Exhibit 99.1
INDEMNIFICATION
AGREEMENT
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