Document:

exhibit103.htm

    Exhibit
10.3

     

    

    COMMUNITY
BANCORP. AND SUBSIDIARY

    OFFICER
INCENTIVE PLAN

    

    

    1.  Purposes

    

    The purpose of the Community Bancorp.
and Subsidiary Officer Incentive Plan (the "Plan") is to attract, retain
and motivate highly-qualified management employees by providing
appropriate performance-based short-term incentive awards.

    

    2.  Definitions

    

    The following terms, as used herein,
shall have the following meanings:

    

    “Additional Bonus Pool” has
the meaning set forth in Section 3.02.

    

    “Bank” means the Company’s
wholly-owned subsidiary, Community National Bank, a national banking
association, or any successor financial institution.

    

    "Board" means the Board of
Directors of the Company.

    

    "Bonus" means an annual
incentive bonus award granted pursuant to the Plan, the payment of which
shall be contingent upon the attainment of Performance Goals with respect to the
applicable Calculation Period.

    

    “Calculation Period” means (i), with
respect to Participants who are Executive Officers, the twelve month period
ending on September 30; and (ii) with respect to eligible Participants who are
Other Participants, a calendar year.

    

    "Code" means the Internal
Revenue Code of 1986, as amended from time to time.

    

    "Committee" means the
Compensation Committee of the Board.

    

    "Company" means Community
Bancorp., a corporation organized under the laws of the State of Vermont, or any
successor corporation.

    

    “ESSA” has the meaning set
forth in Section 6.07.

    

    “Executive Officer Bonus Pool”
has the meaning set forth in Section 3.02.

    

    “Executive Officers” and “Executive Officer
Participants” mean those executive officers of the Company or the Bank
who are designated from time to time by the Board or the Committee as Executive
Officer Participants in this Plan.

    

    “IDC” means IDC Financial
Publishing, Inc., a banking industry performance ranking service.

    

    “Other Participant Bonus Pool”
has the meaning set forth in Section 3.02.

    

    “Other Participants” means the
officers of the Company or the Bank (other than Executive Officer Participants)
and other salaried employees, who are designated from time to time by the Board
or the Committee as Participants in this Plan.

    

    "Participant" means, a
management employee of the Company or the Bank who meets the eligibility
requirements in Section 3.01 and who has been designated by the Board or the
Committee to participate in the Plan with respect to any annual Calculation
Period.

    

    "Performance Goals" means the criteria and
objectives established pursuant to Section 3, which must be met as a condition
to payment of Bonuses under this Plan.

    

    "Plan" has the meaning set
forth in Section 1.

    

    3.  Eligibility;
Bonus Pools; Performance Goals

    

    3.01.  Eligibility and
Designation for Participation.  Except as the Board may otherwise determine,
only executive officers, other officers and other salaried employees who have
been employed by the Company or the Bank for at least 12 months on the last day
of the applicable Calculation Period shall be eligible for participation in the
Plan with respect to such Calculation Period. The eligible participants for each
bonus pool shall be designated annually by the Board or the
Committee.  Part-time employees who are otherwise eligible to
participate in the Plan shall be eligible for a one-half Bonus payment from the
Other Participant Bonus Pool and from the Additional Bonus Pool.

    

    3.02.  Bonus
Pools.  Subject to Section 6.03 and to attainment of specified
performance criteria as contemplated in Sections 3.03 and 3.04, there shall be
established each year a pool for payment of Bonuses to Executive Officers
(“Executive Officer Bonus
Pool”) and a pool for payment of Bonuses to Other Participants (“Other Participant Bonus
Pool”).  In its
discretion the Board, in consultation with the Committee, may establish an
additional pool for payment of additional Bonuses to Other Participants (“Additional Bonus Pool”), subject to attainment of
supplemental Performance Goals exceeding those established for payment of
Bonuses from the Other Participant Bonus Pool.

    

    3.03.  Minimum Performance
Target.  The Board, in consultation with the Committee, shall
establish annually a minimum performance target below which no Bonuses will be
paid under this Plan. Such minimum performance target may be based on any
factors the Board deems appropriate, including without limitation, attainment of
a specified percentage return on assets or return on equity.

    

    3.04.  Annual Performance
Goals and Available Bonus Funds.  Unless otherwise determined
by the Board, no later than 90 days after the commencement of a Calculation
Period, the Board, in consultation with the Committee, shall establish
Performance Goals and formulas for determining available funds for the payment
of Bonuses with respect to such Calculation Period.  Separate
Performance Goals and formulas shall be established for payment of bonuses under
the Executive Officer Bonus Pool, the Other Participant Bonus Pool and the
Additional Bonus Pool. Performance Goals and the formulas for determining
available funds for payment of Bonuses may include such factors and be based on
such financial measures, including, without limitation, audited or unaudited net
income, as the Board deems appropriate.  Without limiting the
generality of the foregoing, Performance Goals and the formula for determination
of available funds for payment of Bonuses to Executive Officer Participants may
include consideration of the Bank’s and/or the Company’s performance compared to
that of peer institutions, as measured by an independent rating service such as
IDC.

    

    3.05.  Individual
Incentives.  The Executive Officers are authorized to establish
from time to time individual incentive compensation arrangements for designated
officers, other than Executive Officers.  Any incentive compensation
paid to a Participant pursuant to such an arrangement with respect to services
rendered during a Calculation Period shall reduce such Participant’s allocation
of any funds under the Other Participant Bonus Pool, but not under the
Additional Bonus Pool.  The amount or formula for determining any such
reduction shall be determined by the Executive Officers in their
discretion.

    

    3.06.  Allocation of
Executive Officer Bonus Pool.  Unless otherwise determined by
the Board, no later than 90 days after the commencement of a Calculation Period,
the Board, in consultation with the Committee, shall establish for each
Executive Officer Participant an individual allocation percentage for allocation
of available Bonus funds (if any) under the Executive Bonus Pool for such
Calculation Period.  Such allocations may be based on such factors as
the Board deems appropriate, which may include, without limitation, the
executive’s level of responsibilities and full-time or part-time employment
status.

    

    3.07.  Allocation of Other
Participant Bonus Pool and Additional Bonus Pool.  Unless
otherwise determined by the Board, no later than 90 days after the commencement
of a Calculation Period, the Board, in consultation with the Committee and the
President and Chief Executive Officer, shall establish the method for allocating
available Bonus funds (if any) under the Other Participant Bonus Pool and the
Additional Bonus Pool for such Calculation Period.  Participant
allocations may be based on such individual or categorical criteria as the Board
deems appropriate.  Participant allocations of the Other Participant
Bonus Pool (but not allocations under the Additional Bonus Pool) shall take into
account any incentive compensation paid to a Participant under any arrangement
referred to in Section 3.05.

    

    4.  Payment
of Bonuses

    

    4.01.  In General.
 All Bonuses awarded under this Plan shall be paid in
cash.  Except as otherwise determined by the Board in its discretion,
a Participant’s right to payment of a Bonus under this Plan shall vest only upon
expiration of the applicable Calculation Period and only if the Participant is
employed by the Company or the Bank on the last day of such Calculation
Period.  The Board or the Committee shall calculate the Bonus (if any)
to be paid to each Participant with respect to a particular Calculation Period
as soon as practicable following the end of such Calculation Period.
Notwithstanding anything herein to the contrary, payment of a Bonus to a
Participant with respect to services rendered during a Calculation Period
shall be made only if and to the extent the Performance Goals for the
applicable bonus pool for such Calculation Period have been
attained.

    

    4.02. Discretionary Adjustments.  Notwithstanding
any other provision of this Plan, in determining whether Performance Goals
have been achieved for any Participant or group of Participants, the Board may
in its discretion exclude items it deems to be extraordinary, nonrecurring
items, regardless of whether such items are excludable, or the manner in which
such items are otherwise treated for financial reporting purposes,
under generally accepted accounting principles (GAAP), as in effect in the
United States from time to time.

    

    4.03. Time of Payment. All
payments in respect of Bonuses granted under this Plan shall be made no
later than (i) in the case of Executive Officer Participants, two and one-half
months after the end of the calendar year during which the applicable
Calculation Period for such Bonuses expires; and (ii) in the case of Other
Participants, two and one-half months after the end of the calendar year
constituting the applicable Calculation Period for such Bonuses.

    

    4.04. Form of
Payment.  Payment of each Participant's Bonus for any Plan Year
shall be made in cash, in a lump sum, less the appropriate withholding taxes as
set forth in Section 6.02.

    

    5.  Administration

    

    5.01.  Board and
Committee.  The Plan shall be administered by the Board, with
the assistance of Committee.  The Board shall have the authority
in its sole discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all
the powers and authorities either specifically granted to it under the Plan
or necessary or advisable in the administration of the Plan, including,
without limitation, (i) to grant Bonuses, (ii) to determine the persons to
whom and the time or times at which Bonuses shall be granted, (iii) to
determine the terms, conditions, restrictions and Performance Goals
relating to any bonus pool or Bonus payment, (iv) to make adjustments in
the Performance Goals in response to changes in applicable laws,
regulations, or accounting principles, (v) to construe and interpret the Plan,
(vi) to prescribe, amend and rescind rules and regulations relating to the Plan,
and (vii) to make all other determinations deemed necessary or advisable for the
administration of the Plan. The Board may delegate to the Committee or
the Executive Officers such administrative duties in connection with the Plan as
it may deem advisable.

    

    5.02.  Written Record;
Decisions Final and Binding.  All participant designations,
Performance Goals, bonus payment formulas, and bonus allocation determinations
made or established by the Board or the Committee from time to time under this
Plan shall be in writing.  All decisions, determinations and
interpretations of the Board or the Committee acting under delegated
authority, including, without limitation, decisions as to an employee's
selection as a Participant, whether individual or corporate Performance Goals
have been attained and the amount of Bonus to which any Participant is entitled,
shall be final and binding on all persons, including the Company, the Bank, the
Participant (or any person claiming any rights under the Plan from or through
any Participants) and any shareholder.

    

    5.03.  Limitation of
Liability.  No member of the Board or the Committee, nor any
Executive Officer exercising delegated authority under the Plan, shall be liable
for any action taken or determination made in good faith with respect to
the Plan or any Bonus granted hereunder.

    

    6.  General
Provisions

    

    6.01.  No right to Continued
Employment.  Nothing in this Plan or in any Bonus granted
hereunder shall (i) confer upon any Participant the right to continue in the
employ of the Company or the Bank or any entitlement to any remuneration or
benefits not determined in accordance with this Plan, or (ii) interfere with or
limit in any way the right of the Company or the Bank to terminate a
Participant's employment.

    

    6.02.  Withholding
Taxes.  The Company or the Bank employing any Participant shall
deduct from all payments and distributions under this Plan any taxes required to
be withheld by federal, state or local or other
governmental authority.

    

    6.03. Amendment and Termination of the
Plan.  In its discretion, the Board may at any time and from
time to time alter, amend, suspend, or terminate the Plan in whole or in
part.  Additionally, the Committee or the Board may make such
amendments as it deems necessary to comply with other applicable laws,
rules and regulations, including any amendment to preserve an exemption
from Code Section 409A for short-term deferrals.

    

    6.04.  Discretionary Plan; Participant Rights.  This
Plan is a discretionary plan, which may be administered and interpreted in such
manner as the Board deems appropriate.  No Participant shall have any
claim to be granted any Bonus under the Plan other than with respect to any
completed Calculation Period for which applicable Performance Goals have been
attained, and there shall be no obligation for uniformity of treatment among
Participants.

    

    6.05. Unfunded Status of
Bonuses.  The Plan is intended to constitute an unfunded plan
for incentive compensation and no funds or other assets shall be segregated for
any Bonus payments hereunder.  With respect to any vested Bonus
payment which at any time has not yet been made to a Participant, nothing
contained in this Plan shall confer on such Participant any rights that are
greater than those of a general creditor of the Company.

    

    6.06.  Administration and
Interpretation of Plan.  This Plan shall be administered and
interpreted in a manner consistent with applicable law and with preserving the
exemption from Code Section 409A applicable to short-term
deferrals.

    

    6.07.  Compliance with
EESA.  If applicable to the Company, this Plan and all payments
made hereunder shall be made in compliance with Section 111 of the federal
Economic Emergency Stabilization Act of 2008 (“EESA”).  Notwithstanding
anything in this Plan to the contrary, any Bonus payment owing to a Participant
who is a Senior Executive Officer (as defined in EESA) shall be reduced or
otherwise modified to the extent necessary to comply with Section 111 of EESA
(if applicable).

    

    6.08.  Governing Law. The Plan and
the rights of all persons claiming hereunder shall be construed and
determined in accordance with the laws of the State of Vermont.exv10w1

Exhibit 10.1

EMPLOYMENT SEPARATION AND GENERAL RELEASE AGREEMENT

     This Employment Separation and General Release Agreement (this “Separation Agreement”)
is entered into as of this 12th day of December, 2008, by and between Thomas M. Kennedy,
an individual (“Individual”), and Pacific Sunwear of California, Inc., a California
corporation (the “Company”).

     WHEREAS, Individual has been employed as the Division President of the PacSun Division of the
Company;

     WHEREAS, the Company and Individual previously entered into that certain Employment Agreement
dated as of April 1, 2005, as amended September 28, 2007 (the “Employment Agreement”);

     WHEREAS, Individual has been designated as a participant in that certain Executive Severance
Plan initially approved and adopted by the Compensation Committee of the Board of Directors on
August 21, 2007, as amended (as so amended, the “Executive Severance Plan”);

     WHEREAS, Individual and the Company mutually agreed to terminate Individual’s employment
relationship with the Company effective on December 9, 2008 (the “Separation Date”) upon
the terms set forth herein; and

     WHEREAS, Individual and the Company desire to enter into this Separation Agreement and
supersede and replace the Employment Agreement and the Executive Severance Plan.

     NOW, THEREFORE, in consideration of the covenants undertaken and the releases contained in
this Separation Agreement, Individual and the Company agree as follows:

          I. Resignation. Individual’s employment by the Company terminated on the Separation
Date without cause. Individual hereby confirms that he resigned as an officer, director, employee, member,
manager and in any other capacity with the Company and each of its subsidiaries effective as of the
Separation Date and that he currently holds no such position with the Company or any of its
subsidiaries. The Company confirms that it and each of its subsidiaries accepted such resignation
effective as of the Separation Date. Individual agrees that he has no consulting relationship with
the Company or any of its subsidiaries. Individual waives any right or claim to reinstatement as
an employee of the Company and any subsidiary of the Company (if any) by which he was previously
employed. Individual acknowledges and agrees that he has received all amounts owed for his regular
and usual salary (including, but not limited to, any severance (other than the Severance Benefits
expressly provided for in, and subject to the terms of, this Separation Agreement), overtime,
bonus, accrued vacation, commissions, or other wages), reimbursement of expenses, and usual
benefits, and that all payments due to Individual from the Company and its subsidiaries after the
Separation Date shall be determined under this Separation Agreement.

1

 

          II. Severance.

               (a) Subject to Sections II(b) and II(c) below, the Company shall pay as severance pay to
Individual the following benefits (collectively the “Severance Benefits”):

                    1. Severance Pay. The Company shall provide as severance pay to Individual the cash
sum of $826,667.00 (the “Severance Pay”), to be paid as follows: (a) the Company shall
pay to Individual the cash sum of $413,333.50, representing one-half of the total amount of
Severance Pay due hereunder, on June 10, 2009; and (b) the Company shall pay the remaining
one-half of the Severance Pay in six equal monthly installments of $68,888.92 beginning on the
Company’s first regular payroll date in July 2009 and continuing on the Company’s first regular
payroll date each month thereafter until and including December 2009. Notwithstanding the
foregoing provisions, if a “Change in Control Event” (as defined in the Executive Severance Plan)
occurs at any time after the Separation Date, the aggregate amount of any remaining unpaid
installments of Severance Pay due under this Section shall be paid to Individual in cash in a
lump sum on the later of (x) June 10, 2009, and (y) thirty (30) days after the occurrence of such
Change in Control Event. All payments under this Section shall be paid without interest.

                    2. Benefits Payment. The Company shall pay to Individual a cash payment equal to
the expected aggregate cost, as reasonably determined by the Compensation Committee of the
Company’s Board of Directors, of premiums that would be charged to the Individual to continue
medical coverage pursuant to COBRA (the “Benefits Payment”) for twelve (12) months
following the Separation Date. The Benefits Payment shall be paid to the Individual in a lump
sum (without interest) on June 10, 2009.

                    3. Outplacement Services. The Company shall either pay directly or reimburse
Individual for the costs of outplacement services obtained by Individual within the 12-month
period following the Separation Date up to a maximum of $10,000 (the “Outplacement
Benefit”). The Outplacement Benefit shall be subject to the Company’s expense reimbursement
policies in effect immediately prior to the Severance Date 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 the Individual’s third taxable year following 2008. Notwithstanding
anything to the contrary herein, the payment or reimbursement of the Outplacement Benefit
incurred during the six (6) month period following the Separation Date, if any, shall be
accumulated and paid by the Company on June 10, 2009 (subject to Individual’s compliance with the
Company’s expense reimbursement policies).

               (b) The Company’s obligation to pay the Severance Benefits (or any portion thereof, as
applicable) is subject to the condition precedent that Individual shall have complied with the
restrictive covenants set forth in Section VII hereof. The Company shall have no obligation to pay
any portion of the Severance Benefits at any time after a breach by Individual of any covenant set
forth in Section VII. Notwithstanding the foregoing provisions of this Section II(b), however, in
no event shall the amount of the Severance Benefit actually paid by the Company to Individual be
less than Five Thousand Dollars ($5,000) in the aggregate, regardless of any breach by Individual
of the foregoing, which amount the parties agree (in and

2

 

of itself) is good and sufficient consideration for the Release and other obligations of
Individual under this Separation Agreement.

               (c) The Company’s obligation to pay the Severance Benefits (or any portion thereof, as
applicable) is further subject to the condition precedent that Individual shall not have revoked
the Release set forth in Section III hereof pursuant to any revocation rights afforded by
applicable law. The Company shall have no obligation to pay the Severance Benefit to Individual
unless and until the Release becomes irrevocable by Individual under the Age Discrimination in
Employment Act of 1967.

               (d) The Severance Benefits payable under this Separation Agreement are in lieu of any and all
severance and other benefits to which Individual may otherwise be entitled under his Employment
Agreement and/or the Company’s Executive Severance Plan as a result of Individual’s termination of
employment with the Company. Individual agrees that the Severance Benefits received hereunder
shall not be deemed a part of Individual’s compensation for purposes of the determination of
benefits under any other employee pension, welfare or other benefit plans or arrangements, if any,
provided by the Company or any of its subsidiaries, except where explicitly provided under the
terms of such plans or arrangements. Notwithstanding the foregoing provisions, all Severance
Benefits provided hereunder shall be in addition to, and not in substitution for, any pension
rights under the any tax-qualified pension or retirement plan in which Individual participates, and
any disability, workers’ compensation or other Company benefit plan distribution that Individual is
entitled to (other than severance benefits), under the terms of any such plan as of the Separation
Date.

          III. Release. Individual, 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 Individual’s service as an officer, director, employee, member or manager of any Releasee,
Individual’s separation from her 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

3

 

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 Individual pursuant to any of the following: (1) any equity-based awards
previously granted by the Company to Individual, to the extent that such awards continue after the
termination of Individual’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 Individual 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 Individual may in the future
incur with respect to her service as an employee, officer or director of the Company or any of its
subsidiaries or affiliates; (3) with respect to any rights that Individual 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 Individual may have under COBRA; (5) any rights to payment of benefits that
Individual 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; (6) Individual’s
benefit under and in accordance with the terms and conditions of the Company’s Executive Deferred
Compensation Plan; or (7) any rights or benefits that Individual has under this Separation
Agreement. In addition, this Release does not cover any Claim that cannot be so released as a
matter of applicable law. Individual 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.

          IV. 1542 Waiver. It is the intention of Individual in executing this Separation
Agreement that the same shall be effective as a bar to each and every Claim hereinabove specified.
In furtherance of this intention, Individual hereby expressly waives any and all rights and
benefits conferred upon her by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and
expressly consents that this Separation 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 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.”

Individual acknowledges that he may hereafter discover Claims or facts in addition to or different
from those which Individual now knows or believes to exist with respect to the subject matter of
this Separation Agreement and which, if known or suspected at the time of executing this Separation
Agreement, may have materially affected this settlement. Nevertheless,

4

 

Individual hereby waives any right, Claim or cause of action that might arise as a result of such
different or additional Claims or facts. Individual acknowledges that he understands the
significance and consequences of the foregoing Release and such specific waiver of SECTION 1542.

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

               (a) In return for this Separation Agreement, he will receive consideration beyond that which
he was already entitled to receive before entering into this Separation Agreement;

               (b) He is hereby advised in writing by this Separation Agreement to consult with an attorney
before signing this Separation Agreement;

               (c) He has voluntarily chosen to enter into this Separation Agreement and has not been forced
or pressured in any way to sign it;

               (d) He was given a copy of this Separation Agreement on December 9, 2008 and informed that he
had forty-five (45) days within which to consider the Separation Agreement and that if he wished to
execute this Separation Agreement prior to expiration of such 45-day period, he should execute the
Acknowledgement and Waiver attached hereto as Exhibit A;

               (e) Nothing in this Separation Agreement prevents or precludes Individual 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; and

               (f) He was informed that he has seven (7) days following the date of execution of this
Separation Agreement in which to revoke this Separation Agreement, and this Separation Agreement
will become null and void if Individual 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 Individual exercises his right of revocation, neither the Company nor Individual will
have any obligations under this Separation Agreement.

          VI. No Transferred Claims. Individual warrants and represents that Individual has not
heretofore assigned or transferred to any person not a party to this Separation 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.

5

 

          VII. Restrictive Covenants.

               A. Anti-Solicitation. Individual promises and agrees that, for a period of one (1)
year following the Separation Date, he will not directly encourage customers of the Company or any
of its subsidiaries, or directly or indirectly through any third party influence or attempt to
influence any vendor, supplier, brand, product or merchandise designer or consultant, landlord,
bank, lender or investor in, of or to the Company or any of its subsidiaries (collectively referred
to herein as “Company Business Partners”), to refrain from, reduce the level of or cease
doing business with the Company or any of its subsidiaries; provided, however, that nothing
contained in this Section A. shall be construed to prohibit, limit or restrict Individual (subject
to Individual’s compliance with the other restrictive covenants set forth in this Article VII) from
engaging in, entering the employ of or rendering services to any other business (including any
business that competes with that of the Company or any of its subsidiaries) and, in connection
therewith, soliciting or entering into independent commercial relationships with any of the Company
Business Partners for the benefit of such business.

               B. No Solicitation of Employees. Individual promises and agrees that, for a period of
one (1) year following the Separation Date, he will not directly or indirectly solicit any person
who Individual knows is an employee of the Company or any of its subsidiaries to work for any
business, individual, partnership, firm, corporation or other entity then in competition with the
business of the Company or any subsidiary; provided, however, that the foregoing provision shall
not prohibit or restrict Individual from so soliciting any person whose employment with the Company
or any of its subsidiaries terminated prior to the commencement of such solicitation.

               C. Confidentiality. Individual promises and agrees that he will not at any time after
the Separation Date, 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
or information relating to customers, design programs, costs, marketing, sales activities,
promotion, credit and financial data, financing methods, or plans of the Company or any subsidiary
of the Company; provided that the foregoing shall not apply to information which is not
unique to the Company (or subsidiary, as applicable) or which is generally known to the industry or
the public other than as a result of Individual’s breach of this covenant. Individual agrees that,
to the extent he has not already done so, 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 or any subsidiary of the Company. Individual
further agrees that he has not retained and 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 or any subsidiary of the Company; provided, however, that Individual
may retain his rolodex, address books, information relating to his compensation or relating to
reimbursement of expenses, documents relating to his participation in employee benefit plans or
programs of the Company or any of its subsidiaries, any agreement between Individual and the
Company or a subsidiary relating to his 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.

6

 

               D. Non-Disparagement. Individual promises and agrees that, for a period of one (1)
year following the Separation Date, he will not by any means issue or communicate any private or
public statement that may be critical or disparaging of the Company or its subsidiaries, or of any
of their respective products, merchandise, services, directors or officers. The Company promises
and agrees that it will not by any means issue or communicate any private or public statement that
may be critical or disparaging of Individual. However, nothing in this paragraph shall affect
Individual’s or the Company’s ability or obligation to provide complete and truthful testimony or
other information in connection with any (i) governmental and/or regulatory investigation or
proceeding, (ii) required public, governmental or regulatory disclosure or filing, or (iii)
pleadings, discovery and/or trial in litigation.

               E. Solicitation of Proxies. Individual promises and agrees that, for a period of one
(1) year following the Separation Date, he will not initiate, propose or submit any stockholder
proposal, or solicit proxies (or written consents), or assist or participate in any other way,
directly or indirectly, in any solicitation of proxies (or written consents), or otherwise become a
“participant” in a “solicitation” (as such terms are defined under the Securities Exchange Act of
1934, as amended) in opposition to any management proposal or any recommendation or proposal of the
Company’s Board of Directors (including, without limitation, with respect to the election of
directors), or recommend, request, discuss with or induce or attempt to induce any other person or
group to take any such actions, or otherwise seek to advise, encourage or influence any other
person or group with respect to the voting of (or the execution of a written consent in respect of)
any voting securities of the Company in opposition to any proposal, director nomination or
recommendation of the Board of Directors.

               F. Injunctive Relief. Individual expressly agrees that the Company will or would
suffer irreparable injury if he were to breach any of the provisions of this Section VII and that
the Company would by reason of such conduct be entitled, in addition to any other remedies, to
injunctive relief. Individual consents and stipulates to the entry of such injunctive relief
prohibiting his from engaging in conduct which violates any of the provisions of this Section VII.

          VIII. Miscellaneous

               A. Company Insider Trading Restrictions. The Company agrees to immediately notify
Goldman Sachs, as the administrative brokerage for Individual’s stock options and equity grants,
that as of the Separation Date Individual is no longer considered a “company insider” for the
purposes of trading of any Company stock options. Individual hereby acknowledges that he is
personally responsible for complying with all applicable securities laws regarding trading while in
possession of material inside information.

               B. Section 16 Officer Status/SEC Reporting Requirements. The parties hereby
acknowledge and agree that as of the Separation Date, Individual will cease to be considered an
officer of the Company who is subject to Section 16 of the Securities Exchange Act of 1934.
Individual may be subject to certain additional filings and Section 16 considerations for a period
of up to six (6) months following the Separation Date, in the event he engages in any transaction
in Company common stock. Individual is encouraged to coordinate

7

 

with his own personal legal advisor, as may be relevant for any transaction in Company stock
within a period of up to six (6) months following the Separation Date.

               C. Return of Company Property. On the Separation Date, Individual shall return the
Company laptop computer, cellular phone, employee identification, and all other equipment, devices,
or items provided to Individual by the Company. Except as otherwise provided herein, all Company
provided services will be discontinued as of the Separation Date.

               D. Successors.

     (i) This Separation Agreement is personal to Individual and shall not, without the
prior written consent of the Company, be assignable by Individual. However, should
Individual die during the twelve (12) month period following the Separation Date, then, so
long as Individual had not theretofore materially breached his obligations under this
Separation Agreement, (and such material breach remains uncured following notice thereof)
the Company agrees to pay any then remaining balance of the Severance Benefits to
Individual’s heirs or his estate, as applicable.

     (ii) This Separation 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 Separation 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 Separation Agreement by operation of law or otherwise.

               E. Waiver. No waiver of any breach of any term or provision of this Separation
Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Separation
Agreement. No waiver shall be binding unless in writing and signed by the party waiving the
breach.

               F. Modification. This Separation 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.

               G. Complete Agreement. This Separation Agreement embodies the entire agreement of the
parties hereto respecting the matters within its scope. This Separation Agreement supersedes all
prior agreements of the parties hereto on the subject matter hereof, including, without limitation,
the Employment Agreement and the Executive Severance Plan. Any prior negotiations, correspondence,
agreements, proposals, or understandings relating to the subject matter hereof shall be deemed to
be merged into this Separation Agreement and to the extent inconsistent herewith, such
negotiations, correspondence, agreements, proposals, or understandings shall be deemed to be of no
force or effect. As of the date of this Separation Agreement, 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. Notwithstanding the foregoing, the Company’s
rights under any confidentiality, trade secret,

8

 

proprietary information, inventions or similar agreement to which Individual was a party or
otherwise bound are not integrated into this Agreement and such rights of the Company shall
continue in effect.

               H. Severability. In the event that a court of competent jurisdiction determines that
any portion of this Separation Agreement is in violation of any statute or public policy, then only
the portions of this Separation Agreement which violate such statute or public policy shall be
stricken, and all portions of this Separation 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 Separation 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 Separation Agreement.

               I. Governing Law. This Separation 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.

               J. Legal Counsel; Mutual Drafting. Each party recognizes that this is a legally
binding contract and acknowledges and agrees that they have had the opportunity to consult, and
have consulted, with legal counsel of their choice. Each party has cooperated in the drafting,
negotiation and preparation of this Separation Agreement. Hence, in any construction to be made of
this Separation Agreement, the same shall not be construed against either party on the basis of
that party being the drafter of such language. Individual agrees and acknowledges that he has read
and understands this Separation Agreement, is entering into it freely and voluntarily, and has been
advised to seek counsel prior to entering into this Separation Agreement, has had ample opportunity
to do so, and has had the benefit of such counsel.

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

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

Attention: Chief Financial Officer

3450 East Miraloma Avenue

Anaheim, California 92806

	 	 	 	with a copy to:
	 
	 	 	 	Pacific Sunwear of California, Inc.

Attention: Senior Vice President, Human Resources

3450 East Miraloma Avenue

Anaheim, California 92806

	 	(ii)	 	if to Individual:
	 
	 	 	 	At the address on file with the Company

9

 

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.

               L. On-going Communication with the Company. For the purposes of coordinating and
controlling any ongoing communications, contacts, or interactions between Individual and the
Company following the Separation Date, Caroline Kenyon is to be the sole and exclusive point of
contact between Individual and the Company. Any and all communications, contacts, questions,
requests, or other interactions of any nature by Individual or on Individual’s behalf whatsoever
must be directed to Ms. Kenyon, as the exclusive point of contact with and “entry” to the Company
for any matter dealing with the Company, or for any matter which arises from or relates in any way
to Individual’s involvement with the Company. This arrangement includes, by way of example and not
as any limitation or restriction on the generality of the foregoing, requests involving employee
benefit questions, matters involving any transaction with equity awards Individual beneficially
owns from whatever source, or matters of administration of any aspect of this Separation Agreement.
Ms. Kenyon will arrange for contact with, response by, or communication with, the applicable
personnel of the Company on a case-by-case basis. Ms. Kenyon may be reached at (714) 414-4395. If
Ms. Kenyon is not then employed by the Company, the Company will designate the appropriate new
contact person.

               M. Litigation / Audit Cooperation. Following the Separation Date, Individual 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 of its subsidiaries with respect to matters relating to Individual’s employment
with or service as a member of the board of directors of the Company or any of its subsidiaries
(collectively, “Litigation”); or (b) any audit of the financial statements of the Company
or any of its subsidiaries with respect to the period of time when Individual was employed by the
Company or any of its subsidiaries (“Audit”). Individual acknowledges that such
cooperation may include, but shall not be limited to, Individual making himself available to the
Company or any of its 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 of its subsidiaries to give testimony without requiring service of a
subpoena or other legal process; (iii) volunteering to the Company or any of its subsidiaries
pertinent information related to any Litigation or Audit; (iv) providing information and legal
representations to the auditors of the Company or any of its subsidiaries, in a form and within a
time frame requested by the Company’s Board of Directors, with respect to the Company’s or any of
its subsidiaries’ opening balance sheet valuation of intangibles and financial statements for the
period in which Individual was employed by the Company or any of its subsidiaries; and (v) turning
over to the Company or any of its subsidiaries any documents relevant to any Litigation or Audit
that are or may come into Individual’s possession. The Company shall reimburse Individual for
reasonable travel expenses incurred in connection with providing the services under this Section
VIII(M), including lodging and meals, upon Individual’s submission of receipts. If, due to an
actual or potential conflict of interest, it is necessary for Individual to retain separate counsel
in connection with providing the services under this Section VIII(M), and such counsel is not
otherwise supplied by and at the expense of the Company (pursuant to

10

 

indemnification rights of the Individual or otherwise), the Company shall further reimburse
Individual for the reasonable fees and expenses of such separate counsel.

               N. Counterparts. This Separation 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.

               O. Arbitration. Any controversy arising out of or relating to this Separation
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
Individual’s employment or the termination thereof, including, but not limited to, any state or
federal statutory claims, shall be submitted to arbitration in Orange County, California, before a
sole arbitrator selected from Judicial Arbitration and 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 Code of Civil Procedure §§ 1280 et
seq. as the exclusive forum for the resolution of such dispute. Pursuant to California Code of
Civil Procedure § 1281.8, provisional injunctive relief may, but need not, be sought by either
party to this Separation Agreement 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 determined by the Arbitrator. Final resolution of any dispute through arbitration may
include any remedy or relief which the Arbitrator deems just and equitable, including any and all
remedies provided by applicable state or federal statutes. At the conclusion of the arbitration,
the Arbitrator shall issue a written decision that sets forth the essential findings and
conclusions upon which the Arbitrator’s award or decision is based. 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 parties acknowledge and agree that they are hereby
waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either of
the parties against the other in connection with any matter whatsoever arising out of or in any way
connected with this Separation Agreement or Individual’s employment. The parties agree that (i)
the Company shall be responsible for payment of the forum costs of any arbitration hereunder,
including the Arbitrator’s fee, in connection with any proceeding to enforce the terms of this
Separation Agreement, and (ii) the Arbitrator shall have discretion, if the Arbitrator determines
it to be appropriate, to award reasonable attorneys’ fees and costs to the party prevailing in any
such proceeding.

               P. 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.

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

               R. Taxes. The Company has the right to withhold from any payment hereunder or under
any other agreement between the Company and Individual the amount required by law to be withheld
with respect to such payment or other benefits provided to Individual. Other than as to such
withholding right, Individual shall be solely responsible for any taxes due as a result of the
payments and benefits received by Individual contemplated by this Separation Agreement.

11

 

          I have read the foregoing Separation Agreement and I accept and agree to the provisions it
contains and hereby execute it voluntarily with full understanding of its consequences.

          EXECUTED this 12th day of December, 2008, at Los Angeles County, California.

	 	 	 	 	 
	 	“Individual”	 
	 
	 	/s/ Thomas M. Kennedy	 
	 	Thomas M. Kennedy	 

          EXECUTED this 12th day of December, 2008, at Orange County, California.

	 	 	 	 	 
	 	“Company”

Pacific Sunwear of California, Inc.,

a California corporation

 	 
	 
	 	/s/ Caroline Kenyon	 
	 	By:  	Caroline Kenyon
 	 
	 	Its:	 Senior Vice President, Human Resources 	 

12

 

	 	 	 	 	 

EXHIBIT A

ACKNOWLEDGEMENT AND WAIVER

     I, Thomas M. Kennedy, hereby acknowledge that I was given 45 days to consider the foregoing
Employment Separation and General Release Agreement and voluntarily chose to sign the Employment
Separation and General Release Agreement prior to the expiration of the 45-day period.

     I declare under penalty of perjury under the laws of the state of California, that the
foregoing is true and correct.

          EXECUTED this 12th day of December, 2008, at Los Angeles County, California.

	 	 	 	 	 
	 	/s/ Thomas M. Kennedy	 
	 	Thomas M. Kennedy	 

A-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}]]