CHKE Cherokee Inc. (MM)

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A base salary of $650,000 per year in cash;

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Eligibility to receive a discretionary annual bonus award of up to $300,000 for performance in each fiscal year to be determined at the discretion of the Compensation Committee of the Company’s Board of Directors;

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Eligibility to receive an annual performance-based cash bonus, which will equal an amount determined based on the level of achievement of the Company’s EBITDA (defined as net income before subtracting interest expense, income tax provision, depreciation and amortization, and inclusive of any amounts payable in such performance-based cash bonus) for each fiscal year relative to the EBTIDA target included in the budget approved by the Company’s Board of Directors for such fiscal year (and taking into account any adjustments to the budgeted EBITDA approved by the Company’s Board of Directors resulting from any business acquisitions or dispositions consummated during the relevant fiscal year or any other specified unusual or non-recurring transactions or events, but in no event less than $10,000,000 of EBITDA), with Mr. Stupp to earn a target bonus of $200,000 at 100% achievement, a maximum bonus of $350,000 at 120% achievement, and a minimum bonus of $50,000 at 80% achievement (with linear interpolation between 80% and 120% achievement);

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An option to purchase 100,000 shares of the Company’s Common Stock granted pursuant to the terms of the Cherokee Inc. Amended and Restated 2013 Stock Incentive Plan (the “Plan”) at a purchase price equal to Fair market Value (as such term is defined in the Plan), such option to vest in equal annual installments over three years, and subject to accelerated vesting if certain corporate transactions occur;

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Eligibility to receive a cash bonus if the Company undergoes a change in control and the per-share price received by holders of the Company’s Common Stock from such change-in-control transaction exceeds $1.00, such bonus being equal to $100,000 multiplied by the per share price received in excess of $1.00; and

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If Mr. Stupp is terminated other than for cause, death or disability, if Mr. Stupp’s employment contract is not renewed, or if Mr. Stupp terminates his employment for good reason, then, subject to Mr. Stupp’s execution and non-revocation of a release in favor of the company, he will be entitled to receive severance compensation from the Company of (i) six months of his then current base salary, or twelve months of his then current base salary under certain circumstances subsequent to a change in control of the Company, (ii) a cash payment in an amount equal to any earned but unpaid bonuses; (iii) an additional bonus equal to the average performance bonuses for the prior two completed fiscal years, to be paid within 60 days of termination of employment; (iv) cash payments in an amount equal to the cost of Mr. Stupp’s health care coverage under COBRA for the duration of his severance payment period, and (v) full vesting of all equity awards held by Mr. Stupp as of his termination.