True Religion Apparel (TRLG)

Deductibility of Executive Compensation

        The Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Code, which provides that the Company may not deduct for federal income tax purposes annual compensation of more than $1 million paid to certain executive officers. Performance based compensation paid pursuant to stockholder approved plans is not subject to this deduction limit as long as such compensation is approved by "outside directors" within the meaning of Section 162(m). Our Company met the requirements of Section 162(m) in order to deduct compensation in excess of $1.0 million for 2008. Although the Compensation Committee generally intends to structure and administer executive compensation plans and arrangements so that they will not be subject to the deduction limit of Code Section 162(m), the Compensation Committee may from time to time approve non-deductible payments in order to maintain flexibility in structuring appropriate compensation programs in the interests of the Company and our stockholders.

Deductibility of Executive Compensation

        The Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Code, which provides that the Company may not deduct for federal income tax purposes annual compensation of more than $1 million paid to certain executive officers. Performance-based compensation paid pursuant to stockholder-approved plans is not subject to this deduction limit as long as such compensation is approved by "outside directors" within the meaning of Section 162(m). Our Company failed to meet the requirements of Section 162(m) in order to deduct compensation in excess of $1.0 million in 2007. Although the Compensation Committee generally intends to structure and administer executive compensation plans and arrangements in 2008 and following so that they will not be subject to the deduction limit of Code Section 162(m), the Compensation Committee may from time to time approve non-deductible payments in order to maintain flexibility in structuring appropriate compensation programs in the interests of the Company and our stockholders.

        On March 28, 2008, the Board of Directors adopted the Company's Executive Cash Incentive Bonus Plan. The Company designed its Executive Cash Incentive Bonus Plan so that the payments made under the Plan are eligible for deduction as performance-based compensation under Section 162(m) of the Code.

Deductibility of Executive Compensation

        The Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Code, which provides that the Company may not deduct for federal income tax purposes annual compensation of more than $1 million paid to certain executive officers. Performance-based compensation paid pursuant to stockholder-approved plans is not subject to this deduction limit as long as such compensation is approved by "outside directors" within the meaning of Section 162(m). Our Company failed to meet the requirements of Section 162(m) in order to deduct compensation in excess of $1.0 million in 2007. Although the Compensation Committee generally intends to structure and administer executive compensation plans and arrangements in 2008 and following so that they will not be subject to the deduction limit of Code Section 162(m), the Compensation Committee may from time to time approve non-deductible payments in order to

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maintain flexibility in structuring appropriate compensation programs in the interests of the Company and our stockholders.

        On March 28, 2008, the Board of Directors adopted the Company's Executive Cash Incentive Bonus Plan. The Company designed its Executive Cash Incentive Bonus Plan so that the payments made under the Plan are eligible for deduction as performance-based compensation under Section 162(m) of the Code.

Deductibility of Executive Compensation

        The Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Code, which provides that the
Company may not deduct for federal income tax purposes annual compensation of more than $1 million paid to certain executive officers. Performance-based compensation paid pursuant to
stockholder-approved plans is not subject to this deduction limit as long as such compensation is approved by "outside directors" within the meaning of Section 162(m). Our Company failed to
meet the requirements of Section 162(m) in order to deduct compensation in excess of $1.0 million in 2007. Although the Compensation Committee generally intends to structure and
administer executive compensation plans and arrangements in 2008 and following so that they will not be subject to the deduction limit of Code Section 162(m), the Compensation Committee
may from time to time approve non-deductible payments in order to

34

maintain
flexibility in structuring appropriate compensation programs in the interests of the Company and our stockholders.

        On
March 28, 2008, the Board of Directors adopted the Company's Executive Cash Incentive Bonus Plan. The Company designed its Executive Cash Incentive Bonus Plan so that the
payments made under the Plan are eligible for deduction as performance-based compensation under Section 162(m) of the Code.