Document:

Exhibit 10.1

 

Exhibit 10.1

March 7, 2007

Mr. Peter Collins

Dear Peter,

We are delighted to offer you a position as Chief Financial Officer for True Religion Apparel,
Inc., reporting to the President, Michael Buckley.

The terms of the job offer are outlined below:

	1)	 	You will be paid in biweekly installments (26 times per year) of
$12,500.00 minus applicable taxes and elected benefits.

	 	•	 	Annual salary reviews are currently done once per year in March after the close of
our fiscal year. You would be joining us during Fiscal Year 2007, which runs from
January 1, 2007 to December 31, 2007; therefore, any increase (if awarded) would be
effective April 1, 2008. Salary increases are awarded in the sole discretion of True
Religion Apparel, Inc.

	2)	 	You may be eligible to receive a bonus based on personal business objectives identified by
True Religion Apparel, Inc. during your first month of employment and based on the financial
performance of the company, “EBIT”. The company EBIT plan for 2007 is $47.5 million. Your
bonus plan starts paying out at 80% of EBIT plan. If EBIT is between $38 million and $71.5
million, your potential bonus will be an amount interpolated between 37.5% and 150% of your
base salary. If EBIT is less than $38 million, no bonus will be paid. This bonus plan would
be in effect for Fiscal 2007, which will run from January 2007 through December 2007. If True
Religion Apparel, Inc. awards you a bonus for 2007, that bonus will be prorated based on
length of service in 2007. This payment would be made no later than March 15, 2008, following
year-end. The amount of bonus and target performance goals in future years will be determined
by the Company’s compensation committee.

	3)	 	As an active, full-time True Religion Apparel employee, you will be eligible to elect
coverage and participation in a wide range of benefit programs after the successful completion
of a 90-day continuous introductory period. The specific benefits which you will be offered
as a True Religion Apparel employee are set forth in our employee handbook, a copy of which
you will receive upon hire. You will accrue vacation at the rate of not less than 4 weeks
annually, beginning on your date of hire. For 2007, your vacation accrual will be pro-rated
given that you are beginning after the start of Fiscal Year 2007. Vacation accruals will be
“capped” at 3 times the accrual rate, based on years of service.

 

 

			
	• Page 2
	 	March 7, 2007

	4)	 	In addition, on your start date, you will receive a stock grant of 50,000 shares of True
Religion Apparel, Inc. stock (TRLG). Please refer to the following breakdown and guidelines
regarding this incentive:

	 	•	 	16,667 shares will vest after completion of 1 year of service
	 
	 	•	 	16,667 shares will vest after completion of 2 years of service
	 
	 	•	 	16,666 shares will vest after completion of 3 years of service.

	5)	 	True Religion Apparel reviews each employee’s work performance at least twice per fiscal
year. We believe that this review process is essential to maintaining productive employees
and a successful organization.

	 	•	 	Business objectives will be established by you and your manager within (30) days of
hire. Thereafter, they will be established and documented at the beginning of each
season. Goals may be adjusted as needed, in the sole discretion of management.
	 
	 	•	 	As a new employee, you will have your first performance review within your initial
three (3) months of employment.

	6)	 	You will be located at True Religion Apparel’s Los Angeles headquarters.

	7)	 	You shall be reimbursed for the actual out-of-pocket expenses you incur for you and your
family’s relocation of your residence from Seattle to California, which includes, without
limitation, moving expenses, brokerage fees, closing costs, mortgage broker costs and title
insurance. The maximum amount of reimbursement for such relocation will be one hundred and
fifteen thousand dollars ($115,000), which shall be payable following presentation by you of
detailed itemized receipts for the same. You shall have until December 31, 2007 to complete
the relocation and submit the documentation for reimbursement.

	8)	 	Commuting Costs. It is anticipated that you shall relocate to Los Angeles during the period
that is three to six months following your start date. Until the earlier to occur of (i)
December 31, 2007 or (b) until you relocate from Seattle to Los Angeles, you shall be
reimbursed for reasonable out-of-pocket expenses related to your commute to and from your
residence in Seattle, including coach airfare and short-term corporate housing, which
aggregate expenses shall be limited to $5,000 per month, and which unused amounts shall not
carry over from month to month. Such expenses shall be reimbursed following presentation of
detailed itemized receipts for the same.

	9)	 	True Religion Apparel, Inc. will reimburse all reasonable travel, accommodation, and other
expenses properly and reasonably incurred by you in the proper performance of your duties.
You may submit all expense reimbursement requests on a separate expense report form
accompanied by an original receipt for each item.

 

 

			
	• Page 3
	 	March 7, 2007

	 	•	 	All expense reimbursement requests are subject to the review and approval of
vouchers and documents by your manager, Michael Buckley, President.

	10)	 	In order to comply with US immigration laws, all persons employed by True Religion Apparel,
Inc. must provide evidence of their identity and right to work in the United States. You will
be asked to supply such proof on the first day of your employment.

	11)	 	Either you or True Religion Apparel, Inc. may terminate the employment relationship by
providing 180 days written notice to the other. Both you and True Religion Apparel, Inc.
reserve the right to terminate the employment relationship for any reason, with or without
cause. If either you or True Religion Apparel, Inc. provides 180 days notice, True Religion
Apparel, Inc. retains the option of continuing to employ you during the notice period or of
asking you to end your employment at any point after the notice is given and paying you a pro
rata portion of your annual base salary for whatever portion of the 180-day notice period
remains. In the event that your employment with True Religion Apparel, Inc. is terminated
within 12 months of a Change in Control (as defined in Exhibit A hereto) and the reason for
the termination of employment in event of a Change in Control is other than for willful
misconduct, you will receive 1 year severance pay, all outstanding stock options, restricted
stock and other equity awards granted to Executive under any of TRA’s equity incentive plans
(or awards substituted therefore covering the securities of a successor company) shall become
immediately vested and exercisable in full. In a situation where you are entitled to 1 year
severance, you will not receive 180-days notice of such termination. Under no situation will
you be entitled to both 180-days notice and 1 year severance pay. True Religion also retains
the right to modify the terms and conditions of your employment at any time, for any reason,
with the exception of the terms in this paragraph 11.

	12)	 	This job offer is contingent upon True Religion Apparel, Inc.’s completion of a background
and credit check, pre-employment drug test and reference checks. You will be required to sign
separate authorization forms granting True Religion Apparel, Inc. the right to conduct such
background checks and reference checks.

	13)	 	This job offer is also contingent on your agreement to sign various other forms provided to
you by True Religion Apparel, Inc. including but not limited to a Mutual Agreement to
Arbitrate Claims and a Proprietary Information and Inventions Agreement.

	14)	 	Your employment with True Religion Brand Jeans will be on an “at-will” basis, as set forth in
more detail in paragraph 11. The “at will” nature of your employment can not be changed or
modified other than in a writing signed by the CEO of the company.

This offer letter sets forth all of the terms and conditions of your employment with True Religion
Apparel, Inc. and supersedes any prior or contemporaneous statements concerning your employment.
Any changes to the terms and conditions set forth in this offer letter must be in writing and
signed by the President of True Religion Apparel, Inc. or his official designee.

 

 

			
	• Page 4
	 	March 7, 2007

Please sign your acceptance of this position as Chief Financial Officer for True Religion Apparel,
Inc., and confirm your planned start date. Please return the fully executed acceptance via
facsimile to (323) 826-6457, attention Delores Gilmore, Vice President, Human Resources and FedEx
back a copy to True Religion Apparel, 2263 East Vernon Avenue, Vernon, CA 90058 attn: Michael
Buckley.

The information outlined above is intended to clarify as many issues as possible regarding your new
employee status. Please call me with any further questions.

We are excited about the future and we would be delighted to have you as part of our team.

	 	 	 
	 

	 	Sincerely,
	 
	 
	 
	 	 
	 

	 	/s/ Michael Buckley
	 

	 	 
	 

	 	Michael Buckley
	 

	 	President
	 

	 	True Religion Apparel, Inc.
	 
	 	 
	Accepted and agreed:
	 	 
	 
	 	 
	 
	 	 
	/s/ Peter Collins	 	 
	 

Peter Collins

	 	Intended start date: No later than 

March 26, 2007

 

 

			
	• Page 5
	 	March 7, 2007

EXHIBIT A

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

     (a) 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

          (i) 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

          (ii) any transaction or event resulting in the beneficial ownership of voting securities by
TRA or a corporation owned, directly or indirectly, by the stockholders of TRA in substantially the
same proportions as their ownership of the stock of TRA, or

          (iii) any transaction or event resulting in the beneficial ownership of voting securities
pursuant to a transaction described in clause (c) below that would not be a Change in Control under
clause (c), or

          (iv) any transaction or event resulting solely from the transfer or acquisition of the
beneficial ownership of voting securities by Jeffery Lubell, or an Immediate Family Member or
Affiliate thereof (collectively, the “Lubell Affiliates”);

     (b) 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 ;

     (c) 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 or (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:

 

 

			
	• Page 6
	 	March 7, 2007

          (i) 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

          (ii) 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 clause (c) 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

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

     For purposes of clause (a) 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 clause
(c) 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.

The following terms shall have the following meanings for purposes of this Section:

          (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.Exhibit 10.2

 

Exhibit 10.2

RELEASE AND CONSULTING AGREEMENT

     This Release and Consulting Agreement (the “Agreement”) is entered into by and between Charles
Lesser (hereinafter “Lesser”), on the one hand and True Religion Apparel, Inc. and Guru Denim,
Inc., on the other hand (hereinafter collectively referred to as the “Company”).

Recitals

     A. WHEREAS, Lesser was employed by the Company as its Chief Financial Officer pursuant to an
Employment Agreement dated January 4, 2006 between Lesser and the Company, as modified on May 31,
2006 (the “Employment Agreement”);

     B. WHEREAS, Lesser and the Company have decided to end the employment relationship between
them, effective March 26, 2007;

     C. WHEREAS, Lesser has offered to provide full-time consulting services to the Company for the
period of up to September 26, 2007 and thereafter to provide consulting services on an as needed
basis only; and

     D. WHEREAS, the Company has agreed to accept Lesser’s offer to provide consulting services to
the Company on the terms and conditions set forth below.

     NOW THEREFORE, in consideration of the covenants and promises contained in this Agreement and
other good and valuable consideration, it is hereby agreed among the parties as follows:

Agreement

     1. Separation of Employment/Termination of Agreements.

          (a) Effective March 26, 2007 (the “Separation Date”), Lesser shall no longer be employed by
the Company in any capacity, nor shall he serve the Company as an officer or director and the
Employment Agreement shall terminate and be of no further force or effect. On the Separation Date,
the Company shall pay Lesser any accrued but unpaid salary through the Separation Date, any accrued
but unpaid vacation through the Separation Date in accordance with the Company’s vacation policy
and any unreimbursed business expenses incurred on or prior to the Separation Date, subject to
submission by Lesser of documentation in accordance with the Company’s reimbursement policy no
later than ten business days after the Separation Date.

          (b) Except for this Agreement, the Proprietary Information and Inventions Agreement signed by
Lesser on March 6, 2006 (the “NDA”), the Stock Issuance Agreement (defined below), and that certain
Indemnification Agreement dated August 18, 2005 (the “Indemnification Agreement”), all other
agreements between the Company and Lesser, including, without limitation, the Employment Agreement,
shall terminate and be of no further force or effect as of the Separation Date.

     2. Consulting Arrangement. Provided that Lesser executes this Agreement and does not
revoke this Agreement as set forth in Paragraph 14 below, the Company shall retain Lesser as a
consultant in the manner and for the period of time set forth in Paragraphs 3 and 4, below.

     3. Term of Consulting Arrangement. The Company shall retain Lesser as a full-time
consultant from the Separation Date until September 26, 2007, unless sooner terminated pursuant to
this

 

 

Paragraph 3 (the “Consulting Period”). The Consulting Period may be terminated by the
Company by written notice to Lesser in the event of a breach of any of the terms of this Agreement
by Lesser. All of the Company’s obligations to Lesser hereunder shall immediately cease upon
written notice to Lesser of his breach of any of the terms of this Agreement. Notwithstanding the
foregoing, it is understood and agreed that Lesser will be required to serve jury duty in April and
will be taking a two week vacation in June (the dates for which he will provide the Company with
reasonable prior notice), and his absence from his duties hereunder during such time periods shall
not be considered a breach of this Agreement.

     4. Scope of Consultant Duties. During the Consulting Period, Lesser shall make
himself available to the Company, on a full time basis not to exceed forty (40) hours per week, to
consult and perform tasks as requested by the Company. During the Consulting Period, Lesser shall
report to the Company’s President, Michael Buckley. During the Consulting Period, Lesser shall
provide his services exclusively to the Company and shall not provide services of any nature to any
other person or entity without the Company’s prior written consent.

     5. Consulting Fee. In exchange for Lesser’s agreement to provide consulting services
in accordance with this Agreement and in further consideration for Lesser’s other promises and
covenants herein, the Company shall pay a consulting fee to Lesser of $20,833.33 per month, during
the Consulting Period, in accordance with the Company’s normal practices. The payments set forth
in this Paragraph 5 shall be referred to as the “Consulting Fee”. During the Consulting Period,
Lesser shall be treated as an independent contractor and the Company shall not withhold amounts for
taxes from the Consulting Fee. The Consulting Fee shall be payable to Lesser hereunder regardless of the level of services for
which the Company utilizes Lesser hereunder. In addition, the Consulting Fee shall be paid for the
full Consulting Period if Lesser should die or become permanently disabled during the Consulting
Period and this Agreement shall not have been terminated prior to his death or disability.

     6. Equity Awards/No Accrual of Other Benefits.

          (a) During the term of his employment with the Company, Lesser was granted shares of
restricted stock, of which 15,000 shares remain unvested and subject to a right of forfeiture (the
“Restricted Stock”). The grants were made pursuant and subject to the terms and conditions of the
Company’s 2005 Equity Incentive Plan (as amended, the “Plan”), copies of which plans were
previously provided to Lesser. The Restricted Stock grant was made pursuant to a Stock Issuance
Agreement dated January 4, , 2006 (the “Stock Issuance Agreement”).

          (b) The Company and Lesser agree that pursuant to the terms of the Plan, during the Consulting
Period, the Restricted Stock shall continue to vest in accordance with the original vesting
schedule in the Stock Issuance Agreement. Upon the termination, if any, of the Consulting Period
prior to September 26, 2007, the Restricted Stock shall cease to vest and the Stock Issuance
Agreements shall terminate in full.

          (c) Provided that Lesser executes this Agreement (and does not revoke it) and provided that
Lesser abides by all of the terms herein, specifically including but not limited to Paragraphs 19,
21 and 22, and provided that the Company has not terminated the Consulting Period prior to
September 26, 2007 as a result of Lesser’s breach of this Agreement, then all of Lesser’s
outstanding stock options, restricted stock and other equity awards granted to Lesser under any of
the Company’s equity incentive plans (or awards substituted therefore covering the securities of a
successor company) shall be modified to reflect an additional twelve (12) months of vesting.
Thereafter, the Stock Issuance Agreements shall terminate.

          (d) Lesser acknowledges and agrees that except as set forth in this Paragraph 6, he is not
entitled to, nor shall he make any claim for, any other equity interest in the Company of any type
whatsoever, including, but not limited to, any other stock option, any shares of any class or
series of

2

 

capital stock in the Company or any security of the Company. Lesser further acknowledges and
agrees that he waives any claim of right to any other equity interest in the Company not
specifically set forth in this Paragraph 6.

          (e) Lesser agrees, to the maximum extent allowed by law: (i) that he shall be solely liable
for and shall pay any and all taxes, costs, interest, assessments, penalties, damages, attorney’s
fees or other losses to which he is or may be subject by reason of the payments by the Company to
him identified in Paragraph 5 of this Agreement, and by reason of the equity interest identified in
Paragraph 6 of this Agreement; (ii) to indemnify and hold the Company Releasees (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 may be subject by reason of
such payments, interest, reimbursements and/or loans, including, but not limited to, any claim or
claims against the Company Releasees, for failure to withhold or under withholding of taxes; (iii)
not to seek or make any claim or claims against the Company Releasees, or any of them, for
contribution, indemnity, compensation, recompense, damages, taxes, costs, interest, penalties,
attorneys’ fees or other losses, if a determination is made that withholdings should have been made
from any payments to Lesser; and (iv) to assume responsibility for contesting and defending any
claim or assertion that withholding should have been made from any payment or other interest
provided, or that the Company Releasees, or any of them, owe taxes thereon for any reason, and to
cooperate fully in the defense of any such claim or claims which is/are brought against the Company
Releases, or any of them.

     7. Further Consideration For Lesser’s Agreement Hereunder. Provided that Lesser
executes this Agreement (and does not revoke it), and provided that Lesser abides by all of the
terms herein, specifically including but not limited to Paragraphs 19, 21 and 22, and provided that
the Company has not terminated the Consulting Period prior to its expiration as a result of
Lesser’s breach of this Agreement, then the Company shall provide Lesser with the following:

          (a) A lump sum amount equal to $340,000. This lump sum shall be paid on September 26, 2007,
assuming that Lesser’s service as a consultant hereunder has continued through that date.

          (b) Payment of COBRA continuation coverage for Lesser and Lesser’s eligible family members
beginning March 26, 2007 and ending September 26, 2008, provided however that should Lesser become
re-employed with another employer and become eligible to receive group health insurance coverage
under another employer’s plan(s), Lesser must immediately report said coverage to the Company and
the Company’s obligations under this Paragraph 7(b) shall immediately terminate.

     8. Release of Known and Unknown Claims by Lesser.

          (a) In exchange for the agreements contained herein, Lesser agrees unconditionally and forever
to release and discharge the Company and its affiliated, related, parent and subsidiary
corporations, as well as their respective attorneys, agents, representatives, partners, joint
ventures, successors, assigns, insurers, employees, officers, and directors (“Company Releasees”)
from any and all claims, suits, rights, actions, complaints, demands, agreements, contracts, causes
of action, and liabilities of any kind or nature which he may now have, or ever have, whether known
or unknown, including any claims, causes of action or demands of any nature arising out of or in
any way relating to his employment with, or separation from the Company on or before the date of
the execution of this Agreement.

3

 

          (b) This release specifically includes, but is not limited to, any claims for fraud; breach of
contract; breach of implied covenant of good faith and fair dealing; inducement of breach;
interference with contract; wrongful or unlawful discharge or demotion; violation of public policy;
assault and battery (sexual or otherwise); invasion of privacy; intentional or negligent infliction
of emotional distress; intentional or negligent misrepresentation; conspiracy; failure to pay
wages, benefits, vacation pay, severance pay, attorneys’ fees, or other compensation of any sort;
retaliation, discrimination or harassment on the basis of age, race, color, sex, gender, national
origin, ancestry, religion, disability, handicap, medical condition, marital status, sexual
orientation or any other protected category; any claim under Title VII of the Civil Rights Act of
1964, as amended, the Americans with Disabilities Act, the Age Discrimination in Employment Act, as
amended by the Older Workers Benefit Protection Act; the California Fair Employment and Housing
Act; Sarbanes-Oxley, or Section 1981 of Title 42 of the United States Code; violation of COBRA;
violation of any safety and health laws, statutes or regulations; violation of ERISA; violation of
the Internal Revenue Code; or any other wrongful conduct, based upon events occurring prior to the
date of execution of this Agreement.

          (c) Lesser acknowledges that he may hereafter discover facts different from or in addition to
those he now knows or believes to be true with respect to the claims, suits, rights, actions,
complaints, demands, agreements, contracts, causes of action, and liabilities of any nature
whatsoever that are the subject of the release set forth in this Agreement, and Lesser expressly
agrees to assume the risk of the possible discovery of additional or different facts, and agrees
that this Agreement shall be and remain effective in all respects regardless of such additional or
different facts.

          (d) Lesser further agrees knowingly to waive the provisions and protections of Section 1542 of
the California Civil Code, which reads:

     A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, MUST
HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

          (e) Notwithstanding the provisions of Section 1542, and for the purpose of implementing a full
and complete release and discharge of the Company Releasees, Lesser expressly acknowledges that
this Agreement is intended to include and does include in its effect, without limitation, all
claims which Lesser does not know or suspect to exist in his favor against the Company Releasees,
or any of them, at the moment of execution hereof, and that this Agreement expressly contemplates
the extinguishment of all such claims.

          (f) This release of known and unknown claims shall be construed as broadly as possible under
applicable law but shall not include any claim for indemnification under California Labor Code
Section 2802 or California Corporations Code Section 317 or any other claim the release of which
would violate California or federal statutory law or the public policy of the State of California.

          (g) Nothing in this release of known or unknown claims shall be construed as prohibiting
Lesser from making a future claim with the Equal Employment Opportunity Commission or any similar
state agency including, but not limited to the California Department of Fair Employment and Housing
provided, however, that should Lesser pursue such an administrative action against the Company,
Lesser agrees and acknowledges that he will not seek, nor shall he be entitled to recover, any
monetary damages from any such proceeding.

4

 

     9. Indemnification. Lesser expressly agrees to indemnify and hold the Company
Releasees, and any of them, harmless from any claim, cause of action, complaint, demand, penalty,
damage, attorney’s fees or other losses to which the Company Releasees, or any of them, are subject
to liability, arising from, related to or any in way connected with any fraudulent, tortious and/or
criminal conduct engaged in by Lesser at any time during his employment with the Company. As a
partial remedy hereunder, in the event Lesser is found by any body having jurisdiction to have
engaged in any fraudulent, tortious or criminal conduct at any time during his employment, the
Consulting Period hereunder shall terminate with no further liability or obligations of the Company
whatsoever, and Lesser shall thereupon forfeit the Option to the extent not vested.

     10. Assistance in Legal Actions. In the event the Company is or becomes involved in
any legal action relating to events which occurred or alleged to have occurred while Lesser was
rendering services to the Company or about which Lesser possesses any information, Lesser agrees to
assist in the preparation, prosecution or defense of any case involving the Company, including,
without limitation, executing truthful declarations or documents or providing information requested
by the Company and attending and/or testifying truthfully at deposition(s) or at trial without the
necessity of a subpoena. To the extent Lesser is requested to provide assistance in legal actions following the completion
of the Consulting Period, he shall be entitled to receive reasonable compensation for his time
spent and expenses incurred in providing such services, in each case as reasonably and mutually
agreed upon by the parties.

     11. Standstill. Lesser agrees that, without the prior written consent of the Company,
Lesser shall not, for a period of five (5) years from the date of this Agreement (the “Standstill
Period”), directly or indirectly:

          (a) other than with respect to the Option Shares, acquire 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”))
of any of the assets or businesses of the Company or any securities of the Company (including,
without limitation, any debt, equity or convertible securities) or any rights or options to acquire
any such ownership from any Person;

          (b) make, or in any way participate in, any “solicitation” of “proxies,” as such terms are
used 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 of
any 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 voting
securities or securities convertible or exchangeable into or exercisable for any voting securities
or 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 or
similar transaction to or with the Company or otherwise act, whether alone or in concert with
others, 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 a
merger, business combination, exchange offer or liquidation of the Company or any other acquisition
of the Company, any acquisition of securities of or all or any portion of the assets of the Company
or any other similar transaction;

5

 

          (g) make any proposal to be considered and/or voted upon at any meeting of the stockholders of
the Company;

          (h) announce an intention to, or enter into any discussion, negotiations, arrangements or
understandings with any third party with respect to, any of the foregoing matters;

          (i) disclose any intention, plan or arrangement inconsistent with any of the foregoing
provisions; or

          (j) advise, assist, encourage or participate with any other Person in connection with action
inconsistent 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 liability
company, government or any agency or political subdivision thereof, or any other legal entity or
organization. This standstill provision shall not affect Lesser’s ability to purchase interests in
mutual funds or other similar investment vehicles over which he has no ability to direct the
investment or disposition of shares or other equity interests.

     12. Knowing and Voluntary. Each party represents and agrees that the party is
entering into this Agreement knowingly and voluntarily. Each party affirms that no promise or
inducement was made to cause the party to enter into this Agreement, other than what is promised to
the party in this Agreement. Each party further confirms that the party has not relied upon any
other statement or representation by anyone other than what is in this Agreement as a basis for the
party’s agreement.

     13. 21 Days to Execute The Agreement. Lesser expressly acknowledges that he has been
provided twenty-one (21) days to consider this Agreement and that he was informed that he had the
right to consult with counsel regarding this Agreement, and that he has had the opportunity to
consult with counsel. To the extent that Lesser has taken fewer than twenty-one (21) days to
consider this Agreement, Lesser acknowledges that he had sufficient time to consider the Agreement
and to consult with counsel and that he does not desire additional time.

     14. 7 Days To Revoke The Agreement. This Agreement is revocable by Lesser for a
period of seven calendar days following the execution of this Agreement. The revocation must be in
writing, must specifically revoke this Agreement, and must be received by Michael Buckley via
personal delivery by messenger at 2263 East Vernon Avenue, Vernon, CA 90058, prior to the eighth
calendar day following the execution of this Agreement. This Agreement becomes effective,
enforceable and irrevocable on the eighth calendar day following Lesser’s execution of this
Agreement.

     15. Return of Property. Upon the conclusion of the Consulting Period, Lesser agrees
to return to the Company all property of the Company which Lesser has in his custody or control
such as office equipment, forms, manuals, documents of client files, computer disks, personnel
files, or other confidential or proprietary materials of the Company. By signing this Agreement,
Lesser hereby certifies that he will not retain possession of any of the Company’s property,
including, but not limited to the original or a copy of the materials outlined in this Paragraph.

     16. No Admission of Liability. This Agreement does not constitute an admission of any
kind by the Company or Lesser. The parties hereto desire to resolve any potential disputes in an
amicable fashion and have entered into this Agreement with the desire to forever resolve between
them those matters described in this Agreement.

6

 

     17. Attorneys’ Fees. The prevailing party in any proceeding brought to enforce the
terms of this Agreement shall be entitled to recover from the other party all damages, costs and
expenses, including with limitations, attorneys’ and arbitrator’s fees, incurred as a result of
said action. Lesser shall be entitled to be reimbursed up to $5,000 for legal fees incurred by him in the
preparation and negotiation of this Agreement, upon presentation by him to the Company of
reasonably detailed legal bills.

     18. Modification. No amendments to this Agreement will be valid unless written and
signed by Lesser and the Company’s President or the President’s designee.

     19. Noncompetition/Nonsolicitation/Noninterference.

          (a) Lesser agrees that during the Consulting Period, without the prior written consent of the
Company, he shall not, directly or indirectly, through a corporation, partnership, limited
liability company, consulting arrangement or any other form of business entity, in any capacity,
including but not limited to as an employee, officer, director, shareholder, partner, member, owner
or otherwise, in any state or territory of the United States, engage in the business of designing,
manufacturing, marketing, selling, licensing apparel, accessories or apparel or accessory related
products or services or engage in any of the other lines of business conducted directly or
indirectly by the Company.

          (b) Lesser also agrees that during the Consulting Period and for one (1) year after the
Consulting Period, Lesser (and any corporation or entity of which Lesser is a director, officer,
employee or greater than 5% shareholder) shall not:

               (i) Directly or indirectly, engage, employ or solicit the employment of any person who is then
or has been within twelve (12) months prior to the time of such action, an employee the Company or
any of its affiliates or subsidiaries; or

               (ii) Make any public statement concerning the Company, any of its affiliates or subsidiaries,
or concerning Lesser’s employment with or Lesser’s consulting arrangement with the Company, unless
such public statement has been previously approved by the Company, except as may be required by
law; or

               (iii) Induce, attempt to induce or knowingly encourage any Customer, supplier, distributor,
vendor, contractor or agent of the Company or any of its affiliates or subsidiaries to divert any
business or income from the Company or any of its affiliates or subsidiaries or to stop or alter
the manner in which the Customer, supplier, distributor, vendor, contractor, or agent is or are
then doing business with the Company or any of its affiliates or subsidiaries. The term “Customer”
shall mean any individual or business that was or is a customer or client of, or one that was or is
a party in a selling agreement with, or whose business was actively solicited by, the Company or
any of its affiliates or subsidiaries at any time, regardless of whether such customer was
generated, in whole or in part, by Lesser’s efforts.

          (c) Each party hereto acknowledges that the potential restrictions on Lesser’s future
activities imposed by the covenants in Section 19 are reasonable in both duration and scope and in
all other respects. In the event that the provisions of Section 19 should ever be deemed to exceed
the duration or scope permitted by applicable law, then such provisions shall be reformed to the
maximum time, scope or other limitation, as the case may be, permitted by applicable law, and each
party agrees that the restrictions and prohibitions contained herein shall be effective to the
fullest extent allowed under applicable law in such jurisdiction.

7

 

          (d) Lesser understands and agrees that the consideration he is receiving in connection with
this agreement is adequate consideration to support the covenants set forth in this Agreement.
Lesser further understands and agrees that this Paragraph 19 is a material term of this Agreement.

     20. Specific Performance. Lesser acknowledges that in the event of breach or
threatened breach by Lesser of the terms of Paragraphs 11 or 19 hereof, the Company could suffer
significant and irreparable harm that could not be satisfactorily compensated in monetary terms,
and that the remedies at law available to the Company may otherwise be inadequate and the Company
shall be entitled, in addition to any other remedies to which it may be entitled to under law or in
equity, to specific performance of this Agreement by Lesser including the immediate ex parte
issuance, without bond, of a temporary restraining order enjoining Lesser from any such violation
or threatened violation of this Agreement and to exercise such remedies cumulatively or in
conjunction with all other rights and remedies provided by law and not otherwise limited by this
Agreement. Lesser hereby acknowledges and agrees that the Company shall not be required to post
bond as a condition to obtaining or exercising any such remedies, and Lesser hereby waives any such
requirement or condition. Lesser also specifically acknowledges that the issuance of a temporary
restraining order may be requested by the Company through the dispute resolution procedure set
forth in Paragraph 29, below.

     21. Entire Agreement/Integration. This Agreement, the Stock Issuance Agreement, the
Proprietary Information and Inventions Agreement, and the Indemnification Agreement, constitute the
entire agreement between Lesser and the Company concerning the terms of Lesser’s employment with
and separation from the Company and the compensation related thereto, and this Agreement
constitutes the entire agreement between Lesser and the Company concerning the terms and conditions
of Lesser’s consulting arrangement with the Company. All prior discussions and negotiations have
been and are merged and integrated into, and are superseded by, this Agreement and those agreements
referenced herein. 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 their behalf, which are not embodied in this Agreement, the Option Agreement, as
amended hereby, and the Proprietary Information and Inventions Agreement, and that they have not
executed this Agreement in reliance on any such representation, inducement, promise, agreement or
warranty.

     22. Non-Disparagement. Lesser agrees that he will not, either directly or indirectly,
disparage or otherwise make negative remarks to any person or entity regarding (a) the Company, (b)
the Company’s owners, agents, representatives, attorneys, accountants, employees, officers or
directors, or (c) the Company’s current or potential products, services, plans, strategies,
operations, business or financial condition. Lesser understands and agrees that this Paragraph is
a material term of this Agreement.

     23. [Intentionally omitted].

     24. No Assignment. Lesser represents and warrants that he has made no assignment, and
will make no assignment, of any claim, right of action or any right of any kind whatsoever,
embodied in any of the claims released herein, and that no other person or entity of any kind had
or has any 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.

     25. No Waiver. Failure to insist on compliance with any term, covenant or condition
contained in this Agreement shall not be deemed a waiver of that term, covenant or condition, nor
shall any waiver or relinquishment of any right contained in this Agreement at any one time or more
times be deemed a waiver or relinquishment of any right at any other time or times.

8

 

     26. Successors and Assigns. This Agreement may not be assigned by the Executive, but
may be assigned by the Company to any successor to its business and will inure to the benefit of
and be binding upon any such successor.

     27. Severability. Should any portion, word, clause, phrase, sentence or paragraph of
this Agreement be declared void of unenforceable, such portion may be considered and independent
and severable from the remainder, the validity of which shall remain unaffected.

     28. Representations and Warranties. Both parties to this Agreement represent and
warrant that this Agreement in all respects has been voluntarily and knowingly executed by them
after having received independent legal advice, if they desired, from attorneys of their choice.
Both parties also represent and warrant that they have carefully read this Agreement and the
contents hereof are known and understood by them.

     29. Choice of Law. This Agreement has been negotiated and executed in the State of
California and shall in all respects be interpreted, enforced and governed in accordance with the
laws of California. After execution of this Agreement, any dispute regarding enforcement or breach
of this Agreement, or any aspect of Lesser’s employment with the Company or the cessation of such
employment, or the consulting arrangement set forth herein, will be submitted to final and binding
arbitration pursuant to the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association (“AAA”) in Los Angeles County, California, as the exclusive remedy
for such claim or dispute. In any such arbitration, discovery may be conducted pursuant to
applicable California law. The arbitrator shall issue a written opinion and shall have full
authority to award all remedies which would be available in court. Judgment upon the award
rendered by the AAA arbitrator may be entered in any court having jurisdiction thereof.

     30. Publicity. To the extent the Company issues a press release regarding the
termination of Lesser’s employment, it shall provide a copy of such press release to Lesser prior
to its release.

     31. Joint Preparation. The parties acknowledge that this Agreement was jointly
prepared by them, by and through their respective legal counsel, and any uncertainty or ambiguity
existing herein shall not be interpreted against any of the parties, but otherwise according to the
application of the rules on interpretation of contracts.

* * *

9

 

     PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
THE UNDERSIGNED AGREE TO THE TERMS OF THIS AGREEMENT AND VOLUNTARILY ENTER INTO IT WITH THE INTENT
TO BE BOUND THEREBY.

	 	 	 	 	 
	 	 	 
	Date: March 7, 2007 	/s/ Charles Lesser
 	 
	 	Charles Lesser 	 
	 	 	 
	 
	Date: March 7, 2007 	TRUE RELIGION APPAREL, INC.

 	 
	 	By:  	                      /s/ Michael Buckley
 	 
	 	 	Michael Buckley, President 	 
	 	 	 	 
	 
	Date: March 7, 2007 	GURU DENIM, INC.

 	 
	 	By:  	/s/ Jeff Lubell
 	 
	 	 	Jeff Lubell, CEO 	 
	 	 	 	 
	 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00118-of-00352.parquet"}]]