Exhibit 10.1

 

FIRST AMENDMENT TO

LICENSE AGREEMENT

 

This First Amendment to the License Agreement (“First Amendment”) is made
effective as of October 10, 2005, by and between INNOVO GROUP INC., a Delaware
corporation, with its principle place of business at 5804 East Slauson Avenue,
Commerce, California 90040, (hereinafter referred to as “INNOVO”) and JD DESIGN
LLC, a California limited liability company, with its principle place of
business at 5900 S. Eastern Avenue, Commerce, California 90040, (hereinafter
referred to as “JD DESIGN”) and collectively know as (the “Parties”).

 

W I T N E S S E T H:

 

WHEREAS, the Parties entered into that certain License Agreement (the “License
Agreement”) dated effective as of February 7, 2001 pursuant to which JD DESIGN
granted to INNOVO an exclusive, non-assignable right to use certain marks,
including the Joe’s® and JD symbol, in connection with the manufacture and/or
importation and sale of certain Licensed Products (capitalized terms not
otherwise defined herein shall have the same meaning as ascribed to them in the
License Agreement) bearing the Trademarks in the Territory; and

 

WHEREAS, INNOVO and JD DESIGN have been in discussions regarding the licensing
of certain kids products under the License Agreement which INNOVO, through its
wholly-owned subsidiary Joe’s Jeans, Inc. (“JOE’S JEANS”) is not actively
producing or selling; and

 

WHEREAS, in connection with the License Agreement between the Parties, the
Parties wish to amend the License Agreement to provide, subject to certain
restrictions and conditions as more fully set forth hereinbelow, for a release
by INNOVO to JD DESIGN of certain of the Licensed Products set forth in
Schedule A attached to the License Agreement and incorporated therein relating
to the right to exploit the Trademarks in connection with “Boyswear Licensed
Products,” “Girlswear Licensed Products” and “Infants and Toddlers Licensed
Products”; and

 

NOW, THEREFORE, the Parties to this First Amendment hereby agree as follows:

 

1.                                       INNOVO hereby releases to JD DESIGN its
rights to the following Licensed Products from Schedule A of the License
Agreement:

 

(a)                                  “Boyswear Licensed Products,” sizes 4-20,
as follows: boy’s dress, knit and woven sport shirts, suits, sportcoats, vests,
sweaters, topcoats, neckwear, long and short pants and slacks, jeans, socks,
gloves, underwear, pajamas, hats and caps, handkerchiefs and swimsuits, and such
other items as may from time-to-time be designated upon written agreement by the
parties.

 

(b)                                 “Girlswear Licensed Products,” sizes 3-14,
as follows: shirts, blouses, knit shirts, dresses, coats, sport jackets,
sweaters, slacks, jeans, socks, gloves, hats, scarves, swimwear,

 

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handkerchiefs, and skirts and such other items as may from time-to-time be
designated upon written agreement by the parties.

 

(c)                                  “Infants and Toddlers Licensed Products,”
sizes 0-4 as follows:  newborn, infant and toddler apparel including without
limitation playwear, sportswear, outerwear and sleepwear.

 

(The Licensed Products mentioned above in Paragraphs 1(a), (b) and (c) shall
hereinafter be referred to as the “Released Products.”)

 

2.                                       (a)                                  In
connection with the release of the Released Products from Schedule A of the
License Agreement and the reversion of the rights related thereto to JD DESIGN
and in consideration of the efforts by INNOVO and JOE’S JEANS with the
exploitation of the original Trademarks and any and all subsequent marks, JD
DESIGN hereby grants to INNOVO the right to receive a 5% commission on all Net
Sales of the Released Products (the “Commission”).  “Net Sales” shall have the
same meaning and be calculated in the same manner as set forth in the License
Agreement between INNOVO and JD DESIGN.  For purposes of this First Amendment,
it shall specifically be understood that INNOVO shall not be obligated to pay to
JD DESIGN the three percent (3%) commission as set forth in Section 6.1 of the
License Agreement for any sales of the Released Products.

 

(b)                                 In addition so long as JD DESIGN meets the
following minimum Net Sales and pays the guaranteed minimum royalties (“GMR”) of
Released Products according to the following schedule, the rights granted to JD
DESIGN under this First Amendment shall remain in effect:

 

Annual Periods of Initial Term

 

Minimum
Net Sales

 

GMR

 

 

 

 

 

 

 

December 1, 2005 – May 31, 2007 (“Year 1”)

 

$

1,000,000

 

$

50,000

 

June 1, 2007 – May 31, 2008 (“Year 2”)

 

$

2,000,000

 

$

100,000

 

June 1, 2008 – May 31, 2009 (“Year 3”)

 

$

3,000,000

 

$

150,000

 

 

(c)                                  All GMR’s paid during the term shall be
creditable against the Commission otherwise owed in Paragraph 2 of this First
Amendment.  Any excess GMR paid for during the

 

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respective term shall not be credited against GMR’s owed in any subsequent
terms.

 

3.                                       Any additional consents or references
to permission, specifically the language of Section 2.1 of the License
Agreement, by Licensee for Licensor to subsequently grant third parties the
right to manufacture, sell and/or import the Released Products is hereby
expressly granted.

 

4.                                       The rights granted under this First
Amendment shall remain in effect for a period of five (5) years from the date
hereof (“Initial Term”) with the option to renew by JD DESIGN for up to the
total term granted to Innovo under the License Agreement dated February 7, 2001,
so long as JD DESIGN shall not be in default of its existing obligations under
this First Amendment.  This First Amendment shall automatically renew unless
terminated in writing by JD Design.

 

5.                                       It is agreed to by the Parties that JD
DESIGN shall agree to employ at least one (1) salesperson responsible for sales
of Released Products.

 

6.                                       It is agreed to by the Parties that JD
DESIGN shall agree to ship its first substantial quantities of Released Products
no later than March 2006.

 

7.                                       It is agreed to by the Parties that all
sales of Released Products shall be made only to better department and better
specialty stores, and that JD DESIGN shall have discretion on any close-out
sales up to twenty percent (20%) of all Net Sales of Released Products.

 

8.                                       At its sole discretion, JD Design shall
decide the extent of the product line to be offered under this Release, and no
Event of Default shall occur as against JD Design as long as the GMR  payment
across all three Released Products categories is met.  For purposes of this
First Amendment, an Event of Default shall have the same meaning as set forth in
Section 9.1 of the License Agreement.

 

10.                                 Except as set forth herein or as amended by
this First Amendment, all other terms and conditions of the License Agreement
shall remain the same and shall be in full force and effect.  Any capitalized
terms not otherwise defined herein shall have the same meaning as set forth in
the License Agreement.  In the event of a conflict between this First Amendment
and the License Agreement, the License Agreement shall govern.

 

11.                                 This First Amendment may be executed in two
or more counterparts, each of which shall be deemed to be an original, and all
of which, taken together, shall constitute one and the same instrument.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.  SIGNATURE PAGE TO FOLLOW.]

 

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IN WITNESS WHEREOF, the parties have executed this First Amendment, as of the
date first written above.

 

 

INNOVO GROUP INC.

 

JD DESIGN LLC

 

 

 

 

 

 

 

 

 

/s/      Marc Crossman

 

 

            /s/ Joe Dahan

By:

Marc Crossman

 

By: Joe Dahan

Title:

President

 

Title: Chief Manager

 

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