Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made and entered into as of the
date set forth on the signature page hereto, by and between True Religion
Apparel, Inc., a Delaware corporation (“TRA”), and Mike Egeck, an individual
(“Executive”).

 

RECITALS

 

TRA and Executive desire to enter into an employment agreement setting forth the
terms and conditions of Executive’s employment with TRA.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing recitals and the terms,
covenants and conditions contained herein, TRA and Executive agree as follows:

 

1.             EMPLOYMENT

 

As of June 4, 2010, the “Effective Date” of this Agreement, TRA employs
Executive, and Executive accepts such employment, as President of TRA, on the
terms and subject to the conditions set forth herein.  Notwithstanding the
foregoing, the effectiveness of this Agreement shall be conditioned upon
Executive reporting to work as a full-time employee of TRA on or before June 4,
2010, after first completing all pre-employment administrative procedures in
accordance with TRA’s employment policies applicable to executive-level
employees.  If for any reason Executive does not report to work as a full-time
employee of TRA as of the Effective Date, this Agreement will be null and void
and without effect.

 

2.             CAPACITY AND DUTIES

 

(a)           Executive shall serve TRA as its President, and shall report
directly to the Chief Executive Officer of TRA (the “CEO”).

 

(b)           Subject to the direction and control of the CEO and the Board of
Directors of TRA (the “Board”), Executive shall perform such duties as are usual
and customary for such position and such other duties as the Board or the CEO
shall from time to time reasonably assign to Executive.  Initially, Executive
shall have responsibility for international, retail and e-commerce, sales,
marketing and operations and the employees managing these operations will report
to Executive or an executive designated by him; provided, that, at the direction
of the CEO, one or more of such persons may have dual reporting obligations to
Executive and the CEO and such dual reporting will not constitute a breach of
this Agreement.

 

(c)           At TRA’s request, Executive shall serve TRA and/or its
subsidiaries and affiliates in other offices and capacities in addition to the
foregoing.  In the event that Executive, during the Employment Period (as
defined herein), serves in any one or more of such additional capacities,
Executive’s compensation shall not be increased beyond that specified in Section
4 of this Agreement.  In addition, in the event Executive’s service in one or
more of such additional capacities is subsequently terminated, Executive’s
compensation, as specified in Section 4 of this Agreement, shall not be
diminished or reduced in any manner as a result of such termination for so long
as Executive otherwise remains employed under the terms of this Agreement.

 

(d)           During the Employment Period Executive agrees to devote
substantially all of Executive’s business time, energy, skill and best efforts
to the performance of Executive’s duties hereunder in a manner that will
faithfully and diligently further the business and interests of TRA. 
Notwithstanding the foregoing, during the Employment Period it shall not be a
violation of this Agreement for Executive to (i) serve on civic or charitable
boards or committees consistent with TRA’s conflicts of interests policies and
corporate governance guidelines in effect from time to time, (ii) deliver
lectures or fulfill speaking engagements or (iii) manage Executive’s personal
investments, so long as such activities do not interfere with the performance of
Executive’s responsibilities as an executive officer of TRA.

 

(e)           [Intentionally Omitted]

 

(f)            Executive agrees that Executive will not take personal advantage
of any business opportunity that arises during Executive’s employment by TRA
which may be of benefit to TRA unless all material facts regarding such
opportunity are promptly reported by Executive to the Board for consideration by
TRA and the disinterested members of the Board determine to reject the

 

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opportunity and to approve Executive’s participation therein.

 

(g)           The terms of this Section 2 shall not prevent Executive from
investing or otherwise managing Executive’s assets in such form or manner as
Executive chooses and spending such time, whether or not during business hours,
as Executive deems necessary to manage Executive’s investments, so long as
Executive is able to fulfill Executive’s duties pursuant to this Section 2.

 

(h)           Except for routine travel incident to the business of TRA,
Executive shall perform Executive’s duties and obligations under this Agreement
principally from an office provided by TRA in Vernon, California or the
surrounding area.

 

3.             TERM

 

Subject to the provisions for earlier termination hereinafter provided,
Executive’s employment hereunder shall be for a term (the “Employment Period”)
ending on the third anniversary of the Effective Date (the “Initial Termination
Date” ); provided, however, that this Agreement shall be automatically extended
for one additional year on the Initial Termination Date and on each subsequent
anniversary of the Initial Termination Date, unless either Executive or TRA
elects not to so extend the term of this Agreement by notifying the other party,
in writing, of such election not less than ninety (90) days prior to the last
day of the term as then in effect.  For the avoidance of doubt, non-renewal of
this Agreement pursuant to the provisions contained in the preceding sentence
shall not be deemed to give rise to any payment to Executive as might be the
case in connection with a termination of this Agreement.

 

4.             COMPENSATION

 

(a)           Base Salary.

 

(i)            During the Employment Period, Executive shall receive a base
salary (the “Base Salary”) of $650,000 per annum, payable in accordance with
TRA’s normal payroll procedures.  During the Employment Period, the Base Salary
shall be reviewed at least annually for possible increase (but not decrease) in
TRA’s sole discretion, as determined by the Board’s compensation committee (the
“Compensation Committee”) or the full Board; provided, however, that Executive
shall be entitled to any annual cost-of-living increases in Base Salary that are
generally granted to TRA’s Named Executive Officers, as such term is defined in
TRA’s proxy for its annual meeting of stockholders (“Senior Executives”).

 

(ii)           Any increase in Base Salary shall not serve to limit or reduce
any other obligation to Executive under this Agreement.

 

(iii)          The term “Base Salary” as utilized in this Agreement shall refer
to the Base Salary as so adjusted.

 

(b)           Bonuses.

 

(i)            Annual Cash Bonus.  In addition to Base Salary, Executive shall
be eligible, for each fiscal year of TRA ending during the Employment Period, to
participate in TRA’s Executive Cash Incentive Bonus Plan or other cash incentive
plan then in existence and to receive an annual cash performance bonus (an
“Annual Cash Bonus”) in accordance with the terms of such plan or plans.  The
amount of such Annual Cash Bonuses and annual target performance goals during
the Employment Period shall be determined by the Compensation Committee, or the
full Board, in its sole discretion; provided, however, Executive’s Annual Cash
Bonus for fiscal 2010, will be $350,000 if the minimum annual performance goal
established by the Compensation Committee for 2010 is achieved, $640,000 if the
target annual performance goal established by the Compensation Committee for
2010 is achieved, and $1,200,000 if the maximum annual performance goal
established by the Compensation Committee for 2010 is achieved, in each case
pro-rated based on the number of days from the Effective Date to the end of
2010.

 

(ii)           Annual Equity Incentive Bonus.  In addition to the Base Salary,
Executive shall be eligible, for each fiscal year of TRA ending during the
Employment Period, to participate in TRA’s 2009 Equity Incentive Plan or such
other equity incentive plan or plans then in existence for the benefit of
executive officers, and to receive an annual performance equity award (an
“Annual Equity Award”) in accordance with the terms of such plan or plans.  The
amount of such Annual Equity Awards, the target performance goals and the
vesting terms of such awards will be determined by the Compensation Committee in
its sole discretion; provided, however, Executive will receive a grant of
restricted stock for 2010 under the 2009 Equity Incentive Plan with a fair
market value on the date of grant of $1,660,000 if the minimum annual
performance goal established by the Compensation Committee for 2010 is achieved,
$2,410,000 if the target annual performance goal established by the Compensation
Committee for 2010 is achieved, and $2,610,000 if the maximum annual performance
goal established by the Compensation Committee for 2010 is achieved, in each
case pro-rated based on the number of days from the Effective Date to the end of
2010.  The 2010 restricted stock awards shall vest (A) two-thirds on the later
to occur of the first anniversary of the Effective Date or the date the
Compensation Committee certifies the achievement of the annual performance goal
and (B) one-third on the second anniversary of the Effective Date.

 

(iii)          Effective Date Grant of Restricted Stock.  Within 30 days
following the Effective Date, TRA will grant to

 

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Executive 100,000 shares of common stock of TRA (the “Restricted Stock Award”),
which shares will vest in three (3) equal installments on the first, second, and
third anniversaries of the Effective Date so long as Executive is employed by
TRA on the applicable anniversary date.

 

(c)           Benefits.

 

(i)            Incentive, Savings and Retirement Plans.  During the Employment
Period, Executive shall be eligible to participate in all other incentive plans,
policies and programs, and all savings and retirement plans, policies and
programs, in each case that are applicable generally to Senior Executives of
TRA.

 

(ii)           Welfare Benefit Plans.  During the Employment Period, Executive
and Executive’s eligible family members shall be eligible for participation in
the welfare benefit plans, practices, policies and programs (including, if
applicable, medical, dental, disability, employee life, group life and
accidental death insurance plans and programs) maintained by TRA for its Senior
Executives; provided, that (i) the life insurance benefit shall be at least
equal to $400,000, and (ii) TRA shall fully pay any employee funded portion of
the health insurance premium.

 

(iii)          Expenses.  During the Employment Period, Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred by Executive in accordance with the policies, practices and procedures
of TRA provided to Senior Executives of TRA, which shall include premium class
hotel accommodations, business class air travel for all flights and executive
car service for ground transportation.

 

(iv)          Fringe Benefits.  During the Employment Period, Executive shall be
entitled to such fringe benefits and perquisites as are provided by TRA to its
Senior Executives from time to time, in accordance with the policies, practices
and procedures of TRA.

 

(v)           Vacation.  During the Employment Period, Executive shall be
entitled to paid vacation in accordance with the plans, policies, programs and
practices of TRA applicable to its Senior Executives but in no event shall
Executive receive less than four (4) weeks paid vacation per full year of
employment.

 

(vi)          Automobile.  During the Employment Period, Executive shall be
entitled to an automobile allowance of $1,200 per month.

 

5.             INDEMNIFICATION

 

TRA and Executive are parties to an Indemnification Agreement, pursuant to
which, inter alia, TRA has agreed, on the terms and conditions therein set
forth, to indemnify Executive against certain claims arising by reason of the
fact that Executive is or was an officer of TRA.

 

6.             ADDITIONAL AGREEMENTS

 

Executive acknowledges the Confidentiality and Non-Disclosure Agreement, dated
the Effective Date, between Executive and TRA (the “Confidentiality
Agreement”).  Executive represents that Executive is not in breach of any of the
terms and conditions of the Confidentiality Agreement, and affirms that the
Confidentiality Agreement remains in full force and effect pursuant to its
terms.

 

7.             RETURN OF CORPORATE PROPERTY AND TRADE SECRETS

 

Upon termination of this Agreement for any reason, Executive, or Executive’s
estate in the event of Executive’s death, shall turn over to TRA all
correspondence, property, writings or documents then in Executive’s possession
or custody belonging to or relating to the affairs of TRA or any of its
subsidiaries or affiliates.

 

8.             TERMINATION OF EMPLOYMENT

 

(a)           Termination by Reason of Death or Disability.

 

(i)            Death or Disability.  Executive’s employment hereunder shall
terminate immediately upon the death of Executive.  Executive’s employment may
be terminated if Executive suffers a Disability.  For purposes of this
Agreement, “Disability” means Executive’s inability by reason of physical or
mental illness to fulfill Executive’s obligations hereunder for ninety (90)
consecutive days or on a total of one hundred fifty (150) days in any twelve
(12) month period which, in the reasonable opinion of an independent physician
selected by TRA or its insurers and reasonably acceptable to Executive or
Executive’s legal representative, renders Executive unable to perform the
essential functions of Executive’s job, even after reasonable accommodations are
made by TRA.  TRA is not, however, required to make unreasonable accommodations
for Executive or accommodations that

 

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would create an undue hardship on TRA.

 

(b)           Termination by Executive for Good Reason.

 

(i)            Good Reason.  Executive’s employment may be terminated by
Executive for Good Reason; provided, however Executive may terminate this
Agreement for Good Reason only within the period of one hundred eighty (180)
days following the occurrence of the event which results in the right of
termination hereunder; provided further (i) Executive provides written notice to
TRA of the occurrence of such event within ninety (90) days of Executive first
becoming aware of its occurrence and (ii) TRA fails to fully cure the
circumstances constituting Good Reason (provided such circumstances are capable
of cure) prior to the Date of Termination (as defined below), which date will be
at least thirty (30) days following the date of such notice.  For purposes of
this Agreement, “Good Reason” shall mean the occurrence of any one or more of
the events listed below without Executive’s prior written consent:

 

(A)          A material reduction in Executive’s title, duties, authority and
responsibilities, or the assignment to Executive of any duties materially
inconsistent with Executive’s position, authority, duties or responsibilities
without the written consent of Executive;

 

(B)           TRA’s reduction in a material amount of Executive’s Base Salary,
as in effect on the date hereof or as the same may be increased from time to
time;

 

(C)           The relocation of TRA’s office where Executive is required to
perform Executive’s duties to a location more than thirty-five (35) miles from
TRA’s current headquarters in Vernon, California; or

 

(D)          TRA’s material breach of its obligations under this Agreement.

 

(c)           Termination by TRA for Cause.

 

(i)            Cause.  TRA may terminate Executive’s employment during the
Employment Period for Cause or without Cause.  For purposes of this Agreement,
“Cause” shall mean the occurrence of any one or more of the following events:

 

(A)          Executive’s willful failure to perform, or gross negligence in
performing, Executive’s duties owed to TRA, after fifteen (15) days following
written notice delivered to Executive by the Board, which notice specifies such
failure or negligence;

 

(B)           Executive’s willful engagement in gross misconduct relating to
Executive’s employment that is materially injurious to TRA;

 

(C)           Executive’s commission of an act of fraud or dishonesty in the
performance of Executive’s duties;

 

(D)          Executive’s conviction of, or entry by Executive of a guilty or no
contest plea to, any (x) felony or (y) any misdemeanor involving moral
turpitude;

 

(E)           Any breach by Executive of Executive’s fiduciary duty of care or
duty of loyalty to TRA; or

 

(F)           Executive’s material breach of any of the provisions of this
Agreement or TRA’s Code of Conduct applicable to executive officers, which, if
curabale, is not cured within thirty (30) days following written notice thereof
from TRA.

 

(d)           Notice of Termination.  Any termination by TRA for Cause, or by
Executive for Good Reason, shall be communicated by a Notice of Termination (as
defined herein) to the other party hereto given in accordance with this
Section 8(d).  For purposes of this Agreement, a “Notice of Termination” means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than thirty days
after the giving of such notice).  The failure by Executive or TRA to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of Executive or TRA,
respectively, hereunder or preclude Executive or TRA, respectively, from
asserting such fact or circumstance in enforcing Executive’s or TRA’s rights
hereunder.

 

(e)           Date of Termination.  For the purposes of this Agreement, “Date of
Termination” means (i) if Executive’s employment is terminated by TRA for Cause,
or by Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein (which date shall not be more
than 30 days after the giving of such notice), as the case may be, (ii) if
Executive’s employment is terminated by TRA other than for Cause or Disability,
the Date of Termination shall be the date on which TRA notifies Executive of
such termination, (iii) if Executive’s employment is terminated by Executive
without Good Reason (which

 

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shall constitute a breach of this Agreement), the Date of Termination shall be
the thirtieth day after the date on which Executive notifies TRA of such
termination, unless otherwise agreed by TRA and Executive, and (iv) if
Executive’s employment is terminated by reason of death, Disability or
expiration of the Employment Period, the Date of Termination shall be the date
of death or Disability of Executive, as the case may be.

 

9.             PAYMENTS UPON TERMINATION

 

(a)           Termination Without Cause or For Good Reason.  If, during the
Employment Period, TRA shall terminate Executive’s employment without Cause or
Executive shall terminate Executive’s employment for Good Reason:

 

(i)            Executive shall be paid, in two separate lump sum payments
(A) Executive’s earned but unpaid Base Salary and accrued but unpaid vacation
pay through the Date of Termination, and any Annual Cash Bonus required to be
paid to Executive pursuant to Section 4(b)(i) above for any fiscal year of TRA
that ends on or before the Date of Termination to the extent not previously paid
(the “Accrued Obligations”), and (B) an amount (the “Severance Amount”) equal to
one and one-half (1.5) (the “Severance Multiple”) times the sum of (x) the Base
Salary in effect on the Date of Termination plus (y) the average Annual Cash
Bonus received by Executive for the two complete fiscal years (or such lesser
number of complete fiscal years as Executive has been employed by TRA) of TRA
immediately prior to the Date of Termination; provided, that the Severance
Multiple shall be reduced to 1.0 (one) during the last year of the initial
Employment Period and for each subsequent Employment Period thereafter.  The
Accrued Obligations shall be paid when due under California law and the
Severance Amount shall be paid no later than March 15 of the calendar year
following the year in which occurs Executive’s “separation from service” as
defined in Section 1.409A-1(h)(1) of the Treasury Regulations, and not before
the last day on which the Executive could satisfy the conditions of Section
9(a)(vi) hereof, including any period provided for revocation thereunder.

 

(ii)           At the time when Executive’s Annual Cash Bonus would otherwise be
payable pursuant to Section 4(b)(i) of this Agreement for the fiscal year of TRA
in which the Date of Termination occurs, Executive shall, if the applicable
performance goals are satisfied (the highest of such performance goals which is
satisfied being referred to in this paragraph as the “Applicable Performance
Goal”), be paid an Annual Cash Bonus in an amount equal to the greater of: (x)
the product of (I) the amount of the Annual Cash Bonus to which Executive would
have been entitled if Executive’s employment had not been terminated, and (II) a
fraction, the numerator of which is the number of days in such fiscal year
through the Date of Termination and the denominator of which is the total number
of days in such fiscal year, or (y) the product of (I) the amount of the Annual
Cash Bonus to which Executive would have been entitled if Executive’s employment
had not been terminated, and (II) a percentage which represents that percentage
of the Applicable Performance Goal actually satisfied as of the end of the
fiscal quarter immediately preceding the Date of Termination, (a “Pro-Rated
Annual Bonus”);

 

(iii)          For a period of eighteen (18) months following the Date of
Termination, TRA shall continue to provide Executive and Executive’s eligible
family members with group health insurance coverage at least equal to that which
would have been provided to them if Executive’s employment had not been
terminated (or at TRA’s election, pay the applicable COBRA premium for such
coverage); thereafter, Executive shall be entitled to purchase, at Executive’s
sole cost, insurance coverage under COBRA for the period permitted pursuant to
TRA policy and applicable law; provided, however, that if Executive becomes
re-employed with another employer and is eligible to receive group health
insurance coverage under another employer’s plans, TRA’s obligations under this
Section 9(a)(iii) shall terminate and any such coverage shall be reported by
Executive to TRA;

 

(iv)          The Restricted Stock Award shall become immediately vested and
exercisable in full;

 

(v)           All outstanding Annual Equity Awards (except for performance based
awards, which shall vest only upon satisfaction of the performance goals)
granted to Executive (or awards substituted therefore covering the securities of
a successor company) which are scheduled to vest within twelve (12) months
following the Date of Termination, shall become immediately vested and
exercisable in full; and

 

(vi)          To the extent not theretofore paid or provided, TRA shall timely
pay or provide to Executive any vested benefits and other amounts or benefits
required to be paid or provided or which Executive is eligible to receive as of
the Date of Termination under any plan, contract or agreement of TRA and its
affiliates (such other amounts and benefits shall be hereinafter referred to as
the “Other Benefits”) to which Executive is a party.

 

(vii)         Notwithstanding anything herein to the contrary, it shall be a
condition to Executive’s right to receive the amounts provided for in Sections
9(a)(i)(B), 9(a)(ii) and 9(a)(iii) above that Executive timely execute and
deliver to TRA, and not revoke within the period provided therefor, a release of
claims in a form to be agreed upon by parties hereto.  Such execution and
delivery will be deemed timely only if completed within 21 days (or such longer
period as TRA may establish) of TRA’s delivery of such form to Executive.

 

(b)           Termination For Cause or Without Good Reason; Expiration of
Employment Period.  If Executive’s employment shall be terminated by TRA for
Cause or by Executive without Good Reason during the Employment Period or upon
expiration of the

 

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Employment Period, TRA shall have no further obligations to Executive under this
Agreement and the obligation to pay to Executive the Accrued Obligations when
due under California law and to provide the Other Benefits.

 

(c)           Termination by Reason of Death or Disability.  Upon termination of
Executive’s employment by reason of death or Disability during the Employment
Period:

 

(i)            The Accrued Obligations shall be paid to Executive’s estate or
beneficiaries or to Executive, as applicable, in cash when due under California
law;

 

(ii)           One Hundred Percent (100%) of Executive’s then current annual
Base Salary, as in effect on the Date of Termination, shall be paid to
Executive’s estate or beneficiaries or to Executive, as applicable, within
thirty (30) days of the Date of Termination;

 

(iii)          The Pro-Rated Annual Bonus shall be paid to Executive’s estate or
beneficiaries or to Executive, as applicable, at the time when Annual Cash
Bonuses are paid to TRA’s other Senior Executives for the fiscal year of TRA in
which the Date of Termination occurs;

 

(iv)          For a period of eighteen months following the Date of Termination,
Executive and Executive’s eligible family members shall continue to be provided
with group health insurance coverage at least equal to that which would have
been provided to them if Executive’s employment had not been terminated (or at
TRA’s election, pay the applicable COBRA premium for such coverage); thereafter,
if applicable, Executive shall be entitled to purchase, at Executive’s sole
cost, insurance coverage under COBRA for the period permitted pursuant to TRA
policy and applicable law; provided, however, that if Executive becomes
re-employed with another employer and is eligible to receive group health
insurance coverage under another employer’s plans, TRA’s obligations under this
Section 9(c)(iv) shall terminate, and any such coverage shall be reported by
Executive to TRA; and

 

(v)           The Other Benefits shall be paid or provided to Executive’s estate
or beneficiaries or to Executive, as applicable, on a timely basis.

 

(d)           Timing of Payment.  Notwithstanding anything to the contrary in
this Agreement, to the extent required to comply with Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), if Executive is deemed
to be a “specified employee” for purposes of Section 409A(a)(2)(B) of the Code,
Executive agrees that any non-qualified deferred compensation payments due to
Executive under this Agreement in connection with a termination of Executive’s
employment that would otherwise have been payable at any time during the
six-month period immediately following such termination of employment shall not
be paid prior to, and shall instead be payable in a lump sum on the first
business day of the seventh month following Executive’s “separation from
service” as that term is defined in Section 1.409A-1(h) of the Treasury
Regulations.

 

10.          Change in Control

 

(a)           Severance Payment.  If a Change in Control (as defined herein)
occurs during the Employment Period, and the Executive’s employment is
terminated by TRA without Cause or by the Executive for Good Reason, in each
case within one (1) year after the effective date of the Change in Control, then
the Executive shall be entitled to the payments and benefits provided in
Section 9(a), subject to the terms and conditions thereof; provided, that for
purposes of this Section 10, (x) the Severance Multiple shall equal three
(3.0), and (y) all outstanding Annual Equity Awards (except for performance
based awards, which shall vest only upon satisfaction of the performance goals)
granted to Executive (or awards substituted therefore covering the securities of
a successor company) shall become immediately vested and exercisable in full.

 

(b)           Change in Control.  For purposes of this Agreement, “Change in
Control” shall mean the occurrence of any of the following events:

 

(i)            Any transaction, whether effected directly or indirectly,
resulting in any “person” or “group” (as those terms are defined in
Sections 3(a)(9), 13(d), and 14(d)  of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and the rules thereunder) having “beneficial
ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of
securities entitled to vote generally in the election of directors (“Voting
Securities”) of TRA that represent greater than 35% of the combined voting power
of TRA’s then outstanding Voting Securities, other than:

 

(A)          any transaction or event resulting in the beneficial ownership of
Voting Securities by a trustee or other fiduciary holding securities under any
employee benefit plan (or related trust) sponsored or maintained by TRA or any
Person controlled by TRA or by any employee benefit plan (or related trust)
sponsored or maintained by TRA or any Person controlled by TRA, or

 

(B)           any transaction or event resulting in the beneficial ownership of
Voting Securities by TRA or a

 

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corporation owned, directly or indirectly, by the stockholders of TRA in
substantially the same proportions as their ownership of the stock of TRA, or

 

(C)           any transaction or event resulting in the beneficial ownership of
Voting Securities pursuant to a transaction that would not be a Change in
Control pursuant to Section 10(b)(iii)(A).

 

(ii)           Individuals who, as of the Effective Date, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election by TRA’s stockholders, or
nomination for election by the Board, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an election contest with respect to the election or
removal of directors or other solicitation of proxies or consents by or on
behalf of a Person other than the Board;

 

(iii)          The consummation by TRA (whether directly involving TRA or
indirectly involving TRA through one or more intermediaries) of (x) a merger,
consolidation, reorganization, or business combination, (y) a sale or other
disposition of all or substantially all of TRA’s assets, or (z) the acquisition
of assets or stock of another entity, in each case, other than a transaction:

 

(A)          which results in TRA’s Voting Securities outstanding immediately
before the transaction continuing to represent (either by remaining outstanding
or by being converted into Voting Securities of TRA or the Person that, as a
result of the transaction, controls, directly or indirectly, TRA or owns,
directly or indirectly, all or substantially all of TRA’s assets or otherwise
succeeds to the business of TRA (TRA or such person, the “Successor Entity”))
directly or indirectly, greater than 50% of the combined voting power of the
Successor Entity’s outstanding Voting Securities immediately after the
transaction, and after which no Person or group beneficially owns Voting
Securities representing greater than 50% of the combined voting power of the
Successor Entity; provided, however, that no Person or group shall be treated
for purposes of this Section 10(b)(iii) as beneficially owning greater than 50%
of combined voting power of the Successor Entity solely as a result of the
voting power held in TRA prior to the consummation of the transaction; or

 

(B)           the approval by TRA’s stockholders of a liquidation or dissolution
of TRA.

 

(c)           For purposes of Section 10(b)(i) above, the calculation of voting
power shall be made as if the date of the acquisition were a record date for a
vote of TRA’s stockholders, and for purposes of Section 10(b)(iii) above, the
calculation of voting power shall be made as if the date of the consummation of
the transaction were a record date for a vote of TRA’s stockholders.

 

(d)           The following terms shall have the following meanings for purposes
of this Section 10:

 

(i)            “Affiliate” shall mean, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under common control with
such Person.  Control of any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of Voting Securities or other interests, by contract or otherwise, and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.

 

(ii)           “Immediate Family Member” shall mean a natural person’s estate or
heirs or current spouse or former spouse, parents, parents-in-law, children
(whether natural, adopted or by marriage), siblings and grandchildren and any
trust or estate, all of the beneficiaries of which consist of such person or
such person’s spouse, or former spouse, parents, parents-in-law, children,
siblings or grandchildren.

 

(iii)          “Person” shall mean an individual or a corporation, partnership,
limited liability company, trust, unincorporated organization, association or
other entity.

 

11.          FULL SETTLEMENT

 

In no event shall Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to Executive under any
of the provisions of this Agreement and except as expressly provided, such
amounts shall not be reduced whether or not Executive obtains other employment. 
If any party to this Agreement institutes any action, suit, counterclaim,
appeal, arbitration or mediation for any relief against another party,
declaratory or otherwise (collectively an “Action”), to enforce the terms hereof
or to declare rights hereunder, then the Prevailing Party (as defined herein) in
such Action shall be entitled to recover from the other party all costs and
expenses of the Action, including reasonable attorneys’ fees and costs (at the
Prevailing Party’s attorneys’ then-prevailing rates) incurred in bringing and
prosecuting or defending such Action and/or enforcing any judgment, order,
ruling or award (collectively, a “Decision”) granted therein, all of which shall
be deemed to have accrued on the commencement of such Action and shall be paid
whether or not such Action is prosecuted to a Decision.  Any Decision entered in
such Action shall contain a specific provision providing for the recovery of
attorneys’ fees and costs incurred in enforcing such Decision.  A court or
arbitrator shall fix the amount of reasonable attorneys’ fees and costs upon the
request of either party.  Any judgment or order entered in any final judgment
shall contain a specific provision providing for the recovery of all costs and
expenses

 

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of suit, including reasonable attorneys’ fees and expert fees and costs incurred
in enforcing, perfecting and executing such judgment.  For the purposes of this
paragraph, costs shall include, without limitation, in addition to costs
incurred in prosecution or defense of the underlying action, reasonable
attorneys’ fees, costs, expenses and expert fees and costs incurred in the
following: (a) post judgment motions and collection actions; (b) contempt
proceedings; (c) garnishment, levy, debtor and third party examinations; (d)
discovery; (e) bankruptcy litigation; and (f) appeals of any order or judgment. 
“Prevailing Party” within the meaning of this Section 11 includes, without
limitation, a party who agrees to dismiss an Action in consideration for the
other party’s payment of the amounts allegedly due or performance of the
covenants allegedly breached, or obtains substantially the relief sought by such
party.

 

12.          MISCELLANEOUS

 

(a)           Entire Agreement.  This Agreement contains the entire
understanding of the parties hereto relating to the subject matter hereof and
cannot be changed or terminated except in writing signed by both Executive and
TRA.

 

(b)           Governing Law.  This Agreement has been made and entered into in
the state of California and shall be construed in accordance with the laws of
the State of California without regard to the conflict of law principles
thereof.

 

(c)           Arbitration.  To the fullest extent allowed by law, any
controversy, claim or dispute between Executive and TRA (and/or any of its
owners, directors, officers, employees, affiliates, or agents) in any way
related to or arising out of Executive’s employment or the cessation of that
employment will be submitted to final and binding arbitration before a retired
state or federal judge in the County of Los Angeles, State of California, for
determination in accordance with the Judicial Arbitration and Mediation Services
(“JAMS”) National Rules for the Resolution off Employment Disputes, as the
exclusive remedy for such controversy, claim or dispute.  In any such
arbitration, the parties may conduct discovery in accordance with the applicable
rules of the arbitration forum, except that the arbitrator shall have the
authority to order and permit discovery as the arbitrator may deem necessary and
appropriate in accordance with applicable state or federal discovery statutes. 
The arbitrator shall issue a reasoned, written decision, and shall have full
authority to award all remedies which would be available in court.  The parties
shall share the filing fees required for the arbitration, provided that
Executive shall not be required to pay an amount in excess of the filing fees
required by a federal or state court with jurisdiction.  TRA shall pay the
arbitrator’s fees and any JAMS administrative expenses.  The award of the
arbitrator shall be final and binding upon the parties and may be entered as a
judgment in any California court of competent jurisdiction and the parties
hereby consent to the exclusive jurisdiction of the courts of California. 
Possible disputes covered by the above include (but are not limited to) unpaid
wages, breach of contract, torts, violation of public policy, discrimination,
harassment, or any other employment-related claims under laws including but not
limited to, Title VII of the Civil Rights Act of 1964, the Americans With
Disabilities Act, the Age Discrimination in Employment Act, the California Fair
Employment and Housing Act, the California Labor Code, and any other statutes or
laws relating to an employee’s relationship with his/her employer, regardless of
whether such dispute is initiated by the employee or TRA.  Thus, this bilateral
arbitration agreement applies to any and all claims that TRA may have against an
employee, including but not limited to, claims for misappropriation of TRA
property, disclosure of proprietary information or trade secrets, interference
with contract, trade libel, gross negligence, or any other claim for alleged
wrongful conduct or breach of the duty of loyalty by an employee.  However,
notwithstanding anything to the contrary contained herein, TRA and Executive
shall have their respective rights to seek and obtain injunctive relief with
respect to any controversy, claim or dispute to the extent permitted by law. 
Claims for workers’ compensation benefits and unemployment insurance (or any
other claims where mandatory arbitration is prohibited by law) are not covered
by this arbitration agreement, and such claims may be presented by either
Executive or TRA to the appropriate court or government agency.  BY AGREEING TO
THIS BINDING ARBITRATION PROVISION, BOTH EXECUTIVE AND TRA GIVE UP ALL RIGHTS TO
TRIAL BY JURY.  This arbitration agreement is to be construed as broadly as is
permissible under applicable law.

 

(d)           Sarbanes-Oxley Act of 2002.  Notwithstanding anything herein to
the contrary, if TRA determines, in its good faith judgment, that any transfer
or deemed transfer of funds hereunder is likely to be construed as a personal
loan prohibited by Section 13(k) of the Exchange Act and the rules and
regulations promulgated thereunder, then such transfer or deemed transfer shall
not be made to the extent necessary or appropriate so as not to violate the
Exchange Act and the rules and regulations promulgated thereunder.

 

(e)           Withholding.  TRA may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

 

(f)            No Waiver.  Executive’s or TRA’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right Executive or TRA may have hereunder, including, without limitation, the
right of Executive to terminate employment for Good Reason pursuant to Section
8(b) of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.

 

(g)           Consultation With Counsel.  Executive acknowledges that Executive
has had a full and complete opportunity to consult with counsel and other
advisors of Executive’s own choosing concerning the terms, enforceability and
implications of this

 

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Agreement, and that TRA has not made any representations or warranties to
Executive concerning the terms, enforceability or implications of this Agreement
other than as reflected in this Agreement.

 

(h)           Notices.  All notices, requests and other communications given
pursuant to this Agreement shall be in writing, and shall be delivered by
facsimile transmission with a copy delivered by personal service or by United
States first class, registered or certified mail (return receipt requested),
postage prepaid, addressed to the party at the address set forth below:

 

 

If to TRA:

True Religion Apparel, Inc.
2263 E.  Vernon Avenue
Vernon, CA 90058
Attention: Chief Executive Officer

 

 

 

 

with a copy to:

Akin Gump Strauss Hauer & Feld LLP
2029 Century Park East
Suite 2400
Los Angeles, CA 90067
Attn:  Frank Reddick

 

 

 

 

If to Executive:

Executive’s most recent address
on the records of TRA

 

Any notice shall be deemed duly given when received by the addressee thereof,
provided that any notice sent by registered or certified mail shall be deemed to
have been duly given three (3) days from date of deposit in the United States
mails, unless sooner received.  Either party may from time to time change its
address for further notices hereunder by giving notice to the other party in the
manner prescribed in this Section 12(h).

 

(i)            Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

 

(j)            Severable Provisions.  The provisions of this Agreement are
severable, and if any one or more provisions are determined to be judicially
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.

 

(k)           Successors and Assigns.  This Agreement and all obligations and
benefits Executive and TRA hereunder shall bind and inure to the benefit
Executive and TRA, their respective affiliates, and their respective successors
and assigns.

 

(l)            Amendments and Waivers.  No amendment or waiver of any term or
provision of this Agreement shall be effective unless made in writing.  Any
written amendment or waiver shall be effective only in the instance given and
then only with respect to the specific term or provision (or portion thereof) of
this Agreement to which it expressly relates, and shall not be deemed or
construed to constitute a waiver of any other term or provision (or portion
thereof) waived in any other instance.

 

(m)          Title and Headings.  The titles and headings contained in this
Agreement are included for convenience only and form no part of the agreement
between the parties.

 

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IN WITNESS WHEREOF, this Agreement has been executed as of the date set forth
below.

 

 

TRUE RELIGION APPAREL, INC.

 

 

 

/s/ Jeffrey Lubell

 

Name:

Jeffrey Lubell

 

Title:

Chief Executive Officer

 

 

 

Date:

5/13/10

 

 

 

 

ACCEPTED AND AGREED TO:

 

 

 

 

 

 

 

 

/s/ Mike Egeck

 

 

Name:  Mike Egeck

 

 

 

 

 

Date:

5/12/10

 

 

 

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