Related Party Transactions and Outside Related Director Information

Cherokee Inc. (CHKE)

5/1/2006 Proxy Information

On November 7, 1997, the Company entered into an Agreement of Purchase and Sale of Trademarks and Licenses with Sideout Sport Inc., pursuant to which the Company agreed to purchase all of Sideout Sport Inc.Ős trademarks, copyrights, trade secrets and associated license agreements. Steven Ascher, a former Executive Vice President of the Company, beneficially owns 37.2% of Sideout Sport Inc. Mr. AscherŐs father and father-in-law beneficially own 8.9% and 5.0%, respectively, of Sideout Sport Inc. Pursuant to the agreement with Sideout, the Company paid $1.5 million at the closing of the acquisition and agreed to pay an additional $500,000 upon release of liens on the assets that were purchased. Most of the liens have since been released and $495,000 of the $500,000 holdback has been paid. Under the terms of the agreement with Sideout, the Company also agreed to pay Sideout Sport Inc., on a quarterly basis, contingent payments of 40% of the first $10.0 million, 10% of the next $5.0 million and 5% of the next $20.0 million, of royalties and license fees received by the Company through licensing of the Sideout trademarks. Upon the earlier of such time as the Company has paid Sideout Sport Inc. total contingent payments of $5.5 million or October 22, 2004, the Company will have no further obligation to pay Sideout Sport Inc. During fiscal 2005, the Company made payments of $163,000 to Sideout Sport Inc. and since January 1999, the Company has paid in total over $4.8 million in contingent payments to Sideout Sport Inc. The Company made its last contingent payment due under this agreement in the third quarter ended October 30, 2004.