Resignation And Non-competition Agreement

RESIGNATION AND NON-COMPETITION AGREEMENT


Resignation and Non-Competition Agreement (this "Agreement"), dated this 4th day of January, 2001, by and between Bernard Chaus, Inc. (the "Company"), a New York corporation and Ivy Karkut (the "Executive").


W I T N E S S E T H
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WHEREAS, the Executive serves as President of the Company pursuant to the terms of an Employment Agreement (the "Employment Agreement") dated November 5, 1999;


WHEREAS, the Executive serves as a member of the Company's board of directors (the "Board");


WHEREAS, the Executive intends to resign as an employee under the Employment Agreement and as a member of the Board, and the Company desires to accept such resignation upon the terms and conditions provided in this Agreement; and


WHEREAS, the Executive and the Company desire to enter into this resignation and non-competition agreement.


NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Company and the Executive hereby agree as follows:


1. RESIGNATION FROM EMPLOYMENT; RESIGNATION FROM THE BOARD; TERMINATION OF EMPLOYMENT AGREEMENT. Effective on January 10, 2001 (the "Effective Date"), the Executive hereby resigns from her position as President and shall cease to be an employee of the Company. Executive resigns from her position as a member of the Board effective on the date hereof. The Employment Agreement is hereby terminated, except that: (i) the paragraphs in the Employment Agreement opposite the captions "Non-Competition" and "Non-Solicitation Period" shall survive for a period of twelve (12) months following the Effective Date and (ii) the paragraphs in the Employment Agreement opposite the captions "Confidentiality" and "Remedies" shall survive indefinitely. The termination of the Employment Agreement shall be deemed by mutual consent. From and after the Effective Date, the rights and obligations of the parties hereto shall be governed by this Agreement.


2. NON-COMPETITION PAYMENTS. Subject to Section 5 hereof, the Company shall make non-competition payments to the Executive as follows: (i) the Company shall pay to the Executive for a period of twelve (12) months following the Effective Date: (x) the Executive's base salary of $900,000 per year (as set forth in the Employment Agreement), payable in twelve (12) equal monthly installments and (y) the Executive's automobile allowance (as set forth in the Employment Agreement), and (ii) the Executive's medical insurance currently in effect


(including dental and eye care) and life insurance and long term disability coverage currently in effect, shall remain effective for a period of twelve (12) months following the Effective Date.


3. COBRA. Pursuant to the requirements of COBRA, the Executive and the Executive's covered dependents, if any, are eligible to continue medical insurance coverage for eighteen (18) months from the date of the Executive's termination of employment with the Company inclusive of the twelve (12) month period referred to in Section 2(ii) above. The balance of the eighteen (18) month period shall be covered at the Executive's expense, subject to her provision of notice that she elects to continue such coverage.


4. STOCK OPTIONS. Options to purchase 168,750 shares of the Company's common stock have already vested pursuant to the Employment Agreement and Options to purchase an additional 168,750 shares of the Company's common stock shall vest on the Effective Date (collectively, the "Vested Options"). The Executive may exercise the Vested Options at the exercise price set forth in the Employment Agreement during the period of thirty (30) days following the Effective Date. Any of the Vested Options not exercised during such 30-day period and the remaining 337,500 Options originally granted to the Executive shall be forfeited.


5. TERMINATION OF THE NON-COMPETITION PAYMENTS. The non-competition payments set forth in Section 2 hereof shall terminate immediately upon the Executive's acceptance of a position as employee (including self-employment) or consultant with another entity, and the Executive hereby agrees to provide immediate notice to the Company of her acceptance of any such position.


6. GENERAL RELEASE AND WAIVER.


a. The Executive hereby agrees to release, remise, acquit and discharge the Company and its partners, agents, employees, consultants, independent contractors, attorneys, advisers, successors and assigns, ...