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) Executive’s 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)
Executive’s 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) Executive’s 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 entity’s 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 Company’s assets. A transaction
shall not constitute a Change in Control if (i) its sole purpose is to change
the state of the Company’s incorporation or to create a holding company that
will be owned in substantially the same proportions by the persons who held the
Company’s 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 Executive’s resignation from employment with
the Company that is effective within one-hundred twenty (120) days after the
occurrence, without Executive’s written consent, of any of the following: (i) a
material diminution in Executive’s base compensation that is not proportionately
applicable to other officers and key employees of the Company generally; (ii) a
material diminution in Executive’s 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 Executive’s Constructive Termination hereunder; (iii) a material change of
at least fifty (50) miles in the geographic location of both the Company’s
Brisbane, California offices and the Company’s 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 Executive’s 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 Executive’s employment is terminated
due to Executive’s death, the date of Executive’s death; (ii) if Executive’s
employment is terminated due to Executive’s Disability, the date determined
pursuant to Section 4(a)(ii) hereof; or (iii) if Executive’s 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 Executive’s 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
Administration’s or the provider’s 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 Executive’s
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
Executive’s 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 Company’s
rules and policies as adopted by the Company from time to time. The Board has
already consented to Executive’s 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 Executive’s 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 Executive’s
duties under this Agreement, violate the Company’s standards of conduct then in
effect, or raise a conflict under the Company’s conflict of interest policies.
Executive cannot serve on the board of directors of a private or publicly traded
company (other than the Company’s Board) without the Board’s 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 Company’s 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 Company’s 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 Executive’s 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
Company’s 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 Executive’s 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 Executive’s duties to the Company in
accordance with the Company’s applicable expense reimbursement policies and
procedures.
4.Termination.
(a)    Circumstances. Executive’s employment hereunder may be terminated by the
Company or Executive, as applicable, without any breach of this Agreement under
the following circumstances:
(i)Death. Executive’s employment hereunder shall terminate upon Executive’s
death.

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(ii)Disability. If Executive incurs a Disability, the Company may give Executive
written notice of its intention to terminate Executive’s employment. In that
event, Executive’s 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 Executive’s duties hereunder.
(iii)Termination for Cause. The Company may terminate Executive’s employment for
Cause at any time.
(iv)Termination Without Cause. The Company may terminate Executive’s 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 Executive’s
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 Executive’s 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 Executive’s 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 Company’s 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 Executive’s 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 Executive’s employment for any reason,
Executive (or Executive’s estate) shall be entitled to receive: (i) any portion
of Executive’s 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
Executive’s 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 Executive’s termination
of employment for any reason.
(b)    Severance Payments Not In Connection With a Change in Control. In the
event of Executive’s 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 Executive’s
delivery (or delivery by Executive’s 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 Executive’s 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
Executive’s 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 Executive’s 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 Executive’s 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 Executive’s option, directly pay, or reimburse
Executive for, the COBRA premiums for Executive and Executive’s covered
dependents during the period commencing on Executive’s 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 Executive’s 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 Executive’s and Executive’s 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 Executive’s 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 Executive’s delivery (or
delivery by Executive’s 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 Executive’s 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 Executive’s option, directly
pay, or reimburse Executive for, the premium for Executive, Executive’s covered
dependents and Executive’s spouse or domestic partner through the earlier of (i)
the first anniversary of the Date of Termination and (ii) the date Executive,
Executive’s covered dependents, if any, and Executive’s spouse or domestic
partner, if any, become eligible for healthcare coverage under another
employer’s 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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Executive’s 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 Executive’s and Executive’s 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 Executive’s 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 Company’s 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 Executive’s 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 Executive’s 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 Executive’s 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 Company’s 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. Executive’s obligation to maintain
and not use, disseminate, disclose or publish, or use for Executive’s 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 Executive’s 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 Executive’s 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 Executive’s rights or obligations may be
assigned or transferred by Executive, other than Executive’s 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 Executive’s prior areas of responsibility,
except if Executive’s 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 Executive’s reasonable travel and
other direct expenses incurred, or to be reasonably incurred, to comply with
Executive’s 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 Executive’s
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 Executive’s 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 Executive’s
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 Executive’s 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 Executive’s Separation from
Service with the Company or (ii) the date of Executive’s 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 Executive’s 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 Executive’s
termination of employment are subject to Executive’s 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 Company’s 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 Executive’s 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 Executive’s 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 Executive’s
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

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