Exhibit 10.7

 

SEPARATION AGREEMENT AND MUTUAL LIMITED RELEASE

 

This Separation Agreement and Mutual Release (“Agreement”) is entered into as of
September 8, 2015, by and between Joseph M. Dahan (“Dahan”) and Joe’s Jeans Inc.
(“Company”) (collectively, the ‘Parties”).

 

RECITALS

 

WHEREAS, Dahan has been employed by the Company pursuant to the Amended and
Restated Employment Agreement between Dahan and Innovo Group Inc. effective as
of June 25, 2007 (as amended, the “Employment Agreement”);

 

WHEREAS, Dahan’s current renewal term of the Employment Agreement expires on
October 25, 2015;

 

Whereas, the Company and Sequential Brands Group, Inc., (“SBGI”) entered into an
agreement, dated as of September 8, 2015, pursuant to which SBGI will acquire
the “Joe’s Jeans” and related licensed trademarks of the Company and its
subsidiaries, and related intellectual property;

 

WHEREAS, the Company and GBG USA Inc. (“GBG”) entered into an Asset Purchase
Agreement, dated as of September 8, 2015 (“GBG Purchase Agreement”) pursuant to
which GBG will acquire certain assets, employees and the operating business of a
subsidiary of the Company conducted under the Joe’s Jeans brand, including
inventory, working capital, store leases and certain related assets;

 

WHEREAS, SBGI will license the Joe’s Jeans brand to GBG to manufacture,
distribute and sell the premium denim products now manufactured, distributed and
sold by the Company;

 

WHEREAS, the Company will terminate Dahan as an employee without Cause as a
result of the transactions described above;

 

WHEREAS, Dahan will be entitled to a severance payment as set forth in Section V
of the Employment Agreement through October 25, 2015 by reason of a termination
by the Company without Cause; and

 

WHEREAS, the Parties mutually desire to confirm their mutual understanding of
the future of Dahan’s employment with the Company and bring Dahan’s employment
to a smooth closure;

 

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which
the Parties acknowledge, the Parties agree as follows:

 

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AGREEMENT

 

1.              The Company is terminating Dahan’s employment without Cause,
including any and all positions he holds with any affiliates of the Company,
contingent upon and effective as of the Closing Date (as defined in the GBG
Purchase Agreement).  In addition, contingent upon and effective as of the
Closing Date, Dahan resigns as a director of the Company.

 

2.              Contingent upon and on the Closing Date, the Company will pay
Dahan an amount equal to his Termination Severance (as defined in the Employment
Agreement), calculated from the Closing Date through and including October 25,
2015 .

 

3.              Through the Closing Date, Dahan’s employment will continue to be
governed pursuant to the terms and conditions of the Employment Agreement, and
he will continue to be compensated under the Employment Agreement.

 

4.              Contingent upon and effective as of the Closing Date, the
Company and Dahan (the “Releasor” and the “Released Party” with respect to the
other party) hereby forever release and discharge one another for and from any
and all claims, causes of action, demands, suits, liabilities, fees, costs,
expenses, and/or damages of any kind or nature, whether known or unknown,
whether accrued or contingent, which Releasor ever had, now has, or hereafter
may have against the Released Party with respect to Dahan’s employment by the
Company, the terms and conditions of Dahan’s employment, the performance of
Dahan’s duties as an employee, or the termination of Dahan’s employment
(collectively, “Employment Claims”)by reason of any actual or alleged act,
omission, transaction, practice, conduct, statement, occurrence, or other matter
up to and including the date of this Agreement, including, but not limited to,
Employment Claims arising under any federal, state, local, and/or foreign
statutory law, regulatory law, and/or common law.  The Releasor specifically
intends this release to be the broadest possible release permitted under law
with respect to the Employment Claims.

 

5.              Without limiting the generality of Section 4, above, contingent
upon and effective as of the Closing Date, Releasor acknowledges and agrees that
the Employment Claims being released hereunder include, but are not limited to,
any and all claims for compensation, wages, benefits, commissions, bonuses,
royalties, stock options, deferred compensation, vacation pay, sick pay,
personal day pay, other monetary or equitable relief, fringe benefits,
attorneys’ fees or expenses, or any tangible or intangible property, and any
claims under any other laws, regulations, and/or rules applicable to Dahan’s
employment, including but not limited to: (i) any and all claims under Title VII
of the Civil Rights Act, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, the Older Workers Benefit Protection Act, the
Civil Rights Act of 1991, the California Civil Code, the California Fair
Employment and Housing Act, and all other federal, state, local or foreign law
(statutory or decisional) or ordinance prohibiting employment discrimination,
harassment, or retaliation, as all such laws may be amended from time to time;
(ii) any and all claims under the Employee Retirement Income Security Act, as
amended, or any employee benefit plan maintained by the Company; (iii) any and
all claims under the Family and Medical Leave Act, the California Family

 

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Rights Act, the Workers Adjustment and Retraining Notification Act, Article 3 of
Division 3 of the California Labor Code, and any applicable state, local or
foreign equivalent to any of the foregoing laws, as each of such law may be
amended from time to time; (iv) any and all claims for breach of contract
(express or implied), or tort, including but not limited to all claims of fraud,
duress, wrongful or constructive discharge, intentional or negligent
misrepresentation, retaliatory discharge, intentional interference with
contract, detrimental reliance, defamation, slander, libel, intentional or
negligent affliction of emotional distress, and/or claims based on quantum
meruit; (v) any and all claims under the Fair Labor Standards Act, the
California Labor Code, or any other federal, state, local or foreign laws
governing wages, vacation pay, fringe benefits, and obligations of employees, as
all such laws may be amended from time to time; (vi) any and all claims for
monetary or equitable relief, or compensatory or punitive damages; (vii) any and
all other claims (whether based on federal, state, local or foreign law,
statutory or decisional) in connection with, relating to, or arising out of
Dahan’s employment or the terms and conditions of his employment, including but
not limited to the separation or termination of such employment and/or any of
the events relating directly or indirectly to such separation or termination;
and (viii) any claim for attorneys’ fees, costs, disbursements, or any other
amounts; which the Releasor ever had, now has, or hereafter may have against the
Released Party by reason of any actual or alleged act, omission, transaction,
practice, conduct, statement, occurrence, or other matter up to and including
the date of this Agreement.  Releasor represents and warrants that Releasor has
not assigned or subrogated any of his or its rights, claims, or causes of
action, including but not limited to any claims referenced in this Agreement,
nor has he or it authorized any other person or entity to assert any such claim
or claims on his or its behalf and agrees to indemnify and hold harmless the
Released Party against any such assignment or subrogation of any such rights,
claims, and/or causes of action.

 

6.              Notwithstanding anything to the contrary stated in this
Agreement, and for the avoidance of doubt, the releases contained in Sections 4
and 5, above, shall not apply to:

 

6.1.                                                    any rights or claims
that arise under, or are explicitly preserved by, this Agreement; including
without limitation rights or claims under the Employment Agreement preserved by
Sections 2 and 3, above, and this Section 6;

 

6.2.                                                    any rights to or claims
by Dahan for indemnification or insurance pursuant to (a) the Employment
Agreement (including, without limitation, entitlement to coverage under the
Company’s directors’ and officers’ insurance policy as set forth in Section XIX
of the Employment Agreement), (b) applicable law (including without limitation
section 2802 of the California Labor Code); (c) the Company’s certificate of
incorporation or bylaws or Company policy; or (d) otherwise pursuant to the
governance documents of the Company, or under any separate indemnification
agreement the Executive may enter (or may have entered) into from time to time;

 

6.3.                                                    any rights to or claims
by Dahan for earned but unpaid compensation, including payment upon termination
of employment of all earned and unpaid salary; bonus; and accrued, unused
vacation or PTO as set forth in Sections III(A) and (B) of the Employment
Agreement or otherwise;

 

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6.4.                                                    any rights to or claims
by Dahan for reimbursement of business expenses incurred through the termination
of his employment as set forth in Section III.C of the Employment Agreement or
otherwise;

 

6.5.                                                    any rights to or claims
by Dahan under any employee benefit plan of the Company;

 

6.6.                                                    any rights to or claims
by Dahan for worker’s compensation benefits, unemployment insurance benefits;
and vested retirement, pension or other benefits;

 

6.7.                                                    the Parties’ obligations
to each other under the Agreement dated as of February 18, 2013 by and among the
Company, Joe’s Jeans Subsidiary, Inc. and Dahan (“February 2013 Agreement”),
including, without limitation, the Company’s obligation to pay Dahan the balance
remaining on the Amended Payment Amount (as defined in the February 2013
Agreement); provided, however, that this exception to the release given in this
Agreement shall not apply to Paragraph 3 of the February 2013 Agreement, which
the Parties hereby mutually release;

 

6.8.                                                    the Parties’ obligations
to each other under the Earn Out Subordination Agreement dated as of
September 13, 2013, by and among the Company and its affiliates, CIT Group
Commercial Services, Inc., Garrison Loan Agency Services LLC and Dahan;

 

6.9.                                                    the Parties’ rights
under the Investor Rights Agreement dated as of October 25, 2007 between the
Company and Dahan;

 

6.10.                                             Dahan’s rights to his equity
interest in the Company;

 

6.11.                                             the Company’s rights to
intellectual property as set forth in Section VII of the Employment Agreement;
and

 

6.12.                                             Any right or claim that cannot
be released under applicable law.

 

7.              Releasor understands and agrees that because this release
specifically covers all known and unknown or unanticipated Employment Claims of
every kind and character that would otherwise come within the scope of the
released claims, Releasor further waives any rights under Section 1542 of the
California Civil Code that he or it has with respect to the Employment Claims
(if and to the extent California Civil Code applies at all), which states 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.”

 

Releasor knowingly and voluntarily hereby expressly waives and relinquishes all
rights and benefits that he or it may now have, or in the future may have with
respect to the Employment Claims, under Section 1542 of the California Civil
Code and any law of any jurisdiction of similar effect with respect to his or
its respective releases of claims, including unknown claims, they may have
against the other.

 

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8.              Releasor represents and warrants that he or it has not filed or
caused to be filed any lawsuit, complaint, or charge against the Released Party
in any court, any municipal, state, federal, or foreign agency, or any other
tribunal.  Releasor agrees that he or it will not, to the fullest extent
permitted by law, sue or file a complaint, grievance or demand for arbitration
in any forum pursuing any claim released under this Agreement or accept any
monetary or other recovery in connection with any charge, complaint, grievance,
demand, or other action brought by any other person or entity.  Releasor further
expressly waives any claim to any monetary or other damages or any other form of
recovery in connection with any proceeding that violates this Agreement.

 

9.              A failure by any party hereto at any time to give notice of any
breach by any other party of this Agreement, or to require compliance with any
condition or provision of this Agreement shall not (i) be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time or (ii) preclude insistence upon strict compliance in the
future.  This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.  This Agreement is binding upon, and
shall inure to the benefit of Dahan and the Company and their respective heirs,
executors, administrators, successors, and assigns.

 

10.       This Agreement shall be construed and enforced in accordance with the
laws of the state of California without regard to the principles of conflict of
law.  If any provision(s) or clause(s) of this Agreement is found to be invalid
or unenforceable under any applicable law, this Agreement shall be considered
severable and divisible, and a reviewing court shall have the authority to
modify, amend, and/or “blue pencil” the Agreement so as to make it fully valid
and enforceable, while maintaining the parties’ original intent to the maximum
extent possible.  This Agreement represents the complete understanding between
Dahan and the Company with respect to the subject matter of this Agreement and,
except as specifically set forth herein, supersedes any and all other written or
oral agreements between the Parties pertaining to the subject matter of this
Agreement, including without limitation the Employment Agreement.  This
Agreement may not be modified orally, and instead may be modified only by a
writing signed by both the Company and Dahan after the date on which this
Agreement is executed.

 

11.       Within thirty days of submission of documentation by counsel for Dahan
(redacted as needed to preserve the attorney-client privilege), the Company
agrees to pay for Dahan’s reasonable attorneys’ fees and costs up to a maximum
of One Hundred Thousand Dollars ($100,000.00) incurred with respect to obtaining
advice and representation with respect to the proposed GBG Purchase Agreement,
including without limitation, the negotiation of this Agreement, Dahan’s
Employment Agreement with GBG, his Consulting Agreement with SBGI, his Voting
Agreement, and related matters.

 

The parties have read and understand this Agreement.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

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JOE’S JEANS, INC.

 

 

 

 

 

Name:

/s/ Hamish Sandhu

 

Title: CFO

 

Date: September 8, 2015

 

 

 

 

 

/s/ Joseph M. Dahan

 

JOSEPH M. DAHAN

 

Date: September 4, 2015

 

 

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