines (e.g. in the form of equity awards, retention bonuses, etc.).


Amounts which the executive officers of the Company are eligible to receive under the Plan are as follows:

                                                        Target                                Maximum
                                                        Bonus                                  Bonus             Maximum
Name/Title                         Base Salary        Percentage         Target Bonus        Percentage           Bonus
Gary H. Schoenfeld                 $  1,050,000               100 %          1,050,000               200 %       2,100,000
  President and CEO

Michael W. Kaplan                  $    437,746                50 %     $      218,873               100 %     $   437,746
  SVP, CFO

Paula M. Lentini                   $    437,746                50 %     $      218,873               100 %     $   437,746
  SVP, Retail

Alfred Chang                       $    327,438                50 %     $      163,719               100 %     $   327,438
  SVP, Men's Merchandising

Christine Lee                      $    427,462                50 %     $      213,731               100 %     $   427,462
  SVP, Women's Merchandising

Jon Brewer,                        $    394,657                50 %     $      197,328               100 %     $   394,657
  SVP, Product Development and
Supply Chain

Craig E. Gosselin                  $    371,305                50 %     $      185,652               100 %     $   371,305
  SVP and General Counsel

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