**EXHIBIT 10.12****SETTLEMENT AGREEMENT AND GENERAL RELEASE**     This Settlement and General Release (“Agreement”) is entered into by and between Joseph C.Canouse, an individual, for himself and all his agents, representatives, heirs, executors,trustees, administrators, successors and assigns (“Canouse”), and True Religion Apparel, Inc., aDelaware corporation, for itself and its parents, subsidiaries, related, affiliated, andpredecessor corporations and entities, and also on behalf of all of its and their respective pastand present officers, directors, shareholders, partners, agents, representatives, employees,administrators, and assigns (“TRLG” or the “Company”). This Agreement is intended by the partiesto resolve fully and finally any and all obligations and/or differences between them, including,without limitation, those obligations and/or differences arising out of or relating to any and allagreements between Canouse and the Company and any claims, disputes, or litigation related thereto.**RECITALS**     **WHEREAS**, Canouse filed a civil action in the United States District Court for the CentralDistrict of California, styled Joseph C. Canouse v. True Religion Apparel, Inc., Case No.CV 05-1978-JFW for Breach of Contract, Fraud, Unjust Enrichment, Attorneys’ Fees per GeorgiaStatute, Specific Performance and Conversion (the “Civil Action”);     **WHEREAS**, the Civil Action pertained to that certain Agreement, dated as of February 26, 2004,by and between Canouse and the Company, pursuant to which Canouse was to render services to theCompany in 2004 in exchange for the consideration set forth therein;     **WHEREAS**, TRLG has denied all liability, filed an Answer, and defended itself in the CivilAction;     **WHEREAS**, the parties hereto desire to settle all disputes and to enter into this Agreement andto set forth their understandings and agreements with respect to the settlement of all theirrespective rights, obligations or liabilities arising under, out of, or in connection with theCivil Action, as well as all other disputes, controversies, and claims between them of whatevernature and origin, from the beginning of time through the date of this Agreement;     **NOW THEREFORE**, for and in consideration of the mutual promises, covenants, and agreementsherein below set forth, the parties hereto do hereby mutually covenant and agree by and betweenthemselves as follows:**AGREEMENT**     **1. ****Cash Payment To Canouse.** TRLG will pay Canouse One Hundred Thousand Dollars($100,000.00), in good funds within five (5) days of the Effective Date. Payment shall
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be delivered to Canouse care of Scott L. Bonder at Fleming, Fried & Bonder, LLC, 1230Peachtree Street, Suite 3750, Atlanta Georgia 30309. If payment is made by negotiable instrumentsuch as a check, it shall be made payable to “Joseph C. Canouse AND Fleming, Fried & Bonder, LLC.”Wire transfer may also be used and appropriate information will be supplied upon request.     **2. ****Stock Issuance to Canouse.**          2.1 Issuance of Shares. Subject to the terms and conditions of this Agreement, withinfive (5) days of the Effective Date, TRLG will issue to Canouse and Canouse will acquire from TRLGone hundred thousand (100,000) shares of the Company’s common stock (the “Shares”). TRLG willdeliver the certificate(s) representing the Shares, free and clear of any liens, claims, charges,pledges, security interests, options or other legal or equitable encumbrances, other than ascreated by this Agreement and federal and states securities laws, to Fleming, Fried & Bonder LLC at1230 Peachtree Street, Suite 3750, Atlanta Georgia 30309. As of the Effective Date, the Companyand Canouse agree that all of the Shares shall be fully vested and saleable by Canouse subject onlyto the requirements of state and federal securities laws.          2.2 Responsibility for Taxes. Canouse agrees: (i) that he shall be solely liable forand shall pay any and all taxes, costs, interest, assessments, penalties, damages, attorney’s feesor other losses to which he is or may be subject by reason of the cash payments and\or stocktransfer by the Company to him identified in this Agreement; (ii) to indemnify and hold the CompanyReleasees (defined below) harmless from any and all taxes, costs, assessment, interest, penalties,damages, attorney’s fees or other losses to which the Company Releasees, or any of them, are or maybe subject by reason of such payments, interest, reimbursements and/or loans, including, but notlimited to, any claim or claims against the Company Releasees, for failure to withhold orunderwithholding of taxes; (iii) not to seek or make any claim or claims against the CompanyReleasees, or any of them, for contribution, indemnity, compensation, recompense, damages, taxes,costs, interest, penalties, attorneys’ fees or other losses, if a determination is made thatwithholdings should have been made from any payments to Canouse; and (iv) to assume responsibilityfor contending and defending any claim or assertion that withholding should have been made from anypayment or other interest provided, or that the Company Releasees, or any of them, owe taxesthereon for any reason, and to cooperate fully in the defense of any such claim or claims whichis/are brought against the Company Releases, or any of them.          2.3 Standstill. Canouse agrees that, without the prior written consent of theCompany, Canouse shall not, for a period of five (5) years from the date of this Agreement (the“Standstill Period”), directly or indirectly:               (a) acquires or agree, offer, seek or propose to acquire, or cause to be acquired, ownership(including, but not limited to, beneficial ownership as defined in Rule 13d-3 under the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”)) of any of the assets or businesses of theCompany or any securities of the Company (including, without limitation, any debt, equity orconvertible securities) or any rights or options to acquire any such ownership from any Person;
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               (b) make, or in any way participate in, any “solicitation” of “proxies” (as such terms areused in the proxy rules of the Securities and Exchange Commission (“the SEC”) to vote or consents,or seek to advise or influence in any manner whatsoever any Person with respect to the voting ofany securities of the Company;               (c) form, join, or in any way participate in a “group” (within the meaning of Section 13d(3)of the Exchange Act) with respect to any voting securities of the Company;               (d) arrange, or in any way participate in, any financing for the purchase of any votingsecurities or securities convertible or exchangeable into or exercisable for any voting securitiesor assets of the Company;               (e) otherwise act, whether alone or in concert with others, to seek to propose to the Company,or any of its stockholders, any merger, business combination, restructuring, recapitalization orsimilar transaction to or with the Company or otherwise act, whether alone or in concert withothers, to seek to control, change or influence the management, stockholders, Board of Directors,or policies of the Company, or nominate any Person as a director of the Company;               (f) solicit, negotiate with, or provide any information to, any Person with respect to amerger, business combination, exchange offer or liquidation of the Company or any other acquisitionof the Company, any acquisition of securities of or all or any portion of the assets of the Companyor any other similar transaction;               (g) make any proposal to be considered and/or voted upon at any meeting of the stockholders ofthe Company;               (h) announce an intention to, or enter into any discussion, negotiations, arrangements orunderstandings with any third party with respect to, any of the foregoing matters;               (i) disclose any intention, plan or arrangement inconsistent with any of the foregoingprovisions; or               (j) advise, assist, encourage or participate with any other Person in connection with actioninconsistent with any of the foregoing provisions.     For purposes of this Agreement, the term “Person” shall mean any natural person, corporation,association, partnership (general or limited), joint venture, trust, estate, limited liabilitycompany, government or any agency or political subdivision thereof, or any other legal entity ororganization. This standstill provision shall not affect Canouse’s ability to purchase interestsin mutual funds or other similar investment vehicles over which he has no ability to direct theinvestment or disposition of shares or other equity interests.          2.4 Registration Rights.
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               (a) Canouse understands that the Company will use its commercially reasonable efforts to filea Registration Statement with the SEC for the resale of the Shares as soon as shall be reasonablypracticable following the date of this Agreement, but in no event more than thirty (30) days fromthe Effective date of this Agreement. Subject to the provisions of this Agreement, the Companyshall use commercially reasonable efforts to have such Registration Statement declared effective bythe SEC as promptly as shall be practicable, and shall use reasonable efforts to expedite theprocess, but in any event within 120 days of the filing date of the registration statement. If andwhen the Registration Statement becomes effective, the Company shall keep such RegistrationStatement effective for a period of up to 120 days or until the distribution contemplated in suchRegistration Statement has been completed. For the purposes of this Agreement: (A) “RegistrableShares” means the Shares (and including any shares issued in connection with any split or dividendin respect of any such shares); *provided*, *however*, that any such Share will cease to be aRegistrable Share when (1) a Registration Statement covering a Registrable Share has been declaredeffective by the SEC and such Share has been disposed of by Canouse pursuant to such effectiveRegistration Statement, (2) the Registrable Share is transferred to another person, (3) such Share(after initial issuance) is held by the Company or one of its subsidiaries or otherwise ceases tobe outstanding, or (4) such Share may be traded without restriction pursuant to paragraph (k) ofRule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if applicable; and(B) “Registration Statement” means any registration statement or comparable document under theSecurities Act through which a public sale or disposition of the Registrable Shares may beregistered, including the prospectus, amendments and supplements to such registration statement,all exhibits, and all material incorporated by reference or deemed to be incorporated by referencein such registration statement. The Company shall promptly respond to all requests from the SECand, except as set forth under subsection (d) below, shall not delay the effectiveness of theRegistration Statement.               (b) Upon the written request of Canouse to include all or any portion of Canouse’s RegistrableShares in an underwritten offering, the Company shall have the right, in its sole discretion, todetermine whether any of such Registrable Shares are to be included in such underwritten offering,and if the Company so determines, the Company alone shall have the right to select the managingunderwriter or underwriters to administer the offering.               (c) If the managing underwriter of an underwritten offering under this Section 2.4 advises theCompany in writing that in its opinion the number of shares requested to be included in suchregistration exceeds the number which can be sold in such offering, the Company will include insuch registration only the number of shares which in the opinion of such underwriter can be soldand may delay registering the balance of the shares in a non-underwritten offering for up to 120days. This provision shall not relieve or modify the Company’s obligations to use its commerciallyreasonable efforts to file and have declared effective any Registration Statement under paragraph(a) above.               (d) The Company’s obligations under this Section 2.4 shall not restrict its ability to suspendthe effectiveness of, or direct Canouse not to offer or sell Shares under, any RegistrationStatement, at any time, for such reasonable period of time which the Company reasonably believes isnecessary to prevent the premature disclosure of any events or information having a material effecton the Company. In addition, the Company shall not be required to keep any Registration Statementeffective, or may, without suspending such effectiveness, instruct
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Canouse not to sell such Shares, during any period during which the Company is instructed,directed, ordered or otherwise requested by any governmental agency or self-regulatory organizationto stop or suspend such trading or sales.               (e) In the event of any filing of a prospectus supplement or the commencement of anunderwritten public distribution of the Company’s common stock under a Registration Statement,whether or not Registrable Shares are included, Canouse agrees not to effect any public sale ordistribution of Registrable Shares (except as part of such underwritten public distribution),including a sale pursuant to Rule 144 or Rule 144A under the Securities Act, during a perioddesignated by the Company in a written notice duly given to Canouse, which period shall commence upto 14 days prior to the effective date of any such filing of such prospectus supplement or thecommencement of such underwritten public distribution of such common stock under a RegistrationStatement and shall continue for up to 44 consecutive days in the case of a sale pursuant to Rule144 and for up to 74 consecutive days otherwise.               (f) *Registration Procedures*. Except as otherwise expressly provided herein, in connection withany registration of Registrable Shares pursuant to this Section 2.4, the Company shall, asexpeditiously as possible:                    (i) use its commercially reasonable efforts to prepare and file with the SEC a RegistrationStatement with respect to such Registrable Shares and use its commercially reasonable efforts tocause such Registration Statement to become effective as soon as practicable thereafter; and beforefiling a Registration Statement or prospectus or any amendments or supplements thereto, furnish toCanouse copies of such Registration Statement and such other documents as proposed to be filed(including copies of any document to be incorporated by reference therein), and thereafter furnishto Canouse such number of copies as may be reasonably requested in writing by Canouse of suchRegistration Statement, each amendment and supplement thereto (including copies of any document tobe incorporated by reference therein), including all exhibits thereto, the prospectus included insuch Registration Statement (including each preliminary prospectus), and, promptly after theeffectiveness of a Registration Statement, the definitive final prospectus filed with the SEC;                    (ii) notify Canouse, at any time when a prospectus relating thereto is required to bedelivered under the Securities Act, of the occurrence of any event as a result of which theprospectus included in such Registration Statement (including any document to be incorporated byreference therein) contains an untrue statement of a material fact or omits any fact necessary tomake the statements therein not misleading and, the Company shall prepare a supplement or amendmentto such prospectus, as soon as practicable, so that, as thereafter delivered to the purchasers ofsuch Registrable Shares, such prospectus will not contain an untrue statement of a material fact oromit to state any material fact required to be stated therein or necessary to make the statementstherein not misleading and promptly make available to Canouse any such supplement or amendment;                    (iii) notify Canouse and the managing underwriters, if any, promptly, and (if requested by anysuch person) confirm such advice in writing, (A) when the Registration Statement, the prospectus orany prospectus supplement or post-effective amendment has been filed, and, with respect to theRegistration Statement or any post-effective
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amendment, when the same has become effective, (B) of the issuance by the SEC of any stoporder suspending the effectiveness of a Registration Statement or of any order preventing orsuspending the use of any preliminary prospectus or the initiation of any proceedings for thatpurpose and the Company shall promptly use its commercially reasonable best efforts to prevent theissuance of any stop order or to obtain its withdrawal if such stop order should be issued, and (C)of the receipt by the Company of any notification with respect to the suspension of thequalification or exemption from qualification of a Registration Statement or any of the RegistrableShares for offer or sale in any jurisdiction, or the initiation or threatening of any proceedingfor such purpose.               (g) The Company may require Canouse to furnish to the Company such information regardinghimself and the distribution of such Registrable Shares as the Company may from time to timereasonably request in writing and such other information as may be legally required in connectionwith such registration. Canouse agrees, by its acquisition of Registrable Shares and his acceptanceof the benefits provided to him hereunder, to furnish promptly to the Company all informationrequired to be disclosed in order to make any previously furnished information not materiallymisleading. If Canouse proposes to distribute his Registrable Shares through an underwrittenoffering, then he shall (together with the Company) enter into an underwriting agreement incustomary form with the underwriter or underwriters selected by the Company for such underwritingand shall provide to such underwriter or underwriters any opinions and certificates, and anyindemnification with respect to him as reasonably required by such underwriter or underwriters.               (h) Canouse agrees that upon receipt of any notice from the Company of the happening of anyevent of the kind described herein requiring the cessation of the distribution of a prospectus orthe distribution of a supplemented or amended prospectus, he will forthwith discontinue dispositionof Registrable Shares pursuant to the Registration Statement covering such Registrable Shares untilhis receipt of the copies of the supplemented or amended prospectus contemplated by this Agreement,or until it is advised in writing by the Company that the use of the prospectus may be resumed,and, if so directed by the Company, Canouse will deliver to the Company (at the Company’s expense)all copies, other than permanent file copies then in the his possession, of the prospectus coveringsuch Registrable Shares current at the time of receipt of such notice.               (i) All expenses incident to the Company’s performance of or compliance with the registrationof shares pursuant to this Agreement, including, without limitation, all registration and filingfees, fees and expenses of compliance with securities or blue sky laws (including reasonable feesand disbursements of counsel of the Company and counsel for the underwriters in connection with“blue sky” qualifications of the Registrable Shares), fees and expenses associated with filingsrequired to be made with the National Association of Securities Dealers, Inc., and with listing onany national securities exchange or exchanges in which listing may be sought, printing expenses,messenger and delivery expenses, fees and expenses of counsel for the Company and its independentcertified public accountants, securities acts liability insurance (if the Company elects to obtainsuch insurance), the fees and expenses of any special experts retained by the Company in connectionwith such registration, and fees and expenses of other persons retained by the Company (all suchexpenses being herein called “Registration Expenses”) will be borne by the Company; provided thatin no event shall
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Registration Expenses payable by the Company include any (i) underwriting discounts,commissions, or fees attributable to the sale of Registrable Shares, (ii) fees and expenses of anycounsel, accountants, or other persons retained or employed by Canouse or underwriters, or (iii)transfer taxes, if any.          2.5 Investment Representations and Warranties. Canouse hereby acknowledges,represents and warrants to, and agrees with, the Company as follows:               (a) Canouse understands that the offering and sale of the Shares are intended to be exemptfrom registration under the Securities Act, by virtue of Section 4(2) and Rule 506 of Regulation Dpromulgated under the Securities Act, and in accordance therewith and in furtherance thereof, theundersigned represents and warrants and agrees as follows:                    (i) Canouse and his advisers have been afforded an opportunity to review and receive thereports filed by the Company under the Exchange Act and other publicly available informationrelating to the Company, the Company’s business and finances (collectively, the “Information”), andhas reviewed and received such Information and understand the Information and this Agreement;                    (ii) No written representations have been made other than as stated, or in addition to thosestated, in the Information;                    (iii) Canouse is not receiving Shares as a result of or subsequent to any advertisement,article, notice, other communication published in any newspaper, magazine, or similar media orbroadcast over television or radio, or presented at any seminar or meeting, or any solicitation ofa subscription by a person other than a representative of the Company;                    (iv) Canouse has adequate means of providing for his current financial needs andcontingencies, is able to bear the substantial economic risks of an investment in the Shares for anindefinite period of time, has no need for liquidity in such investment, and, at the present time,could afford a complete loss of such investment;                    (v) Canouse has such knowledge and experience in financial, tax, and business matters so as toenable him to utilize the Information made available to him in connection with the offering of theShares to evaluate the merits and risks of an investment in the Company and to make an informedinvestment decision with respect thereto;                    (vi) Canouse is not relying on the Company with respect to the legal, tax, and other economicconsiderations of an investment and has obtained, or had the opportunity to obtain the advice ofhis own legal, tax, and other advisors;                    (vii) Canouse will not sell or otherwise transfer the Shares without registration under theSecurities Act or applicable state securities laws or an exemption therefrom. The Shares have notbeen registered under the Securities Act or under the securities laws of any state. Canouserepresents that he is purchasing the Shares for his own account, for investment and not with a viewto resale or distribution except in compliance with the Securities Act. Canouse has not offered orsold any portion of the Shares being acquired. Canouse does
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not have any present intention of selling, distributing or otherwise disposing of any portionof the Shares, which may be a violation of the Securities Act unless (i) a registration statementhas been filed and declared effective by the SEC covering such Shares to be resold or otherwisedistributed; or (ii) the passage of a fixed or determinable period of time that makes such resaleor distribution exempt from registration and is pursuant to Rule 144 promulgated under theSecurities Act or upon the occurrence or nonoccurrence of any predetermined event or circumstancein violation of the Securities Act;                    (viii) CANOUSE UNDERSTANDS AND ACKNOWLEDGES THAT HIS INVESTMENT IN THE COMPANY INVOLVES A HIGHDEGREE OF RISK AND IS SUITABLE ONLY FOR INVESTORS OF SUBSTANTIAL MEANS WHO HAVE NO IMMEDIATE NEEDFOR LIQUIDITY OF THE AMOUNT INVESTED, AND THAT SUCH INVESTMENT INVOLVES A RISK OF LOSS OF ALL OR ASUBSTANTIAL PART OF SUCH INVESTMENT; and                    (ix) Canouse is an “accredited investor” within the meaning of Rule 501 of Regulation Dpromulgated under the Securities Act.               (b) Canouse’s overall commitment to investments which are not readily marketable is reasonablein relation to his net worth.               (c) Canouse hereby agrees to provide such information and to execute and deliver suchdocuments as may reasonably be necessary to comply with any and all laws and ordinances to whichthe Company is subject, including, without limitation, such additional information as the Companymay reasonably deem appropriate with regard to the Canouse’s suitability.               (d) Canouse acknowledges:                    (i) In making an investment decision he has relied on his own examination of the Company,including the merits and risks involved. THE SHARES ISSUED PURSUANT TO THIS AGREEMENT HAVE NOTBEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACYOF THE INFORMATION OR THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE;                    (ii) The representations, warranties, and agreements of Canouse contained herein and in anyother writing delivered in connection with the transactions contemplated hereby shall be true andcorrect in all respects on and as of the date of the sale of the Shares as if made on and as ofsuch date and shall survive the execution and delivery of this Agreement and the purchase of theShares;                    (iii) It is understood that the certificate(s) evidencing the Shares shall bear the followinglegend:
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“These securities have not been registered under the Securities Actof 1933, as amended. They may not be sold, offered for sale,pledged or hypothecated in the absence of a registration statementin effect with respect to the securities under such Act or anopinion of counsel satisfactory to the Company that suchregistration is not required or unless sold pursuant to Rule 144 ofsuch Act.”     **3. ****Dismissal of The Civil Action With Prejudice.** Within ten (10) days of the the cashpayment and delivery of Shares contemplated by Sections 1 and 2 of this Agreement, Canouse shallexecute and file with the Court a dismissal with prejudice of the entire Civil Action as againstall parties thereto.     **4. ****Effective Date****.**For purposes of this Agreement, the “Effective Date” shall meanthe date on which this Agreement is executed by all parties hereto.     **5. ****General Release of All Claims****.**Canouse hereby agrees to, and by signing thisAgreement does hereby finally, unconditionally, irrevocably, and absolutely releases and foreverdischarges the Company, each of the Company’s affiliated or related entities including any parentor subsidiary entities, and its and their respective and collective directors, officers, employees,subsidiaries, agents, managers, representatives, legal and financial advisors, parents, principals,partners, members, trustees and affiliates, and any heirs, executors, administrators, successors orassigns of any such persons (collectively “Company Releasees”), from any and all actions,proceedings, suits, claims, debts, damages, judgments, sums of money, accounts, reckonings, bonds,bills, specialties, covenants, controversies, agreements, promises, variances, trespasses,injuries, harms, remedies, extents, executions, liens, liabilities and demands whatsoever, in lawor equity, whether known or unknown, absolute or contingent, matured or unmatured, presentlyexisting or hereafter discovered, at law, in equity or otherwise, which Canouse ever had, now hascould have had, or may have arising out of or related to any of the circumstances giving rise tothe Civil Action or the Company’s ownership of Shares of the Company or any obligation of theCompany in connection with such shareholding from the beginning of the world to the date of thisAgreement (other than claims and liabilities arising out of a breach of this Agreement by theCompany).     **6. ****Agreement Effective Notwithstanding Subsequent Discovery of Different Information****.**Canouse acknowledges that he may hereafter discover facts different from or in addition to those henow knows or believes to be true with respect to the claims, suits, rights, actions, complaints,agreements, contracts, causes of action, and liabilities of any nature whatsoever that are thesubject of the release set forth in this Agreement, and Canouse expressly agrees to assume the riskof the possible discovery of additional or different facts, and agrees that this Agreement shall beand remain effective in all respects regardless of such additional or different facts.     **7. ****Waiver of California Civil Code Section 1542****.**Further, in connection with thereleases set forth above in this Agreement, Canouse expressly agrees that he waives andrelinquishes all rights and benefits under Section 1542 of the Civil Code of the State ofCalifornia, or any similar provision under the laws of any state, including Georgia. Section 1542reads as follows:
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**“****Section 1542****. [****Certain claims not affected by generalrelease****.] A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THECREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OFEXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTEDHIS SETTLEMENT WITH THE DEBTOR.”**     Notwithstanding the provisions of Section 1542, and for the purpose of implementing a full andcomplete release and discharge of the Company Releasees, Canouse expressly acknowledges that thisAgreement is intended to include and does include in its effect, without limitation, all claimswhich Canouse does not know or suspect to exist in his favor against the Company Releasees, or anyof them, at the moment of execution hereof, and that this Agreement expressly contemplates theextinguishment of all such claims.     **8. ****Confidentiality and Non-Disclosure of Confidential Information.**          8.1 Confidentiality.               (a) The terms of this Agreement and all negotiations leading to this Agreement shall beconsidered confidential. Neither Canouse nor the Company shall disclose the terms of thisAgreement except as may be required by law, subpoena or other legal process, including, but notlimited to, the Company’s obligations to provide information pertaining to this Agreement and thetransactions contemplated hereby in its filings with the Securities and Exchange Commission. TheCompany may file a copy of this Agreement with the Securities and Exchange Commission if itreasonably determines that such filing may be necessary to fulfill its obligations under federalsecurities laws.               (b) In the event that any party hereto is served with a subpoena or other process seekinginformation relating to this Agreement, the served-party shall, immediately upon service, objectbased upon this confidentiality clause and notify the non-served party. The non-served party shalleither waive its objection in writing or propound an objection as may be appropriate under theapplicable law or procedure. The parties hereto agree that in the event disclosure is required bylaw that the served-party will seek to maintain confidentiality by requesting appropriate orders,sealing of records or other available means.          8.2 Confidential Information. Canouse acknowledges and agrees that (i) by reason ofCanouse’s past relationship with the Company, in 2004, Canouse was given access to information,trade secrets, strategies, procedures, and expertise unique to the Company, as well as otherconfidential materials and non-public information relating to its directors, officers andemployees; and (ii) the foregoing constitute trade secrets and/or confidential, privileged andproprietary information respecting the business affairs of the Company and its directors, officersand employees which gravely affect the successful and effective operation of the Company(collectively “Confidential Information”). As such, Canouse agrees not to, directly or indirectly,disclose to any third person or use for the benefit of anyone other than the Company, or use forCanouse’s own benefit or purposes any such confidential, privileged or proprietary informationwithout the prior written approval of the Company. Canouse agrees to immediately return alldocuments and writings of any kind, including both originals and copies, whether developed by
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Canouse or others, within Canouse’s custody, possession or control, which contain anynon-public information which in any way relates or refers to the Company or any of its directors,officers, or employees. The parties hereto agree and acknowledge that Canouse was not providedInformation other than in connection with the Civil Action and Information provided prior to theCivil Action.          8.3 Maintaining Confidentiality. Canouse also agrees that the terms and conditions ofthis Agreement as well as any Confidential Information as defined herein are and shall bemaintained in privacy and confidence, except to the extent disclosure is necessary to Canouse’sattorney or accountant, partners, family members, others to whom Canouse has a financial obligationwith respect to the settlement, or any state or federal taxing authority as required by law. Inthe event disclosure is necessary to any of the persons or entities identified herein, Canouse alsoagrees to notify such persons or entities of Canouse’s confidentiality obligations under thisAgreement and to obtain the consent and agreement of such persons or entities (other than taxingauthorities) consistent with the terms stated herein. Canouse further agrees and acknowledges thatthis confidentiality is a material term of this Agreement.          8.4 Confidentiality Applicable to Lawyers. All counsel in this action and privy tothe terms of this Agreement agree to maintain the terms of this Agreement as confidential subjectto the same limitation and exceptions as noted herein.          8.5 Civil Action. The parties hereto acknowledge and agree that certain informationregarding the Civil Action will be public by virtue of the public filings required to be made inthe Civil Action. Such information shall not be subject to the confidentiality provisions of thisAgreement.     **9. ****Covenant Not to Sue.** Canouse agrees that this Agreement shall be the full andfinal resolution of all claims by Canouse. Canouse expressly agrees that he will not and may neverpursue in the future any claim against TRLG for any claim whatsoever relating to or arising fromconduct at issue in the Civil Action. Canouse further agrees that, unless otherwise required bylaw and under compulsion of subpoena or other court order or legal process, Canouse shall notassist any other person in any manner whatsoever with any claim against the Company whether theclaim is made informally or during any regulatory, administrative or judicial proceeding (includingarbitration).     **10. ****Rescission, Injunction and Equitable Relief.**          10.1 By Company. Canouse acknowledges the particular value to the Company of everyterm in this Agreement and, in particular, the Stock Transfer provisions in Section 2, the Release,Waiver and Indemnity provisions in Sections 5 through 8, the Confidentiality provisions in Section9, the Covenant Not to Sue provisions in Section 10, and the No Disparagement provisions in Section13, the breach of which cannot be reasonably or adequately compensated in an action at law.Therefore, Canouse expressly agrees that the Company, in addition to any other rights or remediesthat the Company shall possess, shall be entitled to rescission of this Agreement and injunctiveand other equitable relief to prevent or remedy a breach of this Agreement by Canouse.
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          10.2 By Canouse. The Company acknowledges the particular value to Canouse of theprovisions of Section 2.4 and Section 8.1(a), the breach of which cannot be reasonably oradequately compensated in an action at law. Therefore, the Company expressly agrees that Canouse,in addition to any other rights or remedies that he shall possess, shall be entitled to injunctiveand other equitable relief to prevent or remedy a breach of Section 8.1(a) by the Company.     **11. ****No Assignment****.**Canouse represents and warrants that he has made no assignment,and will make no assignment, of any claim, choses in action, right of action or any right of anykind whatsoever, embodied in any of the claims released herein, and that no other person or entityof any kind had or has any independent interest in any of the claims, demands, obligations,actions, causes of action, debts, liabilities, rights, contracts, damages, attorneys’ fees, costs,expenses or losses released herein.     **12. ****No Disparagement**. Canouse agrees not to make or publish any disparaging ordefamatory communication or statement that has the purpose of causing, or which by naturalconsequence causes, injury or damage to the reputation or business of the Company Releasees, or anyof them. The Company agrees that it shall not, through either its Chief Executive Officer or ChiefFinancial Officer, make or publish any disparaging or defamatory communication or statement thathas the purpose of causing, or which by natural consequence causes, injury or damage to thereputation or business of Canouse, provided, that filings with the Securities and ExchangeCommission shall not be deemed to be prohibited in any manner by the foregoing provision.     **13. ****No Waiver****.**Failure to insist on compliance with any term, covenant or conditioncontained in this Agreement shall not be deemed a waiver of that term, covenant or condition, norshall any waiver or relinquishment of any right contained in this Agreement at any one time or moretimes be deemed a waiver or relinquishment of any right at any other time or times.     **14. ****Successors and Assigns****.**This Agreement, and all terms and provisions hereof,shall be binding upon and shall inure to the benefit of the parties and their respective heirs,legal representatives, successors and assigns.     **15. ****No Admission of Liability****.**The parties to this Agreement acknowledge that thisAgreement effects the resolution of all issues which are in controversy and that nothing containedherein shall constitute or be construed as an admission of liability or as an admission of thetruth of the facts and the matters asserted by either party. The parties hereto desire to resolvetheir disputes in an amicable fashion and have entered into this Agreement with the desire toforever resolve between them all of those matters described in this Agreement. The prevailingparty in any proceeding brought to enforce the terms of this Agreement shall be entitled to recoverfrom the other party all damages, costs and expenses, including with limitations, actual attorneys’fees, incurred as a result of said action.     **16. ****Severability****.**Should any portion, word, clause, phrase, sentence or paragraph ofthis Agreement be declared void or unenforceable, such portion may be considered independent andseverable from the remainder shall not be affected. Notwithstanding the foregoing, if theprovisions of Section 1 or Section 2 relating solely to the payment of the cash or Share
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consideration hereunder are declared void or unenforceable, then this Agreement shall be void.Regulatory delays, including with respect to the filing and approval of the RegistrationStatement, shall not be considered a declaration that a provision is void or unenforceable.     **17. ****Representations and Warranties****.**Both parties to this Agreement represent andwarrant that this Agreement in all respects has been voluntarily and knowingly executed by themafter having received independent legal advice, if they desired, from attorneys of their choice.Both parties also represent and warrant that (i) they have carefully read this Agreement and (ii)the contents hereof are known and understood by them.     **18. ****Choice of Law****.**This Agreement has been negotiated and executed in the State ofCalifornia and shall in all respects be interpreted, enforced and governed in accordance with thelaws of California.     **19. ****Joint Preparation****.**The parties acknowledge that this Agreement was jointlyprepared by them, by and through their respective legal counsel, and any uncertainty or ambiguityexisting herein shall not be interpreted against any of the parties, but otherwise according to theapplication of the rules on interpretation of contracts.     **20. ****Entire Agreement****.**This Agreement constitutes the entire integrated agreementbetween the parties and supersedes any and all other agreements, understandings, negotiations, ordiscussions, either oral or in writing, express or implied, between the parties to this Agreement.The parties to this Agreement each acknowledge that no representations, inducements, promises,agreements or warranties, oral or otherwise, have been made by them, or anyone acting on theirbehalf, which are not embodied in this Agreement, that they have not executed this Agreement inreliance on any such representation, inducement, promise, agreement or warranty, and that norepresentation, inducement, promise, agreement or warranty not contained in the Agreement,including, without limitation, any purported supplements, modifications, waivers or terminations ofany of the Agreement, shall be valid or binding unless executed in writing by both of the partiesto this Agreement.     **21. ****Costs; Miscellaneous.**          21.1 The parties to this Agreement agree to bear their own costs and attorneys’ fees inconnection with the Civil Action and this Agreement, except as otherwise expressly stated herein.          21.2 The parties, and each of them, warrant: (i) that no other person or entity owns, owned,or claims to own any interest in any of the claims, demands, causes of action, obligations,damages, property rights or liabilities covered in this Agreement; (ii) that they, and each ofthem, have the sole right and exclusive authority to execute this Agreement; and (iii) that theyhave not sold, assigned, transferred, conveyed or otherwise disposed of any claim, demand, cause ofaction, obligation, damage, property right or liability covered in this Agreement.          21.3 The headings in this Agreement are for convenience only and do not limit, alter or affectthe matters contained in this Agreement or the paragraphs they encaption.
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     **22. ****Counterparts****.**This Agreement may be executed in one or more counterparts, all ofwhich together constitute one single document. It is further understood that no legal obligationswill arise under this instrument unless and until each and every party has signed its respectivecopy of the Agreement.     **23. ****Notices****.**All notices, payments or other communications received under thisAgreement shall be sent in writing to the following addresses designated in writing by the parties:If to Canouse, to:Joseph C. Canouse