Exhibit 10.1

 

SEPARATION AGREEMENT

 

This Separation Agreement (“Agreement”) is made effective as of January 9, 2009,
between bebe stores, inc., a California corporation (the “Company”), and Gregory
Scott (“Executive”).

 

RECITALS

 

A.                                   Executive serves as the Company’s Chief
Executive Officer, and his employment with the Company will terminate effective
as of January 9, 2009 (the “Termination Date”).

 

B.                                     The parties wish to enter into this
Agreement to set forth the terms and conditions related to Executive’s
termination of employment with the Company.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of good and valuable consideration the receipt
of which is hereby acknowledged, the parties hereby agree as follows:

 

1.                                       Termination; Accrued Obligations. 
Executive acknowledges that his employment with the Company will end effective
as of the Termination Date.  The Company shall pay Executive, within three days
after the Termination Date, all accrued but unpaid salary, and all accrued and
unused vacation earned through the Termination Date, subject to any applicable
withholding required under federal, state or local law.  Executive is entitled
to these amounts regardless of whether Executive revokes this Agreement (as
described in Section 5(e) below).

 

2.                                       Severance Benefits.  The Company agrees
that Executive shall be entitled to receive the following benefits, provided
that Executive does not revoke the Agreement as described in Section 5(e) below:

 

(a)                                  Severance Payments.  The Company shall
provide Executive with severance payments in an aggregate amount equal to
$600,000, which is Executive’s current annual base salary.  The severance
payments shall be paid in equal increments over the twelve (12) month period
following the Termination Date (the “Salary Continuation Period”) in accordance
with the Company’s normal payroll procedures.

 

(b)                                 Continued Health Care Benefits.  The Company
shall maintain in full force and effect for the continued benefit of Executive
during the Salary Continuation Period, medical and dental insurance (including
coverage for Executive’s dependents to the extent dependent coverage is provided
by the Company for its employees generally) under such plans and programs in
which Executive was entitled to participate immediately prior to the Termination
Date, provided that Executive’s continued participation is possible under the
general terms and provisions of such plans and programs.  In the event that
participation in any such plan or program is not permitted, the Company shall
arrange to provide Executive with medical and dental insurance benefits at the
Company’s expense during the Salary Continuation Period substantially similar to
those which Executive would otherwise have been entitled to receive

 

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under such plans and programs from which his continued participation is barred.

 

(c)                                  Stock Option.  As of the Termination Date,
Executive shall (i) become fully vested with respect to any previously unvested
portion of the option to purchase 100,000 shares of the Company’s common stock
which was previously granted to Executive on September 8, 2008 (the “Stock
Option”), and (ii) the Stock Option shall remain exercisable until the date
occurring one year after the Termination Date.

 

(d)                                 Withholding.  Executive understands and
agrees that all payments under Section 2 of this Agreement will be subject to
any applicable withholding required under federal, state or local law.

 

3.                                       Section 409A.  This Agreement shall be
administered and interpreted to maximize the short-term deferral exception to
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
Executive shall not, directly or indirectly, designate the taxable year of a
payment made under this Agreement.  Any payment under this Agreement that is
paid within the short-term deferral period (within the meaning of Code
Section 409A and Treas. Reg. §1.409A-1(b)(4)) shall be treated as a short term
deferral and not aggregated with other plans or payments.

 

4.                                       General Release.  In exchange for the
severance payments and benefits provided for in Section 2, Executive releases
and forever discharges the Company and each of its subsidiaries, affiliates,
officers, directors, employees, and agents and all of their predecessors and
successors (“Releasees”) from any and all claims that legally can be released
that Executive may have against the Releasees, whether known or unknown, arising
out of Executive’s employment with the Company or the termination of that
employment.  This waiver and release of claims is full and complete, and
includes, without limitation, any claim of constructive discharge, harassment,
or wrongful termination, any claims under Title VII of the 1964 Civil Rights
Act, the Americans With Disabilities Act, the Age Discrimination in Employment
Act, the Family and Medical Leave Act, the California Fair Employment and
Housing Act, the California Family Rights Act, the Employee Retirement Income
Security Act, the state and federal Worker Adjustment Retraining and
Notification Acts, or any other applicable federal, state, or local law, rule,
regulation or order, claims for breach of contract or covenant, whether express
or implied, negligent or intentional infliction of emotional distress,
misrepresentation, fraud, breach of statute or public policy, defamation, or any
claims alleging tort or other wrongful conduct under common law, as well as any
claim for additional compensation in any form, including salary, bonus or
incentive compensation, sick leave benefits, vacation benefits, compensatory
time, severance pay,  or otherwise and all other claims of any kind arising out
of my employment, including claims for attorney’s fees and costs.  The matters
that are the subject of the release referred to in this Section shall be
referred to collectively as the “Released Matters”.

 

Notwithstanding the foregoing, Executive does not release the following claims
and rights:  (a) Executive’s rights under this Agreement; (b) any claims for
unemployment compensation or any state disability insurance benefits pursuant to
the terms of applicable state law; (c) Executive’s right, if any, to indemnity
pursuant to the California Labor Code; or (d) any other claims determined by law
to be non-waivable.

 

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5.                                       Acknowledgements Related to ADEA. 
Executive understands and acknowledges that:

 

(a)                                  This Agreement constitutes a voluntary
waiver of any and all rights and claims he has against the Company as of the
date of the execution of this Agreement, including rights or claims arising
under the federal Age Discrimination in Employment Act, 29 U.S.C. 621, et seq.

 

(b)                                 He has waived rights or claims pursuant to
this Agreement and in exchange for consideration, the value of which exceeds
payment or remuneration to which Executive was already entitled.

 

(c)                                  He is hereby advised that he may consult
with an attorney of his choosing concerning this Agreement prior to executing
it.

 

(d)                                 He has been afforded a period of at least
twenty one (21) days to consider the terms of this Agreement, and in the event
he should decide to execute this Agreement in fewer than twenty one (21) days,
he has done so with the express understanding that he has been given and
declined the opportunity to consider this Agreement for a full twenty one (21)
days, and waives the balance of the twenty-one (21) day period.

 

(e)                                  He may revoke this Agreement at any time
during the seven (7) days following the date of execution of this Agreement by
providing written notice to an authorized representative of the Company, and
this Agreement shall not become effective or enforceable until such revocation
period has expired.  Executive understands that if he revokes this Agreement, he
shall not be entitled to any of the benefits provided by this Section 2 of this
Agreement.

 

6.                                       California Section 1542 Waiver. 
Executive acknowledges that he has read the provisions of California Civil Code
Section 1542, which provides as follows:

 

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 to him or her must have materially affected his or her settlement with
the debtor.

 

and that he expressly waives, relinquishes and forfeits all rights and benefits
accorded by the provisions of California Civil Code Section 1542 with respect to
the Released Matters.

 

7.                                       Executive Representations.  Executive
warrants and represents that (a) he has not initiated any adversarial
proceedings of any kind against the Company or any other Releasee, (b) he has
been paid all compensation, wages, bonuses, commissions, and/or benefits to
which he may be entitled and no other compensation, wages, bonuses, commissions
and/or benefits are due to him, except as described in this Agreement, and
(c) he has no known workplace injuries

 

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or occupational diseases and has been provided and/or has not been denied any
leave requested under the Family and Medical Leave Act or the California Family
Rights Act.

 

8.                                       Non-Solicitation of Employees. 
Executive agrees that, for the period beginning on the Termination Date and
ending one year thereafter, Executive will not, in any capacity, either directly
or indirectly, recruit, solicit, or induce, or attempt to induce any employee of
Company or any of its affiliates to terminate his or her employment with Company
or such affiliate and will not assist any third party in undertaking any of the
foregoing; provided, however, that  a general advertisement to which an employee
of the Company (or an affiliate of the Company) responds shall in no event be
deemed to result in a breach of this Section.

 

9.                                       Successors.  This Agreement establishes
contract rights which shall be binding upon, and shall inure to the benefit of,
the successors, assigns, heirs and legal representatives of the parties hereto.

 

10.                                 Severability.  Should any provision of this
Agreement, or any clause hereof, be held to be invalid, illegal or
unenforceable, in whole or in part, the remaining provisions and clauses of this
Agreement shall remain fully enforceable and binding on the parties.

 

11.                                 Modification and Waiver.  No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto.  No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether of not similar) nor shall such waiver constitute a
continuing waiver.

 

12.                                 Choice of Law.  This Agreement will be
deemed to have been entered into and will be construed and enforced in
accordance with the laws of the State of California without regard to conflicts
of law principles.

 

13.                                 Entire Agreement.  This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and shall supersede all prior or contemporaneous written
or oral agreements concerning such subject matter.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
day and year first written above.

 

 

bebe stores, inc.

 

 

 

 

 

By:

/s/ Barbara Bass

 

 

 

Its:

Director and Compensation Committee Chair

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

/s/ Gregory Scott

 

Gregory Scott

 

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