Adrenalina Criticizes Pacific Sunwear Board for Rejecting Overtures Regarding a Strategic Combination

Business Wire, Dec 15, 2008

We remain steadfastly determined in pursuing a strategic combination with PacSun and have retained Olshan Grundman Frome Rosenzweig & Wolosky LLP to act as our legal counsel and advise us in this matter. We have also recently spoken with several of PacSun's largest shareholders, and they expressed strong disappointment with the Board for failing to meet with us and expressed support for Adrenalina's initiative. Additionally, we are now a shareholder of the Company and intend to significantly increase our position. We are more confident than ever that moving forward promptly to consummate a transaction is in the best interest of all parties. We think it is irresponsible for the Company's Board to refuse to meet with us.

While management may seek to blame the economic climate for the decline in PacSun's same-store sales, this explicitly ignores the fundamental realities of the retail business environment and, in particular, the difficulties with the Company's retail model. We believe now is the time for our respective companies to authorize teams to negotiate a definitive agreement on a combination of our companies that will deliver superior value to our respective shareholders. We believe the experience of our management team at Adrenalina working with PacSun will allow us to capitalize on several important business synergies, including a combination of PacSun's substantial store footprint with our proven entertainment retailing concept, and create a more efficient and competitive company that is better equipped to deliver value in this challenging economic environment. We can discuss all the potential synergies in our meeting but, a couple major synergies include:

* Real Estate: Adrenalina's exclusive arrangement with the FlowRider(R) and foot traffic of over a million people a year per store has made us extremely meaningful to the malls and their developers. Landlords are paying Adrenalina to build out each store. The relationship Adrenalina has created with these landlords has proven to be incredibly beneficial for Adrenalina and we believe can be of value to PacSun as well.

* Revenue Growth: We are poised to grow our store footprint to include 200 stores in the United States and with considerable international interest, revenue growth will provide the combined company a growth engine it is currently lacking.

While it was our strong preference from the outset to communicate privately with the Company regarding a value-enhancing business combination, we were compelled to publicly set forth our acquisition proposal after our attempts to enter into discussions with the Company were repeatedly declined. We have decided to send this letter privately with the hope that the Board now stands ready to work cooperatively with us and engage in a constructive dialogue regarding a potential business combination. If, on the other hand, you continue to reject our overtures, we will be left with no choice but to pursue further public communication and take our case directly to your shareholders, including the initiation of a potential proxy contest to replace the existing Board with directors who are committed, subject to their fiduciary duties, to consummating a business combination with us. Based on our preliminary conversations with several of your largest shareholders, we believe a vast majority of your shareholders would fully support such a strategic combination.