bebe stores, inc. (NASDAQ:BEBE) Files An 8-K Entry into a Material Definitive Agreement

Item1.01

Sale of Distribution Center

On May22, 2017, bebe stores, inc., a California corporation (the
Company), entered into a Standard Offer, Agreement and
Escrow Instructions for Purchase of Real Estate with Tulloch
Corporation (the Distribution Center Agreement) to sell
its distribution center in Benicia California for a purchase
price of approximately $21.8 million. The Company retains a right
to use 72,000 square feet of the distribution center through
December 31, 2017, with the ability to terminate this right with
30 days written notice. The sale is expected to close by the end
of July 2017, subject to customary closing conditions.

The foregoing description of the Distribution Center Agreement
does not purport to be complete and is qualified in its entirety
by reference to the Distribution Center Agreement, a copy of
which will be filed as an exhibit to the Companys Annual Report
on Form 10-K for the fiscal year ending July1, 2017.

Asset Purchase Agreement

On May30, 2017, the Company and GBG USA Inc., a Delaware
corporation (GBG), entered into an Asset Purchase
Agreement (the Asset Purchase Agreement) to which the
Company agreed to sell and transfer certain inventory and
purchase orders related to the Companys website and international
wholesale business (collectively, the Transferred Assets).
GBG paid the Company $5.0 million as consideration for the
Transferred Assets. The Asset Purchase Agreement contains
customary representations, warranties and covenants of the
Company and GBG and indemnity obligations of each party with
respect to the foregoing.

The foregoing description of the Asset Purchase Agreement does
not purport to be complete and is subject to, and qualified in
its entirety by, the full text of the Asset Purchase Agreement, a
copy of which is filed as Exhibit 10.2 hereto and is hereby
incorporated into this report by reference.

On May30, 2017, the Company and GBG entered into a Transition
Services Agreement (the Transition Services Agreement) to
which the Company agreed to provide certain transitional services
in connection with the Transferred Assets through September30,
2017, with an option for a thirty day extension. GBG agreed to
pay the Company a monthly fee of approximately $3.0million
subject to certain adjustments during the term of the services.

The foregoing description of the Transition Services Agreement
does not purport to be complete and is subject to, and qualified
in its entirety by, the full text of the Transition Services
Agreement, a copy of which is filed as Exhibit 10.3 hereto and is
hereby incorporated into this report by reference.

JV License Termination and Assignments

On May30, 2017, the Company entered into a Consensual Termination
of License Agreement, by and among BB Brand Holdings LLC (the
JV), bebe studio, Inc. and the Company (the License
Agreement Termination), to which the parties terminated the
License Agreement, dated as of June8, 2016. to the License
Agreement Termination, the Company transferred to the JV the
website domains www.bebe.com, www.2bstores.com and
www.bebeoutlets.com (the URLs), along with the Companys
social media accounts (the Media Accounts) and the
Companys agreements with certain of its international
distributors (the Distribution Agreements).

The foregoing description of the License Agreement Termination
does not purport to be complete and is subject to, and qualified
in its entirety by, the full text of the License Agreement
Termination, a copy of which is filed as Exhibit 10.4 hereto and
is hereby incorporated into this report by reference.

In addition, to facilitate the transactions with GBG, on May30,
2017, the Company also transferred to the JV the Companys designs
relating to the bebe brand and customer information collected
from visitors of the bebe retail stores and bebe-branded websites
(collectively, with the assignments of the URLs, Distribution
Agreements and Media Accounts, the Assignments).

Loan Agreement

On May31, 2017, the Company entered into a Loan and Security
Agreement (the Loan Agreement), with the lenders from time
to time party thereto (the Lenders) and GACP Finance Co.,
LLC, a Delaware limited liability company (GACP), as
administrative agent for the Lenders. to the Loan Agreement, the
Company borrowed $35.0 million in term loans.

The Company will use the loan proceeds (a)to fund payments to
landlords of retail stores operated by the Company resulting from
the closure of such stores, (b)to fund the closing costs in
connection with the Loan Agreement, and (c)for general working
capital purposes. The term loans under the Loan Agreement mature
on May30, 2018. Interest payments on the term loans are due on
the last day of each month, beginning on June30, 2017. Interest
on the term loans accrues at an annual fixed rate of 9%. The
Company may prepay all or a portion of the outstanding principal
and accrued unpaid interest under the Loan Agreement at any time
upon prior notice to the Lenders, without penalty or prepayment
fee. The Company is required to prepay all or a portion of the
outstanding principal and accrued unpaid interest under the Loan
Agreement with: (1)75% of the net sale proceeds from bebe studio
realty, LLCs sale of its design center in Los Angeles or its
warehouse in Benicia (whichever sale is first); (2)50% of the net
sale proceeds from bebe studio realty, LLCs sale of its remaining
real property; (3)50% of all proceeds of any dispositions (other
than sales of inventory and other permitted dispositions) in
excess of $250,000 per year; and (4)50% of all proceeds of any
cash for any extraordinary receipts (i.e., insurance proceeds,
tax refunds, condemnation proceeds, etc.) in excess of $250,000
per year.

As security for its obligations under the Loan Agreement, the
Company granted a lien on substantially all of its assets to GACP
for the ratable benefit of the Lenders. In addition, all direct
and indirect wholly-owned subsidiaries of the Company entered
into a Guaranty (the Guaranty), in favor of GACP, to which
such subsidiaries guaranteed the obligations of the Company under
the Loan Agreement, and granted as security for their guaranty
obligations, a lien on certain of their assets, including, among
other things, equity interests, cash and real property
(specifically, bebe studio realty, LLC pledged all of its
interest in certain of its owned real property (a design center,
a warehouse and two condominiums) for the benefit of GACP).

The Loan Agreement also contains customary affirmative and
negative covenants for a credit facility of this size and type,
including covenants that limit or restrict the Companys ability
to, among other things, incur indebtedness, grant liens, merge or
consolidate, dispose of assets, make investments, make
acquisitions, enter into transactions with affiliates, pay
dividends or make distributions, or repurchase stock, in each
case subject to customary exceptions. In addition, the Company
shall not have less than 75% of certain cash set forth under an
agreed budget.

The Loan Agreement includes customary events of default that
include, among other things, non-payment, inaccuracy of
representations and warranties, covenant breaches, events that
result in a material adverse effect (as defined in the Loan
Agreement), cross default to material indebtedness or material
agreements, bankruptcy and insolvency, material judgments and a
change of control (as defined in the Loan Agreement). The
occurrence and continuance of an event of default could result in
the acceleration of the obligations under the Loan Agreement.
Under certain circumstances, a default interest rate of 11.00%per
annum will apply at the election of the Lenders on all
outstanding obligations during the occurrence and continuance of
an event of default under the Loan Agreement.

The foregoing descriptions of the Loan Agreement and Guaranty do
not purport to be complete and are qualified in its entirety by
reference to the Loan Agreement and Guaranty, copies of which are
filed as Exhibit 10.5 and 10.6 hereto, respectively, and each is
hereby incorporated into this report by reference.

The information set forth in Item1.01 above with respect to the
License Agreement Termination and Assignments is incorporated
herein by reference.

The information set forth in Item1.01 above with respect to the
Loan Agreement and the Guaranty are incorporated herein by
reference.

As of May27, 2017, the Company had effectively ended all retail
operations. Going forward, the Company anticipates having no
retail operations, and its sole function will be the collection
of distributions from the JV.

Additionally, as of June 5, 2017, the Company has reached
agreement with substantially all of its retail store landlords to
terminate the existing leases for its retail stores for an
aggregate payment of approximately $65.0 million. The Company has
closed all of its retail stores as of May31, 2017 and all retail
store employees have been terminated as of such date.

About bebe stores, inc. (NASDAQ:BEBE)

bebe stores, inc. designs, develops and produces a range of contemporary women’s apparel and accessories. The Company’s product offering includes a range of separates, tops, dresses, active wear and accessories for a range of occasions. It designs and develops its merchandise in-house, which is manufactured to its specifications and it also sources directly from third-party manufacturers. The Company also offers accessories, which include jewelry, optical, fragrance, shoes and handbags. The Company operates stores in the United States, Puerto Rico and Canada. In addition, it has an online store at www.bebe.com that ships to customers in the United States, Canada, Puerto Rico, the United States Protectorates and internationally via its third-party providers, International Checkout and Shoprunner. It has international stores operated by licensees in South East Asia, the United Arab Emirates, Russia, South America, Turkey and other territories.