Document:

Exhibit 10.76

 

[FORM OF
BEDFORD PROPERTY INVESTORS, INC.

CHANGE IN
CONTROL SEVERANCE AGREEMENT]

 

This Change in Control Severance Agreement
(the “Agreement”) is entered into
this            day of                           ,
200     between [FULLNAME] (“Employee”)
and Bedford Property Investors, Inc., a Maryland corporation (the “Company”). This Agreement is intended to
provide Employee with the compensation and benefits described herein upon the
occurrence of specific events following a change in control of the ownership of
the Company (as defined below, “Change  in  Control”).

 

RECITALS

 

A.            As is the
case with most, if not all, publicly traded businesses, it is expected that the
Company from time to time may consider or may be presented with the need to
consider the possibility of an acquisition by another company, a sale of its
assets to multiple parties, or other change in control of the ownership of the
Company. The Board of Directors of the Company (the “Board”)
recognizes that such considerations can be a distraction to Employee and can
cause the Employee to consider alternative employment opportunities or to be
influenced by the impact of a possible change in control of the ownership of
the Company or its assets on Employee’s personal circumstances in evaluating
such possibilities. The Board has determined that it is in the best interests
of the Company and its stockholders to assure that the Company will have the
continued dedication and objectivity of Employee, notwithstanding the
possibility, threat or occurrence of a Change in Control of the Company.

 

B.            The Board believes that it is in the
best interests of the Company and its stockholders to provide Employee with an
incentive to continue his or her employment and to motivate Employee to
maximize the value of the Company upon a Change in Control for the benefit of
its stockholders.

 

C.            The Board believes that it is
important to provide Employee with certain benefits upon Employee’s termination
of employment in certain
instances upon or following a Change in Control that provide
Employee with enhanced financial security and incentive and encouragement to
Employee to remain with the Company notwithstanding the possibility of a Change
in Control.

 

D.            At
the same time, the Board expects the Company to receive certain benefits in
exchange for providing Employee with this measure of financial security and
incentive under the Agreement. Therefore, the Board believes that the Employee
should provide various specific commitments which are intended to assure the Company
that Employee will not direct Employee’s skills, experience and knowledge to
the detriment of the Company for a period not to exceed the period during which
payments are being made to Employee under this Agreement.

 

E.             Certain
capitalized terms used in this Agreement are defined in Article VII.

 

The Company
and Employee hereby agree as follows:

 

1

 

ARTICLE I.

EMPLOYMENT BY THE COMPANY

 

1.1          Employee is currently employed
as [TITLE] of the Company.

 

1.2          This Agreement shall be in full
force and effect commencing on the Effective Date (as defined in Section 7.13).

 

1.3          The Company and Employee each
agree and acknowledge that Employee is employed by the Company as an “at-will”
employee and that either Employee or the Company has the right at any time to
terminate Employee’s employment with the Company, with or without cause or
advance notice, for any reason or for no reason. The Company and Employee wish
to set forth the compensation and benefits which Employee shall be entitled to
receive in the event that Employee’s employment with the Company terminates
under the circumstances described in Article II of this Agreement.

 

1.4          The duties and obligations of
the Company to Employee under this Agreement shall be in consideration for
Employee’s past services to the Company, Employee’s continued employment with
the Company, Employee’s compliance with the obligations described in Section
4.2, and Employee’s execution of the general waiver and release described in Section
4.3. The Company and Employee
agree that Employee’s compliance with the obligations described in Section 4.2
and Employee’s execution of the general waiver and release described in Section
4.3 are preconditions to Employee’s entitlement to the receipt of benefits
under this Agreement and that these benefits shall not be earned unless all
such conditions have been satisfied through the scheduled date of payment. The
Company hereby declares that it has relied upon Employee’s commitments under
this Agreement to comply with the requirements of Article IV, and would not
have been induced to enter into this Agreement or to execute this Agreement in
the absence of such commitments. 

 

ARTICLE II.

TERMINATION EVENTS

 

2.1          In the event that Employee’s
employment with the Company and its subsidiaries is terminated as a result of
an Involuntary Termination Without Cause during the Change in Control Period,
then the Company shall pay Employee the compensation described in Article III.

 

2.2          In the event that Employee’s
employment with the Company and its subsidiaries is terminated in connection
with any other termination that is not an Involuntary Termination Without
Cause, including but not limited to a termination (i) by the Company with Cause
at any time, (ii) by the Company by reason of Employee’s death or Disability at
any time, (iii) by the Company without Cause at any time other than during the
Change in Control Period, (iv) by Employee at any time other than during the
Change in Control Period, or (v) by Employee during the Change in Control
Period other than for Good Reason, then Employee will not be entitled to
receive any payments or benefits under the provisions of this Agreement, and
the Company will cease paying compensation or providing benefits to Employee as
of Employee’s Date of Termination.

 

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ARTICLE III.

COMPENSATION AND BENEFITS PAYABLE

 

3.1          Right to
Benefits. If
an Involuntary Termination Without Cause occurs during the Change in Control
Period, Employee shall be entitled to receive the benefits described in this
Agreement so long as Employee
complies with the restrictions and limitations set forth in
Article IV. If an Involuntary Termination Without Cause does not occur during
the Change in Control Period, Employee shall not be entitled to receive any
benefits described in this Agreement, except as otherwise specifically set
forth herein.

 

3.2          Severance
Payment. Upon
the occurrence of an Involuntary Termination Without Cause during the Change in
Control Period, Employee shall receive an amount (the “Severance
Payment”) equal to the sum of (a) the
product of (i) his or her Annual Compensation and (ii) his or her Severance
Factor and (b) a pro-rata bonus of $[BONUS] (pro-rated based on days served in
the year in which the Date of Termination occurs). The Severance Payment shall
be paid in one lump sum cash payment, on the Date of Termination (subject to
the effectiveness of the Employee’s general waiver and release described in
Section 4.3), less any applicable withholding of federal, state or local taxes.

 

3.3          Health
Insurance Coverage.
Following the occurrence of an Involuntary Termination Without Cause during the
Change in Control Period, the Company (or any successor entity thereto) shall
provide Employee and Employee’s eligible beneficiaries (the “Covered Persons”) for a period of at least two years after
the Date of Termination with medical, dental and vision insurance coverage and
benefits (the “Covered Benefits”) on terms that
are no less favorable in any respect to the medical, dental and vision
insurance coverage and benefits provided to such Covered Persons by the Company
immediately prior to the consummation of the Change in Control. The Covered
Benefits shall be provided to the Covered Persons at the sole expense of the
Company (or the successor thereto), and shall continue to be provided pursuant
to this Section 3.3 regardless of whether such Covered Persons subsequently
become eligible for medical, dental or vision insurance from another employer.

 

3.4          Mitigation. Except as otherwise
specifically provided herein, Employee shall not be required to mitigate
damages or the amount of any payment provided under this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment provided for
under this Agreement be reduced by any compensation earned by Employee as a
result of employment by another employer or by retirement benefits after the
date of the Involuntary Termination Without Cause, or otherwise.

 

3.5          Compliance
with Section 409A.
Notwithstanding anything herein to the contrary, if at the time of
Employee’s termination of employment with the Company Employee is a “specified
employee” as defined in Section 409A of the U.S. Internal Revenue Code of 1986,
as amended (the “Code”) and the Company notifies
Employee that, based on the advice of counsel, the deferral of the commencement
of any payments or benefits otherwise payable hereunder as a result of such
termination employment is necessary in order to comply with Section 409A of the
Code, then the Company will defer the commencement of the payment of any such
payments or benefits hereunder (without any reduction in such payments or
benefits ultimately paid or provided to Employee) until the date that is six
months following Employee’s

 

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termination
of employment with the Company (or the earliest date as is permitted under
Section 409A of the Code). In addition, if any provision of this
Agreement would cause Employee to incur any accelerated or additional tax under
Section 409A of the Code, the Company may reform such provision to maintain to
the extent practicable the original intent of the applicable provision without
resulting in the accelerated or additional tax. The provisions of this Section
3.5 shall only apply to the extent required to avoid Employee’s incurrence of
any accelerated or additional tax under Section 409A of the Code.

 

ARTICLE IV.

LIMITATIONS AND CONDITIONS ON BENEFITS; AMENDMENT OF AGREEMENT

 

4.1          Reduction in
Payments and Benefits; Withholding Taxes. The benefits provided under this Agreement are in lieu of
any benefit provided under any other severance plan, program or arrangement of
the Company in effect at the time of an Involuntary Termination Without Cause. Furthermore,
to the extent that any federal, state or local laws, including, without
limitation, so-called “plant closing” laws, require the Company to give advance
notice or make a payment of any kind to Employee because of his or her
involuntary termination due to a layoff, reduction in force, plant or facility
closing, sale of business, change of control, or any other similar event or
reason, the benefits payable under this Agreement shall either be reduced or
eliminated. The benefits provided under this Agreement are intended to satisfy
any and all statutory obligations that may arise out of Employee’s involuntary
termination of employment for the foregoing reasons, and the Company shall so
construe and implement the terms of this Agreement. The Company shall withhold
appropriate federal, state or local income, employment and other applicable
taxes from any payments hereunder.

 

4.2          Obligations of
the Employee.

 

(a)           For
two years following the Involuntary Termination Without Cause, Employee agrees not
to personally solicit any of the then-current employees either of the Company
or of any entity in which the Company directly or indirectly possesses the
ability to determine the voting of 50% or more of the voting securities of such
entity (including two-party joint ventures in which each party possesses 50% of
the total voting power of the entity) to become employed elsewhere or provide
the names of such employees to any other company that Employee has reason to
believe will solicit such employees.

 

(b)           Following
the occurrence of an Involuntary Termination Without Cause, Employee agrees to
continue to satisfy his obligations to the Company with respect to the
treatment of the Company’s confidential and proprietary information. Employee’s
obligations under this Section
4.2(b) shall not be limited to the term of this Agreement.

 

(c)           It
is expressly understood and agreed that although Employee and the Company
consider the restrictions contained in this Section 4 to be reasonable, if a
final judicial determination is made by a court of competent jurisdiction that
the time or territory or any other restriction contained in this Agreement is
an unenforceable restriction against Employee, the provisions of this Agreement
shall not be rendered void, but shall be deemed amended to apply as to such
maximum time or territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction

 

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finds that any restriction contained in this Agreement is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.

 

(d)           Employee
acknowledges and agrees that the Company’s remedies at law for a breach or
threatened breach of any of the provisions of Section 4.2(a) or Section 4.2(b)
would be inadequate and, in recognition of this fact, Employee agrees that, in
the event of such a breach or threatened breach, in addition to any remedies at
law, the Company, without posting any bond, shall be entitled to cease making
any payments or providing any benefit otherwise required by this Agreement and,
with respect to a breach or threatened breach of Section 4.2(a) or Section
4.2(b) only, obtain equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction, or any other
equitable remedy which may then be available.

 

4.3          Employee Release
Prior to Receipt of Benefits.
Upon the occurrence of an Involuntary Termination Without Cause during the
Change in Control Period, and prior to the receipt of any benefits under this
Agreement on account of the occurrence of an Involuntary Termination Without
Cause, Employee shall, as of the Date of Termination, execute an employee
release substantially in the form attached hereto as Exhibit A as shall be
determined by the Company. Such employee release shall specifically relate to
all of Employee’s rights and claims in existence at the time of such execution
relating to Employee’s employment with the Company, but shall not include (i)
Employee’s rights under this Agreement; (ii) Employee’s rights under any
employee benefit plan (other than a severance benefit plan) sponsored by the
Company; or (iii) Employee’s rights to indemnification under the Company’s
bylaws or other governing instruments or under any agreement addressing such
subject matter between Employee and the Company. It is understood that Employee
has forty-five (45) days to consider whether to execute such employee release
and Employee may revoke such employee release within seven (7) business days
after execution of such employee release. In the event Employee does not
execute such employee release within the forty-five (45) day period, or if
Employee revokes such employee release within the seven (7) business day
period, no benefits shall be payable under this Agreement and this Agreement
shall be null and void. Nothing in this Agreement shall limit the scope or time
of applicability of such employee release once it is executed and not timely
revoked.

 

4.4          Certain
Reductions in Payments.

 

(a)           If
any payment or benefit Employee would receive in connection with a change in
ownership or effective control of the Company from the Company or otherwise (“Payment”)
(as determined without regard to any additional payments required under this
Section 4.4) would (i) constitute a “parachute payment” within the meaning of
Section 280G of the Code and (ii) but for this subsection (a), be subject to
the excise tax imposed by Section 4999 of the Code, or any comparable federal, state,
local or foreign excise tax (such excise tax, together with any interest and
penalties, is hereinafter referred to as the “Excise  Tax”), then,
subject to the provisions of subsection (b) hereof, such Payment shall be
either (A) delivered in full pursuant to the terms of this Agreement, or (B)
delivered as to such lesser extent which would result in no portion of such
severance payments and other benefits being subject to the Excise Tax (“Reduced  Amount”),
whichever of the foregoing amounts, taking into account the applicable federal,
state, local and foreign income, employment and other taxes and the Excise

 

5

 

Tax (including,
without limitation, any interest or penalties on such taxes),
results in the receipt by the Employee, on an after-tax basis, of the greatest
amount of severance payments and benefits provided for hereunder, notwithstanding
that all or some portion of such severance payments and benefits may be subject
to the Excise Tax. Unless the Company and the Employee otherwise agree in
writing, any determination required under this Section 4.4 shall be made by
Deloitte Touche Tohmatsu (the “Independent  Tax  Consultant),
whose determination shall be conclusive and binding upon the Employee and the
Company for all purposes. For purposes of making the calculations required
under this Section 4.4, Independent Tax Consultant may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. The Company and Employee shall furnish to
Independent Tax Consultant such information and documents as Independent Tax
Consultant may reasonably request in order to make a determination under this
Section 4.4. The Company shall bear all costs that Independent Tax Consultant
may reasonably incur in connection with any calculations contemplated by this
Section 4.4. In the event that Section 4.4(a)(ii)(B) above applies, then based
on the information provided to Employee and the Company by Independent Tax
Consultant, Employee may, in the Employee’s sole discretion and within 30 days
of the date which Employee is provided with the information prepared by
Independent Tax Consultant, determine which and how much of the Payments to be
otherwise received by Employee shall be eliminated or reduced (as long as after
such determination the value (as calculated by Independent Tax Consultant in
accordance with the provisions of Sections 280G and 4999 of the Code) of the
amounts payable or distributable to Employee hereunder equals the Reduced
Amount). If the Internal Revenue Service (the “IRS”)
determines that a Payment is subject to the Excise Tax, then subsection (b)
hereof shall apply, and the enforcement of subsection (b) shall be the
exclusive remedy to the Company.

 

(b)           If, notwithstanding any reduction
described in subsection (a) hereof (or in the absence of any such reduction),
the IRS determines that Employee is liable for the Excise Tax as a result of
the receipt of one or more Payments, then Employee shall be obligated to pay
back to the Company, within 30 days after a final IRS determination, an amount
of such Payments equal to the “Repayment  Amount.”  The
Repayment Amount with respect to such Payments shall be the smallest such
amount, if any, as shall be required to be paid to the Company so that Employee’s
net proceeds with respect to such Payments (after taking into account the
payment of the Excise Tax imposed on such Payments) shall be maximized. Notwithstanding
the foregoing, the Repayment Amount with respect to such Payments shall be zero
if a Repayment Amount of more than zero would not eliminate the Excise Tax
imposed on such Payments. If the Excise Tax is not eliminated pursuant to this
subsection (b), Employee shall pay the Excise Tax.

 

4.5          Amendment or Termination of This Agreement. This
Agreement may be changed or terminated only upon the mutual written consent of
the Company and Employee. The written consent of the Company to a change or
termination of this Agreement must be signed by an authorized officer of the
Company, after such change or termination has been approved by the Company’s
Board of Directors or the Compensation Committee of the Company’s Board of
Directors.

 

6

 

ARTICLE V.

OTHER RIGHTS AND BENEFITS NOT AFFECTED

 

5.1          Nonexclusivity. Nothing in the Agreement
shall prevent or limit Employee’s continuing or future participation in any
benefit, bonus, incentive or other plans, programs, policies or practices
provided by the Company and for which Employee may otherwise qualify, nor shall
anything herein limit or otherwise affect such rights as Employee may have
under any stock option or other agreements with the Company; provided, however, that in accordance with Section 4.1, any benefits
provided hereunder shall be in lieu of any other severance benefits to which
Employee may otherwise be entitled, including without limitation, under any
employment contract or severance plan. Except as otherwise expressly provided
herein, amounts which are vested benefits or which Employee is otherwise
entitled to receive under any plan, policy, practice or program of the Company
at or subsequent to the date of an Involuntary Termination Without Cause shall
be payable in accordance with such plan, policy, practice or program.

 

5.2          Employment
Status. This
Agreement does not constitute a contract of employment or impose on Employee
any obligation to remain as an employee, or impose on the Company any
obligation (i) to retain Employee as an employee, (ii) to change the status of
Employee as an at-will employee, or (iii) to change the Company’s policies
regarding termination of employment.

 

ARTICLE VI.

NON-ALIENATION OF BENEFITS

 

No benefit hereunder shall be subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to do so shall be void.

 

ARTICLE VII.

DEFINITIONS

 

For purposes of the Agreement, the following
terms shall have the meanings set forth below:

 

7.1          “Affiliate”
means generally with respect to the Company, any entity directly, or indirectly
through one or more intermediaries, controlling or controlled by (but not under
common control with) the Company.

 

7.2          “Agreement” means this Change in Control Severance Agreement.

 

7.3          “Annual
Compensation”
shall mean the sum of Employee’s Reference Salary and Reference Bonus.

 

7.4          “Cause” shall mean shall mean Employee’s
(a) conviction or entering a plea of guilty or no contest to a felony, (b)
willful disclosure of material trade secrets or other material confidential
information related to the business of the Company and its subsidiaries, (c )
participated in any fraud against the Company, (d) willful and material breach
of a Company

 

7

 

policy, or
(e) willful and continued failure to substantially perform his or her duties
with the Company (other than any such failure resulting from Disability or any
such actual or anticipated failure resulting from his or her resignation for
Good Reason) after a written demand for substantial performance is delivered to
Employee by the Board, which demand specifically identifies the manner in which
the Board believes that Employee has not substantially performed his or her
duties, and which performance is not substantially corrected within ten days of
receipt of such demand. For purposes of the previous sentence, no act or
failure to act on the part of Employee shall be deemed “willful” unless done,
or omitted to be done, by Employee not in good faith and without reasonable
belief that the action or omission was in the best interest of the Company. Notwithstanding
the foregoing, Employee shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him or her a copy of a
resolution duly adopted by the affirmative vote of not less than three-fourths
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice to Employee and an opportunity for
Employee, together with his or her counsel, to be heard before the Board),
finding that in the good faith opinion of the Board Employee was guilty of
conduct set forth above in clause (b), (c), (d) or (e) of the first sentence of
this section and specifying the particulars thereof in detail.

 

7.5          “Change
in Control” shall
mean the occurrence of any of the following:

 

(a)           during any period
of two (2) consecutive years, individuals who at the beginning of such period
constituted the Board and any new directors, whose election by the Board or
nomination for election by the Company’s stockholders was approved by a vote of
at least three-fourths (3⁄4) of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute a
majority thereof;

 

(b)           there occurs a
reorganization, merger, consolidation or other corporate transaction involving
the Company, in which the voting securities of the Company owned by the
stockholders of the Company immediately prior to such reorganization, merger,
consolidation or other corporate transaction do not represent, after conversion
if applicable, more than fifty percent (50%) of the total voting power of the
surviving controlling entity outstanding immediately after such reorganization,
merger, consolidation or other corporate transaction; provided that any person who (i) was a
beneficial owner (within the meaning of Rules 13d-3 and 13d-5 promulgated under
the Exchange Act) of the voting securities of the Company immediately prior to
such reorganization, merger, consolidation or other corporate transaction, and
(ii) is a beneficial owner of more than twenty percent (20%) of the securities
of the Company immediately after such reorganization, merger, consolidation or
other corporate transaction, shall be excluded from the list of “stockholders
of the Company immediately prior to such reorganization, merger, consolidation
or other corporate transaction for purposes of the preceding calculation);

 

(c)           the direct or
indirect acquisition of beneficial ownership of at least fifty percent (50%)
percent of the voting securities of the Company by a person or group of related
persons (as such terms are defined or described in Sections 3(a)(9) and
13(d)(3) of the Exchange Act); provided that
“person or group of related persons” shall not include the Company, a
Subsidiary, or an employee benefit plan sponsored by the Company or a
Subsidiary (including any trustee of such plan acting as trustee);
notwithstanding the foregoing, a “Change in Control”

 

8

 

shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
Common Stock immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions; or

 

(d)           the date on
which the Company’s stockholders approve a plan providing for a transaction or
series of transactions, the consummation of which would result in a sale, liquidation
or distribution of all or substantially all of the assets of the Company.

 

7.6          “Change
in Control Date” shall mean the date on which a Change in Control occurs.

 

7.7          “Change
in Control Period” shall mean, in the case of a Change of Control as defined
under Sections 7.5(a)-(c), the two-year period commencing on the Change in
Control Date, and in the case of a Change of Control as defined under Section
7.5(d), an endless period commencing on the Change in Control Date.

 

7.8          “Code”
shall
mean the Internal Revenue Code of 1986, as amended from time to time, and the
regulations promulgated and rulings issued thereunder, and any successor
provisions thereto.

 

7.9          “Company” means Bedford Property
Investors, Inc.

 

7.10        “Date
of Termination” means the date of termination of Employee’s employment with
the Company and its subsidiaries, determined as follows: (a) if employment is
terminated for Disability, 30 days after a Notice of Termination is given
(provided that Employee shall not have returned to the full-time performance of
his or her duties during such 30-day period), (b) if employment is
terminated by the Company in an Involuntary Termination Without Cause, five
days after the date the Notice of Termination is received by Employee,
(c) if employment is terminated by the Company for Cause, the later of the
date specified in the Notice of Termination or ten days following the date such
notice is received by Employee, (d) if employment is terminated by Employee for
Good Reason, the Date of Termination shall be the  effective date of Employee’s resignation as
set forth in the Notice of Termination (provided, that the events or
circumstances cited by Employee as constituting Good Reason are not cured by
the Company in accordance with the terms hereof) and (e) if employment is
terminated by Employee other than for Good Reason, the Date of Termination
shall be the date set forth in the Notice of Termination, which shall be no
earlier than ten days after the date such notice is received by the Company.

 

7.11        “Disability”
shall
mean Employee’s incapacity due to physical or mental illness which causes
Employee to be absent from the full-time performance of his or her duties with
the Company as determined by the Company in its sole discretion.

 

7.12        “Exchange
Act” shall
mean the Securities Exchange Act of 1934, as amended from time to time, and the
regulations promulgated and rulings issued thereunder, and any successor
provisions thereto.

 

9

 

7.13        “Effective
Date”
means the date on which the Board of Directors of the Company approves and
authorizes the execution of this Agreement.

 

7.14        “Good
Reason”
means that the Employee voluntarily terminates employment with the Company and
its subsidiaries during the Change in Control Period upon or within 60 days
after the occurrence of any of the following:

 

(a)          A meaningful and detrimental
alteration in the Employee’s position, or nature or status of responsibilities
from those in effect immediately prior to the Change in Control Date;

 

(b)          A reduction by the Company in the
Employee’s annual base salary by ten percent (10%) or more as
in effect immediately prior to the Change in Control Date or as the same
may be increased from time to time thereafter;

 

(c)          The relocation of the office of the
Company where the Employee is employed immediately prior to the Change in
Control Date (the “CIC Location”)
to a location which is more than 25 miles away from the CIC Location or the
Company’s requiring the Employee to be based more than 25 miles away from the
CIC Location (except for required travel on the Company’s business to an extent
substantially consistent with his or her customary business travel obligations
in the ordinary course of business prior to the Change in Control Date);

 

(d)          The failure by the Company to continue
to provide the Employee with benefits at least as favorable in the aggregate to
those enjoyed by the Employee under the Company’s savings, life insurance,
medical, health and accident, disability, and fringe benefit plans and
arrangements in which he or she was participating immediately prior to the
Change in Control Date; the failure by the Company to provide the Employee with
the number of paid vacation days to which he or she is entitled on the basis of
years of service with the Company in accordance with the Company’s normal
vacation policy in effect immediately prior to the Change in Control; or the
failure of the Company to obtain an agreement from any successor to assume and
agree to perform the Company’s obligations under this Agreement, as
contemplated in Section 8.7 hereof; provided, however, that no
event described above shall constitute Good Reason unless it is communicated by
the Employee to the Company in writing and is not corrected by the Company in a
manner which is reasonably satisfactory to the Employee (including full
retroactive correction with respect to any monetary matter) within ten days of
the Company’s receipt of such written notice from the Employee; or

 

(e)          The consummation of a Change in
Control as defined in Sections 7.5(a)-(c).

 

7.15        “Involuntary
Termination Without Cause” means Employee’s (a)  involuntary termination of
employment by the Company and its subsidiaries during the Change in Control
Period other than for Cause or (b)  resignation of employment with
the Company and its subsidiaries during the Change in Control Period for Good Reason.

 

7.16        “Notice
of Termination” shall mean a written notice provided to Employee indicating
the reason for his or her termination and the Date of Termination.

 

10

 

7.17        “Reference
Bonus” shall
mean $[REFBONUS].

 

7.18        “Reference
Salary” shall
mean $[REFSALARY].

 

7.19        “Severance
Factor”
shall mean $[SEVFACTOR].

 

7.20        “Subsidiary”
means any corporation that is a “subsidiary corporation” within the meaning of
Section 424(f) of the Code with respect to the Company.

 

ARTICLE VIII.

GENERAL PROVISIONS

 

8.1          Notices. Any notices provided
hereunder must be in writing and such notices or any other written
communication shall be deemed effective upon the earlier of personal delivery
(including personal delivery by telex or facsimile) or the third day after
mailing by first class mail, to the Company at its primary office location and
to Employee at Employee’s address as listed in the Company’s payroll records. Any
payments made by the Company to Employee under the terms of this Agreement
shall be delivered to Employee either in person or at such address as listed in
the Company’s payroll records.

 

8.2          Severability. It is the intent of the
parties to this Agreement that whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.

 

8.3          Waiver. If either party should waive
any breach of any provisions of this Agreement, that party shall not thereby be
deemed to have waived any preceding or succeeding breach of the same or any
other provision of this Agreement.

 

8.4          Complete
Agreement. This
Agreement, including Exhibit A, constitutes the entire agreement between
Employee and the Company and it is the complete, final, and exclusive
embodiment of their agreement with regard to this subject matter and supersedes
and replaces any prior understandings, whether oral or written, on the subject
matter set forth herein, including but not limited to any change of control
retention agreement previously entered into between Employee and the Company. This
Agreement is entered into without reliance on any promise or representation
other than those expressly contained herein.

 

8.5          Counterparts. This Agreement may be
executed in separate counterparts, any one of which need not contain signatures
of more than one party, but all of which taken together will constitute one and
the same Agreement.

 

8.6          Headings. The headings of the Articles
and Sections hereof are inserted for convenience only and shall neither be
deemed to constitute a part hereof nor to affect the meaning thereof.

 

11

 

8.7          Successors and
Assigns. This
Agreement is intended to bind and inure to the benefit of and be enforceable by
Employee and the Company, and their respective successors, assigns, heirs,
executors and administrators, except that Employee may not delegate any of
Employee’s duties hereunder and may not assign any of Employee’s rights
hereunder without the written consent of the Company, which consent shall not
be withheld unreasonably. Any successor to the Company (whether direct or
indirect and whether by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
shall assume the Company’s obligations under this Agreement in the same manner
and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. For all purposes under this
Agreement, the term “Company” shall include any successor to the Company’s
business and/or assets, whether or not such successor executes and delivers an
assumption agreement referred to in the preceding sentence or becomes bound by
the terms of this Agreement by operation of law or otherwise.

 

8.8          Attorney Fees. If either party hereto brings
any action to enforce such party’s rights hereunder, the prevailing party in
any such action shall be entitled to recover such party’s reasonable attorneys’
fees and costs incurred in connection with such action.

 

8.9          Arbitration. In order to ensure rapid and
economical resolution of any dispute which may arise under this Agreement,
Employee and the Company agree that any and all disputes or controversies,
arising from or regarding the interpretation, performance, enforcement or
termination of this Agreement shall submitted to JAMS for non-binding mediation.
If complete agreement cannot be reached within 60 days after the date of
submission to mediation, any remaining issues will be submitted to JAMS to be
resolved by final and binding arbitration under the JAMS Arbitration Rules and
Procedures for Employment Disputes. The reference to JAMS shall refer to any
successor to JAMS, if applicable. BY ENTERING
INTO THIS AGREEMENT, THE COMPANY AND EMPLOYEE ACKNOWLEDGE THAT THEY ARE WAIVING
THEIR RIGHT TO JURY TRIAL OF ANY DISPUTE COVERED BY THIS AGREEMENT.

 

8.10        Choice of Law. All questions concerning the
construction, validity and interpretation of this Agreement will be governed by
the law of the State of California.

 

8.11        Construction. In the event of a conflict
between the text of the Agreement and any summary, description or other
information regarding the Agreement, the text of the Agreement shall control.

 

IN WITNESS WHEREOF,
the parties have executed this Agreement on the day and year written above.

 

 

	
  BEDFORD
  PROPERTY INVESTORS, INC.,

  	
   

  
	
  a Maryland corporation

  	
  EMPLOYEE

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Signature

  
	
  Title:

  	
   

  	
   

  	
   

  
							

 

12

 

Exhibit A: Employee General
Release

 

13

 

Exhibit A

 

RELEASE

 

1Exhibit
10.1

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(“Agreement”) is entered into by and
between Stephen Pearson (the “Executive”) and
GUESS?, Inc., a Delaware corporation (the “Company”)
on January 31, 2006 and shall be effective on the date that is the first
day of the Executive’s employment with the Company (the “Effective
Date”).

 

WHEREAS, the Company
desires to provide for the service and employment of the Executive with the
Company and the Executive wishes to perform services for the Company, all in
accordance with the terms and conditions provided herein.

 

NOW, THEREFORE, in
consideration of the mutual agreements hereinafter set forth, the Executive and
the Company hereby agree as follows:

 

Section 1.               EMPLOYMENT.  The Company does hereby employ the Executive
and the Executive does hereby accept employment as Executive Vice President and
Chief Supply Chain Officer of the Company. 
In the Executive’s capacity as Executive Vice President and Chief Supply
Chain Officer of the Company, the Executive shall be responsible for worldwide
production, pre-production, technical services, quality control, sourcing and
logistics (including warehouse operations and traffic) for the Company and all
employees performing these responsibilities will report to the Executive in a
manner consistent with the Company’s open door policy.  The Executive shall render such services on
the terms set forth herein and shall report to the President and Chief
Operating Officer of the Company.  The
Executive agrees to devote all of his working time and efforts to the business
and affairs of the Company and its subsidiaries and shall not engage in
activities that interfere in any way with such performance.

 

Section 2.               TERM
OF AGREEMENT.  Subject to Section 5
hereof, the term (the “Term”) of this
Agreement shall commence on the Effective Date and shall continue through January 31,
2009.

 

Section 3.               LOCATION.  In connection with the Executive’s employment
by the Company, the Executive shall be based at the headquarters of the Company
in Los Angeles, California, except for required travel for the Company’s
business.

 

Section 4.               COMPENSATION.

 

(a)           BASE
SALARY.  Effective as of the
Effective Date, the Company shall pay the Executive a base salary (“Base Salary”) at an initial rate of $450,000 per year,
payable in accordance with the Company’s policies relating to 

 

 

salaried employees.  After twelve months of employment and
annually thereafter, the Executive’s Base Salary may be increased in accordance
with the Company’s policies relating to annual increases or as approved by the
Compensation Committee of the Board (the “Compensation Committee”)
in its sole discretion.  So long as
Executive is employed by the Company, the Base Salary may not be decreased.

 

(b)           GUARANTEED
BONUS.  With respect to the 2006
calendar year, the Company shall pay to the Executive a guaranteed annual bonus
of 50% of Executive’s Base Salary prorated from the Effective Date through the
end of the calendar year (the “Guaranteed Bonus”),
payable in accordance with the Company’s payment dates for annual bonuses
provided that the Executive has been continuously employed with the Company
from the Effective Date through the applicable payment date.

 

(c)           TARGET
BONUS.  Commencing with the first
full fiscal year of the Company (“Fiscal Year”)
following the Effective Date, the Executive shall have the opportunity to earn
a bonus (“Target Bonus”) for each Fiscal Year as
recommended by the Compensation Committee in accordance with the Company’s
Executive Incentive Program, as it may be amended or otherwise modified from
time to time (the “EIP”); provided
in each case that the Executive has been continuously employed with the Company
from the Effective Date through the date such Target Bonus is paid by the
Company pursuant to the terms of the EIP. 
The amount of each Target Bonus shall be set by the Compensation
Committee.

 

(d)           RESTRICTED
STOCK AND STOCK OPTIONS.

 

(i)            Restricted
Stock Grant.  Subject to the approval
of the Compensation Committee, the Executive shall be granted 16,000 restricted
shares of common stock of the Company (the “Restricted
Stock”) on the date of the approval of the Restricted Stock by
unanimous written consent of the Compensation Committee.  As a condition to receiving such grant of the
Restricted Stock, the Executive agrees to pay to the Company in cash the
aggregate amount of the par value of the Restricted Stock.  The Restricted Stock shall vest over a four
year period as follows:  one-fourth of
your Restricted Stock will vest on each anniversary date of the grant until
fully vested; provided in each case that the Executive has been
continuously employed with the Company from the Effective Date through the
applicable vesting date.  Except as
otherwise provided herein, the Restricted Stock shall be subject to such terms
and conditions as generally apply to restricted stock granted to other senior
executive officers who participate in the Company’s equity incentive plans as
such terms and conditions are in effect on the Effective Date.

 

2

 

(ii)           Initial
Option Grant.  Subject to the
approval of the Compensation Committee, the Executive shall be granted an
option (the “Initial Option”) to purchase
30,000 shares of common stock of the Company at a per share exercise price
equal to the fair market value of the common stock of the Company on the date
of the approval of the Initial Option by unanimous written consent of the
Compensation Committee.  The Initial
Option shall vest and become exercisable over a four year period as follows:
one-fourth of your options will vest on each anniversary date of the grant
until fully vested; provided in each case that the Executive has been
continuously employed with the Company from the Effective Date through the
applicable vesting date.  Except as
otherwise provided herein, the Initial Option shall be subject to such terms
and conditions, including provisions regarding post-termination exercisability,
as generally apply to stock options granted to other senior executive officers
who participate in the Company’s equity incentive plans as such terms and
conditions are in effect on the Effective Date.

 

(e)           FRINGE
BENEFITS.  The Executive shall be
entitled to participate in any fringe, welfare and pension benefit and
incentive programs adopted from time to time by the Company for the benefit of,
and which generally apply to, its senior executive officers from time to
time.  The Executive will receive four (4) weeks
of paid vacation annually.  The Executive
shall be eligible to participate in the Company-sponsored deferred compensation
plan.

 

Section 5.               TERMINATION.

 

(a)           NOTICE
OF TERMINATION.

 

(i)            “Notice of Termination” shall mean a notice that shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive’s employment under the
provisions so indicated.

 

(ii)           Any
purported termination of the Executive’s employment by the Company or by the Executive
shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 12 hereof.

 

(b)           DATE
OF TERMINATION.  “Date of Termination” shall mean:

 

3

 

(i)            if
the Executive’s employment is terminated because of death, the date of the
Executive’s death,

 

(ii)           if
the Executive’s employment is terminated by the Company because of Disability,
ten (10) days following the date on which the Notice of Termination is
given, and

 

(iii)          if
the Executive’s employment is terminated for any other reason, the date
specified in the Notice of Termination, which shall not be a date prior to the
date such Notice of Termination is given.

 

(c)           ACCRUED
AND UNPAID BENEFITS.  Following the
termination of the Executive’s employment with the Company for any reason, the
Executive shall receive:

 

(i)            any
earned, but unpaid, Base Salary,

 

(ii)           any
earned, but unpaid, Guaranteed Bonus for the 2006 calendar year,

 

(iii)          the
cash equivalent of any accrued, but unused, vacation, and

 

(iv)          any
accrued employee benefits, subject to the terms of the applicable employee
benefit plans.

 

Notwithstanding anything
contained in this Agreement (or any other plan, program or arrangement) to the
contrary, following the termination of the Executive’s employment hereunder by
the Company, by the Executive for Good Reason (as defined in Section 5(g)(iii) below),
or pursuant to Section 5(d) below, the Executive shall receive any
other cash bonus, if applicable, earned pursuant to the specific provisions of
the EIP, provided the Executive has been continuously employed with the Company
from the Effective Date through the last day of the applicable Fiscal Year.

 

(d)           DEATH.  In the event that the Executive’s employment
hereunder is terminated by reason of the Executive’s death, the Company shall
pay the amounts described in Section 5(c) above and all benefits
payable to the Executive, if any, under the terms of the Company’s compensation
and benefit plans, programs or arrangements.

 

4

 

(e)           DISABILITY.

 

(i)            “Disability” shall have the same meaning assigned to the same
or a similar term pursuant to any long-term disability plan or policy of the
Company in effect as of the Date of Termination.  If no such plan or policy is then in effect, “Disability”
shall mean that as a result of the Executive’s incapacity due to physical or
mental illness, the Executive shall have been absent from the full-time
performance of his duties with the Company for a period of three (3) consecutive
months or for any one hundred eighty (180) days within any period of twelve
(12) consecutive months and that, in either case, the Executive shall not have
returned to the full-time performance of his duties within thirty (30) days
following the Company’s delivery of a Notice of Termination pursuant to this Section 5(a).

 

(ii)           The
Executive’s employment under this Agreement may be terminated by the Company or
the Executive for Disability, subject to applicable law.

 

(iii)          During
any period prior to such termination during which the Executive is absent from
the full-time performance of his duties with the Company due to Disability, the
Company shall continue to pay the Executive his Base Salary at the rate in
effect at the commencement of such period of Disability, and the vesting of the
Initial Option, Restricted Stock and other stock awards, if any, shall
continue.

 

(iv)          Upon
termination of the Executive’s employment for Disability, the Company shall pay
all benefits payable to the Executive, if any, under the terms of the Company’s
compensation and benefit plans, programs or arrangements.

 

(f)            TERMINATION
FOR CAUSE.  The Company may terminate
the Executive’s employment under this Agreement for Cause (as defined below) at
any time.

 

(i)            As
used herein, termination for “Cause” shall
mean the occurrence of any of the following, as determined by a two-thirds
majority of the members of the Board:

 

(A)          the
willful failure, neglect or refusal by the Executive to perform his duties
hereunder or to follow the instructions of the Board;

 

5

 

(B)           any
willful or grossly negligent act, or commission of a felony or misdemeanor, by
the Executive that a two-thirds majority of the members of the Board determines
may have the effect of materially injuring (monetarily or otherwise) the
business or reputation of the Company or its subsidiaries or their affiliates
or any division thereof;

 

(C)           the
conviction of the Executive of (or the pleading by Executive of guilty or nolo
contendre to) any misdemeanor involving fraud or embezzlement or any
felony;

 

(D)          any
misappropriation or embezzlement of the property of the Company or its
subsidiaries or their affiliates (whether or not a misdemeanor or felony); and

 

(E)           a
material breach by the Executive of any covenant in this Agreement.

 

(ii)           The
Company shall notify the Executive of any event or circumstance described in
subsection (i) above, and, if curable, the Executive shall have
thirty (30) days following such notice within which to cure such event or
circumstance.  If such event or
circumstance is not cured within such period, the Company may terminate the
Executive for Cause at any time following the end of such period or, if, after
providing Executive the opportunity to be heard, the Board determines such
event or circumstance is not curable, at any time after such notice and hearing.

 

(iii)          In
the event of termination for Cause, this Agreement shall terminate without
further obligation by the Company, except for payment of the amounts described
in Section 5(c) above.

 

(g)           TERMINATION
BY THE EXECUTIVE.

 

(i)            For
Good Reason.  The Executive may
terminate his employment hereunder for Good Reason (as defined below).

 

(ii)           Without
Good Reason.  Except as provided in
clause (iii) below, the Executive may terminate his employment hereunder
voluntarily without Good Reason upon at least six (6) months’ prior notice
to the Company.

 

(iii)          “Good
Reason”.

 

6

 

(A)          The
Executive shall have “Good Reason” to
terminate his employment hereunder upon a failure by the Company to
substantially comply with any material provision of this Agreement, without the
Executive’s consent, that has not been cured within thirty (30) days after
written notice of such noncompliance has been given by the Executive to the
Company.

 

(B)           Failure
by the Company to substantially comply with any material provision of this
Agreement shall mean:

 

(1)           an
action by the Company resulting in a diminution of the Executive’s Base Salary,

 

(2)           any
reduction in the Executive’s Base Salary then in effect or the failure to pay
any other compensation described in Section 4 hereof or Schedule 1
hereto that is due and payable to the Executive,

 

(3)           the
Executive being required by the Company to be based at any office or location
outside the Los Angeles, California metropolitan area, or

 

(4)           any
failure by the Company or any successor of the Company to comply with and
satisfy Section 17 hereof, including any failure by any such successor to
adopt and be bound by this Agreement.

 

Section 6.               SEVERANCE.

 

(a)           UPON
TERMINATION.  If the Company
terminates the Executive’s employment with the Company for any reason other
than (i) the Executive’s death or Disability or (ii) for Cause, or if
the Executive terminates his employment with the Company for Good Reason, the
Executive shall receive severance for the longer of twelve (12) months or the remainder of the
Term (the “Severance Period”).   During
the Severance Period, the Company shall pay to the Executive on an annualized
basis the Executive’s Base Salary then in effect payable in accordance with the
Company’s policies relating to salaried employees.

 

(b)           SUBSEQUENT
EMPLOYMENT.  As a condition to
receiving any payments or benefits pursuant to Section 6(a), the Executive
agrees to notify the Company if he is employed as an employee or engaged as an
independent 

 

7

 

contractor during the
Severance Period.  If the Executive’s base
salary with such subsequent employer or such subsequent engagement is equal to
or greater than his Base Salary in effect on the termination date, payments due
under Section 6(a) shall terminate. 
If such subsequent base salary is lower than the Executive’s Base Salary
at termination, the Company will continue to pay the Executive the difference
in compensation for the remainder of the Severance Period.

 

(c)           RELEASE
OF EMPLOYMENT CLAIMS.  The Executive
agrees, as a condition to receipt of the payments and benefits provided for in
this Section 6, that he will execute a release agreement, in a form
satisfactory to the Company, releasing any and all claims arising out of the
Executive’s employment (other than enforcement of this Agreement and the
Executive’s rights under any of the Company’s incentive compensation and
employee benefit plans and programs to which he is entitled under this
Agreement).

 

Section 7.               CONFIDENTIALITY;
NON-SOLICITATION.

 

(a)           CONFIDENTIALITY.  “Confidential Information”
shall mean non-public information about the Company and its subsidiaries or
their affiliates, and their respective clients and customers that is not
disclosed by the Company or its subsidiaries for financial reporting purposes
and that was learned by the Executive in the course of his employment with the
Company, including, without limitation, any proprietary knowledge, trade
secrets, data, formulae, information and client and customer lists and all
papers, resumes and records (including computer records) of the documents
containing such Confidential Information. 
Confidential Information does not include information regarding the
Executive’s own compensation and benefits.

 

(i)            The
Executive acknowledges that in his employment with the Company, he will occupy
a position of trust and confidence.  The
Executive shall not, except as may be required to perform his duties hereunder
or as required by applicable law, without limitation in time or until such
information shall have become public other than by the Executive’s unauthorized
disclosure, disclose to others or use, whether directly or indirectly, any
Confidential Information.

 

(ii)           The
Executive acknowledges that all Confidential Information is specialized, unique
in nature and of great value to the Company and its subsidiaries, and that such
Confidential Information gives the Company and its subsidiaries a competitive
advantage.  The Executive agrees to
deliver or return to the Company, at the Company’s request at any time or upon
termination or expiration of his employment or as 

 

8

 

soon thereafter as
possible, all documents, computer tapes and disks, records, lists, data,
drawings, prints, notes and written information (and all copies thereof)
furnished by or on behalf of or for the benefit of the Company and its
subsidiaries or their affiliates or prepared by the Executive during the term
of his employment by the Company, but excluding documents relating to the
Executive’s own compensation and benefits.

 

(b)           NON-SOLICITATION
OF CUSTOMERS AND SUPPLIERS.  During
the Executive’s employment with the Company and during the Severance Period, if
any (and, in the event of a termination by the Company for Cause or by the
Executive other than for Good Reason, for a period of twenty-four (24) months
following the Date of Termination), the Executive shall not, directly or
indirectly, influence or attempt to influence customers or suppliers of the
Company or any of its subsidiaries or their affiliates to divert their business
to any business, individual, partner, firm, corporation or other entity that is
then a direct competitor of the Company or its subsidiaries or their affiliates
(each such competitor, a “Competitor of the Company”);
provided, however, that if the Executive is employed by customers
or suppliers of the Company following his termination of employment the normal
execution of his duties in connection with such employment shall not constitute
a violation of this Section 7(b).

 

(c)           NON-SOLICITATION
OF EMPLOYEES.

 

(i)            The
Executive recognizes that he will possess confidential information about other
employees of the Company and its subsidiaries or their affiliates relating to
their education, experience, skills, abilities, compensation and benefits, and
interpersonal relationships with customers of the Company and its subsidiaries
or their affiliates.

 

(ii)           The
Executive recognizes that the information he will possess about these other
employees is not generally known, is of substantial value to the Company and
its subsidiaries in developing their business and in securing and retaining
customers, and will be acquired by him because of his business position with
the Company and its subsidiaries.

 

(iii)          The
Executive agrees that, during the Executive’s employment with the Company and
during the period in which payments are made to the Executive during the
Severance Period, if any (and, in the event of a termination by the Company for
Cause or by the Executive other than for Good Reason, for a period of twenty-four
(24) months following the Date of Termination) he will not, directly or
indirectly, solicit or recruit any employee of the Company or its subsidiaries
or their affiliates 

 

9

 

for the purpose of
being employed by him or by any Competitor of the Company on whose behalf he is
acting as an agent, representative or employee and that he will not convey any
such confidential information or trade secrets about other employees of the
Company and its subsidiaries or their affiliates to any other person.

 

(d)           REMEDIES.  In the event of a breach or threatened breach
of this Section 7, the Executive agrees that the Company shall be entitled
to apply for injunctive relief in a court of appropriate jurisdiction to remedy
any such breach or threatened breach, the Executive acknowledging that damages
would be inadequate and insufficient. 
Without limiting the foregoing and in addition to whatever other rights
and remedies the Company may have at equity or in law, if the Executive
breaches any of the provisions contained in this Section 7, all benefits
and payments payable pursuant to Section 7 hereof shall cease and all
outstanding stock options, Restricted Stock or other stock awards shall be
forfeited.

 

(e)           SURVIVAL
OF PROVISIONS.  The obligations
contained in this Section 7 shall, to the extent provided in this Section 7,
survive the termination or expiration of the Executive’s employment with the
Company and, as applicable, shall be fully enforceable thereafter in accordance
with the terms of this Agreement.  If it
is determined by a court of competent jurisdiction in any state that any
restriction in this Section 7 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it is the intention
of the parties that such restriction may be modified or amended by the court to
render it enforceable to the maximum extent permitted by the law of that state.

 

Section 8.               NO
VIOLATION OF THIRD-PARTY RIGHTS.

 

(a)           The
Executive hereby represents, warrants and covenants to the Company that the
Executive:

 

(i)            shall
not, in the course of his employment or his consultancy with the Company,
infringe upon or violate any proprietary rights of any third party (including,
without limitation, any third party confidential relationships, patents,
copyrights, mask works, trade secrets or other proprietary rights);

 

(ii)           is
not a party to any agreements with third parties that prevent him from
fulfilling the terms of employment and the obligations of this Agreement or
which would be breached as a result of his execution of this Agreement; and

 

10

 

(iii)          agrees
to respect any and all valid obligations which he may now have to prior
employers or to others relating to confidential information, inventions or
discoveries which are the property of those prior employers or others, as the
case may be.

 

(b)           The
Executive agrees to indemnify and save harmless the Company from any loss,
claim, damage, cost or expense of any kind (including, without limitation,
attorney fees) to which the Company may be subjected by virtue of a breach by
the Executive of any of the foregoing representations, warranties and
covenants.

 

Section 9.               RELOCATION
EXPENSES.  The Executive shall be
entitled to the relocation benefits described in Schedule 1 hereto.

 

Section 10.             REIMBURSEMENT
FOR LEGAL FEES.  The Company shall
reimburse the Executive for reasonable legal fees and expenses incurred by the
Executive in connection with the negotiation and preparation of this Agreement;
provided that the aggregate amount of such reimbursement shall not
exceed $5,000 and the Executive has furnished to the Company evidence
satisfactory to the Company relating to such legal fees and expenses.

 

Section 11.             WITHHOLDING;
OFFSET.

 

(a)           The
Company shall make such deductions and withhold such amounts from each payment
made to the Executive hereunder as may be required from time to time by law,
governmental regulation or order.

 

(b)           The
Company shall have the right to offset any amounts that are due and payable to
the Company by the Executive upon or after the Executive’s termination of
employment with the Company for any reason from any amounts due to the
Executive pursuant to this Agreement; provided, however, that the
Company may not offset any amounts payable by the Executive to the Company in
connection with any breach of contract or breach of fiduciary duty claim that
has not been entered as a judgment.

 

Section 12.             NOTICES.  All notices and other communications under
this Agreement shall be in writing and shall be given by hand, facsimile or
first-class mail, certified or registered with return receipt requested, and
shall be deemed to have been duly given three (3) days after mailing
or twenty-four (24) hours after transmission of a facsimile to the
respective persons named below:

 

11

 

(a)           If
to the Company:               GUESS ?, Inc.

1444 South Alameda Street

Los Angeles, California
90021

Attention:  Carlos Alberini

Facsimile: 213-765-0911

 

(b)           If
to the Executive:               Stephen Pearson

 

Either party may change
such party’s address for notices by notice duly given pursuant hereto.

 

Section 13.             DISPUTE
RESOLUTION; ATTORNEYS’ FEES.  The
Company and the Executive agree that any dispute arising as to the parties’ rights
and obligations hereunder, other than with respect to Section 7 hereof,
shall be resolved by binding arbitration in accordance with the rules of
the American Arbitration Association then in effect.  Each party shall have the right, in addition
to any other relief granted by such arbitrator (or by any court with respect to
relief granted with respect to Section 7 hereof), to reasonable attorneys’
fees based on a determination by the arbitrator (or, with respect to Section 7
hereof, the court) of the extent to which each party has prevailed as to the
material issues raised in determination of the dispute.

 

Section 14.             GOVERNING
LAW.  This Agreement and the legal
relations thus created between the parties hereto shall be governed by and
construed under and in accordance with the laws of the State of California,
without regard to its conflicts of law principles.

 

Section 15.             TERMINATION
OF PRIOR AGREEMENTS.  This Agreement
terminates and supersedes any and all prior agreements and understandings
between the parties with respect to the Executive’s employment and compensation
by the Company.

 

Section 16.             WAIVER;
MODIFICATION.  Failure to insist upon
strict compliance with any of the terms, covenants or conditions hereof shall
not be deemed a waiver of such term, covenant or condition, nor shall any
waiver or relinquishment of, or failure to insist upon strict compliance with,
any right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.  This Agreement shall not be modified in any
respect except by a writing executed by each party hereto.

 

12

 

Section 17.             ASSIGNMENT;
SUCCESSORS.  This Agreement is
personal in its nature and neither of the parties hereto shall, without the
consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder; provided that, in the event of the merger,
consolidation, transfer or sale of all or substantially all of the assets of the
Company with or to any other individual or entity or any similar event, this
Agreement shall, subject to the provisions hereof, be binding upon and inure to
the benefit of such successor and such successor shall discharge and perform
all the promises, covenants, duties and obligations of the Company hereunder.

 

Section 18.             SEVERABILITY.  Except as provided in Section 7(e) hereof,
in the event that a court of competent jurisdiction determines that any portion
of this Agreement is in violation of any statute or public policy, only the
portions of this Agreement that violate such statute or public policy shall be
stricken.  All portions of this Agreement
that do not violate any statute or public policy shall continue in full force
and effect.  Furthermore, any court order
striking any portion of this Agreement shall modify the stricken terms as
little as possible to give as much effect as possible to the intentions of the
parties under this Agreement.

 

Section 19.             HEADINGS.  Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

 

Section 20.             COUNTERPARTS.  This Agreement may be executed in
counterparts (including counterparts delivered by facsimile), each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.

 

Section 21.             REPRESENTATION
BY COUNSEL; INTERPRETATION.  Each
party acknowledges that it has had the opportunity to be represented by counsel
in connection with this Agreement.  Any rule of
law or any legal decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived.

 

13

 

IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed by its duly authorized officer
and the Executive has hereunto signed this Agreement on the date first above
written.

 

 

	
   

  	
  GUESS ?, INC.

  
	
   

  	
   

  
	
   

  	
  /s/ Carlos Alberini

  	
  2/9/06

  	
   

  
	
   

  	
  By:

  	
  Carlos Alberini

  	
   

  
	
   

  	
  Title: President and
  Chief Operating

  Officer

  
	
   

  	
   

  
	
   

  	
  /s/ Stephen Pearson 

  	
  2/9/06

  	
   

  
	
   

  	
  STEPHEN PEARSON

  
							

 

14

 

SCHEDULE 1

 

RELOCATION POLICY

 

1.  Reimbursement for Relocation Expenses.  The Company shall reimburse the Executive in
accordance with the Company’s relocation policy for the Executive’s reasonable
relocation-related costs and expenses; provided that the Executive has
furnished to the Company evidence satisfactory to the Company relating to such
costs and expenses.

 

2.  Miscellaneous.  The Company shall provide Executive with
temporary corporate housing for up to one hundred eighty (180) days from the
Effective Date and shall provide or reimburse Executive for up to five
round-trip coach airfare tickets and up to 5 one-way coach airfare tickets for
relocation purposes.

 

3.  Tax Gross Up.  The Company shall provide to Executive a tax “gross
up” equivalent to the income tax liability he incurs with respect to the
payments and reimbursements contemplated in these provisions 1, 2 and 3 of this
Schedule 1, such that the net effect on Executive shall be that he does
not pay any income tax on such contemplated payments and reimbursements.

 

15

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