Document:

Exhibit 10.1

 

 EXHIBIT 10.1

3450 East Miraloma Avenue, Anaheim, CA 92806-2101

(714) 414-4000

pacsun.com

October 25, 2004

Gerald M. Chaney

125 Deer Trail North

Ramsey, New Jersey 07446

Dear Gerry:

I am extremely pleased to offer you the position of Senior Vice President/Chief
Financial Officer of Pacific Sunwear of California, Inc. (“The Company”). In
this position, you will be part of the Executive Committee of the Company. Your
start date is to be no later than December 2, 2004. The following are points
pertaining to your employment:

	1.	 	Your annual salary will be $550,000. You will be eligible to
receive a performance and salary review for fiscal 2005. Said review
is conducted and is generally effective during March/April 2006, and
annually thereafter.
	 
	2.	 	You will be eligible for our 2005 bonus plan. Any bonus
payments will be made in or around April 2006. Your target bonus
potential is 50% of your salary based on both Company earnings for
the fiscal year and on your individual performance (80% of the
bonus is earnings-related and 20% is discretionary, based on your
individual performance). The Company bonus has a potential upside
of 200% (i.e., 100% of your salary, with the same distribution of
80% based on earnings and 20% based on individual performance). You
must be employed on the date the bonus is paid in order to be
eligible for any part of your bonus. The bonus is calculated based
on the fiscal year’s performance of the Company. The bonus plan can
change in future years.
	 
	3.	 	For fiscal 2004, you will be guaranteed a bonus payment in
the amount of $250,000 irrespective of the Company’s or your
individual performance. Such payment will be made in or around
March/April of 2005.
	 
	4.	 	A recommendation will be made to the Board of Directors to
grant you 100,000 shares of nonqualified stock options at fair
market value on your start date. Options have a four (4) year
vesting, with 25% vested after the first year of service and
subsequent monthly vesting thereafter consistent with an additional
25% vesting per year. In addition, you will be granted 25,000
additional shares of nonqualified stock options at fair market value
at the time annual grants are made to employees, which is in or
around March/April

 

 

Gerald Chaney Offer of Employment

October 25, 2004

	 	 	2005. These options shall have a separate four (4) year vesting
schedule, as described herein.
	 
	5.	 	You will be eligible for a car allowance in the pretax amount
of $7,200 annually, paid on a bi-weekly basis.
	 
	6.	 	You will be eligible for 4 weeks of paid vacation annually
for your first five years of employment and 5 weeks annually
thereafter.
	 
	7.	 	The Company will pay for reasonable and customary expenses in
regard to your move from New Jersey to the Orange County area,
consistent with the terms and conditions of the relocation benefits
provided to executives. Relocation benefits are provided with the
understanding, and a separately signed agreement, that costs
associated with relocation will be reimbursed by you in the event
that you leave the company within one year of employment, other than
if such transition is through no fault of your own.
	 
	8.	 	You have indicated that you are under no contractual
restrictions that would prevent you from accepting employment with
the Company and are free to enter into this employment relationship.

You will be entitled to all other Company benefits provided to executives.
Currently, those benefits include, but are not limited to, medical, dental,
vision, basic and supplemental life and disability insurance. Additionally, we
have available an executive deferred compensation plan with a number of
different investment options. The Company reserves the right to periodically
change benefits.

Gerry, we are extremely excited about the prospect of having you join our
organization. Having you as part of our executive team will add a needed
expertise and perspective that will assure us of the continued success of the
company. We look forward to having your expertise and your impact on the
business.

Sincerely,

/s/ ABBY S. AREINOFF

Abby S. Areinoff

Vice President, Human Resources

I acknowledge receipt and acceptance of the above offer of employment with
Pacific Sunwear of California, Inc. In this capacity, my services would be
exclusively retained by Pacific Sunwear foregoing all previous or future
services elsewhere during my employment by the Company. I understand and
acknowledge that Pacific Sunwear of California, Inc. is an at-will employer and
that my employment may be terminated by the Company or me at any time, with or
without prior notice or cause.

Upon acceptance of the above offer, please forward or fax a signed copy of page

two only to Human Resources at (714) 414-4260.

	 	 	 	 	 	 	 
	Signature:

	 	/s/
	 	GERALD M. CHANEY
	 	Date: November 22, 2004
	 	 	
	 	 
	

	 	 	 	Gerald M. Chaney	 	 

Page 2 of 2Exhibit 10.2

 

EXHIBIT 10.2

SEVERANCE AGREEMENT

This Severance Agreement (hereinafter “the Agreement”) is made and entered into
between Pacific Sunwear of California, Inc., (hereinafter “the Company”) and
Gerald M. Chaney (hereinafter “the Executive”).

WHEREAS, the Executive is to be employed by the Company in the capacity of
Senior Vice President, Chief Financial Officer;

WHEREAS, the Company and the Executive wish to provide for the continuation of
certain payments and benefits to the Executive upon termination of Executive’s
employment under specified circumstances, and would like to set forth the terms
relating to a release by Executive of any claims Executive may have against
Company;

NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, and good and valuable other consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

	1.	 	Post-Termination Benefits

	a.	 	Salary. If the employment of Executive by Company is
terminated without Cause, as defined herein, Executive shall
continue to receive from the Company payment of Executive’s base
salary for a period of twelve (12) months following the date of
termination of Executive’s employment (“the Termination Date”).
At the election of Company, such payments of base salary shall
be payable to Executive on a bi-weekly basis and shall be
subject to mitigation by any amounts earned by Executive from a
subsequent employer during this period of time, or shall be paid
in a lump-sum payment at the time of termination.
	 
	b.	 	Bonus. In addition to the foregoing, if the
employment of executive is terminated by the Company without
Cause, as defined herein, at any time during the fourth fiscal
quarter of the year, the Company shall also pay to Executive in
a single payment within 90 days of the end of the Company’s
fiscal year, a prorata portion of the bonus payment that would
otherwise have been received for that year. Such payment shall
take into consideration only the company-performance component
of the bonus payment and shall not include the
individual-performance component of the bonus. The prorata
portion of the bonus shall be based on the number of weeks of
employment completed by the Executive during the fiscal year
prior to the Termination Date.

Page 1 of 6

 

	2.	 	Cause.
	 
	 	 	For purposes of this Agreement, the term “Cause” shall mean:

	(i)	 	Executive’s conviction of or
entrance of a plea of guilty or nolo contendere to a
felony; or
	 
	(ii)	 	Executive is engaging or has
engaged in fraud, material dishonesty, or other acts
of willful misconduct in connection with the business
affairs of the Company; or
	 
	(iii)	 	Executive engages in theft,
embezzlement, or other criminal misappropriation of
funds from the Company; or
	 
	(iv)	 	there is gross negligence in the
performance of Executive’s duties in his position of
Senior Vice President, Chief Financial Officer.

	3.	 	At-Will Employment.
	 
	 	 	It is expressly understood and acknowledged by Executive that
Executive’s employment by Company is “at will” and nothing in this
Agreement alters the “at will” nature of the employment relationship.
Executive acknowledges that the Company may terminate his employment
at any time, with or without Cause; provided, however, that if the
termination is without Cause, Executive will be entitled to the
benefits described herein.
	 
	4.	 	Release Agreement
	 
	 	 	It shall be a condition to the obligations of the Company to make the
payments required hereunder that Executive execute and deliver to the
Company an effective General Release Agreement with the Company, in
substantially the form attached as Exhibit A (“the Release
Agreement”), said agreement to become effective following all time
constraints provided under the Older Workers Benefit Protection Act.
	 
	5.	 	Counterparts.
	 
	 	 	This Agreement may be executed in one or more counterparts. All of
such counterparts shall constitute one and the same agreement and
shall become effective when a copy signed by each party has been
delivered to the other party and all time conditions under the Older
Worker Benefit Protection Act have passed without revocation of such
signature.
	 
	6.	 	Miscellaneous.

	a.	 	This Agreement constitutes the entire agreement of
the parties hereto relating to the subject matter hereof, and
there are no written or oral terms or representations made by
either party other than those contained herein.
	 
	b.	 	This Agreement supersedes all prior agreements
between the parties concerning the subject matter hereof.

Page 2 of 6

 

	c.	 	This Agreement may only be amended in writing signed
by both parties. No waiver by any party of any breach of this
Agreement shall be deemed to be a waiver by any party of any
preceding or succeeding breach.
	 
	d.	 	The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the laws of
the State of California without regard to conflicts of law
principles.
	 
	e.	 	The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of the Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
indicated.

	 	 	 	 	 	 	 
	COMPANY:	 	 	 	 
	 
	 	 	 	 	 	 
	Pacific Sunwear of California, Inc.	 	 
	By:

	 	/s/
	 	GREG H. WEAVER
	 	Date: November 22, 2004
	 	 	
	 	 
	

	 	 	 	Greg H. Weaver

Chairman/CEO	 	 
	 
	 	 	 	 	 	 
	EXECUTIVE:	 	 	 	 
	By:

	 	/s/
	 	GERALD M. CHANEY
	 	Date: November 22, 2004
	 	 	
	 	 
	

	 	 	 	Gerald M. Chaney	 	 

Page 3 of 6

 

Exhibit A

GENERAL RELEASE AGREEMENT

     THIS GENERAL RELEASE AGREEMENT (“the Release”) is made and entered into as
of this    day of    ,    by Gerald M. Chaney (“Executive”) in favor
of Pacific Sunwear of California, Inc.

     WHEREAS, the Company has, prior to the date hereof, employed Executive as
a fulltime employee of the Company, but as of this date, Executive’s status as
an employee has terminated; and

     WHEREAS, as a condition precedent to granting Executive certain severance
benefits pursuant to that Severance Agreement (“the Agreement”) between
Executive and the Company dated as of October 31st, 2004, the Company has
required that Executive execute and deliver this Release in favor of the
Company;

     NOW, THEREFORE, for and in consideration of the foregoing and for other
good and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged, Executive hereby agrees as follows:

     1. Release.

     a. Except with respect to the Company’s obligations pursuant to the
Severance Agreement, any existing director or officer indemnification
obligations and any retirement or similar benefits, if any, applicable or
payable to Executive, Executive hereby unconditionally remises, releases and
forever discharges to the fullest extent permitted by law, the Company, its
employees, officers, directors, agents, affiliates, subsidiaries and each of
them from all manner of actions, proceedings, causes of actions, claims,
counterclaims, suits, debts, sums, monies, accounts, covenants, agreements,
promises, damages, losses or demands of whatever kind or nature from the
beginning of time to the present, whether known or unknown, in law or in
equity, which in the past, now or in the future arise, may arise or allegedly
arise or are in any way resulting from or in any manner connected with
Executive’s employment by the Company and the termination of such employment by
the Company. Executive waives all claims and causes of action against the
Company and all damages, if any, that may be recoverable. This release and
waiver of all claims and damages includes, but is not limited to, any tort or
claim of wrongful discharge, and all rights under the federal, state or local
laws prohibiting race, sex, age, religion, national origin, handicap,
disability or other forms of discrimination, including but not limited to,
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the
California Fair Employment and Housing Act, the California Family Rights Act,
or any other federal, state or local law, regulation or ordinance.

					
	 	 	 	 	 
	
	 	Page 4 of 6
	 	10/31/04

 

 

     b. This Release is intended to be effective as a bar to every claim,
demand, and cause of action stated above. Accordingly, Executive hereby
expressly waives any rights and benefits conferred by Section 1542 of the
California Civil Code, which provides that

“A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.”

2. Miscellaneous.

a. This Release embodies the entire agreement of the parties and
supersedes all prior agreements between the parties hereto relating to
the subject matter hereof.

b. The unenforceability or invalidity of any of the terms or provisions
of this agreement shall not affect the validity or invalidity of any of
the terms or provisions which shall be interpreted and construed in
such manner as to carry out fully the intention of the parties hereto.

c. This Release shall be construed and enforced in accordance with the
laws of the State of California.

d. Executive understands that by executing this release, Executive is
giving up possible rights that he may have, and that Executive does not
have to sign this release. This Release has been voluntarily and
knowingly executed by Executive with the express intention of effecting
the extinguishment of any and all obligations and damages that the
Company may owe to Executive as provided herein, other than those
described in the Severance Agreement, dated October 31, 2004.

3. Effective Waiver

a. Executive understands that the Executive has twenty-one (21) days to
consider whether or not to execute this release. Executive understands
that a portion of this release, solely relating to Executive’s rights
under the Federal Age Discrimination in Employment Act, as amended, may
be revoked by notifying the company in writing of such revocation
within seven (7) days of execution of this release. The portion of this
release relating solely to Executive’s rights under the Federal Age
Discrimination in Employment act, as amended, is not effective until
the expiration of such seven (7) day period. All parts of this release
not relating to claims of age discrimination and alleged damages under
the Age Discrimination in Employment Act, as amended, are

					
	 	 	 	 	 
	 
	 	Page 5 of 6
	 	10/31/04

 

 

effective immediately upon execution of this release. Executive
understands that upon the expiration of such seven (7) day period, this
release will become binding in its entirety upon the Executive and all
portions thereof will be irrevocable.

b. Executive further understands that the rights accruing to Executive
under the Severance Agreement previously entered into by Executive do
not become due and owing until such time as this Release has been
executed voluntarily and knowingly and the seven (7) day rescission
period has expired, rendering the Release irrevocable.

IN WITNESS WHEREOF, Executive has duly executed this Release in favor of the
Company as of the day and year first above written.

EXECUTIVE:

     Gerald M. Chaney

					
	 	 	 	 	 
	 
	 	Page 6 of 6
	 	10/31/04

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