Exhibit 10.9

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of July 15, 2013 by
and between Joe’s Jeans, Inc., a Delaware corporation (the “Parent”), Hudson
Clothing Holdings, Inc. (“HCH”), a Delaware corporation, HC Acquisition
Holdings, Inc. (“HCAH”), a Delaware corporation, Hudson Clothing, LLC (the
“Company”), California limited liability company, and Peter Kim (“Executive”)
but is not effective until the Closing of the Transactions pursuant to the Stock
Purchase Agreement (“Effective Date”).

 

RECITALS

 

In connection with, and as a necessary condition to, the consummation of the
transactions contemplated (the “Acquisition Transaction”) by the Stock Purchase
Agreement dated as of July 15, 2013 among Parent, the Company and the
stockholders party thereto (the “Stock Purchase Agreement”), the Company desires
that Executive continue to serve as the Chief Executive Officer of the Company,
in order to assure continuity of management of the Company, and Executive
desires to be so employed, on the terms and conditions as hereinafter set forth.

 

NOW, THEREFORE, the parties agree as follows:

 

AGREEMENT

 

Section 1.                                           EMPLOYMENT

 

Section 1.1                                                            Term of
Employment.  The Company agrees to employ Executive, and Executive agrees to
remain an employee of the Company, for three years from the Effective Date of
this Agreement.  The period during which Executive is employed by the Company
pursuant to this Agreement is herein referred to as the “Term”.

 

Section 1.2                                                            Title and
Duties.  During the Term, Executive shall be employed as the Chief Executive
Officer of the Company.  He shall further perform such reasonable executive and
managerial responsibilities and duties consistent with the title and position of
Chief Executive Officer as may be assigned to him from time to time by the
Company.  In this capacity, Executive shall report to the Chief Executive
Officer of Parent.  Executive shall diligently devote his business skill, time
and effort to his employment hereunder and shall not serve as an employee,
director or consultant of any other entity without the consent of the Chief
Executive Officer of Parent, provided, however, that Executive shall be entitled
annually to vacation and sick leave pursuant to policies applicable to executive
officers of the Company.

 

During the Term, Executive shall further serve (i) as a director of HCAH and
HCH, and a manager of the Company in each case, to the extent then existing, and
(ii) as Chief Executive Officer of HCAH and HCH; without additional
compensation.  In the event that Executive is not an employee of the Company,
then Section 3.3 shall apply.

 

Section 1.3                                                           
Location.  Executive shall be based in Commerce, California, subject to travel
as required in the performance of duties hereunder.

 

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Section 1.4                                                           
Vacation.  Executive shall be allowed four weeks of vacation with pay and leaves
of absence with pay on the same basis as other senior executive employees of the
Company.

 

Section 1.5                                                            Board of
Directors.  At the Closing (as defined in the Stock Purchase Agreement), the
Board of Directors of Parent (the “Board”) shall increase the size of the Board
by one (1) additional member and appoint Executive to be a member thereof.  In
addition, so long as Executive is an employee of the Company, the Parent shall
nominate Executive to the Board for approval by the stockholders.  So long as
Executive is an employee of the Company, Parent shall assure that: (i) Executive
is included in the Board’s slate of nominees to the stockholders for each
election of directors and (ii) Executive is included in the proxy statement
prepared by management of Parent in connection with soliciting proxies for every
meeting of the stockholders of Parent called with respect to the election of
members of the Board and at every adjournment or postponement thereof, and on
every action or approval by written consent of the stockholders of Parent or the
Board with respect to the election of members of the Board.  In the event that
Executive is not an employee of the Company, then Section 3.3 shall apply.

 

Section 2.                                           COMPENSATION

 

Section 2.1                                                            Salary;
Other Payments.  The Company shall pay Executive during the Term an annual base
salary of $500,000 payable in accordance with the Company’s normal payroll
practices, and Executive and Parent agree that such salary shall be reviewed by
the Compensation Committee of the Board at least annually, beginning with a
review on or around the first anniversary of the Effective Date; provided
however, that Executive’s Base Salary shall not be decreased at any time during
the Term of Employment.  (Executive’s annual salary, as set forth above or as it
may be increased from time to time as set forth herein, shall be referred to
hereinafter as “Base Salary”).

 

Section 2.2                                                           
Benefits.  During the Term, Executive shall be entitled to participate in any
life, health and long-term disability insurance programs, pension and retirement
programs, and other fringe benefit programs made available to senior executive
employees of the Company from time to time (subject, in the case of life, health
and long-term disability insurance programs, to his qualifying under the terms
of the insurance coverage), at a level commensurate with his position, and
Executive shall be entitled to receive such other fringe benefits as may be
granted to him from time to time by the Board.

 

Section 2.3                                                            Annual
Bonus Opportunity.  Executive shall be eligible to receive an annual
discretionary bonus (“Bonus”), targeted at 50% of Executive’s Base Salary, the
achievement of such Bonus to be based on the satisfaction of criteria and
performance standards as established in advance and agreed to by Executive and
the Compensation Committee of the Board with respect to each 12 month period
under this Agreement; provided, however, that the Bonus to be paid within 12
months from the Effective Date of this Agreement shall be based upon subjective
performance criteria at the discretion of the Compensation Committee of the
Board.  The Bonus, if any, should be paid no later than 60 days following the
conclusion of such annual 12 month period.

 

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Section 2.4                                                           
Expenses.  Executive shall be entitled to receive prompt reimbursement for all
reasonable business expenses incurred by him in the performance of his duties
for the Company, including, but not limited to, reasonable entertainment
expenses, travel and lodging expenses, in accordance with the policies and
procedures adopted by the Company from time to time for executive officers of
the Company.  Executive shall furnish appropriate documentation of such
expenses, including documentation required by the Internal Revenue Service.

 

Section 3.                                           TERMINATION OF EMPLOYMENT

 

Section 3.1                                                           
Termination.  The Company shall have the right to terminate Executive’s
employment hereunder upon at least 30 days prior written notice to Executive
(other than as provided in Section 3.2) and Executive shall have the right to
terminate his employment with the Company upon at least 30 days’ prior written
notice of his intention to terminate his employment hereunder.  Nothing herein
prevents the Company from removing Executive from service, during the period, if
any, between notice and effectiveness of termination.

 

Section 3.2                                                            Rights of
Executive Upon Termination.  In the event that Executive’s employment is
terminated for any reason or no reason, the Company shall have no further
obligation to Executive under this Agreement except for payment to Executive of
(A) his accrued, but unpaid Base Salary (as of termination) through the date of
termination, (B) any accrued but unused vacation (if and to the extent
consistent with the Company’s policies), (C) any unreimbursed expenses, and
(D) if it has not previously been paid to Executive, Executive shall be paid any
Bonus that has been earned by Executive for any fiscal year ending prior to the
effective date of such termination but not yet paid, any Bonus for the period in
which termination occurred, prorated for the partial period, any rights under
any benefit or equity plan, program or practice and his rights to
indemnification and directors and officers liability insurance (collectively,
the “Required Payments”).

 

3.2.1.1                         In the event that Executive’s employment is
terminated by the Company without Cause, in addition to the obligations of the
Company pursuant to Section 3.2 above, the Company shall also make a severance
payment to Executive equal to twelve months Base Salary (as of termination)
(payable in twelve monthly, equal installments after termination and beginning
on the first business day of the month after which termination occurs).  For
purposes of the foregoing, “Cause” shall mean:  (i) conviction of an offense
involving an act of dishonesty, fraud or any other act of moral turpitude under
the provisions of any Federal, State or local laws or ordinances;
(ii) substantial and willful failure to perform specific and lawful written
directives of the Board; (iii) willful and knowing violation of any rules or
regulations of any governmental or regulatory body that is materially injurious
to the financial condition of the Company; (iv) conviction of or plea of guilty
or nolo contendere to a felony; or (v) material breach of the terms of this
Agreement by Executive; provided, however, that with regard to subclauses
(ii) or (v) above, Executive may not be terminated for Cause unless and until
the Chief Executive Officer of Parent has given him reasonable written notice of
their intended actions and specifically describing the alleged events,
activities or omissions giving rise thereto and with respect to those events,
activities or omissions for which a cure is possible, 30 days to

 

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cure such breach; and provided further, however, that for purposes of
determining whether any such Cause is present, no act or failure to act by
Executive shall be considered “willful” if done or omitted to be done by
Executive in good faith and in the reasonable belief that such act or omission
was in the best interest of the Company and/or required by applicable law.  The
foregoing shall not be deemed an exclusive list of all acts or omissions that
the Company may consider as grounds for the termination of Executive’s
employment, but it is an exclusive list of the acts or omissions that shall be
considered “Cause” for the termination of Executive’s employment by the Company.

 

The Chief Executive Officer of Parent shall provide Executive with at least 30
days advance written notice detailing the basis for the termination of
employment for Cause.  During the 30 day period after Executive has received
such notice, Executive shall have an opportunity to cure or remedy such alleged
Cause events and to present his case to the Chief Executive Officer of Parent
(with the assistance of his own counsel, at his expense) before any termination
for Cause is finalized.  Executive shall continue to receive the compensation
and benefits provided by this Agreement until his employment is actually
terminated.

 

3.2.1.2                         In the event that Executive voluntarily
terminates his employment for Good Reason, in addition to the obligations of the
Company set forth in Section 3.2, the Company shall also make a severance
payment to Executive equal to twelve months Base Salary (as of termination)
(payable in twelve monthly, equal installments after termination and beginning
on the first business day of the month after which termination occurs).  For
purposes of the foregoing, “Good Reason” shall mean:  the occurrence of any of
the following events, provided that the Executive gives written notice of his
intent to resign pursuant to such event within 90 days following the initial
occurrence and provided that such event is not fully corrected within 30 days
following written notification by Executive to the Company that he intends to
terminate his employment hereunder for one of the reasons set forth below: (i) a
material adverse alteration in the nature or status of Executive’s
responsibilities; provided, however, Executive shall not be entitled to
terminate pursuant to this clause (i) in the event Executive is still serving as
the head of a corporate division with a substantially similar title and whose
operations are substantially similar to the Company’s operations immediately
prior to Executive’s decision to terminate employment; (ii) a requirement that
he relocate his primary place of employment by more than 50 miles from his place
of employment as of the Effective Date (or such later place of employment as to
which he agrees in writing to relocate); (iii) requiring Executive to report to
any person other than the Chief Executive Officer of Parent, (iv) a material
breach by the Company of any provision of this Agreement including, but not
limited to, the assignment to Executive of any duties inconsistent with
Executive’s position as Chief Executive Officer of the Company, or (v) a
material reduction in Executive’s then current Base Salary.

 

Executive must actually terminate his employment within 30 days following the
Company’s failure to cure the applicable event to be treated as resigning for
Good Reason.

 

3.2.1.3                         In the event Executive’s employment is
terminated (whether by the Company or by Executive) without Cause or with Good
Reason or by death or disability, the Executive and his spouse and dependents
shall be entitled to continue to be covered by the

 

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Company’s group medical plan hereof as provided under COBRA continuation
requirements (if applicable) and the Company will pay the premiums (but only to
the extent such premiums exceed the applicable active employee rates) for such
coverage for the shorter of the first 12 months of such coverage or his period
of COBRA eligibility (whichever is shorter). If the payment or reimbursement of
COBRA premiums provided hereunder could result in excise taxes to the Company or
its affiliates under Section 4980D of the Code and/or adverse consequences under
the Employee Retirement Income Security Act of 1974, as amended, or applicable
law, then Executive agrees to negotiate in good faith an alternative arrangement
in lieu of payment or reimbursement hereunder that would avoid such
consequences.

 

Section  3.3                                 If Executive’s employment ends for
any reason, Executive agrees that he will cease immediately to hold any and all
officer or director positions he then has with the Parent or any subsidiary,
absent a contrary direction from the Board (which may include either a request
to continue such service or a direction to cease serving upon notice without
regard to whether his employment has ended).  Executive hereby irrevocably
appoints Parent to be his attorney to execute any documents and do anything in
his name to effect his ceasing to serve as a director and officer of Parent and
any subsidiary, should he fail to resign following a request from the Parent to
do so.  A written notification signed by a director or duly authorized officer
of Parent that any instrument, document or act falls within the authority
conferred by this clause will be conclusive evidence that it does so.

 

Section 3.4                                    Upon the occurrence of an event
described in Section 3.2.1.1 or 3.2.1.2 above, Executive will be eligible for
severance benefits (which shall not include the payment of any Required
Payments, which shall not be conditioned upon execution of a Settlement
Agreement and Release of the Company Group (as defined below hereunder only if
Executive executes and delivers to the Company a Settlement Agreement and
Release of the Company Group (as defined below) in a form prepared by the
Company, which will include a general release of known and unknown claims, a
return of Company Property and a requirement to cooperate regarding any future
litigation, as set forth in Exhibit 1 attached hereto.

 

Section 4.                                           COVENANTS.

 

Section 4.1                                                           
Restrictive Covenants.  Executive agrees to comply with the covenants contained
in this Section 4.

 

4.1.1.1                         Exclusive Dealings.  Executive absolutely and
unconditionally covenants and agrees that for the period commencing on the
Effective Date of this Agreement, and continuing during his employment with the
Company (the “Restrictive Period”), Executive shall not, either directly or
indirectly, solely or jointly with any other person or persons, as an employee,
consultant or advisor, or as an individual proprietor, partner, stockholder,
director, officer, joint venturer, investor, lender or in any other capacity
(whether or not engaged in business for profit), engage or participate in
(i) the business of developing, manufacturing, selling, marketing, distributing
and/or licensing apparel, and (ii) any other business being conducted by Parent
and its subsidiaries (the “Company Group”) during the Term, other than through
the Company Group (“Restricted Business”).

 

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4.1.1.2                         Non-Competition  During the Term, Executive
shall not, directly or indirectly, alone or as a an officer, director, employee,
owner, partner, joint venturer, member, manager, consultant, agent, independent
contractor, or Equity Interest holder of, or lender to, any Person or business,
engage in, compete with, or permit his name to be used by or in connection with
the Restricted Business.

 

4.1.1.3                         Non-Solicitation.  Executive absolutely and
unconditionally covenants and agrees that during the Restrictive Period and for
a period of 12 months thereafter, Executive will not (i) solicit any of the
Company Group’s employees to join a business competitive with the  Company
Group, or (ii) induce or attempt to induce any Company Group employee (other
than Nicole Cross or any other executive assistant of Executive) to terminate
his or her employment for the purpose of becoming employed by Executive or a
third party.

 

4.1.1.4                         Use and Treatment of Confidential Information. 
Executive agrees not to disclose, divulge, publish, communicate, publicize,
disseminate or otherwise reveal, either directly or indirectly, any Confidential
Information to any person, natural or legal.  The term “Confidential
Information” means all information in any form relating to the past, present or
future business affairs, including without limitation, research, development or
business plans, operations or systems, of the Company Group or a person not a
party to this Agreement whose information any member of the Company Group has in
its possession under obligations of confidentiality, which is disclosed by any
member of the Company Group to Executive or which is produced or developed while
Executive is an owner of, employee or director of any member of the Company
Group.  The term “Confidential Information” shall not include any information
of  the Company Group which (i) becomes publicly known through no wrongful act
of Executive, (ii) is received from a person not a party to this Agreement who
is free to disclose it to Executive, or (iii) is lawfully required to be
disclosed to any governmental agency or is otherwise required to be disclosed by
law, subpoena or court order but only to the extent of such requirement,
provided that before making such disclosure Executive shall give the Company
Group an adequate opportunity to interpose an objection or take action to assure
confidential handling of such information.

 

4.1.1.5                         Ownership and Return of Confidential
Information.  All Confidential Information disclosed to or obtained by Executive
in tangible form (including, without limitation, information incorporated in
computer software or held in electronic storage media) shall be and remain the
property of the Company Group.  All Confidential Information possessed by
Executive at the time he ceases employment with the Company Group shall be
returned to the Company at such time.  Upon the return of Confidential
Information, it shall not thereafter be retained in any form, in whole or in
part, by Executive.

 

4.1.1.6                         Work Product Assignment.  Executive agrees that
any work product, intellectual property, developments, processes, inventions,
ideas and discoveries, and works of authorship developed, designed, discovered,
improved, authored, derived, invented or acquired by Executive during the period
of his employment by the Company made, conceived or completed by Executive
during the term of Executive’s service, solely or jointly with others, which are
made with the Company Group’s equipment, supplies, facilities or Confidential
Information, or which are related at the time of conception or reduction to
purpose of the

 

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Invention to the business of any member of the Company Group or the Company
Group’s actual or demonstrably anticipated research and development, or which
result from any work performed by Executive for the Company Group, shall be the
sole and exclusive property of the Company Group, and all trade secrets,
Confidential Information, copyrightable works, works of authorship, and all
patents, registrations or applications related thereto, all other intellectual
property or proprietary information and all similar or related information
(whether or not patentable and copyrightable and whether or not reduced to
tangible form or practice) which are related to the business, research and
development, or existing or future products or services of the Company Group and
which are conceived, developed or made by Executive during Executive’s
employment with the Company (collectively, “Work Product”) shall be deemed to be
“work made for hire” (as defined in the Copyright Act, 17 U.S.C. §101 et seq.,
as amended) and owned exclusively by the Company Group.  To the extent that any
Work Product is not deemed to be a “work made for hire” under applicable law,
and all right, title and interest in and to such Work Product have not
automatically vested in the Company Group, Executive hereby (a) irrevocably
assigns, transfers and conveys, and shall assign transfer and convey, to the
fullest extent permitted by applicable law, all right, title and interest in and
to the Work Product on a worldwide basis to the Company Group (or such other
person or entity as the Company Group shall designate), without further
consideration, and (b) waives all moral rights in or to all Work Product, and to
the extent such rights may not be waived, agrees not to assert such rights
against  the Company  or its respective licensees, successors, or assigns.  In
order to permit the Company Group to claim rights to which it may be entitled,
Executive agrees to promptly disclose to the Company Group in confidence all
Work Product which the Executive makes arising out of the Executive’s employment
with the Company Group.  Executive shall assist the Company Group, at no cost to
Executive, in obtaining patents on all Work Product patentable by the Company
Group in the United States and in all foreign countries, and shall execute all
documents and do all things necessary, at no cost to Executive, to obtain
letters patent, to vest the Company Group with full and extensive title thereto,
and to protect the same against infringement by others.

 

4.1.1.7                         Remedies upon Breach.  The parties acknowledge
that Confidential Information and the other protections afforded to the Company
Group by this Agreement are valuable and unique and that any breach of any of
the covenants contained in this Section 4.1 will result in irreparable and
substantial injury to the Company Group for which it will not have an adequate
remedy at law.  In the event of a breach or threatened breach of any of the
covenants contained in this Section 4.1, any member of the Company Group shall
be entitled to obtain from any court having jurisdiction, with respect to the
Employee, temporary, preliminary and permanent injunctive relief prohibiting any
such breach, as well reimbursement for all reasonable costs, including
attorneys’ fees, incurred in enjoining any such breach.  Any such relief shall
be in addition to and not in lieu of any appropriate relief in the way of
monetary damages and equitable accounting of all earnings, profits and other
benefits arising from such violation, which rights shall be cumulative and in
addition to any other rights or remedies to which the Company  may be entitled. 
Executive does hereby waive any requirement for the Company Group to post a bond
for any injunction.  If, however, a court nevertheless requires a bond to be
posted, Executive agrees that such bond shall be in a nominal amount.

 

4.1.1.8                         Remedies upon Breach.  Nothing in this
Section 4.1 shall limit Executive’s right, after the Restricted Period, to own,
manage, operate, control, participate in, or

 

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otherwise carry on, directly or indirectly (whether as owner, lender, director,
officer, employee, principal, agent, independent contractor or otherwise) a
business that competes with the Company Group’s business, and general
advertising not directed at the Company Group’s employees or customers shall not
be deemed to violate this Section 4.  Executive further agrees that, during the
Restricted Period, he will not, directly or indirectly, knowingly assist or
encourage any other person in carrying out, directly or indirectly, any activity
that would be prohibited by the above provisions of this Section 4 if such
activity were carried out by Executive, either directly or indirectly, and
Executive agrees that he will not, directly or indirectly, knowingly induce any
employee of the Company Group to carry out, directly or indirectly, any such
activity.

 

Section 4.2                                                           
Non-Disparagement.  During the Term, and thereafter, each party to this
Agreement agrees not to defame, disparage or criticize any other party, its
reputation, its business plan, procedures, products, services, development,
finances, financial condition, capabilities or other aspect of its business, or
any of its shareholders in any medium (whether oral, written, electronic or
otherwise, whether currently existing or hereafter created), to any person or
entity, without limitation in time.  Notwithstanding the foregoing sentence, the
Executive may confer in confidence with his advisors and make truthful
statements as required by law, and may criticize the Company in his capacity as
the Chief Executive Officer, and may enforce his rights hereunder and under the
Settlement Agreement and Release of the Company Group (including in respect of
his right to the Required Payments and any severance benefits).  This
Section 4.2 shall survive any termination of Executive’s employment and any
termination of this Agreement.

 

Section 4.3                                                            No Other
Severance Benefits.  Except as specifically set forth in this Agreement,
Executive covenants and agrees that he shall not be entitled to any other form
of severance benefits from the Company, including, without limitation, benefits
otherwise payable under any of the Company’s regular severance policies, in the
event his employment hereunder ends for any reason and, except with respect to
obligations of the Company expressly provided for herein, Executive
unconditionally releases the Parent and its subsidiaries and affiliates, and
their respective directors, officers, employees and stockholders, or any of
them, from any and all claims, liabilities or obligations under any severance or
termination arrangements of the Parent or any of its subsidiaries or affiliates.

 

Section 4.4                                                            Parachute
Treatment.  The Company will make the payments under or referenced by this
Agreement without regard to whether the deductibility of such payments (or any
other payments or benefits) would be limited or precluded by Section 280G of the
Code and without regard to whether such payments would subject Executive to the
federal excise tax levied on certain “excess parachute payments” under
Section 4999 of the Code; provided, however, that if the Total After-Tax
Payments (as defined below) would be increased by the reduction or elimination
of any payment and/or other benefit (including any vesting of equity
compensation) under this Agreement or otherwise in connection with a covered
Change In Control, then the amounts payable will be reduced or eliminated as
follows: (i) first, by reducing or eliminating any cash payments or other
benefits (other than the vesting of the options) and (ii) second, by reducing or
eliminating the vesting of the equity that occurs as a result of an event
covered by Section 280G of the Code, to the extent necessary to maximize the

 

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Total After-Tax Payments.  The Company’s independent, certified public
accounting firm will determine whether and to what extent payments or vesting
under this Agreement are required to be reduced in accordance with the preceding
sentence. If there is an underpayment or overpayment under this Agreement (as
determined after the application of this paragraph), the amount of such
underpayment or overpayment will be immediately paid to Executive or refunded by
Executive, as the case may be, with interest at the applicable federal rate
provided for in Section 7872(f)(2) of the Code.  For purposes of this Agreement,
“Total After-Tax Payments” means the total of all “parachute payments” (as that
term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of
Executive (whether made under the Agreement or otherwise), after reduction for
all applicable federal taxes (including, without limitation, the tax described
in Section 4999 of the Code).

 

Section 5.                                           GENERAL PROVISIONS

 

Section 5.1                                                            Entire
Agreement.  This Agreement and the certificates, documents, instruments and
writings that are delivered pursuant hereto, constitutes the entire agreement
and understanding of the Parties in respect of its subject matters and
supersedes all prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they relate in any way to
Executive’s employment, including all prior employment agreements between
Executive and Hudson Clothing, LLC, Hudson Clothing Holdings, Inc., and HC
Acquisition Holdings, Inc.  The Company, HCH, HCAH and Executive agree that the
Employment Agreement Executive and Hudson Clothing, LLC, Hudson Clothing
Holdings, Inc., and HC Acquisition Holdings, Inc. dated as of March 24, 2009 is
hereby terminated and of no further effect.  Notwithstanding the provisions of
this Section 5.1, the Parent, HCH and Executive acknowledge that they have
entered into a separate Non-Competition Agreement pursuant to the Acquisition
Transaction and nothing stated herein affects the enforceability of the
Non-Competition Agreement.

 

Section 5.2                                                            Notice. 
Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon the earliest of (i) personal delivery,
(ii) actual receipt or (iii) the third full day following deposit in the United
States mail with postage prepaid, addressed to  the Company Group, c/o Joe’s
Jeans, Inc., 2340 South Eastern Avenue, Commerce, CA 90040, to the attention of
the Chief Executive Officer with a copy to the Secretary, or, if to Executive,
to such home or other address as Executive has most recently provided in writing
to the Company.

 

Section 5.3                                                           
Assignment; Binding Effect.  Neither Executive nor the Company may assign this
Agreement without the prior written consent of the other party, except that the
Company may assign this Agreement to any affiliate thereof, or to any subsequent
purchaser of the Company or all or substantially all of the assets of the
Company, or by operation of law and who expressly agrees to fully assume all of
the Company’s obligations hereunder.  This Agreement shall be binding upon the
heirs, executors, and administrators of Executive and on any successors or
assigns of the Company.

 

Section 5.4                                                            Choice of
Law:  Consent to Jurisdiction.  THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED
IN ACCORDANCE WITH AND

 

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ENFORCED UNDER THE LAWS OF THE STATE OF CALIFORNIA.  ALL SUITS, ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, SHALL BE BROUGHT IN A
STATE OR FEDERAL COURT LOCATED IN THE CITY OF LOS ANGELES, STATE OF CALIFORNIA,
WHICH COURTS SHALL BE THE EXCLUSIVE FORUM FOR ALL SUCH SUITS, ACTIONS OR
PROCEEDINGS.  EXECUTIVE AND THE COMPANY HEREBY WAIVE ANY OBJECTION WHICH HE OR
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUCH COURT OR ANY
SUCH SUIT, ACTION OR PROCEEDING.  EXECUTIVE AND THE COMPANY HEREBY IRREVOCABLY
CONSENT AND SUBMIT THEMSELVES TO THE JURISDICTION OF THE COURTS OF THE STATE OF
CALIFORNIA FOR THE PURPOSES OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
THIS AGREEMENT.

 

Section 5.5                                                           
Amendment; Waiver.  No modification, amendment or termination of this Agreement
shall be valid unless made in writing and signed by the parties hereto, and
approved by the Board (but not including Executive if a member of the Board). 
Any waiver by any party of any violation of, breach of or default under any
provision of this Agreement, by the other party shall not be construed as, or
constitute, a continuing waiver of such provision, or waiver of any other
violation of breach of or default under any other provision of this Agreement.

 

Section 5.6                                                           
Withholding of Taxes.  The Company may withhold from any amounts payable under
this Agreement all federal, state, city or other taxes as shall be required to
be withheld pursuant to any law or government regulation or ruling.

 

Section 5.7                                                           
Severability.  The provisions of this Agreement will be deemed severable and the
invalidity or unenforceability of any provision will not affect the validity or
enforceability of the other provisions hereof; provided that if any provision of
this Agreement, as applied to any party hereto or to any circumstance, is
adjudged by a Governmental Body, arbitrator or mediator not to be enforceable in
accordance with its terms, the parties hereto agree that the Governmental Body,
arbitrator, or mediator making such determination will have the power to modify
the provision in a manner consistent with its objectives such that it is
enforceable, and/or to delete specific words or phrases, and in its reduced
form, such provision will then be enforceable and will be enforced.

 

Section 5.8                                                            Survival
of Certain Obligations.  The obligations of the Company and Executive set forth
in this Agreement which by their terms extend beyond or survive the termination
of the Term shall not be affected or diminished in any way by the termination of
the Term.

 

Section 5.9                                                           
Headings.  The headings in this Agreement are intended solely for convenience
and shall be disregarded in interpreting it.

 

Section 5.10                                                     Third Parties. 
Nothing expressed or implied in this Agreement is intended, or shall be
construed, to confer upon or give any person or entity other than the Company
and Executive any rights or remedies under, or by reason of, this Agreement.

 

10

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Section 5.11                                                     Counterparts. 
This Agreement may be executed in counterparts, and all of such counterparts
(including facsimile or PDF), when separate counterparts have been executed by
the parties hereto, shall be deemed to be one and the same agreement.  This
Agreement shall only become effective as of the Effective Date.

 

Section 5.12                                                     409A.  The
parties intend that the payments and benefits provided for in this Agreement to
either be exempt from Section 409A of the Internal Revenue Code, as amended (the
“Code”) or be provided in a manner that complies with Section 409A of the Code. 
Notwithstanding anything contained herein to the contrary, all payments and
benefits which are payable upon a termination of employment hereunder shall be
paid or provided only upon those terminations of employment that constitute a
‘separation from service’ from the Company within the meaning of Section 409A of
the Code (determined after applying the presumptions set forth in Treas. Reg.
Section 1.409A-1(h)(1)). Each payment or series of payments under this Agreement
or otherwise shall be treated as a separate payment for purposes of Section 409A
of the Code.  In no event may Executive, directly or indirectly, designate the
calendar year of any payment to be made under this Agreement or otherwise which
constitutes a “deferral of compensation” within the meaning of Section 409A of
the Code.  All reimbursements and in-kind benefits provided under this Agreement
shall be made or provided in accordance with the requirements of Section 409A of
the Code.  To the extent that any reimbursements pursuant to this Agreement or
otherwise are taxable to Executive, any reimbursement payment due to Executive
shall be paid to Executive on or before the last day of Executive’s taxable year
following the taxable year in which the related expense was incurred; provided,
that, Executive has provided the Company written documentation of such expenses
in a timely fashion and such expenses otherwise satisfy the Company’ expense
reimbursement policies.  Reimbursements pursuant to this Agreement or otherwise
are not subject to liquidation or exchange for another benefit and the amount of
such reimbursements that Executive receives in one taxable year shall not affect
the amount of such reimbursements that Executive receives in any other taxable
year.  Notwithstanding any provision in this Agreement to the contrary, if on
the date of his termination from employment with the Company Executive is deemed
to be a “specified employee” within the meaning of Code Section 409A and the
Final Treasury Regulations using the identification methodology selected by the
Company from time to time, or if none, the default methodology under Code
Section 409A, any payments or benefits due upon a termination of Executive’s
employment under any arrangement that constitutes a “deferral of compensation”
within the meaning of Code Section 409A shall be delayed and paid or provided
(or commence, in the case of installments) on the first payroll date on or
following the earlier of (i) the date which is six (6) months and one (1) day
after Executive’s termination of employment for any reason other than death, and
(ii) the date of Executive’s death, and any remaining payments and benefits
shall be paid or provided in accordance with the normal payment dates specified
for such payment or benefit.  Notwithstanding any of the foregoing to the
contrary, the Company and its respective officers, directors, employees, or
agents make no guarantee that the terms of this Agreement as written comply
with, or are exempt from, the provisions of Code Section 409A, and none of the
foregoing shall have any liability for the failure of the terms of this
Agreement as written to comply with, or be exempt from, the provisions of Code
Section 409A.

 

11

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Section 5.13                                                     Cooperation. 
Without limitation to any other provision herein set forth herein, during and
after Executive’s employment, Executive shall reasonably cooperate with the
Company in the defense or prosecution of any claims or actions now in existence
or which may be brought in the future against or on behalf of the Company which
relate to events or occurrences that transpired while Executive was employed by
the Company; provided, however, that such cooperation shall not materially and
adversely affect Executive or expose Executive to an increased probability of
civil or criminal litigation.  Executive’s cooperation in connection with such
claims or actions shall include, but not be limited to, being reasonably
available to meet with counsel to prepare for discovery or trial and to act as a
witness on behalf of the Company at mutually convenient times.  During and after
Executive’s employment, Executive also shall reasonably cooperate with the
Company in connection with any investigation or review of any federal, state or
local regulatory authority as any such investigation or review relates to events
or occurrences that transpired while Executive was employed by the Company.  The
Company shall reimburse Executive for all costs and expenses incurred in
connection with his performance under this Section 5.13, including, but not
limited to, reasonable attorneys’ fees and costs, provided that Executive shall
not incur costs and expenses in excess of $1,000 in the aggregate without the
prior written consent of the Company.

 

Section 5.14                                                    
Indemnification.  Executive shall be indemnified to the fullest extent permitted
by law with regard to actions or inactions taken as an officer or director of
the Company or Parent or any affiliate or as a fiduciary of any benefit plan. 
Executive shall be covered by directors and officers liability insurance with
regard to the foregoing to the highest extent of any other officer or director
both during his service to the Company and thereafter while any liability may
exist.

 

Section 5.15                                                     Effectiveness.
This Agreement shall only become effective as of the date of consummation of the
transactions contemplated by the Stock Purchase Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company and Executive have executed this Employment
Agreement as of the date first written above.

 

 

JOE’S JEANS, INC.

 

 

 

 

 

By:

\s\ Marc B. Crossman

 

Name:

Marc B. Crossman

 

Title:

President and CEO

 

 

 

 

 

HUDSON CLOTHING HOLDINGS, INC.

 

 

 

 

 

By:

\s\ Christopher M. Lynch

 

Name:

Christopher M. Lynch

 

Title:

CFO and Secretary

 

 

 

HC ACQUISITION HOLDINGS, INC.

 

 

 

 

 

By:

\s\ Christopher M. Lynch

 

Name:

Christopher M. Lynch

 

Title:

CFO and Secretary

 

 

 

 

 

HUDSON CLOTHING, LLC

 

 

 

 

 

By:

\s\ Christopher M. Lynch

 

Name:

Christopher M. Lynch

 

Title:

CFO and Secretary

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

\s\ Peter Kim

 

Peter Kim

 

Signature Page to Employment Agreement

 

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Exhibit 1

 

GENERAL RELEASE

 

THIS GENERAL RELEASE (this “Release”) is entered into effective as
of                                 , 201    , (the “Effective Date”) by and
among Joe’s Jeans Inc. (“Parent”), Hudson Clothing Holdings, Inc., HC
Acquisition Holdings, Inc., Hudson Clothing, LLC (the “Company”), and Peter Kim
(“Executive”), with reference to the following facts:

 

RECITALS

 

A.            The parties entered into an Employment Agreement, dated with an
effective date as of                                , 2013 (the “ Employment
Agreement “), pursuant to which the parties agreed that upon the occurrence of
certain conditions, Executive would become eligible for certain termination
payments (as provided for in Section 3.2 of the Employment Agreement) in
exchange for Executive’s release of the Company from all claims which Executive
may have against the Company as of the termination date.  Capitalized terms not
otherwise defined herein shall have the respective meanings ascribed to them in
the Employment Agreement.  Executive acknowledges that the consideration recited
in this Release is in addition to anything to which Executive may otherwise be
entitled.

 

B.            The parties desire to dispose of, fully and completely, all
claims, which Executive may have against the Company, in the manner set forth in
this Release.

 

AGREEMENT

 

1.             Executive waives and releases Parent and its affiliates,
subsidiaries, partners, officers, directors, shareholders, agents, employees,
attorneys, successors, assigns, affiliates, related organizations and related
employee benefit plans (collectively referred to herein as “ Releasees “) with
respect to any and all claims, rights, and causes of action, known or unknown,
that Executive may have or claim to have had against any of them, based on any
act, occurrence, or omission from the beginning of time to and including the
date this Release was executed, including, but not limited to, any and all
claims, rights, and causes of action arising out of or in any way connected with
Executive’s employment with, or termination of employment from the Company, and
arising under federal, state and/or local laws such as Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the California
Fair Employment and Housing Act, the California Labor Code, the California
Constitution, and ERISA, and the common law (hereinafter referred to as “ the
Released Claims “).  Notwithstanding the foregoing, this Release shall not apply
to (none of which shall be Released Claims): (a) any claims for any amounts
which shall to be paid to Executive following the execution hereof pursuant to
the terms of Section 3.2 of the Employment Agreement; (b) any claims for
indemnification under Section 5.14 of the Employment Agreement, or otherwise
pursuant to the governance documents of any member of the Company Group, or
under any separate indemnification agreement the Executive may enter into from
time to time; (c) claims of the Executive under the Stock Purchase Agreement
dated as of July 15, 2013 among Parent, the Company and the stockholders party
thereto, or any of the other agreements entered into in connection therewith,
other than the Employment Agreement, (c) claims of the Executive as a s

 

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holder, note holder or option holder of Parent or otherwise relating to or
arising out of any agreements relating thereto or to the acquisition of any
securities, notes, options or other equity interests in Parent; (d) the payment
of any Required Payments; and (d) claims under any employee benefit plan (other
than for wages and bonuses to the extent they may be considered an employee
benefit plan) of the Company (collectively, the “ Surviving Claims “).

 

2.             Executive promises not to file any law suits in any court or any
demand for arbitration against any of the Releasees with respect to the Released
Claims.  Executive affirms that, except for the Surviving Claims, Executive has
been paid and/or has received all leave (paid or unpaid), compensation, wages,
commissions, vacation pay, severance pay, bonuses, commissions, reimbursements,
benefits, and other monies to which Executive may have been entitled and that,
except for the termination payments, no other leave (paid or unpaid),
compensation, wages, commissions, vacation pay, severance pay, bonuses,
commissions, reimbursements, benefits, and/or other monies are due Executive. 
Executive also acknowledges that the termination payment is in excess of any
payment to which Executive otherwise was entitled.

 

3.             Executive acknowledges that Executive is familiar with and
understands the provision of Section 1542 of the California Civil Code, which
provides as follows:

 

“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.”

 

Being aware of that Code Section, Executive expressly waives and relinquishes
any rights or benefits Executive may have thereunder, as well as any other state
or federal statutes or common law principles of similar effect.

 

4.             A.            Executive warrants that neither Executive, nor
anyone acting on Executive’s behalf, has filed any claim, charge or action
against any of the Releasees with respect to any of the Released Claims, except
as disclosed to the Company in writing on the date hereof.

 

B.            Nothing in this Release shall affect (i) Executive’s rights, if
any, to indemnification under Labor Code Section 2802, (ii) Executive’s rights
to file claims for workers’ compensation or unemployment insurance benefits, or
(iii) Executive’s rights to file charges of discrimination with any state or
federal administrative agency alleging violations of state or federal
anti-discrimination laws, with the understanding and agreement that Executive
may not accept any money or anything of economic value as a result of having
filed such charges.  Finally, Executive agrees that, if any of the Released
Claims are brought on Executive’s behalf or for Executive’s benefit in a court
or administrative agency, Executive waives and agrees not to accept any award of
money or other damages as a result of such claim.

 

5.             This Release is executed voluntarily and without any duress or
undue influence.  Executive acknowledges he has read this Release and executed
it with his full and free consent.

 

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No provision of this Release shall be construed against any party by virtue of
the fact that such party or its counsel drafted such provision or the entirety
of this Release.

 

6.             This Release is made and entered into in the State of California
and accordingly the rights and obligations of the parties hereunder shall in all
respects be construed, interpreted, enforced and governed in accordance with the
laws of the State of California as applied to contracts entered into by and
between residents of California to be wholly performed within California,
without regard to conflicts of law principles.

 

7.             Executive is hereby advised to consult with an attorney prior to
executing this Release.  Executive is hereby advised that Executive has 21
calendar days to consider whether to sign this Release before signing it and
that Executive has 7 calendar days to revoke the Release subsequent to the time
Executive signed it.  Accordingly, unless Executive has timely revoked
acceptance of this Release, this Release shall become effective the eighth day
after the date of Executive’s signature.

 

8.             If any part, term or provision of this Release is found to be
illegal or invalid, such illegality or invalidity shall not affect the validity
of the remainder of the Release.  This Release constitutes the entire agreement
and understanding concerning the matters addressed herein and replaces all prior
discussions and agreements, and may only be modified by a writing signed by all
of the parties.

 

9.             Any party who asserts that there exists any dispute, controversy
or claim arising out of or relating to this Agreement or the employment
relationship (including claims of discrimination, wrongful termination, tort
claims and claims based on any statutory or constitutional provision), may only
do so by final and binding arbitration in accordance with the then current
employment dispute rules of the American Arbitration Association.  The
arbitration will be conducted in Los Angeles County, California, before and
subject to the administrative procedures of JAMS Endispute.  The arbitrator will
be a neutral, experienced arbitrator who is a retired judge and licensed to
practice law in California.  The arbitrator will be jointly selected by the
parties or, if necessary, designated by JAMS Endispute in accordance with its
procedures.  Executive and each member of the Company Group each knowingly
waives the right to a jury trial in a court of law with respect to claims
subject to arbitration.  All fees of the arbitrator will be paid by the
Company.  All other costs and expenses associated with the arbitration, such as
attorneys’ fees and witness’ fees, will be paid by the party that incurs those
costs and expenses, except to the extent that a party is entitled to recover
those costs or expenses under applicable law.  The arbitrator will have the
power to summarily adjudicate claims and/or enter summary judgment in
appropriate cases and to apply any applicable statutes of limitation, and the
decision of the arbitrator will be final and binding and may be confirmed in
court.  The arbitrator’s decision will be in writing.  A petition to compel
arbitration or to confirm, modify or vacate an arbitration award may be brought
pursuant to applicable federal or California state arbitration statutes, or
both.  Subject to the provisional remedies, if any, provided for under
applicable state or federal law, which either party may pursue in court,
arbitration will be the exclusive remedy for resolving any such arbitrable
disputes, and the decision of the arbitrator will be final and binding on all
parties, subject to review only in accordance with applicable state or federal
law.  The decision of the arbitrator may be reduced to an enforceable court
judgment by the prevailing party in the arbitration, and the Federal Arbitration
Act (FAA) will govern this paragraph.

 

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[Signature Page Follows]

 

Dated:                                   , 201

 

 

 

 

PETER KIM

 

 

 

 

 

 

 

 

JOE’S JEANS, INC.

 

 

 

 

 

 

Dated:                                   , 201

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

HUDSON CLOTHING HOLDINGS, INC.

 

 

 

 

 

 

Dated:                                   , 201

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

HC ACQUISITION HOLDINGS, INC.

 

 

 

 

 

 

Dated:                                   , 201

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

HUDSON CLOTHING, LLC

 

 

 

 

 

 

Dated:                                   , 201

 

 

 

 

Name:

 

 

Title:

 

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