Employment Agreement - bebe stores inc. and John Parros
[bebe logo]
EMPLOYMENT AGREEMENT
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This Employment Agreement ("Agreement") is made effective as of November 20,
2000 ("Effective Date"), by and between bebe stores, inc. ("Company") and John
Parros ("Employee").
The parties agree as follows:
1. EMPLOYMENT. Company hereby employs Employee, and Employee hereby
accepts such employment, upon the terms and conditions set forth herein.
2. DUTIES.
2.1. POSITION. Employee is employed as Chief Operating Officer and
President of bebe stores, inc., and shall have the duties and responsibilities
assigned by Manny Mashouf upon initial hire and as may be reasonably assigned
from time to time. Employee shall perform faithfully and diligently all duties
assigned to Employee. Employee will manage Company's Merchandising, Design,
Visual Merchandising, Planning and Licensing Departments. Additionally,
effective March 1, 2001, Employee will manage Company's Marketing and Retail
Store Operations Departments and, effective June 1, 2001, Employee will manage
Company's Production Department. Notwithstanding the forgoing, Employee's
supervisor, position and duties may be modified at any time, if both parties
agree in good faith that such modification would be in the best interest of the
Company.
2.2. BEST EFFORTS/FULL TIME. Employee will expend Employee's best
efforts on behalf of Company, and will abide by all policies and decisions made
by Company, as well as all applicable federal, state and local laws, regulations
or ordinances. Employee will act in the best interest of Company at all times.
Employee shall devote Employee's full business time and efforts to the
performance of Employee's assigned duties for Company, unless Employee notifies
the Board of Directors in advance of Employee's intent to engage in other paid
work and receives the Board of Directors' express written consent to do so.
2.3. WORK LOCATION. Employee's principal place of work shall be located
in Brisbane, California or such other location as the parties may agree upon
from time to time.
3. TERM.
3.1. INITIAL TERM. The employment relationship pursuant to this
Agreement shall be for an initial term commencing on the Effective Date set
forth above and continuing for a period of one (1) year following such date
("Initial Term"), unless sooner terminated in accordance with section 8 below.
On completion of the Initial Term, this Agreement will terminate, and Employee
will automatically be employed by Company on an at-will basis. Parties shall
discuss prior to the expiration of this Agreement the terms of such at-will
arrangement.
4. COMPENSATION.
4.1. BASE SALARY. As compensation for Employee's performance of
Employee's duties hereunder, Company shall pay to Employee an initial Base
Salary of $360,000 per year, payable
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in accordance with the normal payroll practices of Company, less required
deductions for state and federal withholding tax, social security and all other
employment taxes and payroll deductions. Parties shall discuss prior to the
expiration of this Agreement the base salary terms of Employee's at-will
arrangement that shall begin after the Initial Term, unless Employee's
employment has been terminated prior thereto.
4.2. INCENTIVE COMPENSATION. Employee will receive a guaranteed bonus
equal to 50% of the amount of Base Salary paid to Employee from the date of hire
through June 30, 2001 (the "Bonus"), payable in accordance with the normal
payroll practices of Company, less required deductions for state and federal
withholding tax, social security, and all other employment taxes and payroll
deductions, but not later than by September 30, 2001. Unless Employee's
employment has been terminated during the Initial Term, parties shall discuss
prior to the expiration of this Agreement, the incentive compensation terms of
Employee's at-will arrangement that shall begin after the Initial Term. At such
time, Employee shall be eligible to participate in the Company's Incentive Plan
for Senior Executives, which shall allow the Employee the opportunity to earn a
bonus of at least 7.5% and up to 67.5% of Employee's then base salary, based on
the achievement of individual and company goals.
4.3. STOCK OPTIONS. Subject to the Board of Directors' approval,
Employee will be granted an incentive stock option to purchase 150,000 of shares
of Company's Common Stock under Company's 1997 Stock Plan, as amended (the
"Plan") at an exercise price equal to the fair market value of that stock at
close of market on November 20, 2000 (the "Option"). The Option will be subject
to vesting and the terms and conditions of the Plan and the standard stock
option agreement provided pursuant to the Plan, which Employee will be required
to sign as a condition of receiving the Option.
4.4. PERFORMANCE AND SALARY REVIEW. The Board of Directors will
periodically review Employee's performance on no less than an annual basis.
Adjustments to salary or other compensation, if any, will be made by the
Employee's supervisor in his sole and absolute discretion.
5. CUSTOMARY FRINGE BENEFITS. Employee will be eligible for all
customary and usual fringe benefits generally available to executives of
Company subject to the terms and conditions of Company's benefit plan
documents. Company reserves the right to change or eliminate the fringe
benefits of all employees on a prospective basis, at any time, effective upon
notice to employees.
6. BUSINESS EXPENSES. Employee will be reimbursed for all reasonable,
out-of-pocket business expenses incurred in the performance of Employee's
duties on behalf of Company. To obtain reimbursement, expenses must be
submitted promptly with appropriate supporting documentation in accordance
with Company's policies.
7. ADVANCE ON HOUSING AND RELOCATION EXPENSES. Employee understands and
agrees that the money advanced to Employee pursuant to the housing and
relocation expenses described below constitute a loan that will become due
and payable immediately upon demand by Company if this Agreement is
terminated for "Cause" in accordance with section 8 below or Employee
terminates his employment with the Company for any reason during the Initial
Term other than for Good Reason. Except as provided in this section 7,
Company agrees that it will excuse the entire loan, on the last date of the
Initial Term.
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7.1. HOUSING EXPENSES. Pursuant to Employee's move from Employee's old
residence to Employee's new residence, Company is willing to advance to Employee
the dollar amount equal to 100 percent of the closing costs (including real
estate broker commission not to exceed 6%) involved in the sale of one of
Employee's residences and the dollar amount equal to 100 percent of the closing
costs and points involved in the purchase of Employee's local residence
("Residence Purchase and Sale Expenses"). Employee must submit a copy of the
closing statement without exception for all such stipulated costs incurred
regardless of party making payment. Such documentation must be submitted to
Company Payroll Department within sixty (60) days from the day in which cost was
incurred. At Company's expense and not subject to Employee's repayment, Company
shall arrange and provide Employee with temporary housing for up to ninety days
until Employee is able to find local housing and pay the initial deposit and
first month's rent of Bay Area rental residence up to $10,000. NOTWITHSTANDING
ANY PROVISIONS HEREIN TO THE CONTRARY, IF EMPLOYEE IS CONTINUOUSLY EMPLOYED WITH
COMPANY THROUGH THE INITIAL TERM, EMPLOYEE SHALL NOT BE REQUIRED TO REPAY THE
RESIDENCE PURCHASE AND SALE EXPENSES TO COMPANY, EVEN IF SUCH EXPENSES ARE
INCURRED BEYOND THE INITIAL TERM.
7.2. RELOCATION EXPENSES. The Company agrees to advance to Employee the
dollar amount equal to all of Employee's reasonable relocation costs. Receipts
must be kept without exception for all costs incurred regardless of party making
payment. Original receipts must be submitted to bebe Corporate Payroll
Department within sixty (60) days from the day in which cost was incurred.
8. TERMINATION OF EMPLOYEE'S EMPLOYMENT.
8.1. TERMINATION FOR CAUSE BY COMPANY. Although Company anticipates a
mutually rewarding employment relationship with Employee, Company may terminate
Employee's employment immediately at any time for Cause. For purposes of this
Agreement, "Cause" is defined as: (a) acts or omissions constituting gross
negligence, recklessness or willful misconduct on the part of Employee with
respect to Employee's obligations or otherwise relating to the business of
Company; (b) Employee's material breach of this Agreement or Company's Unfair
Competition and Confidentiality Agreement; (c) Employee's conviction or entry of
a plea of nolo contendere for fraud, misappropriation or embezzlement, or any
felony or crime of moral turpitude; (d) Employee's failure to perform the
essential functions of Employee's position, with or without reasonable
accommodation, due to a mental or physical disability; and (e) Employee's death.
In the event Employee's employment is terminated in accordance with this
subsection 8.1, Employee shall be entitled to receive only the Base Salary then
in effect, prorated to the date of termination. All other Company obligations to
Employee pursuant to this Agreement will become automatically terminated and
completely extinguished. Employee will not be entitled to receive the Severance
Payment described in subsection 8.2 below.
8.2. TERMINATION WITHOUT CAUSE BY COMPANY/SEVERANCE. Company may
terminate Employee's employment under this Agreement without Cause at any time
on thirty (30) days' advance written notice to Employee. In the event of such
termination, Employee will receive the Base Salary then in effect and Bonus,
prorated to the end of the Initial Term ("Severance Payment"), payable in one
lump sum, provided that Employee: (a) complies with all surviving provisions of
this Agreement as specified in subsection 15.8 below; and (b) executes a full
general release, releasing all claims, known or unknown, that Employee may have
against Company arising out of or any way related to Employee's employment or
termination of
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employment with Company. All other Company obligations to Employee will be
automatically terminated and completely extinguished, and Employee's advance for
Housing and Relocation Expenses as provided in subsection 7 above shall be
forgiven.
8.3. VOLUNTARY RESIGNATION BY EMPLOYEE FOR GOOD REASON/SEVERANCE.
Employee may voluntarily resign Employee's position with Company for Good
Reason, at any time on thirty (30) days' advance written notice. In the event of
Employee's resignation for Good Reason, Employee will be entitled to receive the
Base Salary then in effect, prorated to the date of termination, and the
Severance Payment described in subsection 8.2 above, provided Employee complies
with all of the conditions in subsection 8.2 above. All other Company
obligations to Employee pursuant to this Agreement will become automatically
terminated and completely extinguished. Employee will be deemed to have resigned
for Good Reason in the following circumstances: (a) Company's material breach of
this Agreement or (b) Company relocates Employee's principal place of work to a
location more than sixty (60) miles from the location specified in subsection
2.3, without Employee's prior written approval.
8.4. VOLUNTARY RESIGNATION BY EMPLOYEE WITHOUT GOOD REASON. Employee
may voluntarily resign Employee's position with Company without Good Reason, at
any time during the Initial Term, on thirty (30) days' advance written notice,
however, in the event of Employee's resignation without Good Reason, Employee
will be entitled to receive only the Base Salary for the thirty-day notice
period and no other amount for the remaining months of the term. All other
Company obligations to Employee pursuant to this Agreement will become
automatically terminated and completely extinguished. In addition, Employee will
not be entitled to receive the Severance Payment described in subsection 8.2
above and must repay Company for Housing and Relocation Expenses as provided in
subsection 7 above.
9. TERMINATION UPON A CHANGE IN CONTROL.
9.1. SEVERANCE PAYMENT. If Employee's employment is terminated by
Company during the Initial Term due to a Change in Control (as that term is
defined below), other than for Cause (as defined in subsection 8.1 above),
Employee shall be entitled to receive the Severance Payment described in
subsection 8.2 above, provided Employee complies with all the conditions
described in subsection 8.2 above.
9.2. 280G. If, due to the benefits provided under subsection 9.1 above,
Employee is subject to any excise tax due to characterization of any amounts
payable under subsection 9.1 as excess parachute payments pursuant to Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), Employee may
elect, in Employee's sole discretion, to reduce the amounts payable under
subsection 9.1 in order to avoid any "excess parachute payment" under Section
280G(b)(1) of the Code.
9.3. CHANGE OF CONTROL. A Change of Control is defined as any one of
the following occurrences:
a. Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")), other
than a trustee or other fiduciary holding securities of Company under an
employee benefit plan of Company, becomes the "beneficial owner" (as defined
in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of
the securities of Company representing more than 50% of (A) the outstanding
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shares of common stock of Company or (B) the combined voting power of the
Company's then-outstanding securities; or
b. the sale or disposition of all or substantially all of
Company's assets (or any transaction having similar effect is consummated); or
c. Company is party to a merger or consolidation that results
in the holders of voting securities of Company outstanding immediately prior
thereto failing to continue to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) more than
50% of the combined voting power of the voting securities of Company or such
surviving entity outstanding immediately after such merger or consolidation;
or
d. the dissolution or liquidation of Company.
10. NO CONFLICT OF INTEREST. During the term of Employee's employment
with Company and during any period Employee is receiving payments from
Company, Employee must not engage in any work, paid or unpaid, that creates
an actual or potential conflict of interest with Company. Such work shall
include, but is not limited to, directly or indirectly competing with Company
in any way, or acting as an officer, director, employee, consultant,
stockholder, volunteer, lender, or agent of any business enterprise of the
same nature as, or which is in direct competition with, the business in which
Company is now engaged or in which Company becomes engaged during the term of
Employee's employment with Company, as may be determined by the Board of
Directors in its sole discretion. If the Board of Directors believes such a
conflict exists during the term of this Agreement, the Board of Directors may
ask Employee to choose to discontinue the other work or resign employment
with Company. If the Board of Directors believes such a conflict exists
during any period in which Employee is receiving payments pursuant to this
Agreement, the Board of Directors may ask Employee to choose to discontinue
the other work or forfeit the remaining severance payments. In addition,
Employee agrees not to refer any vendor or potential vendor of Company to
competitors of Company, without obtaining Company's prior written consent,
during the term of Employee's employment and during any period in which
Employee is receiving payments from Company pursuant to this Agreement.
11. UNFAIR COMPETITION AND CONFIDENTIALITY RIGHTS. Employee agrees to
read, sign and abide by Company's Unfair Competition and Confidentiality
Agreement, which is provided with this Agreement and incorporated herein by
reference.
12. NON-SOLICITATION.
12.1. NONSOLICITATION OF CUSTOMERS, VENDORS, SUPPLIERS OR
MANUFACTURERS. Employee acknowledges that non-public information about Company's
customers, vendors, suppliers and manufacturers is confidential and constitutes
trade secrets. Accordingly, Employee agrees that during the term of this
Agreement and for a period of one (1) year after the termination of this
Agreement, Employee will not, either directly or indirectly, separately or in
association with others, interfere with, impair, disrupt or damage Company's
relationship with any of its customers, vendors, suppliers and manufacturers or
prospective customers, vendors, suppliers and manufacturers by soliciting or
encouraging others to solicit any of them for the purpose of diverting or taking
away business from Company.
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12.2. NONSOLICITATION OF COMPANY'S EMPLOYEES. Employee agrees that
during the term of this Agreement and for a period of one (1) year after the
termination of this Agreement, Employee will not, either directly or indirectly,
separately or in association with others, interfere with, impair, disrupt or
damage Company's business by soliciting, encouraging or attempting to hire, or
hiring any of Company's employees or causing others to solicit, encourage or
hire any of Company's employees to discontinue their employment with Company.
13. INJUNCTIVE RELIEF. Employee acknowledges that Employee's breach of
the covenants contained in sections 10 through 12 (collectively "Covenants")
would cause irreparable injury to Company and agrees that in the event of any
such breach, Company shall be entitled to seek temporary, preliminary and
permanent injunctive relief without the necessity of proving actual damages
or posting any bond or other security.
14. AGREEMENT TO ARBITRATE. To the fullest extent permitted by law,
Employee and Company agree to arbitrate any controversy, claim or dispute
between them arising out of or in any way related to this Agreement, the
employment relationship between Company and Employee and any disputes upon
termination of employment, including but not limited to breach of contract,
tort, discrimination, harassment, wrongful termination, demotion, discipline,
failure to accommodate, family and medical leave, compensation or benefits
claims, constitutional claims; any injury to your physical, mental, or
economic interests, and any claims for violation of any local, state or
federal law, statute, regulation or ordinance, contract or common law. Both
parties agree that such disputes will be decided by a neutral arbitrator
rather than a court or jury, and that both you and bebe stores, inc. waive
our rights to a court or jury trial. Both parties understand that the
arbitrator's decision will be final and exclusive, and cannot be appealed.
Disputes that are not covered by this Agreement include claims for
unemployment insurance or workers' compensation, claims under the National
Labor Relations Act or those heard exclusively by the Labor Commissioner.
This Agreement does not interfere with either party's right to pursue a
provisional remedy in court pursuant to California Code of Civil Procedure,
section 1281.8 or Company's right to obtain injunctive relief pursuant to
section 13.
14.1. SCOPE OF COMPANY. For the purpose of this agreement to arbitrate,
references to "Company" include all parent, subsidiary or related entities and
their employees, supervisors, officers, directors, agents, pension or benefit
plans, pension or benefit plan sponsors, fiduciaries, administrators, affiliates
and all successors and assigns of any of them, and this agreement shall apply to
them to the extent Employee's claims arise out of or relate to their actions on
behalf of Company.
14.2. CONSIDERATION. The mutual promise by Company and Employee to
arbitrate any and all disputes between them (except for those referenced above)
rather than litigate them before the courts or other bodies, provides the
consideration for this agreement to arbitrate.
14.3. INITIATION OF ARBITRATION. Either party may exercise the right to
arbitrate by providing the other party with written notice of any and all claims
forming the basis of such right in sufficient detail to inform the other party
of the substance of such claims. In no event shall the request for arbitration
be made after the date when institution of legal or equitable proceedings based
on such claims would be barred by the applicable statute of limitations.
14.4. ARBITRATION PROCEDURE. The arbitration will be conducted in San
Francisco, California by a single neutral arbitrator and in accordance with the
then current rules for
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resolution of employment disputes of the American Arbitration Association
("AAA"). The arbitration shall be conducted in accordance with the rules set
forth in the Code of Civil Procedure, section 1280 and following (and any
successor statute), and in particular, the parties may engage in discovery
pursuant to C.C.P. 1283.05. They have the right to be represented by an attorney
or representative of their choosing. The arbitrator shall issue the award in
writing and therein state the essential findings and conclusions on which the
award is based. The arbitrator shall have the authority to award all remedies
that would otherwise be available under applicable law in court, but no more
than that, with respect to the claims in question. In addition, bebe agrees to
pay the arbitrator's fees and expenses, as well as the cost, if any, of the room
where the arbitration hearing is conducted. However, each party shall pay their
own attorneys' fees, except the arbitrator shall have the authority to award
reasonable attorneys' fees and costs to the prevailing party where allowed by
statute. The parties agree to abide by and perform any award rendered by the
arbitrator. Judgment on the award may be entered in any court having
jurisdiction thereof.
14.5. ADDITIONAL TERMS. Other terms of this Arbitration Agreement are
in Company's Arbitration Manual. These terms are incorporated into this
Agreement by reference as if they were fully repeated here. Company will give
Employee a copy of these terms upon request.
15. GENERAL PROVISIONS.
15.1. SUCCESSORS AND ASSIGNS. The rights and obligations of Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of Company. Employee shall not be entitled to assign any
of Employee's rights or obligations under this Agreement.
15.2. WAIVER. Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
or prevent that party thereafter from enforcing each and every other provision
of this Agreement.
15.3. ATTORNEYS' FEES. Each side will bear its own attorneys' fees in
any dispute unless a statutory section at issue, if any, authorizes the award of
attorneys' fees to the prevailing party.
15.4. SEVERABILITY. In the event any provision of this Agreement is
found to be unenforceable by an arbitrator or court of competent jurisdiction,
such provision shall be deemed modified to the extent necessary to allow
enforceability of the provision as so limited, it being intended that the
parties shall receive the benefit contemplated herein to the fullest extent
permitted by law. If a deemed modification is not satisfactory in the judgment
of such arbitrator or court, the unenforceable provision shall be deemed
deleted, and the validity and enforceability of the remaining provisions shall
not be affected thereby.
15.5. INTERPRETATION; CONSTRUCTION. The headings set forth in this
Agreement are for convenience only and shall not be used in interpreting this
Agreement. This Agreement has been drafted by legal counsel representing
Company, but Employee has participated in the negotiation of its terms.
Furthermore, Employee acknowledges that Employee has had an opportunity to
review and revise the Agreement and have it reviewed by legal counsel, if
desired, and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement.
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15.6. GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the laws of the United States and the State of California.
Each party consents to the jurisdiction and venue of the state or federal courts
in San Mateo County, California, if applicable, in any action, suit, or
proceeding arising out of or relating to this Agreement.
15.7. NOTICES. Any notice required or permitted by this Agreement shall
be in writing and shall be delivered as follows with notice deemed given as
indicated: (a) by personal delivery when delivered personally; (b) by overnight
courier upon written verification of receipt; (c) by telecopy or facsimile
transmission upon acknowledgment of receipt of electronic transmission; or (d)
by certified or registered mail, return receipt requested, upon verification of
receipt. Notice shall be sent to the addresses set forth below, or such other
address as either party may specify in writing. Additionally, any notice sent to
Employee shall be sent to the following address:
James Clark, Esq.
Gibson, Dunn and Crutcher LLP
2029 Century Park East
Century City, California 90067-3026
Telephone: (310) 552-8521
Facsimile: (310) 552-7014
15.8. SURVIVAL. Sections 7.1 ("Relocation Expenses"), 9 ("No Conflict
of Interest"), 11 ("Confidentiality and Proprietary Rights"), 12
(Nonsolicitation), 13 ("Injunctive Relief"), 14 ("Agreement to Arbitrate"), 15
("General Provisions") and 16 ("Entire Agreement") of this Agreement shall
survive Employee's employment by Company.
16. ENTIRE AGREEMENT. This Agreement, including the Company Employee
Unfair Competition and Confidentiality Agreement, the Arbitration Manual, the
Company's 1997 Stock Plan, as amended, and related option documents described
in subsection 4.2 of this Agreement, which are incorporated herein by
reference, constitutes the entire agreement between the parties relating to
this subject matter and supersedes all prior or simultaneous representations,
discussions, negotiations, and agreements, whether written or oral. This
Agreement may be amended or modified only with the written consent of
Employee and the Chief Executive Officer of the Company. No oral waiver,
amendment or modification will be effective under any circumstances
whatsoever.
THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES
HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.
BEBE STORES, INC. JOHN PARROS
By: /s/ Blair Lambert /s/ John Parros
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BLAIR LAMBERT 5 BRANDYWINE COURT
CHIEF FINANCIAL OFFICER RANDOLPH, NEW JERSEY 07869
380 VALLEY DRIVE
BRISBANE, CALIFORNIA 94005
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