Form 8-K bebe stores, inc. For: Dec 15
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
December 15, 2014
Date of Report (Date of earliest event reported)
bebe stores, inc.
(Exact name of registrant as specified in its charter)
California | 0-24395 | 94-2450490 |
(State of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
400 Valley Drive� Brisbane, California 94005 (Address of principal executive offices) (Zip Code) | ||
(415) 715-3900
(Registrants telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM�5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of President and Chief Executive Officer
On December 15, 2014, bebe stores, inc. (the Company ) announced the appointment of Jim Wiggett as its Chief Executive Officer and member of the of the Board of Directors (the Board ). Mr. Wiggett, age 64, had been serving as the Companys interim Chief Executive Officer since June 12, 2014. Mr. Wiggett brings nearly 40 years of retail, merchandising, and business experience to the Company. Mr. Wiggett has served as the Chief Executive Officer and founder of Jackson Hole Group, a strategic consulting group, since 2002. Prior to founding Jackson Hole Group, Mr. Wiggett served as Executive Vice President of the Selective Distribution Group (SDG), one of 5 operating divisions of Moet Hennesy Louis Vuitton (LVMH), from 1999 through 2002. Mr. Wiggett also served as the President and Chief Executive Officer of Sephora.com, one of LVMHs operating companies/brands. Prior to that, Mr. Wiggett held senior positions with Duty Free Stores (DFS), Charles Schwab Corporation, the ITEL Corp., Cambridge Plan International and R.H. Macy Corp.
Executive Employment Agreement
On December 15, 2014, the Company entered into an employment agreement (the Agreement ) with Mr. Wiggett. The material terms of Mr. Wiggetts compensation arrangements and the Agreement are summarized below:
" | Base Salary and Bonus. Mr. Wiggett will receive an annual base salary of $800,000. He is also eligible for an annual bonus under the Companys Equity Incentive Plan, which is implemented under the Companys 1997 Stock Plan, as amended, with a target amount of 100% of base salary with a maximum bonus opportunity of 200% of base salary. The actual amount of the annual bonus will be determined by the Board based on the Companys achievement of performance goals to be determined by the Board in its sole discretion. |
" | Grant of Restricted Stock Units. The Board approved a grant of restricted stock units ( RSUs ) for Mr. Wiggett equal to 754,717 shares. The RSUs will vest in four annual installments beginning on the effective date of the Agreement based on continued employment as Chief Executive Officer. |
" | Severance Terms. Pursuant to the Agreement, upon the termination of Mr. Wiggetts employment, Mr. Wiggett is entitled to receive (i) any portion of his annual base salary and annual target bonus (as adjusted) earned through the date of termination not theretofore paid, (ii) any outstanding business expenses owed, (iii) any accrued but unused vacation and (iv) any amount arising from his participation in certain other benefit plans as described in the Agreement. |
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� | Severance Payments Not in Connection with a Change of Control. Pursuant to the Agreement, Mr. Wiggett is entitled to receive certain additional benefits upon the involuntary termination of his employment under certain circumstances. In the event of (i) an involuntary termination of Mr. Wiggetts employment by the Company for any reason other than Cause (as defined in the Agreement) by (ii) Mr. Wiggetts resignation for Good Reason (as defined in the Agreement), in each case, other than during the twelve (12) month period commencing on the consummation of a Change in Control (as defined in the Agreement), then Mr. Wiggett shall generally be entitled to (x) cash lump sum equal to 100% of his annual base salary, (y) up to 12 months of COBRA reimbursement and (z) vesting acceleration of time-based equity awards equal to the number of shares that would have vested during the period through the date of termination if the equity award had been subject to a monthly vesting schedule, with respect to the number of unvested shares underlying such equity awards pursuant to a formula as set forth in the Agreement. |
� | Severance Payments in Connection with a Change of Control. Pursuant to the Agreement, Mr. Wiggett is entitled to receive certain additional benefits upon the involuntary termination of his employment under certain circumstances. In the event of (i) an involuntary termination of Mr. Wiggetts employment by the Company for any reason other than Cause (as defined in the Agreement) by (ii) Mr. Wiggetts resignation for Good Reason (as defined in the Agreement), in each case, occurring within the twelve (12) month period commencing on the consummation of a Change in Control (as defined in the Agreement ), then Mr. Wiggett shall generally be entitled to (x) cash lump sum equal to 100% of his annual base salary, (y) up to 12 months of COBRA reimbursement and (z) vesting acceleration of all time-based equity awards. |
" | Other Benefits. Pursuant to the terms of the Agreement, Mr. Wiggett will also receive certain other benefits, including an automobile allowance and housing assistance. Mr. Wiggett is also eligible to participate in the employee benefit plans and paid time off policy maintained for senior executives and employees of the Company, generally. |
All payments to Mr. Wiggett as described in the paragraphs above are contingent upon Mr. Wiggetts execution, delivery and non-revocation of a customary release of claims in agreed form. Mr. Wiggett is not be entitled to any benefits under the agreement in the case of his involuntary termination for Cause or his resignation under circumstances that do not constitute Good Reason.
The foregoing description of the Agreement is qualified in its entirety by reference to the full text of the Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.
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ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No.����Description
10.1 | Employment Agreement, between bebe stores, inc. and Mr. Jim Wiggett, dated as of December 15, 2014. |
����
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: December 15, 2014 | bebe stores, inc. |
By:����/s/ Liyuan Woo����
Name: | Liyuan Woo |
Title: | Chief Financial Officer |
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INDEX TO EXHIBITS
Exhibit No.����Description
10.1 | Employment Agreement, between bebe stores, inc. and Mr. Jim Wiggett, dated as of December 15, 2014. |
��������
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Employment Agreement
This Employment Agreement (the Agreement ), dated as of December 15, 2014 (the Effective Date ), is made by and between bebe stores, inc., a California corporation (the Company ), and Jim Wiggett (the Executive and, together with the Company, the Parties ).
RECITALS
WHEREAS, the Company desires to assure itself of the services of Executive by engaging Executive to perform services under the terms hereof; and
WHEREAS, Executive desires to provide services to the Company on the terms herein provided.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, including the respective covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
1.Certain Definitions.
Capitalized terms not specifically defined in the text of this Agreement shall have the following meanings:
(a) Affiliate shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where control shall have the meaning given such term under Rule 405 of the Securities Act of 1933, as amended from time to time.
(b) Board shall mean the Board of Directors of the Company.
(c) Cause shall mean (i) Executives gross negligence or willful misconduct in the performance of the duties and services required of Executive pursuant to this Agreement; (ii) Executive has been convicted of a felony; (iii) Executive has willfully refused to perform the duties and responsibilities required of Executive under this Agreement which remains uncorrected for thirty (30) days following written notice to Executive by the Company of such refusal; (iv) Executives involvement in a conflict of interest which is defined as any direct or indirect interest in, connection with, or benefit from any outside activities, particularly commercial activities, which interest might in any way adversely affect the Company or any of its divisions, or involves a possible conflict of interest determined by the Company and for which the Company makes a determination to terminate the employment of Executive which remains uncorrected for thirty (30) days following written notice to Executive by the Company of such conflict; (v) Executive has willfully engaged in conduct that Executive knows or should know is materially injurious to the Company, or any of its divisions; (vi) Executives material breach of any material provision of this Agreement, the Confidential Information Agreement (as defined below) or corporate code or policy which remains uncorrected for thirty (30) days following written notice to Executive by the Company of such
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breach; or (vii) Executive violates the Foreign Corrupt Practices Act or other applicable United States law. For purposes of this Section 1(c), an act or failure to act shall be considered willful only if done or omitted to be done without a good faith reasonable belief that such act or failure to act was in the best interests of the Company.
(d) Change in Control shall mean (i) the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, unless fifty percent (50%) or more of the combined voting power of the continuing or surviving entitys equity securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were shareholders of the Company immediately prior to such merger, consolidation or other reorganization, in substantially the same proportions as their ownership of Company stock prior to the transaction; (ii) the acquisition by any person or entity or group (as defined in the Securities Exchange Act of 1934, as amended) of greater than fifty percent (50%) of the outstanding combined voting power of the Company; or (iii) the sale, transfer or other disposition of all or substantially all of the Companys assets. A transaction shall not constitute a Change in Control if (i) its sole purpose is to change the state of the Companys incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Companys securities immediately before such transaction or (ii) the surviving or acquiring entity is a publicly traded entity and Executive remains as the Chief Executive Officer of such entity following the transaction that otherwise would have constituted a Change of Control.
(e) Code shall mean the Internal Revenue Code of 1986, as amended.
(f) Constructive Termination means Executives resignation from employment with the Company that is effective within one-hundred twenty (120) days after the occurrence, without Executives written consent, of any of the following: (i) a material diminution in Executives base compensation that is not proportionately applicable to other officers and key employees of the Company generally; (ii) a material diminution in Executives job responsibilities or duties, provided, that any change made solely as the result of the Company becoming a subsidiary or business unit of a larger company in a Change in Control shall not provide for Executives Constructive Termination hereunder; (iii) a material change of at least fifty (50) miles in the geographic location of both the Companys Brisbane, California offices and the Companys Los Angeles, California offices; (iv) a failure for Executive to be elected or re-elected to serve as a member of the Board; (v) the failure of any acquirer of or successor to the Company to assume this Agreement; (vi) a material breach by the Company of this Agreement or (vii) the delivery by the Company of a Notice of Non-Renewal. Notwithstanding the foregoing, a resignation shall not constitute a Constructive Termination unless the condition giving rise to such resignation continues more than thirty (30) days following Executives written notice of such condition provided to the Company within ninety (90) days of the first occurrence of such condition.
(g) Date of Termination shall mean (i) if Executives employment is terminated due to Executives death, the date of Executives death; (ii) if Executives employment is terminated due to Executives Disability, the date determined pursuant to Section 4(a)(ii) hereof; or (iii) if Executives employment is terminated pursuant to Section 4(a)(iii)-(viii) hereof either the date
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indicated in the Notice of Termination or the date specified by the Company pursuant to Section 4(b) hereof, whichever is earlier.
(h) Disability shall mean Executives inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that (i) can be expected to result in death or that can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees or directors of the Company. Medical determination of Disability may be made by either the Social Security Administration or by the provider of an accident or health plan covering employees or directors of the Company provided that the definition of disability applied under such disability insurance program complies with the requirements of the preceding sentence. Upon the request of the Board, Executive must submit proof to the plan administrator of the Social Security Administrations or the providers determination.
(i) Person shall mean any individual, natural person, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), incorporated or unincorporated association, governmental authority, firm, society or other enterprise, organization or other entity of any nature.
(j) Section 409A shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.
2.Employment.
(a)����General. The Company shall employ Executive and Executive shall enter the employ of the Company, for the period and in the position set forth in this Section 2, and upon the other terms and conditions herein provided.
(b)����Employment Term. The term of employment under this Agreement (the Term ) shall be for the period beginning on the Effective Date and ending on the third (3rd) anniversary thereof, subject to earlier termination as provided in Section 4 below. The Term shall automatically renew for additional one (1) year periods unless either Party gives ninety (90) days advance written notice of non-renewal ( Notice of Non-Renewal ) to the other Party, in which case Executives employment will terminate at the end of the then-applicable Term or any other date set by the Company in accordance with Section 4 below and subject to earlier termination as provided in Section 4 below.
(c)����Position and Duties. During the Term, Executive: (i) shall serve as the Chief Executive Officer of the Company, with responsibilities, duties and authority customary for such position, subject to direction by the Board; (ii) shall report directly to the Board; (iii) shall devote substantially all Executives working time and efforts to the business and affairs of the Company
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and its subsidiaries; and (iv) agrees to observe and comply with the Companys rules and policies as adopted by the Company from time to time. The Board has already consented to Executives continuing service on each board of directors of which Executive is now a member as set forth on Exhibit A attached hereto, which consent shall continue until such time as the Board provides notice to Executive that, in its reasonable judgment, such company competes with the Company, such service interferes with Executives duties as Chief Executive Officer of the Company or places him in a competing position, or otherwise conflicts with, the interests of the Company. Notwithstanding the foregoing, Executive may devote reasonable time to unpaid activities such as supervision of personal investments and activities involving professional, charitable, educational, religious, civic and similar types of activities, speaking engagements and membership on committees, provided such activities do not individually or in the aggregate interfere with the performance of Executives duties under this Agreement, violate the Companys standards of conduct then in effect, or raise a conflict under the Companys conflict of interest policies. Executive cannot serve on the board of directors of a private or publicly traded company (other than the Companys Board) without the Boards prior written consent. In addition, as of the Effective Date, the Company shall appoint Executive as a member of the Board and shall use commercially reasonable efforts to cause Executive to be reelected as a member of the Board while employed hereunder.
(d)����Place of Employment. Executive shall perform the services required by this Agreement at the Companys principal offices in Los Angeles, California and in Brisbane, California. In addition, the Company may from time to time require Executive to travel temporarily to other locations on the Companys business.
3.Compensation and Related Matters.
(a)����Annual Base Salary. During the Term, Executive shall receive a base salary at a rate of eight hundred thousand dollars ($800,000) per annum (the Annual Base Salary ), which shall be paid in accordance with the customary payroll practices and procedures of the Company. Such Annual Base Salary shall be reviewed by the Board not less often than annually, and may be increased (but not decreased) from time to time.
(b)����Annual Target Bonus. Commencing in the third quarter of fiscal year 2015 and each fiscal year thereafter during Executives employment with the Company, Executive will be eligible to receive a discretionary annual performance bonus, with a target achievement of 100% of Annual Base Salary and a maximum achievement of 200% of Annual Base Salary (the Annual Bonus ). The amount of the Annual Bonus that shall be payable shall be based on the achievement of performance goals to be determined by the Board, in its sole discretion. The amount of any Annual Bonus for which Executive is eligible shall be reviewed by the Board from time to time, provided that that target and maximum achievement for the Annual Bonus shall not be less than 100% and 200% of Annual Base Salary, respectively. Any Annual Bonus earned by Executive pursuant to this section shall be paid to Executive in accordance with Company policies, less authorized deductions and required withholding obligations, within two and a half months following the end of the fiscal year to which the bonus relates. In the event of a Change in Control, the Annual Bonus shall be pro-rated based on the number of days in the fiscal year prior to the consummation of the Change in Control and performance achieved through the consummation of the Change in Control,
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as adjusted to give effect to the shortened measurement period. Any such Annual Bonus shall be paid on, or as soon as administratively practicable following, the consummation of the Change in Control, but in no event later than two and a half months following the end of the fiscal year to which the bonus relates.
(c)����Restricted Stock Units. Executive shall be granted an award (the Restricted Stock Unit Award ) consisting of that number of restricted stock units determined by dividing $2,000,000 by the closing trading price of the Companys common stock on the trading day immediately preceding the Effective Date. The Restricted Stock Unit Award shall vest, and the underlying shares delivered, with respect to twenty five percent (25%) of the total number of restricted stock units subject thereto on each anniversary of the Effective Date, such that the Restricted Stock Unit Award shall be fully vested, and all shares thereunder delivered, on the fourth (4th) anniversary of the Effective Date, subject to Executives continuous service to the Company as an employee through the applicable vesting date. The Restricted Stock Unit Award shall otherwise be subject to the terms of the plan pursuant to which they are granted and/or an award agreement to be entered into between Executive and the Company.
(d)����Automobile Allowance. During the Term, the Company shall provide Executive with a monthly car allowance of $600, less authorized deductions and withholding obligations. This allowance shall be payable to Executive on the regular payroll dates of the Company and shall be prorated for any partial months.
(e)����Housing Allowance. During the Term, the Company shall provide Executive with a monthly allowance of $6,000 for housing in the Los Angeles area. This allowance shall be payable to Executive on the regular payroll dates of the Company and shall be prorated for any partial months.
(f)����Benefits. During the Term, Executive may participate in such employee and executive benefit plans and programs as the Company may from time to time offer to provide to its employees and executives, pursuant to the terms and eligibility requirements of those plans.
(g)����Business Expenses. During the Term, the Company shall reimburse Executive for all reasonable, documented, out-of-pocket travel and other business expenses incurred by Executive in the performance of Executives duties to the Company in accordance with the Companys applicable expense reimbursement policies and procedures.
4.Termination.
(a)����Circumstances. Executives employment hereunder may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the following circumstances:
(i)Death. Executives employment hereunder shall terminate upon Executives death.
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(ii)Disability. If Executive incurs a Disability, the Company may give Executive written notice of its intention to terminate Executives employment. In that event, Executives employment with the Company shall terminate, effective on the later of the thirtieth (30th) day after receipt of such notice by Executive or the date specified in such notice; provided that within the thirty (30) day period following receipt of such notice, Executive shall not have returned to full-time performance of Executives duties hereunder.
(iii)Termination for Cause. The Company may terminate Executives employment for Cause at any time.
(iv)Termination Without Cause. The Company may terminate Executives employment without Cause at any time.
(v)Constructive Termination. Executive may experience a Constructive Termination at any time.
(vi)Resignation for Any Other Reason. Executive may resign from Executives employment without such resignation constituting a Constructive Termination at any time.
(vii)Non-Renewal of Term by the Company. The Company may give Notice of Non-Renewal to Executive pursuant to Section 2 hereof.
(viii)Non-Renewal of Term by Executive. Executive may give Notice of Non-Renewal to the Company pursuant to Section 2 hereof.
(b)����Notice of Termination. Any termination of Executives employment by the Company or by Executive under this Section 4 (other than termination pursuant to paragraph (a)(i)) shall be communicated by a written notice to the other party hereto (i) indicating the specific termination provision in this Agreement relied upon, (ii) setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executives employment under the provision so indicated, and (iii) specifying a Date of Termination which, if submitted by Executive, shall be at least thirty (30) days following the date such notice is received by the Company (a Notice of Termination ); provided, however, that in the event that Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, change the Date of Termination to any date that occurs following the date of Companys receipt of such Notice of Termination and is prior to the date specified in such Notice of Termination. A Notice of Termination submitted by the Company may provide for a Date of Termination on the date Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion.
(c)����Deemed Resignation. Upon termination of Executives employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its Affiliates.
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5.Company Obligations upon Termination of Employment.
(a)����In General. Upon a termination of Executives employment for any reason, Executive (or Executives estate) shall be entitled to receive: (i) any portion of Executives Annual Base Salary and Annual Target Bonus (as adjusted pursuant to Section 3(b)) earned through the Date of Termination not theretofore paid, (ii) any expenses owed to Executive under Section 3(g) above, (iii) any accrued but unused vacation owed to Executive, and (iv) any amount arising from Executives participation in, or benefits under, any employee benefit plans, programs or arrangements under Section 3(e) above, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements. Except as otherwise set forth in Sections 5(b) and (c) below, the payments and benefits described in this Section 5(a) shall be the only payments and benefits payable in the event of Executives termination of employment for any reason.
(b)����Severance Payments Not In Connection With a Change in Control. In the event of Executives termination of employment by the Company without Cause, by Executive as a Constructive Termination, in each case, that occurs other than during the twelve (12) month period commencing on the consummation of a Change in Control pursuant to Section 4(a)(iv) or 4(a)(v) hereof, respectively, in addition to the payments and benefits described in Section 5(a) above, the Company shall, subject to Sections 12 and 5(d) hereof and subject to Executives delivery (or delivery by Executives estate) to the Company of a general release of claims against the Company in a form reasonably acceptable to the Company (a Release ) that becomes effective and irrevocable accordance with Section 11(d) hereof:
(i)����Pay to Executive in a lump sum cash payment an amount equal to one hundred percent (100%) of Executives Annual Base Salary as of the Date of Termination, such payment to be made on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 11(d) hereof;
(ii)����Each equity award held by Executive that vests based solely upon Executives continued service to the Company as an employee, including, without limitation, the Restricted Stock Unit Award, that is subject to annual vesting shall automatically become vested and any forfeiture restrictions or rights of repurchase thereon shall lapse immediately prior to the Date of Termination, in each case, with respect to that number of unvested shares underlying such equity award equal to (i) the product of (A) the total number of shares underlying such equity award as of the Termination Date divided by (B) the number of total months in the vesting schedule of such equity award multiplied by (ii) that number of full calendar months that have elapsed since the later of (A) the vesting commencement date of such equity award or (B) the last vesting date of such equity award (rounded down to the nearest whole number of shares). For example, if Executives Termination Date is March 16, 2016 and Executive was granted 10,000 restricted stock units with a vesting commencement date of January 15, 2016 and an annual vesting schedule over two years, then the vesting of 833 restricted stock units would be accelerated ((10,000/24) x 2 = 833.33). In all other respects Executives equity award shall continue to be bound by and subject to the terms of their respective agreements and equity plans; and
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(iii)����If Executive elects to receive continued healthcare coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ( COBRA ), the Company shall, at Executives option, directly pay, or reimburse Executive for, the COBRA premiums for Executive and Executives covered dependents during the period commencing on Executives termination of employment and ending upon the earliest of (X) the first anniversary of the Date of Termination, (Y) the date that Executive and/or Executives covered dependents, as applicable, become no longer eligible for COBRA or (Z) the date Executive becomes eligible to receive healthcare coverage from a subsequent employer. Notwithstanding the preceding sentence, with regard to such COBRA continuation coverage, if the Company determines in its sole discretion that it cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to the Executive a taxable monthly payment in an amount equal to the monthly COBRA premium that the Executive would be required to pay to continue the Executives and Executives covered dependents group insurance coverage as in effect on the Date of Termination (which amount shall be based on the premiums for the first month of COBRA coverage).
(c)����Severance Payments In Connection with a Change in Control. In the event of Executives termination of employment by the Company without Cause, by Executive as a Constructive Termination, in each case, that occurs within the twelve (12) month period commencing on the consummation of a Change in Control pursuant to Section 4(a)(iv) or 4(a)(v) hereof, respectively, in addition to the payments and benefits described in Section 5(a) above, the Company shall, subject to Sections 12 and 5(d) hereof and subject to Executives delivery (or delivery by Executives estate) to the Company of a Release that becomes effective and irrevocable accordance with Section 11(d) hereof:
(i)����Pay to Executive in a lump sum cash payment an amount equal to one hundred percent (100%) of Executives Annual Base Salary as of the Date of Termination, such payment to be made on the first regular payroll date following the date the Release becomes effective and irrevocable or as otherwise provided in Section 11(d) hereof;
(ii)����Each outstanding equity award, including, without limitation, each stock option, restricted stock award and restricted stock unit award, held by Executive shall automatically become vested and, if applicable, exercisable and any restrictions thereon shall immediately lapse, in each case, with respect to one hundred percent (100%) of the then unvested shares subject to such equity award; and
(iii)����If Executive elects to receive continued healthcare coverage pursuant to the provisions of COBRA, the Company shall, at Executives option, directly pay, or reimburse Executive for, the premium for Executive, Executives covered dependents and Executives spouse or domestic partner through the earlier of (i) the first anniversary of the Date of Termination and (ii) the date Executive, Executives covered dependents, if any, and Executives spouse or domestic partner, if any, become eligible for healthcare coverage under another employers plan(s). After the Company ceases to pay premiums pursuant to the preceding sentence, Executive may, if eligible, elect to continue healthcare coverage at
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Executives expense in accordance with the provisions of COBRA. Notwithstanding the preceding sentence, with regard to such COBRA continuation coverage, if the Company determines in its sole discretion that it cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof provide to the Executive a taxable monthly payment in an amount equal to the monthly COBRA premium that the Executive would be required to pay to continue the Executives and Executives covered dependents group insurance coverage as in effect on the Date of Termination (which amount shall be based on the premiums for the first month of COBRA coverage).
(d)����No Other Severance. The provisions of this Section 5 shall supersede in their entirety any severance payment provisions in any severance plan, policy, program or other arrangement maintained by the Company.
(e)����No Requirement to Mitigate; Survival. Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or in any other manner. Notwithstanding anything to the contrary in this Agreement, the termination of Executives employment and the expiration or termination of the Term shall not impair the rights or obligations of any party hereto.
6.Restrictive Covenants.
(a)����Affiliates. As used in this Section 6, the term Company shall include the Company and any Affiliate of the Company.
(b)����Confidential Information Agreement. Executive shall enter into and abide by the Companys standard Confidentiality and Intellectual Property Agreement which is attached hereto as Exhibit B and incorporated herein by this reference (the Confidential Information Agreement ).
(c)����Non-Competition. Without limiting the Confidential Information Agreement, Executive hereby agrees that Executive shall not, at any time during the Term, directly or indirectly engage in, have any interest in (including, without limitation, through the investment of capital or lending of money or property), or manage, operate or otherwise render any services to, any Person (whether on his own or in association with others, as a principal, director, officer, employee, agent, representative, partner, member, security holder, consultant, advisor, independent contractor, owner, investor, participant or in any other capacity) that engages in (either directly or through any subsidiary or affiliate thereof) any business or activity in the United States (i) that is in direct or indirect competition with the business of the Company, or (ii) which the Company has taken active steps to engage in or acquire, but only if Executive directly or indirectly engages in, has any interest in (including, without limitation, through the investment of capital or lending of money or property), or manages, operates or otherwise renders any services in connection with, such business or activity (whether on his own or in association with others, as a principal, director, officer, employee, agent, representative, partner, member, security holder, consultant, advisor, independent contractor, owner, investor, participant or in any other capacity). Notwithstanding the foregoing, Executive shall be permitted to acquire a passive stock or equity interest in such a business; provided that such stock
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or other equity interest acquired is not more than one percent (1%) of the outstanding interest in such business.
(d)����Non-Solicitation. Without limiting the Confidential Information Agreement, Executive hereby agrees that Executive shall not, at any time during the Term or within the one (1) year period immediately following the Term, directly or indirectly, either for himself or on behalf of any other Person recruit or otherwise solicit or induce any employee or consultant of the Company to terminate its employment or arrangement with the Company, or otherwise change its relationship with the Company. Notwithstanding the foregoing, nothing herein shall prevent Executive from directly or indirectly hiring any individual who submits a resume or otherwise applies for a position in response to a publicly posted job announcement or otherwise applies for employment with any Person with whom Executive may be associated absent any violation of Executives obligations pursuant to this Section 6(d).
(e)����Non-Disclosure. Without limiting the Confidential Information Agreement, except as Executive reasonably and in good faith determines to be required in the faithful performance of Executives duties hereunder or in accordance with Section 6(g) below, Executive shall, during the Term and after the Date of Termination, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, for Executives benefit or the benefit of any other Person, any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Companys operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment ( Proprietary Information ), or deliver to any Person, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information. Executives obligation to maintain and not use, disseminate, disclose or publish, or use for Executives benefit or the benefit of any other Person, any Proprietary Information after the Date of Termination will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of Executives direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company. The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company).
(f)����Return of Company Property. Upon termination of Executives employment with the Company for any reason, Executive will promptly deliver to the Company (i) all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents that are Proprietary Information, including all physical and digital copies thereof, and (ii) all other Company property (including, without limitation, any personal computer or wireless device and related accessories, keys, credit cards and other similar items) which is in his possession, custody or control.
(g)����Disclosure of Agreements. Prior to accepting other employment or any other service relationship during the Term or the one (1) year period immediately following the Term, Executive
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shall provide a copy of this Section 6 and the Confidential Information Agreement to any recruiter who assists Executive in obtaining other employment or any other service relationship and to any employer or other Person with which Executive discusses potential employment or any other service relationship.
(h)����Revision. In the event the terms of this Section 6 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action. Any breach or violation by Executive of the provisions of this Section 6 shall toll the running of any time periods set forth in this Section 6 for the duration of any such breach or violation.
7.Injunctive Relief.
It is recognized and acknowledged by Executive that a breach of the covenants contained in Section 6 above will cause irreparable damage to Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, Executive agrees that in the event of a breach of any of the covenants contained in Section 6 above, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief.
8.Assignment and Successors.
The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise), and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its Affiliates. This Agreement shall be binding upon and inure to the benefit of the Company, Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executives rights or obligations may be assigned or transferred by Executive, other than Executives rights to payments hereunder, which may be transferred only by will or operation of law.
9.Miscellaneous Provisions.
(a)����Defense of Claims. Executive agrees that, during the Term and for a period of twelve (12) months after the Date of Termination, upon request from the Company, Executive will cooperate with the Company and its Affiliates in the defense of any claims or actions that may be made by or against the Company or any of its Affiliates that affect Executives prior areas of responsibility, except if Executives reasonable interests are adverse to the Company or its Affiliates in such claim or action. The Company agrees to promptly pay or reimburse Executive upon demand for all of Executives reasonable travel and other direct expenses incurred, or to be reasonably incurred, to comply with Executives obligations under this Section 9(a).
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(b)����Indemnification. Executive shall be covered by any policy of liability insurance which Company maintains during the Term for its officers and directors ( D&O Insurance ), to the maximum extent of such coverage provided any other executive officer of Company. Company agrees to provide Executive with information about all D&O Insurance maintained during the Term, including proof that such insurance is in place and the terms of coverage, upon Executives reasonable request. In addition to any rights Executive may have under such D&O Insurance, other insurance, applicable law, or the Articles of Incorporation and Bylaws of Company, and to the fullest extent permitted by applicable law, Company agrees to indemnify Executive for all costs, damages, losses and expenses reasonably and actually incurred by Executive in connection with any and all third-party claims or proceedings arising from, as a result of, or in connection with Executive's employment by Company or any outside appointments and offices held at Company's request. This right to indemnification shall not apply to, and Company will have no obligation to indemnify Executive with respect to, any action, suit or proceeding brought by or on behalf of Executive against Company, or by Company against Executive.
(c)����Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of California, without giving effect to any principles of conflicts of law, whether of the State of California or any other jurisdiction, and where applicable, the laws of the United States, that would result in the application of the laws of any other jurisdiction.
(d)����Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(e)����Notices. Any notice, request, claim, demand, document and other communication hereunder to any Party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by facsimile or certified or registered mail, postage prepaid, as follows:
(i)����If to the Company:
bebe stores, inc.
400 Valley Drive
Brisbane, CA 94005
Attn: Board of Directors
Facsimile: ______________
and copies to:
Latham & Watkins LLP
140 Scott Drive
Menlo Park, California 94025-1008
Attn: Tad Freese, Esq.
Facsimile: (650) 463-2600
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(ii)����If to Executive, at the address set forth on the signature page hereto,
and copies to:
Davis Wright Tremaine LLP
505 Montgomery Street, Suite 800
San Francisco, CA 94108
Attn: Judith Droz Keyes, Esq.
Facsimile: (415) 276-6599
or at any other address as any Party shall have specified by notice in writing to the other Party.
(f)����Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement. Signatures delivered by facsimile shall be deemed effective for all purposes.
(g)����Entire Agreement. The terms of this Agreement are intended by the Parties to be the final expression of their agreement with respect to the employment of Executive by the Company and supersede all prior understandings and agreements, whether written or oral. The Parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.
(h)����Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and a duly authorized officer of Company. By an instrument in writing similarly executed, Executive or a duly authorized officer of the Company, as applicable, may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
(i)����No Inconsistent Actions. The Parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the Parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.
(j)����Forum. Any suit brought hereon shall be brought in the state or federal courts sitting in San Mateo County, California, and the Parties hereby waiving any claim or defense that such forum is not convenient or proper. Each Party hereby agrees that any such court shall have in personam jurisdiction over it and consents to service of process in any manner authorized by California law.
(k)����Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such
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provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
(l)����Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.
10.Golden Parachute Excise Tax.
(a)����Best Pay. Any provision of this Agreement to the contrary notwithstanding, if any payment or benefit Executive would receive from the Company pursuant to this Agreement or otherwise ( Payment ) would (i)�constitute a parachute payment within the meaning of Section 280G of the Code, and (ii)�but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the Excise Tax ), then such Payment will be equal to the Reduced Amount (as defined below). The Reduced Amount will be either (l)�the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (2)�the entire Payment, whichever amount after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes), results in Executive s receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (1) of the preceding sentence, the reduction shall occur in the manner (the Reduction Method ) that results in the greatest economic benefit for Executive. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the Pro Rata Reduction Method ). Notwithstanding the foregoing, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A of the Code that would not otherwise be subject to taxes pursuant to Section 409A of the Code, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A of the Code as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for you as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are deferred compensation within the meaning of Section 409A of the Code shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A of the Code.
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(b)����Accounting Firm. The accounting firm engaged by the Company for general tax purposes as of the day prior to the Change in Control will perform the calculations set forth in Section 10(a) above. If the firm so engaged by the Company is serving as accountant or auditor for the acquiring company, the Company will appoint a nationally recognized accounting firm to make the determinations required hereunder. The Company will bear all expenses with respect to the determinations by such firm required to be made hereunder. The accounting firm engaged to make the determinations hereunder will provide its calculations, together with detailed supporting documentation, to the Company within fifteen (15) days before the consummation of a Change in Control (if requested at that time by the Company) or such other time as requested by the Company. If the accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it will furnish the Company with documentation reasonably acceptable to the Company that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm made hereunder will be final, binding and conclusive upon the Company and Executive.
11.Section 409A.
(a)����General. The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If Executive notifies the Company that Executive has received advice of tax counsel of a national reputation with expertise in Section 409A that any provision of this Agreement would cause Executive to incur any additional tax or interest under Section 409A (with specificity as to the reason therefor) or the Company independently makes such determination, the Company and Executive shall take commercially reasonable efforts to reform such provision to try to comply with or be exempt from Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A, provided that any such modifications shall not increase the cost or liability to the Company. To the extent that any provision hereof is modified in order to comply with or be exempt from Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Executive and the Company of the applicable provision without violating the provisions of Section 409A.
(b)����Separation from Service. Notwithstanding any provision to the contrary in this Agreement: (i) no amount that constitutes deferred compensation under Section 409A shall be payable pursuant to Sections 5(b), 5(c) and 5(d) above unless the termination of Executives employment constitutes a separation from service within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations ( Separation from Service ); and (ii) to the extent that any reimbursement of expenses or in-kind benefits constitutes deferred compensation under Section 409A, such reimbursement or benefit shall be provided no later than December 31st of the year following the year in which the expense was incurred. The amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year. The amount of any in-kind benefits provided in one year shall not affect the amount of in-kind benefits provided in any other year.
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(c)����Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executives Separation from Service to be a specified employee for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executives benefits shall not be provided to Executive prior to the earlier of (i)�the expiration of the six (6)-month period measured from the date of Executives Separation from Service with the Company or (ii) the date of Executives death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executives estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
(d)����Release. Notwithstanding anything to the contrary in this Agreement, to the extent that any payments due under this Agreement as a result of Executives termination of employment are subject to Executives execution and delivery of a Release, (i)�the Company shall deliver the Release to Executive within ten (10) business days following the Date of Termination, and the Companys failure to deliver a Release prior to the expiration of such ten (10) business day period shall constitute a waiver of any requirement to execute a Release, (ii)�if Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes his acceptance of the Release thereafter, Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release, and (iii)�in any case where the Date of Termination and the Release Expiration Date fall in two separate taxable years, any payments required to be made to Executive that are conditioned on the Release and are treated as nonqualified deferred compensation for purposes of Section�409A shall be made in the later taxable year. For purposes of this Section 11(d), Release Expiration Date shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to Executive, or, in the event that Executives termination of employment is in connection with an exit incentive or other employment termination program (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date. To the extent that any payments of nonqualified deferred compensation (within the meaning of Section�409A) due under this Agreement as a result of Executives termination of employment are delayed pursuant to this Section 11(d), such amounts shall be paid in a lump sum on the first payroll date following the date that Executive executes and does not revoke the Release (and the applicable revocation period has expired) or, in the case of any payments subject to Section 11(d)(iii), on the first payroll period to occur in the subsequent taxable year, if later.
12.Employee Acknowledgement.
Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executives own judgment.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date and year first above written.������������
BEBE STORES, INC.
By: /s/ Seth R. Johnson����
Name: Seth R. Johnson
Title: Chairman, Compensation Committee
EXECUTIVE
By: /s/ Jim Wiggett����
Jim Wiggett
Address:
3622 Diablo Court
Pleasanton, CA 94588
SV\1441409.1
SV\1441409.3
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