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Exhibit 99.1



THIS INDEMNIFICATION AGREEMENT (the “ Agreement ”) is made and entered into this 6 th day of October, 2011, between Bernard Chaus, Inc. , a New York corporation (the “ Company ”), and Robert Flug (“ Indemnitee ”).


WHEREAS, Indemnitee, as a member of the Company’s board of directors (the “ Board of Directors ”), performs valuable services for the Company;


WHEREAS, the Company and Indemnitee recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, controlling persons, agents and fiduciaries to expensive litigation risks;


WHEREAS, Indemnitee does not regard the current protection available for the Company’s directors as adequate under the present circumstances, and Indemnitee may not be willing to serve or continue to serve in such capacity without additional protection;


WHEREAS, the Bylaws of the Company permit the company to indemnify and advance expenses to the Company’s directors;


WHEREAS, the Company (i) desires to attract and retain the involvement of highly qualified individuals, such as Indemnitee, to serve the Company and, in part, in order to induce Indemnitee to be involved with the Company, and (ii) wishes to provide for the indemnification and advancing of expenses to Indemnitee to the maximum extent permitted by law; and


WHEREAS, in view of the considerations set forth above, the Company desires that Indemnitee be indemnified by the Company as set forth herein.


NOW, THEREFORE , in consideration of Indemnitee’s service to the Company, the parties hereto agree as follows:


1.     Indemnity of Indemnitee.   The Company hereby agrees to indemnify Indemnitee against all actions or proceedings (including one by or in the right of the Company to procure a judgment in its favor), whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which Indemnitee served in any capacity at the request of the Company, by reason of the fact that Indemnitee, or Indemnitee’s testator or intestate, was a director of the Company, or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity (each a “ Claim ”) to the fullest extent permitted by applicable law and by the Company’s Certificate of Incorporation and Bylaws. In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a New York corporation to indemnify Indemnitee, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits afforded by such change. In the event of any change in any applicable law, statute or rule which narrows the right of a New York corporation to indemnify Indemnitee, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder except as set forth in Section 9 hereof.











2.     Period of Indemnity.      The indemnification and expense payment obligations of the Company contained herein shall continue for so long as Indemnitee may be or become subject to any threatened or filed Claim.


3.     Indemnification Rights.


(a)     Indemnification of Expenses .  The Company shall indemnify and hold harmless Indemnitee, together with Indemnitee’s heirs and legal representatives, to the fullest extent permitted by law against any and all reasonable expenses (including reasonable attorneys’ fees actually incurred as a result of such Claim) and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in, any such action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation, judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) of such Claim and any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement (collectively, “ Expenses ”), including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, incurred by Indemnitee or arising in part in connection therewith;  “Expenses” shall include any and all losses, claims, damages, expenses and liabilities, joint or several (including any investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any action, suit, proceeding or any claim asserted) under the Securities Act of 1933 (the “ Securities Act ”), the Securities Exchange Act of 1934 (the “ Exchange Act ”) or other federal or state statutory law or regulation, at common law or otherwise, which relate directly or indirectly to the registration, purchase, sale or ownership of any securities of the Company or to any fiduciary obligation owed with respect thereto.  Any payment of Expenses under this Section 3(a) shall be made by the Company as soon as practicable but in any event no later than 25 days after written demand by Indemnitee therefor is presented to the Company.  For purposes of this Agreement, references to “ fines ” shall include any excise taxes assessed on Indemnitee with respect to any employee benefit plan.


(b)     Reviewing Party .  In the event that Indemnitee has not been successful, on the merits or otherwise, in the defense of a civil or criminal action or proceeding, the obligations of the Company under this Section 3 shall be subject to the condition that the Board of Directors or shareholders of the Company authorize such payment in conformity with the procedural provisions of Section 723(b) of the New York Business Corporation Law (the “ NYBCL ”).  It is understood and agreed by the Company that the Board of Directors will, if necessary or deemed desirable, appoint an Independent Legal Counsel (as defined in Section 10(c) hereof) within thirty days after a request for such payment is submitted by Indemnitee.  If there has been no determination by the Reviewing Party (as defined in Section 10(d) hereof) or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, including the legal or factual bases therefor, and the Company hereby consents to service of process and to appear in any such proceeding.  Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee.










(c)     Contribution .  If the indemnification provided for in Section 3(a) above for any reason is held by a court of competent jurisdiction to be unavailable to Indemnitee in respect of any losses, claims, damages, expenses or liabilities referred to therein, then the Company, in lieu of indemnifying Indemnitee thereunder, shall contribute to the amount paid or payable by Indemnitee as a result of such losses, claims, damages, expenses or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and Indemnitee as a consequence of the matter giving rise to such losses, claims, damages, expenses or liabilities, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and Indemnitee in connection with the action or inaction which resulted in such losses, claims, damages, expenses or liabilities, as well as any other relevant equitable conside

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