Document:

exv10w1

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made as of June 16, 2009, between Gary
H. Schoenfeld (“Executive”) and Pacific Sunwear of California, Inc. (the
“Company”).

RECITALS

     A. The Company desires that Executive be employed by the Company to carry out the duties and
responsibilities described below, all on the terms and conditions hereinafter set forth, effective
as of June 29, 2009 (the “Effective Date”), and Executive is willing to accept such
employment on such terms and conditions.

     B. This Agreement shall govern the employment relationship between Executive and the Company
from and after the Effective Date and supersedes and negates all previous agreements and
understandings with respect to such relationship.

AGREEMENT

     The parties agree as follows:

1. DUTIES

     (a) The Company does hereby hire, engage, and employ Executive as its President and Chief
Executive Officer for the Term (as defined in Section 2). Executive does hereby accept and agree
to such hiring, engagement, and employment. Executive shall serve the Company in such position in
conformity with the provisions of this Agreement and the general direction of the Board of
Directors of the Company (the “Board”). Executive shall have duties and authority
consistent with Executive’s position as President and Chief Executive Officer. The Company further
agrees to nominate and recommend Executive for election to the Board at the first annual meeting of
the Company’s shareholders at which directors are elected after the Effective Date. If Executive
is elected to serve on the Board, Executive shall not receive additional compensation for such
Board service.

     (b) Throughout his employment, Executive shall devote his time, energy, and skill to the
performance of his duties for the Company, vacations and other leave authorized under this
Agreement excepted. During his employment hereunder, and except for his service on the board of
directors of Camelback Products LLC (“Camelback Products”) (on which Executive may continue
to serve so long as such service does not materially interfere with Executive’s performance of his
duties for the Company), Executive shall not serve as a director, officer, partner, member or
employee of, or consultant to, any other company or business without first receiving the written
consent of the Board. In the event that Executive ceases to serve on the board of directors of
Camelback Products, the Board shall not unreasonably withhold its consent to Executive serving on
another board of one company or business that does not compete with the Company. The foregoing
notwithstanding, Executive shall be permitted to engage in charitable, civic, educational,
professional, industry and community affairs, to serve on the boards of directors of non-profit
organizations, and to manage Executive’s passive personal investments, provided that such
activities do not materially interfere with the performance of
Executive’s duties hereunder. All of Executive’s business and professional relationships
shall at

 

 

all times be in compliance with the conflict of interest and other policies set forth in
the Company’s Code of Ethical Standards, Business Practices and Conduct applicable to all officers
and employees of the Company (the “Code of Ethics”).

     (c) Executive hereby represents to the Company that he is not subject to any employment,
confidentiality, trade secret or similar agreement, which would interfere with the performance of
his duties for the Company.

2. TERM

     The term of employment under this Agreement (the “Term”) shall commence on the
Effective Date and shall terminate on the third (3rd) anniversary of the Effective Date
(the “Termination Date”); provided, however, that this Agreement shall be automatically
renewed, and the Term shall be automatically extended for one (1) additional year on each
anniversary of the Effective Date, unless either party gives notice, in writing, more than sixty
(60) days prior to such anniversary that the Term shall not be extended (or further extended, as
the case may be). The term “Term” shall include any extension thereof pursuant to the preceding
sentence. Provision of notice that the Term shall not be extended or further extended, as the case
may be, shall not constitute a breach of this Agreement and shall not constitute “Good Reason” for
purposes of this Agreement. Notwithstanding the foregoing, the Term is subject to earlier
termination as provided below in this Agreement.

3. COMPENSATION

     (a) Base Salary. Executive’s base salary as increased from time to time (the
“Base Salary”) shall be paid in accordance with the Company’s regular payroll practices in
effect from time to time, but not less frequently than in monthly installments. Executive’s Base
Salary shall initially be at an annualized rate of One Million Fifty Thousand Dollars ($1,050,000).
Following the conclusion of the Company’s fiscal year ending on or about January 31, 2012,
Executive will be eligible for an annual performance and salary review, with any corresponding
increase in Executive’s Base Salary to be determined by the Compensation Committee of the Board
(the “Compensation Committee”), which will consider such increase in good faith and with
consideration of the performance of Executive and the Company during the just-concluded fiscal
year. In no event, however, shall Executive’s Base Salary be reduced from its then-current level
at any time.

     (b) Annual Bonus. For each fiscal year of the Company that ends during the Term,
Executive will be eligible to participate in and receive a bonus under the Company’s annual bonus
plan (the “Annual Bonus”). Executive’s target Annual Bonus will be 100% of Base Salary
(the “Target Annual Bonus”) with a maximum Annual Bonus of 200% of Base Salary if the
Company reaches its established stretch target for the applicable fiscal year; provided, however,
that Executive shall not be eligible for an Annual Bonus with respect to the fiscal year ending on
or about January 31, 2010. The Annual Bonus amount shall be determined by the Company’s
Compensation Committee based upon achievement of Company and individual performance goals to be
established each fiscal year by the Compensation Committee. The Annual Bonus payment, if any,
shall be made in or around April of the fiscal year following the
fiscal year for which the bonus is earned, provided that in all events (except as provided in

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Sections 5(b), 6(b) and Section 7) Executive must be employed by the Company through the date on
which the bonus is paid in order to be eligible to receive any payment of the bonus.

     (c) Equity Compensation. At the first regular meeting of the Compensation Committee
held following the Effective Date, the Compensation Committee will approve the grant to Executive
of the following equity awards under the Company’s 2005 Performance Incentive Plan (the “2005
Plan”), each such award to be effective on the date of such approval by the Compensation
Committee (the “Grant Date”):

	 	•	 	An option to purchase 1,000,000 shares of the Company’s common stock, with the per
share exercise price of such option to be the closing market price of a share of the
Company’s common stock on the Grant Date, the expiration date of such option to be the
day before the seventh anniversary of the Grant Date (subject to earlier termination as
provided in the applicable award agreement), and such option to vest and become
exercisable with respect to 25% of the shares covered by such option on each of the
first four anniversaries of the Grant Date, in each case subject to Executive’s
employment by the Company through the applicable vesting date; and
	 
	 	•	 	An award of 25,000 restricted shares of the Company’s common stock, such award to
vest with respect to 100% of the shares covered by the award on the first anniversary
of the Grant Date, subject to Executive’s employment by the Company through the vesting
date.

     In addition, provided Executive is then still employed by the Company, the Compensation
Committee will approve the grant to Executive at the first regular meeting of the Compensation
Committee held in January 2010 of an option to purchase 500,000 shares of the Company’s common
stock, with the per share exercise price of such option to be the closing market price of a share
of the Company’s common stock on the date of such approval (the “January Grant Date”), the
expiration date of such option to be the day before the seventh anniversary of the January Grant
Date (subject to earlier termination as provided in the applicable award agreement), and such
option to vest and become exercisable with respect to 100% of the shares covered by such option on
the fourth anniversary of the Effective Date, subject to Executive’s employment by the Company
through the vesting date.

     Each of the foregoing awards will be evidenced by an award agreement in the Company’s standard
form of award agreement for that particular type of award under the 2005 Plan and be subject to
such other terms as are provided therein and in the 2005 Plan. Copies of the 2005 Plan and such
forms of award agreements have been provided to Executive. The parties acknowledge and agree that
the foregoing awards are intended to satisfy the Company’s obligation to grant equity incentive
awards to Executive through 2011 (if employment continues through such period) and the parties do
not anticipate that additional equity incentive awards will be granted to Executive prior to 2012.
The amount, timing, and other terms of any future equity award grants to Executive shall be
determined by the Board (or the Compensation Committee) in its good faith discretion.

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4. BENEFITS

     (a) Health, Welfare and Pension. During the Term, Executive shall be entitled to
participate, on no less favorable terms than those generally applicable to other senior executives
of the Company, in all health and welfare benefit plans and programs and all retirement, deferred
compensation, auto allowance and similar plans and programs generally available to other executives
or employees of the Company as in effect from time to time, subject to any legally required
restrictions specified in such plans and programs. Notwithstanding the foregoing, Executive shall
not be eligible to participate in any severance plan, program or arrangement of the Company (other
than this Agreement), including, without limitation, the Company’s Executive Severance Plan, and
shall not be entitled to any severance benefits under any such plan, program or arrangement.

     (b) Vacation and Other Leave. During the Term, Executive shall accrue vacation at a
rate of four (4) weeks per year (subject to the Company’s standard vacation policies applicable to
Company executives which limit or eliminate accruals for any period of time when the individual has
accrued and untaken vacation in excess of a prescribed level). Such vacation shall be scheduled
and taken in accordance with the Company’s standard vacation policies applicable to Company
executives. Executive shall also be entitled to all other holiday and leave pay generally
available to other executives of the Company.

     (c) Expense Reimbursements. During the Term, the Company shall, pursuant to the
Company’s expense reimbursement policies, promptly reimburse Executive for reasonable expenses
incurred in connection with the performance of his duties for the Company.

5. DEATH OR DISABILITY

     (a) Definition of Disabled and Disability. For purposes of this Agreement, the terms
“Disabled” or “Disability” shall mean Executive’s inability, because of physical or
mental illness or injury, to perform the essential functions of his customary duties pursuant to
this Agreement, even with a reasonable accommodation, and the continuation of such disabled
condition for a period of one hundred eighty (180) continuous days, or for not less than two
hundred ten (210) days during any continuous twenty-four (24) month period.

     (b) Termination Due to Death or Disability. If Executive dies during the Term,
Executive’s employment shall automatically cease and terminate as of the date of Executive’s death.
If Executive becomes Disabled during the Term, the Company may terminate Executive’s employment
upon thirty (30) days notice to Executive. In the event of the termination of employment hereunder
due to Executive’s death or Disability, Executive or his estate shall be entitled to receive:

	 	(i)	 	a lump sum cash payment, payable on the termination of
Executive’s employment, equal to the sum of (x) any accrued but unpaid Base
Salary as of the date of Executive’s termination of employment hereunder, and
(y) any accrued but unused vacation time in accordance with Company policy;

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	 	(ii)	 	a payment equal to any earned but unpaid Annual Bonus in
respect of the most recently completed fiscal year preceding Executive’s
termination of employment hereunder payable at the same time bonuses are paid
for such completed fiscal year to other senior executives of the Company, but
in no event later than two and one-half (2 1/2) months following the end of such
completed fiscal year;
	 
	 	(iii)	 	a “Pro Rata Portion of the Bonus,” meaning an amount
equal to any Annual Bonus to which Executive would have been entitled had
Executive remained an employee for the balance of the Company’s fiscal year in
which his employment terminated multiplied by a fraction, the numerator of
which is the number of days from February 1 of such fiscal year through the
date of Executive’s termination, and the denominator of which is 365. Such Pro
Rata Portion of the Bonus, if any, shall be paid to Executive in a single
payment at the same time bonuses are paid for the fiscal year of termination to
other senior executives of the Company, but in no event later than two and
one-half (2 1/2) months following the end of such fiscal year;
	 
	 	(iv)	 	such employee benefits, if any, to which Executive may be
entitled under the employee benefit plans and arrangements of the Company; and
	 
	 	(v)	 	reimbursement of any expenses incurred by Executive during the
Term that are reimburseable by the Company in accordance with Section 4(c) (the
amounts described in clauses 5(b)(i) through (v) are collectively referred to
herein as the “Accrued Obligations”).

6. TERMINATION BY THE COMPANY

     (a) Termination for Cause. The Company may terminate the Term and Executive’s
employment hereunder for Cause at any time; provided, however, that in the event of conduct giving
rise to a claim of Cause based on any of clauses (iv) through (vii) of the following definition of
“Cause,” Executive shall be given written notice of the grounds claimed to constitute Cause and
(except as otherwise provided below) be given an opportunity (of not more than 30 days) to promptly
cure such conduct. The Company need not, however, give Executive such an opportunity to cure if
(x) a cure is not reasonably possible in the circumstances or (y) the Company has theretofore given
notice to Executive of similar conduct (whether or not he cured the prior instance(s) of such
conduct). Executive agrees that a cure may not be possible in all circumstances. The term
“Cause” for purposes of this Agreement shall mean a determination by the Compensation
Committee of the Board, acting in good faith and based on the information then known to it, that
one or more of the following has occurred:

	 	(i)	 	Executive’s conviction of, or entrance of a plea of guilty or
nolo contendere to a felony;
	 
	 	(ii)	 	fraudulent conduct by Executive in connection with the business
affairs of the Company or any of its Subsidiaries;

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	 	(iii)	 	theft, embezzlement, or other criminal misappropriation of
funds by Executive from the Company or any of its Subsidiaries;
	 
	 	(iv)	 	Executive’s bad faith refusal to perform his duties to the
Company or its Subsidiaries, or follow the lawful orders of the Board;
	 
	 	(v)	 	Executive’s willful misconduct, which has, or would if
generally known, materially adversely affect the good will, business, or
reputation of the Company or any of its Subsidiaries;
	 
	 	(vi)	 	Executive’s material breach of any written agreement between
Executive and the Company or any of its Subsidiaries; or
	 
	 	(vii)	 	Executive’s material violation of the Company’s Code of Ethics
or Code of Ethics for the Chief Executive Officer and Senior Financial
Officers.

     In the event of the termination of Executive’s employment hereunder due to a termination by
the Company for Cause, then Executive shall be entitled to receive payment of the Accrued
Obligations (excluding the Pro Rata Portion of the Bonus) and the Company shall have no further
obligation to Executive pursuant to this Agreement.

     If the Company attempts to terminate Executive’s employment pursuant to this Section 6(a) and
it is ultimately determined that the Company lacked Cause, the provisions of Section 6(b)
(“Termination by the Company-Termination Without Cause”) shall apply and Executive shall be
entitled to receive the payments called for by Section 6(b) (“Termination by the
Company-Termination Without Cause”).

     For purposes of this Agreement, the term “Subsidiary” means any corporation or other
entity a majority of whose outstanding voting stock or voting power is beneficially owned, directly
or indirectly, by the Company.

     (b) Termination Without Cause. The Company may, with or without reason, terminate
Executive’s employment hereunder without Cause at any time, by providing Executive written notice
of such termination. Such notice shall specify the effective date of the termination of
Executive’s employment. In the event of the termination of Executive’s employment hereunder due to
a termination by the Company without Cause (other than due to Executive’s death or Disability),
then Executive shall be entitled to payment of the Accrued Obligations and, subject to Section
6(c), the following severance benefits, such benefits to be paid at the times and in the manner
provided in Section 6(d):

	 	(i)	 	a cash payment equal to Executive’s last annualized rate of
Base Salary in effect on or immediately prior to Executive’s Separation from
Service;
	 
	 	(ii)	 	a cash payment equal to (i) the quotient obtained by dividing
Executive’s Base Salary (at the last annualized rate in effect on or
immediately prior to Executive’s Separation from Service) by twelve (12),
multiplied by (ii) Executive’s Years of Service as of Executive’s Separation
from Service
(up to a maximum of twelve (12) Years of Service); provided,
however,

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	 	 	 	that in no event shall the amount determined pursuant to
this Section 6(b)(ii) exceed an amount equal to (x) the amount obtained by
multiplying two (2) by Executive’s Base Salary (at the last annualized rate
in effect on or immediately prior to Executive’s Separation from Service),
less (y) the amount determined pursuant to Section 6(b)(i);
	 
	 	(iii)	 	a cash payment equal to the expected aggregate cost, as
reasonably determined by the Compensation Committee, of the premiums that would
be charged to Executive to continue medical coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”), at the same
or reasonably equivalent medical coverage for Executive (and, if applicable,
Executive’s eligible dependents) as last in effect upon or immediately prior to
Executive’s Separation from Service, for twelve (12) months; and
	 
	 	(iv)	 	payment or reimbursement of Executive’s costs for outplacement
services obtained by Executive within the twelve (12) month period following
Executive’s Separation from Service up to a maximum of $20,000.

For purposes of this Agreement, Executive’s severance benefits shall be calculated with respect to
Executive’s Base Salary as in effect prior to any reduction that would constitute “Good Reason” (as
defined in Section 7) for Executive’s resignation.

For purposes of this Agreement, the term “Years of Service” shall mean the number of whole
years that Executive was employed by the Company or any of its Subsidiaries. Years of Service
shall be determined by dividing the total number of calendar days on which Executive was employed
by the Company or one or more of its Subsidiaries by three hundred sixty-five (365). Any
fractional year shall be disregarded.

For purposes of this Agreement, a “Separation from Service” occurs when Executive dies,
retires, or otherwise has a termination of employment with the Company that constitutes a
“separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without
regard to the optional alternative definitions available thereunder.

     (c) Compliance with Agreement; Release.

	 	(i)	 	Notwithstanding anything to the contrary contained in this
Agreement but subject to Section 6(c)(ii), during the period in which Executive
is entitled to receive any payments described in Sections 6(b)(i) and 6(b)(ii)
(including any entitlement to receive such payments pursuant to Section 7) and
prior to the date on which all such payments have been made to Executive
pursuant to Section 6(d)(i), any money or other valuable consideration earned
or otherwise received by Executive or credited to Executive’s account (whether
presently or on a deferred basis) from the provision of services (whether as an
employee, independent contractor, consultant, advisor, or otherwise) during
such period shall be offset
against and serve to decrease the amount of any such payments.

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	 	 	 	Executive
agrees to notify the Company in writing immediately upon receiving or
earning any such money or other valuable consideration.
	 
	 	(ii)	 	Notwithstanding anything to the contrary contained in this
Agreement, the Company’s obligation to make any payment of severance benefits
to Executive pursuant to Section 6(b), Section 7 or Section 10(a) (or to
continue making any such payment, as the case may be) is subject to the
condition precedent that Executive shall have complied with the restrictive
covenants set forth in Sections 11 through 14 hereof; provided, however, that,
subject to Section 6(c)(iii), in no event shall the total amount actually paid
by the Company pursuant to Sections 6(b)(i) and 6(b)(ii) (or Sections 7 or
10(a)(i) and 10(a)(ii), if applicable) be less than the lesser of (i) the
aggregate amount Executive is otherwise entitled to receive pursuant to such
sections, or (ii) Ten Thousand Dollars ($10,000), regardless of any breach by
Executive of Executive’s obligations under Section 6(c)(i) or any of the
provisions of Sections 11 through 14, which amount Executive agrees is good and
sufficient consideration for the release described in Section 6(c)(iii).
	 
	 	(iii)	 	Notwithstanding anything to the contrary contained in this
Agreement, the Company’s obligation to make any payment of severance benefits
pursuant to Section 6(b), Section 7 or Section 10(a) is subject to the
condition precedent that (A) Executive has fully executed a valid and effective
release (in the form attached hereto as Exhibit A or such other form as
the Compensation Committee may reasonably require in the circumstances, which
other form shall be substantially similar to that attached hereto as
Exhibit A but with such changes as the Compensation Committee may
determine to be required or reasonably advisable in order to make the release
enforceable and otherwise compliant with applicable laws), (B) such executed
release is delivered by Executive to the Company so that it is received by the
Company in the time period specified below, and (C) such release is not revoked
by Executive (pursuant to any revocation rights afforded by applicable law).
In order to satisfy the requirements of this Section 6(c)(iii), Executive’s
release referred to in the preceding sentence must be delivered by Executive to
the Company so that it is received by the Company no later than thirty (30)
calendar days after Executive’s Separation from Service (or such later date as
may be required for an enforceable release of Executive’s claims under the Age
Discrimination in Employment Act of 1967, as amended (“ADEA”), to the
extent the ADEA is applicable in the circumstances, in which case Executive
will be provided with either twenty one (21) or forty five (45) days, depending
on the circumstances of the termination, to consider the release). In
addition, the Company may require that Executive’s release be executed no
earlier than the date that Executive’s employment with the Company terminates.

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     (d) Form and Timing of Severance Payments. Any severance benefits that become payable
to Executive pursuant to Section 6(b) (including any such benefits payable pursuant to Section 7)
or Section 10(a) shall be paid at the times and in the manner set forth in this Section 6(d).

	 	(i)	 	The payments described in Sections 6(b)(i) and 6(b)(ii) shall
be paid by the Company in cash to Executive in a series of twelve (12)
substantially equal monthly installment payments (each constituting the same
approximate fraction of the aggregate severance amount), with the first such
installment payment being made within ten (10) business days following the date
on which Executive’s release contemplated by Section 6(c) has been executed by
Executive, delivered to the Company, and has become effective and irrevocable
by Executive (to the extent Executive has any revocation rights under
applicable law) and with the remaining eleven (11) installment payments being
made monthly thereafter for eleven (11) months. Notwithstanding the foregoing
provisions, if a Change in Control Event (as defined below) occurs upon or at
any time after Executive’s Separation from Service, the aggregate amount of the
remaining unpaid installments shall be paid to Executive in cash in a lump sum
not more than thirty (30) days after such Change in Control Event.
	 
	 	(ii)	 	The payments described in Section 10(a)(i) and in Section
6(b)(iii) or Section 10(a)(ii), as applicable, shall be paid by the Company in
cash to Executive on or within (x) the seventy-four (74) day period following
Executive’s Separation from Service, or, if later and in the case of payments
described in Sections 10(a)(i) or 10(a)(ii), (y) the thirty (30) day period
following the Change in Control Event, as applicable.
	 
	 	(iii)	 	Any payment or reimbursement to which Executive may become
entitled pursuant to Section 6(b)(iv) or Section 10(a)(iii) shall be subject to
the Company’s expense reimbursement policies in effect immediately prior to
Executive’s Separation from Service (or, if earlier, the date of a Change in
Control Event) and applicable to the Company’s executives generally and shall
be fully paid or reimbursed, as applicable, by the Company not later than the
end of Executive’s third taxable year following Executive’s taxable year in
which Executive’s Separation from Service occurs.
	 
	 	(iv)	 	Each installment of severance benefits is a separate “payment”
for purposes of Treasury Regulation Section 1.409A-2(b)(2)(i), and the
severance benefits are intended to satisfy the exemptions from application of
Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4) and
1.409A-1(b)(9) (to the extent of the applicable limitations of such
exemptions). However, if such exemptions are not available, the provisions of
Section 6(d)(v) shall apply.
	 
	 	(v)	 	The provisions of this paragraph shall only apply if, and to
the extent, required to avoid the imputation of any tax, penalty or interest
pursuant to

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	 	 	 	Section 409A of the Code. Notwithstanding any other provision herein, if
Executive is a “specified employee” (within the meaning of Treasury
Regulation Section 1.409A-1) as of the date of Executive’s Separation from
Service, Executive shall not be entitled to any distribution of his
severance benefits hereunder until the earlier of (i) the date which is six
(6) months after his Separation from Service for any reason other than
death, or (ii) the date of Executive’s death. Any amounts otherwise payable
to Executive upon or in the six (6) month period following Executive’s
Separation from Service that are not so paid by reason of the preceding
paragraph shall be paid (without interest) as soon as practicable (and in
any event within thirty (30) days) after the date that is six (6) months
after Executive’s Separation from Service (or, if earlier, as soon as
practicable after the date of Executive’s death).

7. TERMINATION BY EMPLOYEE

     Executive shall have the right to terminate Executive’s employment hereunder at any time with
or without “Good Reason” (as defined below) by providing sixty (60) days written notice of such
termination to the Company. In the event of the termination of Executive’s employment hereunder by
Executive without Good Reason, then Executive shall be entitled to receive payment of the Accrued
Obligations (excluding the Pro Rata Portion of the Bonus) and the Company shall have no further
obligation to Executive pursuant to this Agreement. In the event of the termination of Executive’s
employment hereunder by Executive for Good Reason, then Executive shall be entitled to payment of
the Accrued Obligations and, subject to Section 6(c), the severance benefits set forth in clauses
(i) through (iv) of Section 6(b), such benefits to be paid at the times and in the manner provided
in the corresponding provisions of Section 6(d).

     For purposes hereof, the term “Good Reason” shall mean the occurrence of any one or
more of the following conditions without Executive’s express written consent:

	 	(i)	 	a material diminution in Executive’s authority, duties or
responsibilities;
	 
	 	(ii)	 	a material diminution in Executive’s rate of base compensation;
	 
	 	(iii)	 	a change in the location of Executive’s principal workplace
for the Company to a location that is more than fifty (50) miles from Anaheim,
California and that results in an increased commute for Executive from his
principal residence (except for reasonable periods of required travel on
Company business); or
	 
	 	(iv)	 	a material breach by the Company of this Agreement.
	 
	 	provided, however, that any such condition shall not constitute “Good Reason” unless
both (x) Executive provides written notice to the Company of the condition claimed
to constitute Good Reason within ninety (90) days of the initial existence of such
condition, and (y) the Company fails to remedy such condition within thirty (30)
days of receiving such written notice thereof; and provided, further,
that in all events the termination of Executive’s employment with the Company

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	 	 	 	shall
not be treated as a termination for “Good Reason” unless such termination occurs not
more than one (1) year following the initial existence of the condition claimed to
constitute “Good Reason.”

8. EXPIRATION OF TERM

     In the event Executive’s employment has not otherwise been terminated pursuant to this
Agreement, Executive’s employment shall terminate effective on the Termination Date. In such
event, Executive shall be entitled to receive payment of the Accrued Obligations.

9. EFFECT OF TERMINATION ON BOARD MEMBERSHIP

     Executive agrees that any termination of Executive’s employment hereunder by either Executive
or the Company shall, unless otherwise agreed in writing by Executive and the Company, effect a
resignation of Executive from the Board (if Executive is then a member of the Board) concurrent
with the termination date.

10. CHANGE IN CONTROL

     (a) Change in Control Severance Benefits. If (1) Executive’s employment with the
Company is terminated during the Term by the Company without Cause (and other than due to
Executive’s death or Disability) or by Executive for Good Reason, and (2) such termination of
employment occurs at any time during the period commencing three (3) months before the occurrence
of a Change in Control Event and ending twelve (12) months after such Change in Control Event, then
Executive shall be entitled to payment of the Accrued Obligations and, subject to Section 6(c), the
following severance benefits, such benefits to be paid at the times and in the manner provided in
Section 6(d):

	 	(i)	 	a cash payment equal to (i) 2.0, multiplied by (ii) the sum of
(x) Executive’s highest annualized rate of Base Salary in effect in the one
year period preceding Executive’s Separation from Service, and (y) Executive’s
Target Annual Bonus for the Company’s fiscal year in which Executive’s
Separation from Service occurs (or, if there is then no such target bonus
opportunity, the average Annual Bonus paid by the Company to Executive for the
last three full fiscal years of the Company prior to Executive’s Separation
from Service).
	 
	 	(ii)	 	a cash payment equal to the amount determined under Section
6(b)(iii), subject to the conditions and limitations set forth in such section.
	 
	 	(iii)	 	payment or reimbursement of Executive’s costs for outplacement
services as provided in Section 6(b)(iv), subject to the conditions and
limitations set forth in such section.

If Executive is otherwise entitled to receive benefits under both Section 6(b) or Section 7 above
and this Section 10(a), Executive shall receive the benefits provided in this Section 10(a) and
not
the benefits provided in Section 6(b) or Section 7. If Executive has previously commenced
receiving benefits under Section 6(b) or Section 7, and then becomes entitled to benefits under

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this Section 10(a) due to a Change in Control Event that follows Executive’s termination, Executive
shall receive severance benefits under this Section 10(a) less the amount of any severance benefits
theretofore provided pursuant to Section 6(b) or Section 7, and Executive shall thereafter not be
entitled to any severance benefits otherwise due pursuant to Section 6(b) or Section 7.

For purposes of this Agreement, “Change in Control Event” has the meaning ascribed to such
term under the 2005 Plan as in effect on the Effective Date. In no event shall a transaction or
other event that occurred prior to the Effective Date constitute a Change in Control Event.
Notwithstanding any other provision herein, a transaction shall not constitute a Change in Control
Event for purposes of this Agreement unless it is a “change in the ownership or effective control”
of the Company, or a change “in the ownership of a substantial portion of the assets” of the
Company within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”).

     (b) Section 280G.

	 	(i)	 	Notwithstanding anything contained in this Agreement to the
contrary, to the extent that any payment or distribution of any type to or for
Executive by the Company or any of its affiliates, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (including, without limitation, any accelerated vesting of stock
options or other equity-based awards granted by the Company to Executive)
(collectively, the “Total Payments”) is or will be subject to the
excise tax imposed under Section 4999 of the Code (which reference includes,
for purposes of this Agreement, any similar successor provision to Section
4999), then the Total Payments shall be reduced (but not below zero) so that
the maximum amount of the Total Payments (after reduction) shall be one dollar
($1.00) less than the amount which would cause the Total Payments to be subject
to the excise tax imposed by Section 4999 of the Code; provided that such
reduction to the Total Payments shall be made only if the total after-tax
benefit to Executive is greater after giving effect to such reduction than if
no such reduction had been made. The Company shall reduce or eliminate the
Total Payments by first reducing or eliminating any cash severance benefits,
then by reducing or eliminating any accelerated vesting of stock options, then
by reducing or eliminating any accelerated vesting of other equity-based
awards, then by reducing or eliminating any other remaining Total Payments.
The preceding provisions of this Section 10(b) shall take precedence over the
provisions of any other plan, arrangement or agreement governing Executive’s
rights and entitlements to any benefits or compensation.
	 
	 	(ii)	 	Any determination that Total Payments to Executive must be
reduced or eliminated in accordance with Section 10(b)(i) and the assumptions
to be
utilized in arriving at such determination, shall be made by a nationally
recognized accounting firm or consulting firm with experience in such
matters selected by the Company (the “Accounting Firm”), which shall

12

 

	 	 	 	provide detailed supporting calculations both to the Company and Executive
within fifteen (15) business days after the date such calculation is
requested by the Company or Executive. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change in Control Event, Executive shall appoint another
nationally recognized accounting or consulting firm with experience in such
matters to make the determinations required hereunder (which accounting firm
shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. If a
reduction or elimination of Total Payments to Executive in accordance with
the foregoing is necessary based on the Accounting Firm’s determination, the
Accounting Firm shall furnish Executive with a written opinion that failure
to limit the amount of the Total Payments would result in the imposition of
a tax under Section 4999 of the Code as well as the estimates of Executive’s
after-tax net benefits before and after giving effect to such a reduction.
Any determination by the Accounting Firm shall be binding upon the Company
and Executive. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Total Payments to Executive which will
not have been made by the Company should have been made. The Accounting
Firm shall determine the amount of such underpayment that has occurred and
any such underpayment shall be promptly paid by the Company to or for the
benefit of Executive. In the event that any Total Payment made to Executive
shall be determined by the Accounting Firm to result in the imposition of
any tax under Section 4999 of the Code and a reduction of Total Payments was
otherwise required pursuant to Section 10(b)(i) to avoid the imputation of
such tax, Executive shall promptly repay the amount of such excess to the
Company together with interest on such amount (at the same rate as is
applied to determine the present value of payments under Section 280G or any
successor thereto), from the date the reimbursable payment was received by
Executive to the date the same is repaid to the Company.

11. NON-COMPETITION

     Executive acknowledges and recognizes the highly competitive nature of the businesses of the
Company and its affiliates and accordingly agrees as follows:

     (a) During his employment, and except as permitted by Section 1(b), Executive will not,
directly or indirectly, (i) engage in any business for Executive’s own account that competes with
the business of the Company or its Subsidiaries (including, without limitation, businesses which
the Company or its Subsidiaries have specific plans to conduct in the future and as to
which Executive is aware of such planning), (ii) enter the employ of, or render any services
to, any person engaged in any business that competes with the business of the Company or its
Subsidiaries, (iii) acquire a financial interest in any person engaged in any business that
competes with the business of the Company or its Subsidiaries, directly or indirectly, as an

13

 

individual, partner, shareholder, officer, director, principal, agent, trustee or consultant, or
(iv) interfere with business relationships (whether formed before or after the date of this
Agreement) between the Company or any of its Subsidiaries and customers, suppliers, partners,
members or investors of the Company or its Subsidiaries. Without limiting the generality of the
foregoing, Executive agrees that any designer, manufacturer, wholesaler or retailer which designs,
manufactures, markets or sells specialty apparel, clothing or accessories to the age groups between
eleven (11) and thirty-five (35) and where such designer, manufacturer, wholesaler or retailer
operates within seventy-five (75) miles of any store location of the Company or any Subsidiary,
would be “in competition with the business of the Company” or its Subsidiaries.

     (b) Notwithstanding anything to the contrary in this Agreement, Executive may, directly or
indirectly, own, solely as an investment, securities of any person engaged in the business of the
Company or its Subsidiaries which are publicly traded on a national or regional stock exchange or
on an over-the-counter market, or an interest in a diversified mutual fund, hedge fund or pooled
investment account (including venture capital funds and private equity funds), if Executive (i) is
not a controlling person of, or a member of a group which controls, such person, fund or account
and (ii) does not, directly or indirectly, own five percent (5%) or more of any class of securities
of such person, fund or account.

12. ANTISOLICITATION

     Executive promises and agrees that during his employment, and for a period of one (1) year
thereafter, he will not directly contact customers of the Company or any of its Subsidiaries to
encourage them to divert business from the Company or a Subsidiary to any individual partnership,
firm, corporation or any other entity then in competition with the business of the Company or any
Subsidiary. Additionally, Executive promises and agrees that during his employment, and for a
period of one (1) year thereafter, he will not directly or indirectly influence or attempt to
influence vendors or business partners of the Company or any of its Subsidiaries to divert their
business from the Company or a Subsidiary to any individual, partnership, firm, corporation or
other entity then in competition with the business of the Company or any Subsidiary.

13. SOLICITING EMPLOYEES

     Executive promises and agrees that during his employment, and for a period of one (1) year
thereafter, he will not directly or indirectly solicit any employee of the Company or a Subsidiary
to work for any business, individual, partnership, firm, corporation, or other entity then in
competition with the business of the Company or any Subsidiary.

14. CONFIDENTIALITY

     Executive promises and agrees that he will not at any time (whether during or after his
employment with the Company), unless compelled by lawful process, disclose or use for his own
benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint
venture, association, corporation or other business organization, entity or enterprise other than
the Company and any of its Subsidiaries or affiliates, any trade secrets, or other confidential
data

14

 

or information relating to customers, design programs, costs, marketing, sales activities,
promotion, credit and financial data, financing methods, or plans of the Company or of any
Subsidiary or affiliate of the Company; provided that the foregoing shall not apply to
information which is not unique to the Company (or Subsidiary or affiliate, as applicable) or which
is generally known to the industry or the public other than as a result of Executive’s breach of
this covenant. Executive agrees that upon termination of his employment with the Company or a
Subsidiary for any reason, or upon the request of the Company or a Subsidiary, he will return to
the Company immediately all memoranda, books, papers, plans, information, letters and other data,
and all copies thereof or therefrom, in any way relating to the business of the Company, any
Subsidiary or affiliate of the Company. Executive further agrees that he will not retain or use
for his account at any time any trade names, trademark or other proprietary business designation
used or owned in connection with the business of the Company, any Subsidiary or affiliate of the
Company; provided, however, that Executive may retain Executive’s rolodex, address books,
information relating to Executive’s compensation or relating to reimbursement of expenses,
documents relating to Executive’s participation in employee benefit plans or programs of the
Company or Subsidiary, any agreement between Executive and the Company or a Subsidiary relating to
Executive’s employment with the Company or a Subsidiary, and other personal property provided that
such items do not contain any confidential information of the Company or a Subsidiary.

15. LITIGATION/AUDIT COOPERATION

     Executive promises and agrees that from the last day of the Term and continuing until the
Company receives its audited financial statements for the Company’s second full fiscal year
following the fiscal year of the Company in which the Term ends or is terminated, Executive shall
reasonably cooperate with the Company and its Subsidiaries in connection with: (a) any internal or
governmental investigation or administrative, regulatory, arbitral or judicial proceeding involving
the Company and any Subsidiaries with respect to matters relating to Executive’s employment with or
service as a member of the Board or the board of directors of any Subsidiary (collectively,
“Litigation”); or (b) any audit of the financial statements of the Company or any
Subsidiaries with respect to the period of time when Executive was employed by the Company or any
Subsidiaries (“Audit”). Executive acknowledges that such cooperation may include, but
shall not be limited to, Executive making himself available to the Company or any Subsidiaries (or
their respective attorneys or auditors) upon reasonable notice for: (i) interviews, factual
investigations, and providing declarations or affidavits that provide truthful information in
connection with any Litigation or Audit; (ii) appearing at the request of the Company or any
Subsidiaries to give testimony without requiring service of a subpoena or other legal process;
(iii) volunteering to the Company or any Subsidiaries pertinent information related to any
Litigation or Audit; (iv) providing information and legal representations to the auditors of
the Company or any Subsidiaries, in a form and within a time frame requested by the Board,
with respect to the Company’s or any Subsidiaries’ opening balance sheet valuation of intangibles
and financial statements for the period in which Executive was employed by the Company or any
Subsidiaries; and (v) turning over to the Company or any Subsidiaries any documents relevant to any
Litigation or Audit that are or may come into Executive’s possession. The Company shall reimburse
Executive for reasonable travel expenses incurred in connection with providing the services under
this Section 15, including lodging and meals, upon Executive’s submission of receipts. If, due to
an actual or potential conflict of interest, it is necessary for

15

 

Executive to retain separate
counsel in connection with providing the services under this Section 15, and such counsel is not
otherwise supplied by and at the expense of the Company (pursuant to indemnification rights of the
Executive or otherwise), the Company shall further reimburse Executive for the reasonable fees and
expenses of such separate counsel.

16. INJUNCTIVE RELIEF

     Executive expressly agrees that the Company will or would suffer irreparable injury if
Executive were to breach any of Sections 11 through 15 above and that the Company would by reason
of such conduct be entitled, in addition to any other remedies, to injunctive relief. Executive
consents and stipulates to the entry of such injunctive relief prohibiting him from engaging in
conduct which violates any of the provisions of Sections 11 through 15.

17. ASSIGNMENT

     This Agreement is personal in its nature and neither of the parties hereto shall, without the
consent of the other, assign or transfer this Agreement or any rights or obligations hereunder;
provided, however, that, in the event of a merger, consolidation, or transfer or sale of all or
substantially all of the assets of the Company with or to any other individual(s) or entity, this
Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such
successor and such successor shall discharge and perform all the promises, covenants, duties, and
obligations of the Company hereunder. The Company shall be required to cause such successor to
expressly assume and agree to perform this Agreement, in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken place, and any
failure by the Company to comply with such requirement shall constitute a material breach of this
Agreement.

18. GOVERNING LAW

     This Agreement and the legal relations hereby created between the parties hereto shall be
governed by and construed under and in accordance with the internal laws of the State of
California, without regard to conflicts of laws principles thereof.

19. ENTIRE AGREEMENT

     This Agreement (together with the exhibit hereto and any indemnification agreement the parties
may enter into as contemplated by Section 28) embodies the entire agreement of the parties hereto
respecting the matters within its scope. This Agreement supersedes all prior agreements of the
parties hereto on the subject matter hereof. Any prior negotiations,
correspondence, agreements, proposals, or understandings relating to the subject matter hereof
shall be deemed to be merged into this Agreement and to the extent inconsistent herewith, such
negotiations, correspondence, agreements, proposals, or understandings shall be deemed to be of no
force or effect. There are no representations, warranties, or agreements, whether express or
implied, or oral or written, with respect to the subject matter hereof, except as set forth herein.

16

 

20. MODIFICATIONS

     This Agreement shall not be modified by any oral agreement, either express or implied, and all
modifications hereof shall be in writing and signed by the parties hereto.

21. WAIVER

     Failure to insist upon strict compliance with any of the terms, covenants, or conditions
hereof shall not be deemed a waiver of such term, covenant, or condition, nor shall any waiver or
relinquishment of, or failure to insist upon strict compliance with, any right or power hereunder
at any one or more times be deemed a waiver or relinquishment of such right or power at any other
time or times.

22. NUMBER AND GENDER

     Where the context requires, the singular shall include the plural, the plural shall include
the singular, and any gender shall include all other genders.

23. SECTION HEADINGS

     The section headings in this Agreement are for the purpose of convenience only and shall not
limit or otherwise affect any of the terms hereof.

24. ARBITRATION

     The Company and Executive hereby consent to the resolution by mandatory and binding
arbitration of all claims or controversies arising out of or relating to this Agreement, its
enforcement or interpretation, or because of an alleged breach, default, or misrepresentation in
connection with any of its provisions, or any other controversy arising out of Executive’s
employment, including, but not limited to, any state or federal statutory claims, that the Company
may have against Executive, or that Executive may have against the Company or against any of its
officers, directors, employees or agents acting in their capacity as such. Each party’s promise to
resolve all such claims or controversies by arbitration in accordance with the terms hereof rather
than through the courts is consideration for the other party’s like promise. It is further agreed
that the decision of an arbitrator on any issue, dispute, claim or controversy submitted for
arbitration, shall be final and binding upon the Company and Executive and that judgment may be
entered on the award of the arbitrator in any court having proper jurisdiction.

     Except as otherwise provided in this procedure or by mutual agreement of the parties, any
arbitration shall be before a sole arbitrator (the “Arbitrator”) selected from Judicial
Arbitration & Mediation Services, Inc., Orange County, California, or its successor
(“JAMS”),
or if JAMS is no longer able to supply the arbitrator, such arbitrator shall be selected from
the American Arbitration Association, and shall be conducted in accordance with the provisions of
California Civil Procedure Code Sections 1280 et. seq. as the exclusive remedy of such dispute.

     The Arbitrator shall interpret this Agreement, any applicable Company policy or rules and
regulations, any applicable substantive law (and the law of remedies, if applicable) of the state
in which the claim arose, or applicable federal law. In reaching his or her decision, the

17

 

Arbitrator shall have no authority to change or modify any lawful Company policy, rule or
regulation, or this Agreement. Except as provided in the next paragraph, the Arbitrator, and not
any federal, state or local court or agency, shall have exclusive and broad authority to resolve
any dispute relating to the interpretation, applicability, enforceability or formation of this
Agreement, including but not limited to, any claim that all or any part of this Agreement is
voidable. The Arbitrator shall have the authority to decide dispositive motions. Following
completion of the arbitration, the arbitrator shall issue a written decision disclosing the
essential findings and conclusions upon which the award is based.

     Notwithstanding the foregoing, provisional injunctive relief may, but need not, be sought by
Executive or the Company in a court of law while arbitration proceedings are pending, and any
provisional injunctive relief granted by such court shall remain effective until the matter is
finally resolved by the Arbitrator in accordance with the foregoing. Final resolution of any
dispute through arbitration may include any remedy or relief which would otherwise be available at
law and which the Arbitrator deems just and equitable. The Arbitrator shall have the authority to
award full damages as provided by law. Any award or relief granted by the Arbitrator hereunder
shall be final and binding on the parties hereto and may be enforced by any court of competent
jurisdiction.

     The Company shall pay the reasonable fees and expenses of the Arbitrator and of a stenographic
reporter, if employed. Each party shall pay its own legal fees and other expenses and costs
incurred with respect to the arbitration.

25. SEVERABILITY

     In the event that a court of competent jurisdiction determines that any portion of this
Agreement is in violation of any statute or public policy, then only the portions of this Agreement
which violate such statute or public policy shall be stricken, and all portions of this Agreement
which do not violate any statute or public policy shall continue in full force and effect.
Furthermore, any court order striking any portion of this Agreement shall modify the stricken terms
as narrowly as possible to give as much effect as possible to the intentions of the parties under
this Agreement.

26. NOTICES

     All notices under this Agreement shall be in writing and shall be either personally delivered
or mailed postage prepaid, by certified mail, return receipt requested:

	 	(a)	 	if to the Company:
	 
	 	 	 	Pacific Sunwear of California, Inc.

Attention: Chairman of the Board

3450 East Miraloma Avenue

Anaheim, California 92806

18

 

	 	 	 	with copies to:
	 
	 	 	 	Pacific Sunwear of California, Inc.

Attention: General Counsel

3450 East Miraloma Avenue

Anaheim, California 92806
	 
	 	 	 	and
	 
	 	 	 	O’Melveny & Myers LLP

Attention: Jeffrey W. Walbridge, Esq.

610 Newport Center Drive, Suite 1700

Newport Beach, California 92660

	 	(b)	 	if to Executive:
	 
	 	 	 	At the address on file with the Company
	 
	 	 	 	with copies to:

	 	 	 	Cooley Godward Kronish LLP

Attention: Craig E. Dauchy, Esq.

3175 Hanover Street

Palo Alto, CA 94304-1130

Notice shall be effective when personally delivered, or five (5) business days after being so
mailed. Any party may change its address for purposes of giving future notices pursuant to this
Agreement by notifying the other party in writing of such change in address, such notice to be
delivered or mailed in accordance with the foregoing.

27. COUNTERPARTS

     This Agreement may be executed in any number of counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same instrument.

28. INDEMNIFICATION

     The Company hereby agrees to enter into a separate indemnification agreement pursuant to which
the Company will indemnify Executive and hold Executive harmless to the maximum extent provided
under the By-Laws or other organizational documents of the Company and
applicable law against and in respect of any and all actions, suits, proceedings, claims,
demands, judgments, costs, expenses (including reasonable attorney’s fees), losses, and damages
resulting from Executive’s good faith performance of Executive’s duties and obligations with the
Company. This obligation shall survive the termination of Executive’s employment with the Company.

19

 

29. LIABILITY INSURANCE

     The Company shall cover Executive under directors and officers liability insurance both during
and, while potential liability exists, after the term of this Agreement in the same amount and to
the same extent as the Company covers its other officers and directors (except in no event shall
the Company be required to maintain such coverage for a period of more than six years after the
last day that the Executive served as an employee of the Company or a member of the Board).

30. TAX MATTERS

     (a) Tax Withholding. The Company may withhold from any amounts payable under this
Agreement such federal, state and local taxes as may be required to be withheld pursuant to any
applicable law or regulation.

     (b) Section 409A Compliance. It is intended that any amounts payable under this
Agreement shall either be exempt from or comply with Section 409A of the Code (including the
Treasury regulations and other published guidance relating thereto) (“Code Section 409A”)
so as not to subject Executive to payment of any additional tax, penalty or interest imposed under
Code Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid
the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve
(to the nearest extent reasonably possible) the intended benefit payable to Executive.

31. LEGAL FEES

     Upon presentation of appropriate documentation, the Company shall pay Executive’s reasonable
counsel fees incurred in connection with the negotiation and documentation of this Agreement;
provided, however, that in no event shall the Company’s payment obligations pursuant to this
Section 31 exceed Ten Thousand Dollars ($10,000) in the aggregate.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

20

 

     IN WITNESS WHEREOF, the Company and Executive have executed this Employment Agreement as of
the date first above written.

	 	 	 	 	 	 	 
	 	 	THE COMPANY:	 	 
	 	 	Pacific Sunwear of California, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas J. Leary	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Thomas J. Leary	 	 
	 

	 	Title:
	 	Senior Vice President, General Counsel and Human
Resources	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE:	 	 
	 	 	Gary H. Schoenfeld	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Gary H. Schoenfeld	 	 
	 	 	 	 	 

21

 

EXHIBIT A

FORM OF RELEASE AGREEMENT

          This Release Agreement (this “Release Agreement”) is entered into this ___day of
                     20___, by and between                                         , an individual (“Executive”), and
Pacific Sunwear of California, Inc., a California corporation (the “Company”).

          WHEREAS, Executive has been employed by the Company or one of its subsidiaries; and

          WHEREAS, Executive’s employment by the Company or one of its subsidiaries has terminated and,
in connection with that certain Employment Agreement dated June 16, 2009 between the Company and
Executive (the “Employment Agreement”), the Company and Executive desire to enter into this
Release Agreement upon the terms set forth herein;

          NOW, THEREFORE, in consideration of the covenants undertaken and the releases contained in
this Release Agreement, and in consideration of the obligations of the Company (or one of its
subsidiaries) to pay severance benefits (conditioned upon this Release Agreement) under and
pursuant to the Employment Agreement, Executive and the Company agree as follows:

          1. Termination of Employment. Executive’s employment with the Company terminated on
[                    , ___] (the “Separation Date”). Executive waives any right or claim to
reinstatement as an employee of the Company and each of its affiliates. Executive hereby confirms
that Executive does not hold any position as an officer, director, employee, member, manager and in
any other capacity with the Company and each of its affiliates. Executive acknowledges and agrees
that Executive has received all amounts owed for his regular and usual salary (including, but not
limited to, any severance (other than any benefits due pursuant to the Employment Agreement),
overtime, bonus, accrued vacation, commissions, or other wages), reimbursement of expenses, and
usual benefits, and that all payments due to Executive from the Company have been received.

          2. Release. Executive, on behalf of himself, his descendants, dependents, heirs,
executors, administrators, assigns, and successors, and each of them, hereby covenants not to sue
and fully releases and discharges the Company and each of its parents, subsidiaries and affiliates,
past and present, as well as its and their trustees, directors, officers, members, managers,
partners, agents, attorneys, insurers, employees, stockholders, representatives, assigns, and
successors, past and present, and each of them, hereinafter together and collectively referred to
as the “Releasees,” with respect to and from any and all claims, wages, demands, rights,
liens, agreements or contracts (written or oral), covenants, actions, suits, causes of action,
obligations, debts, costs, expenses, attorneys’ fees, damages, judgments, orders and liabilities of
whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or
unsuspected, and whether or not concealed or hidden (each, a “Claim”), which he now owns or
holds or he has at any time heretofore owned or held or may in the future hold as against any of
said Releasees (including, without limitation, any Claim arising out of or in any way connected
with Executive’s service as an officer, director, employee, member or manager of any Releasee,

 

 

Executive’s separation from his position as an officer, director, employee, manager and/or member,
as applicable, of any Releasee, or any other transactions, occurrences, acts or omissions
or any loss, damage or injury whatever), whether known or unknown, suspected or unsuspected,
resulting from any act or omission by or on the part of said Releasees, or any of them, committed
or omitted prior to the date of this Release Agreement including, without limiting the generality
of the foregoing, any Claim under Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act of 1967, the Americans with Disabilities Act, the Family and Medical Leave Act of
1993, the California Fair Employment and Housing Act, the California Family Rights Act, or any
other federal, state or local law, regulation, or ordinance, or any Claim for severance pay, bonus,
sick leave, holiday pay, vacation pay, life insurance, health or medical insurance or any other
fringe benefit, workers’ compensation or disability (the “Release”); provided, however,
that the foregoing Release does not apply to any obligation of the Company to Executive pursuant to
any of the following: (1) any equity-based awards previously granted by the Company to Executive,
to the extent that such awards continue after the termination of Executive’s employment with the
Company in accordance with the applicable terms of such awards (and subject to any limited period
in which to exercise such awards following such termination of employment); (2) any right to
indemnification that Executive may have pursuant to the Bylaws of the Company, its Articles of
Incorporation or under any written indemnification agreement with the Company (or any corresponding
provision of any subsidiary or affiliate of the Company) or applicable state law with respect to
any loss, damages or expenses (including but not limited to attorneys’ fees to the extent otherwise
provided) that Executive may in the future incur with respect to his service as an employee,
officer or director of the Company or any of its subsidiaries or affiliates; (3) with respect to
any rights that Executive may have to insurance coverage for such losses, damages or expenses under
any Company (or subsidiary or affiliate) directors and officers liability insurance policy; (4) any
rights to continued medical or dental coverage that Executive may have under COBRA (or similar
applicable state law); (5) any rights to severance benefits payable under Section 6(b), 7 or 10(a)
of the Employment Agreement in accordance with the terms of the Employment Agreement; or (6) any
rights to payment of benefits that Executive may have under a retirement plan sponsored or
maintained by the Company that is intended to qualify under Section 401(a) of the Internal Revenue
Code of 1986, as amended. In addition, this Release does not cover any Claim that cannot be so
released as a matter of applicable law. Executive acknowledges and agrees that he has received any
and all leave and other benefits that he has been and is entitled to pursuant to the Family and
Medical Leave Act of 1993.

          3. 1542 Waiver. It is the intention of Executive in executing this Release Agreement
that the same shall be effective as a bar to each and every Claim hereinabove specified. In
furtherance of this intention, Executive hereby expressly waives any and all rights and benefits
conferred upon him by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and expressly
consents that this Release Agreement (including, without limitation, the Release set forth above)
shall be given full force and effect according to each and all of its express terms and provisions,
including those related to unknown and unsuspected Claims, if any, as well as those relating to any
other Claims hereinabove specified. SECTION 1542 provides:

          “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR

2

 

SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

Executive acknowledges that he may hereafter discover Claims or facts in addition to or different
from those which Executive now knows or believes to exist with respect to the subject matter of
this Release Agreement and which, if known or suspected at the time of executing this Release
Agreement, may have materially affected this settlement. Nevertheless, Executive hereby waives any
right, Claim or cause of action that might arise as a result of such different or additional Claims
or facts. Executive acknowledges that he understands the significance and consequences of such
release and such specific waiver of SECTION 1542.

          4. ADEA Waiver. Executive expressly acknowledges and agrees that by entering into
this Release Agreement, Executive is waiving any and all rights or Claims that he may have arising
under the Age Discrimination in Employment Act of 1967, as amended (the “ADEA”), which have
arisen on or before the date of execution of this Release Agreement. Executive further expressly
acknowledges and agrees that:

          A. In return for this Release Agreement, the Executive will receive consideration
beyond that which the Executive was already entitled to receive before entering into this
Release Agreement;

          B. Executive is hereby advised in writing by this Release Agreement to consult with an
attorney before signing this Release Agreement;

          C. Executive has voluntarily chosen to enter into this Release Agreement and has not
been forced or pressured in any way to sign it;

          D. Executive was given a copy of this Release Agreement on [                    , 20___]
and informed that he had [twenty one (21)/forty five (45)] days within which to consider
this Release Agreement and that if he wished to execute this Release Agreement prior to
expiration of such [21-day/45-day] period, he should execute the Endorsement attached
hereto;

          E. Executive was informed that he had seven (7) days following the date of execution of
this Release Agreement in which to revoke this Release Agreement, and this Release Agreement
will become null and void if Executive elects revocation during that time. Any revocation
must be in writing and must be received by the Company during the seven-day revocation
period. In the event that Executive exercises his right of revocation, neither the Company
nor Executive will have any obligations under this Release Agreement;

          F. Nothing in this Release Agreement prevents or precludes Executive from challenging
or seeking a determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs from doing so, unless
specifically authorized by federal law.

3

 

          5. No Transferred Claims. Executive warrants and represents that the Executive has
not heretofore assigned or transferred to any person not a party to this Release Agreement any
released matter or any part or portion thereof and he shall defend, indemnify and hold the Company
and each of its affiliates harmless from and against any claim (including the payment of attorneys’
fees and costs actually incurred whether or not litigation is commenced) based on or in connection
with or arising out of any such assignment or transfer made, purported
or claimed.

          6. Compliance with Employment Agreement. Executive warrants and represents that
Executive has complied fully with his obligations pursuant to the Employment Agreement. Executive
covenants that he will continue to abide by the applicable provisions of such Employment Agreement.

          7. Severability. It is the desire and intent of the parties hereto that the
provisions of this Release Agreement be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if
any particular provision of this Release Agreement shall be adjudicated by a court of competent
jurisdiction to be invalid, prohibited or unenforceable under any present or future law, such
provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Release Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there
will be added automatically as a part of this Release Agreement, a legal, valid and enforceable
provision as similar in terms to such invalid or unenforceable provision as may be possible.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Release Agreement or
affecting the validity or enforceability of such provision in any other jurisdiction.

          8. Counterparts. This Release Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together constitute one and the
same agreement.

          9. Successors. This Release Agreement is personal to Executive and shall not, without
the prior written consent of the Company, be assignable by Executive. This Release Agreement shall
inure to the benefit of and be binding upon the Company and its respective successors and assigns
and any such successor or assignee shall be deemed substituted for the Company under the terms of
this Release Agreement for all purposes. As used herein, “successor” and “assignee” shall include
any person, firm, corporation or other business entity which at any time, whether by purchase,
merger, acquisition of assets, or otherwise, directly or indirectly acquires the ownership of the
Company, acquires all or substantially all of the Company’s assets, or to which the Company assigns
this Release Agreement by operation of law or otherwise.

          10. Governing Law. THIS RELEASE AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH UNITED STATES FEDERAL LAW AND, TO THE EXTENT NOT PREEMPTED BY UNITED STATES FEDERAL
LAW, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING

4

 

EFFECT TO ANY CHOICE OF LAW OR CONFLICTING
PROVISION OR RULE (WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE LAWS OF ANY JURISDICTION OTHER THAN UNITED STATES FEDERAL LAW AND THE LAW OF THE STATE OF
CALIFORNIA TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, APPLICABLE FEDERAL LAW AND, TO THE
EXTENT NOT PREEMPTED BY APPLICABLE FEDERAL LAW, THE INTERNAL LAW OF THE STATE OF CALIFORNIA, WILL
CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS RELEASE AGREEMENT, EVEN IF UNDER SUCH
JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER
JURISDICTION WOULD ORDINARILY APPLY.

          11. Amendment and Waiver. The provisions of this Release Agreement may be amended and
waived only with the prior written consent of the Company and Executive, and no course of conduct
or failure or delay in enforcing the provisions of this Release Agreement shall be construed as a
waiver of such provisions or affect the validity, binding effect or enforceability of this Release
Agreement or any provision hereof.

          12. Descriptive Headings. The descriptive headings of this Release Agreement are
inserted for convenience only and do not constitute a part of this Release Agreement.

          13. Construction. Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to modify, limit or restrict
in any manner the construction of the general statement to which it relates. The language used in
this Release Agreement shall be deemed to be the language chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any party.

          14. Arbitration. The Company and Executive hereby consent to the resolution by
mandatory and binding arbitration of all claims or controversies arising out of or in connection
with this Release Agreement that the Company may have against Executive, or that Executive may have
against the Company or against any of its officers, directors, employees or agents acting in their
capacity as such. Each party’s promise to resolve all such claims or controversies by arbitration
in accordance with this Release Agreement rather than through the courts is consideration for the
other party’s like promise. It is further agreed that the decision of an arbitrator on any issue,
dispute, claim or controversy submitted for arbitration, shall be final and binding upon the
Company and Executive and that judgment may be entered on the award of the arbitrator in any court
having proper jurisdiction.

          Except as otherwise provided in this procedure or by mutual agreement of the parties, any
arbitration shall be before a sole arbitrator (the “Arbitrator”) selected from Judicial
Arbitration & Mediation Services, Inc., Orange County, California, or its successor
(“JAMS”), or if JAMS is no longer able to supply the arbitrator, such arbitrator shall be
selected from the American Arbitration Association, and shall be conducted in accordance with the
provisions of California Civil Procedure Code Sections 1280 et. seq. as the exclusive remedy of
such dispute.

5

 

          The Arbitrator shall interpret this Release Agreement, any applicable Company policy or rules
or regulations, any applicable substantive law (and the law of remedies, if applicable) of the
state in which the claim arose, or applicable federal law. In reaching his or her decision, the
Arbitrator shall have no authority to change or modify any lawful Company policy, rule or
regulation, or this Release Agreement. Except as provided in the next paragraph, the Arbitrator,
and not any federal, state or local court or agency, shall have exclusive and broad authority to
resolve any dispute relating to the interpretation, applicability, enforceability or formation of
this Release Agreement, including but not limited to, any claim that all or any part of this
Release Agreement is voidable. The Arbitrator shall have the authority to decide dispositive
motions. Following completion of the arbitration, the arbitrator shall issue a written decision
disclosing the essential findings and conclusions upon which the award is based.

          Notwithstanding the foregoing, provisional injunctive relief may, but need not, be sought by
Executive or the Company in a court of law while arbitration proceedings are pending, and any
provisional injunctive relief granted by such court shall remain effective until the matter is
finally resolved by the Arbitrator in accordance with the foregoing. Final resolution of any
dispute through arbitration may include any remedy or relief which would otherwise be available at
law and which the Arbitrator deems just and equitable. The Arbitrator shall have the authority to
award full damages as provided by law. Any award or relief granted by the Arbitrator hereunder
shall be final and binding on the parties hereto and may be enforced by any court of competent
jurisdiction.

          The Company shall pay the reasonable fees and expenses of the Arbitrator and of a stenographic
reporter, if employed. Each party shall pay its own legal fees and other expenses and costs
incurred with respect to the arbitration.

          15. Nouns and Pronouns. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns
and pronouns shall include the plural and vice-versa.

          16. Legal Counsel. Each party recognizes that this is a legally binding contract and
acknowledges and agrees that they have had the opportunity to consult with legal counsel of their
choice. Executive acknowledges and agrees that he has read and understands this Release Agreement
completely, is entering into it freely and voluntarily, and has been advised to seek counsel prior
to entering into this Release Agreement and he has had ample opportunity to do so.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

6

 

          The undersigned have read and understand the consequences of this Release Agreement and
voluntarily sign it. The undersigned declare under penalty of perjury under the laws of the State
of California that the foregoing is true and correct.

     EXECUTED this                      day of                      20___, at Anaheim, California.

	 	 	 	 	 	 	 	 	 
	 	 	“Executive”	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Print Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	PACIFIC SUNWEAR OF CALIFORNIA, INC.,	 	 
	 	 	a California corporation,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	Name: 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 
	 	 	 	 	 	 	 

7

 

ENDORSEMENT

          I,                                                             , hereby
acknowledge that I was given [21/45] days to consider the
foregoing Release Agreement and voluntarily chose to sign the Release Agreement prior to the
expiration of the [21-day/45-day] period.

          I declare under penalty of perjury under the laws of the United States and the State of
California that the foregoing is true and correct.

          EXECUTED this [___] day of [                     20___], at Anaheim, California.

	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Print Name:	 	 	 	 
	 

	 	 	 	 	 	 

8exv10w2

Exhibit 10.2

June 16, 2009

Ms. Sally Frame Kasaks

c/o Pacific Sunwear of California, Inc.

3450 East Miraloma Avenue

Anaheim, California 92806-2101

Dear Sally:

     This letter confirms our agreement regarding the scheduled expiration of your employment
agreement and your retirement on January 31, 2010 (your “Retirement Date”).

     The Company has, with your help, conducted a search for a candidate to succeed you as the
Company’s Chief Executive Officer (“CEO”) in light of your Retirement Date. The Company
has identified such a candidate sooner than was anticipated and you have agreed to resign as CEO
and from any other offices you hold with the Company or any of its subsidiaries effective upon your
successor’s commencement of active employment with the Company (the “Transition Time”).

     During the period from the Transition Time through your Retirement Date (the “Transition
Period”), you will continue to be an employee of the Company and will continue to serve as a
member of the Board of Directors. Your employment by the Company will terminate on your Retirement
Date. During the Transition Period, you will provide such transition services as may be requested
from time to time by the Company’s Board of Directors (the “Board”) and/or the new CEO.

     During the Transition Period, the Company will continue to pay you a base salary at your
current annualized rate of $1,125,000 and you will continue to participate in the Company’s
employee benefit plans and programs pursuant to the terms of your Employment Agreement with the
Company dated May 22, 2007, as amended (your “Employment Agreement”). Your equity awards granted
by the Company will continue to vest during the Transition Period, and the termination of
employment rules applicable to your awards (as set forth in the applicable award agreements) will
apply on your Retirement Date. You have been paid or granted, as the case may be, any and all
salary, bonuses, equity-based and other incentive awards that you are entitled to receive from the
Company to date and you have agreed to forego any additional bonuses, equity-based awards and other
incentives that you may have otherwise been entitled to during the Transition Period.

     You have agreed that you are not entitled to and that you will not make any claim for
severance benefits under your Employment Agreement, the Company’s Executive Severance Plan or any
other Company severance plan or policy in connection with the Company’s hiring of a new CEO, any
reduction in your compensation and any reduction in your authorities, duties or responsibilities
contemplated by this letter. You agree that you are not entitled, now or at any time in the
future, to terminate your employment for “Good Reason” (or similar concept) and receive severance
benefits under any such agreement, plan or policy. You will continue to be

 

 

eligible for severance
as provided in your Employment Agreement if the Company actually terminates your employment before
your Retirement Date.

     For purposes of clarity, you remain entitled to the supplemental retirement benefit from the
Company (on the terms and conditions that you and the Company have previously agreed to) that
relates to the portion of your supplemental retirement benefit from Ann Taylor that was reduced in
connection with your employment by the Company.

     In connection with the Company’s desire to transition to an independent Chair of the Board,
you also resign as Chair of the Board effective at the Transition Time.

     This letter agreement shall be governed by and construed under and in accordance with the
internal laws of the State of California, without regard to conflicts of laws principles thereof.
There are no representations, warranties, or agreements, whether express or implied, or oral or
written, with respect to the subject matter hereof, except as set forth herein. In the event of
any inconsistency between this letter agreement, on the one hand, and your Employment Agreement
and/or the Company’s Executive Severance Plan, on the other hand, this letter agreement controls.
Except as expressly modified by this letter agreement, your Employment Agreement otherwise remains
in full force and effect

     If this letter accurately sets forth our agreement with respect to the foregoing matters,
please sign the enclosed copy of this letter and return it to me.

	 	 	 	 	 
	 	Sincerely,

Pacific Sunwear of California, Inc.

 	 
	 	/s/ Thomas J. Leary
 	 
	 	Thomas J. Leary 	 
	 	Senior Vice President, General Counsel and
Human Resources 	 
	 

ACKNOWLEDGED AND AGREED:

	 	 	 
	/s/ Sally Frame Kasaks

	 	 
	 
	 	 
	Sally Frame Kasaks

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