Exhibit 10.25

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August 20, 2007

Susan Peterson
15417 Longbow Drive
Sherman Oaks, CA  91403

Dear Susan:

The following details summarize our agreement with respect to compensation,
benefits, and other pertinent information relative to your employment with bebe
stores, inc.

1.                                       Compensation:

We are offering you the following compensation package:

a.                                       Base Salary:

Your base salary will be $350,000.00 per year.  Salaries are earned and paid in
bi-weekly increments.

b.                                      Bonus:

Your bonus target will remain 30% and your FY08 sales goals and objectives will
be lowered.

c.                                       Stock Options:

I. Time Vest Options:

After acceptance of this offer and subject to approval by the board of
directors, you would receive an option to purchase 100,000 shares of bebe common
stock, subject to vesting and other standard provisions of the company’s 1997
Stock Plan, as amended.  The Grant Date and consequently the Fair Market Value
(FMV) or price, would be set as of the 15th of the month following the month of
your date of hire.  In the event that the 15th is a weekend or trading holiday,
the following trading day shall determine price/grant date.

II. Time Based Restricted Stock Units:

Subject to Board approval and the terms of the Company’s Stock Option Plan, you
will also be granted 10,000 shares of restricted stock, that will vest over a 2
year period beginning from the grant date (5,000 shares vesting one year from
grant date and 5,000 shares vesting two years from grant date).

3.                                       Benefits:

Your benefits will remain the same.

4.                                       Performance Reviews:

You will receive a Performance Review on a bi annual basis and be given a salary
review, if merited, annually.

5.                                       At-Will Employment:  bebe stores,
inc.’s employment relationship with employees is an “at-will” arrangement where
the employment relationship is voluntary and based on mutual consent.  You may
leave your employment at any time, and bebe stores, inc. reserves the right to
terminate your employment at any time, with or without cause.  Nothing said to
you or promised to you by anyone other than a specific, written agreement signed
by the Chief Executive Officer of the company will change this at-will
arrangement.

6.                                       Company Policies:

As an employee of bebe stores, inc., you will be subject to and required to
adhere to all of the company’s policies and procedures pertaining to its
employees.  This includes all policies relating

400 Valley Drive Brisbane, CA  94005      Telephone 415.657.4472        Fax
415.657.4445

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to standards of conduct, conflicts of interest, and compliance with the
company’s rules and regulations.

7.                                       Arbitration Agreement:

You agree that if any disputes should arise between you and bebe stores, inc.
(including claims against its employees, officers, directors, shareholders,
agents, successors and assigns) relating or pertaining to or arising out of your
employment with bebe, the dispute will be submitted exclusively to binding
arbitration before a neutral arbitrator.  This means that disputes will be
decided by an arbitrator rather than a court or jury, and that both you and bebe
stores, inc. waive our rights to a court or jury trial.  You understand that the
arbitrator’s decision will be final and exclusive, and cannot be appealed.

You agree that all disputes between you and bebe stores, inc. are covered by
this Arbitration Agreement to the fullest extent permitted by law.  This
includes claims for wrongful discharge, discrimination, harassment, and any
injury to your physical, mental, or economic interests.  Also, you agree that
all disputes are covered by this Arbitration Agreement whether based on claimed
violations of statutory, contractual, or common law rights.

Disputes between you and bebe stores, inc. that are not covered by this
Agreement include claims for unemployment insurance or workers’ compensation,
and claims under the National Labor Relations Act or those heard exclusively by
the Labor Commissioner.  This Agreement does not interfere with either party’s
right to pursue a provisional remedy in court pursuant to California Code of
Civil Procedure, section 1281.8.

The arbitration shall be conducted in accordance with the rules set forth in the
Code of Civil Procedure, section 1280 and following (and any successor
statute).  The parties may engage in discovery pursuant to C.C.P. 1283.05.  They
have the right to be represented by an attorney or representative of their
choosing.  The arbitrator’s decision will be rendered in writing, and shall
provide the legal and factual basis for the decision.  This agreement to
arbitrate survives the termination of your employment with bebe.  The arbitrator
shall have the authority to award all remedies that would otherwise be available
under applicable law in court, but no more than that, with respect to the claims
in question.  In addition, the parties agree to share equally in paying the
arbitrator’s fees and expenses, as well as the cost, if any, of the room where
the arbitration hearing is conducted.  However, each party shall pay their own
attorneys’ fees, except the arbitrator shall have the authority to award
reasonable attorneys’ fees and costs to the prevailing party where allowed by
statute.

This letter supersedes any prior discussions, agreements, understandings, offers
or statements made to you during the interview process.  This offer letter and
the Arbitration Manual represent the entire agreement regarding your position
with bebe.  If you are in agreement with the provisions of this employment
offer, please sign, date, and return the original of this letter to the Human
Resources Department, acknowledging your understanding and acceptance; retain a
copy for your records.

Very truly yours,

 

 

/s/ Greg Scott

 

Greg Scott

Chief Executive Officer

 

 

cc:    Patricia Quartini, Human Resources

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ACKNOWLEDGEMENT AND ACCEPTANCE

My signature below acknowledges my understanding and acceptance of bebe stores,
inc.’s offer of employment subject to the terms and conditions set forth in this
letter.

 

/s/ Susan Peterson

 

8/22/07

Susan Peterson

 

Date

 

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