EX-10.2






INVESTOR RIGHTS AGREEMENT




This Investor Rights Agreement dated as of October 25, 2007 (this “Agreement”) is entered into
by and among Joe’s Jeans Inc. (f/k/a Innovo Group Inc.), a Delaware corporation (the “Company”),
and Joseph M. Dahan, a California resident (the “Investor”).



WHEREAS, the Company and the Investor have entered into an Agreement and Plan of Merger dated
as of February 6, 2007 and June 25, 2007 (the “Merger Agreement”) pursuant to which the Investor
shall receive a number of shares of the common stock, par value $0.10 per share, of the Company
(the “Common Stock”), as set forth therein;



WHEREAS, in order to induce the Investor to enter into the Merger Agreement, the Company has
agreed to grant certain registration rights to the Investor with respect to such shares and certain
Board designation rights, in each case, subject to the terms and conditions set forth herein;



NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:



Section 1. Definitions. As used herein, the following terms have the indicated
meanings, unless the context otherwise requires:



“Agreement” has the meaning given to such term in the preamble hereto.



“Beneficially Own,” “Beneficially Owned,” “Beneficial Ownership” and “Beneficial Owner” with
respect to any securities means the Investor having such ownership, control or power to direct the
voting with respect to, or which otherwise enables the Investor to legally act with respect to,
such securities as contemplated hereby, including without limitation pursuant to any agreement,
arrangement or understanding, regardless of whether in writing. Securities “Beneficially Owned”
shall include securities Beneficially Owned by all other persons with whom the Investor would
constitute a “group” as within the meaning of Section 13(d) of the Exchange Act.



“Blackout Period” means, with respect to a Registration Statement, a period in each case
commencing on the day immediately after the Company notifies the Investor that he is required,
pursuant to Section 3(c)(vi), to suspend offers and sales of Registrable Securities during which
the Company, in the good faith judgment of the Board, determines (because of the existence of, or
in anticipation of, any acquisition, financing activity, or other transaction involving the
Company, or the unavailability for reasons beyond the Company’s control of any required financial
statements, disclosure of information which is in its best interest not to publicly disclose, or
any other event or condition of similar significance to the Company) that the registration and
distribution of (and/or the registration of the offer and sale of) the Registrable Securities
covered or to be covered by such Registration Statement would be seriously detrimental to the
Company and its stockholders and ending on the earlier of (a) the date upon which the material
non-public information commencing the Blackout Period is disclosed to the public or ceases to be
material and (b) such time as the Company notifies the Investor that the Company will no longer
delay such filing of such Registration Statement, recommence taking steps to make such Registration
Statement effective, or allow sales pursuant to such Registration Statement to resume; provided
that no Blackout Period may last for more than 60 consecutive days; provided, further, that during
any period of 365 consecutive days, Blackout Periods may not, in the aggregate, last for more than
the greater of (a) zero days and (b) the result of 90 days minus the number of days that the
Investor is required pursuant to Section 3(d) to discontinue and suspend disposition of Registrable
Securities because of the happening of any event described in Section 3(c)(vi).



“Board” means the board of directors of the Company.



“Business Day” means any day of the year, other than a Saturday, Sunday, or other day on which
the SEC is required or authorized to close.



“Closing Date” has the meaning given to such term in the Merger Agreement.



“Common Stock” has the meaning given to such term in the recitals hereto.



“Company” has the meaning given to such term in the preamble hereto.



“Effectiveness Period” has the meaning given to such term in Section 3(c)(i).



“Equity Securities Offering” means any underwritten registered offering of Relevant
Securities, and any offering or placement of any Relevant Securities pursuant to Rule 144A under
the Securities Act.



“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.



“Family Member” means (a) with respect to any individual, such individual’s spouse, any
descendants (whether natural or adopted), any trust all of the beneficial interests of which are
owned by any of such individuals or by any of such individuals together with any organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership, limited liability company or other
entity all of the equity interests of which are owned by those above described individuals, trusts
or organizations and (b) with respect to any trust, the owners of the beneficial interests of such
trust.



“Form S-1” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.



“Form S-3” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.



“Form S-4” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.



“Form S-8” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.



“Inspector” means any attorney, accountant or other agent retained by the Investor for the
purposes provided in Section 3(c)(ix).



“Investor” has the meaning given to such term in the preamble hereto.



“Investor Director” means any member of the Board that was nominated for election to the Board
by the Investor pursuant to and in accordance with Section 2(a).



“Merger Agreement” has the meaning given to such term in the recitals hereto.



“NASD” means the National Association of Securities Dealers.



“Piggyback Registration” has the meaning given to such term in Section 3(b)(i).



“Piggyback Registration Statement” has the meaning given to such term in Section 3(b)(i).



“register,” “registered,” and “registration” refer to a registration effected by preparing and
filing a registration statement in compliance with the Securities Act, and the declaration or
ordering of the effectiveness of such registration statement.



“Registrable Securities” means the Unlocked Shares, excluding any such Unlocked Shares (a)
that have been publicly sold or may be sold immediately without registration or the requirement to
make filings with the SEC under the Securities Act either pursuant to Rule 144 of the Securities
Act or otherwise, (b) sold by a person in a transaction pursuant to a registration statement filed
under the Securities Act or (c) that are at the time subject to an effective registration statement
under the Securities Act (other than the Registration Statements contemplated hereby).



“Registration Expenses” has the meaning given to such term in Section 3(e).



“Registration Statement” means either any of the Piggyback Registration Statements or the
Shelf Registration Statement; and “Registration Statements” means, collectively, the Piggyback
Registration Statements and the Shelf Registration Statement.



“Relevant Security” means the Shares, any other equity security of the Company or any of its
subsidiaries and any security convertible into, or exercisable or exchangeable for, any Shares or
other such equity security.



“SEC” means the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.



“SEC Effective Date” means, with respect to a Registration Statement, the date as of which
such Registration Statement is originally declared effective by the SEC.



“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect from time to time.



“Selling Expenses” has the meaning given to such term in Section 3(e).



“Shares” means the shares of Common Stock issued to the Investor pursuant to the Merger
Agreement and (a) any and all shares of capital stock or other equity securities of the Company
which are added to or exchanged or substituted for such shares of Common Stock by reason of the
declaration of any stock dividend or stock split, the issuance of any distribution or the
reclassification, readjustment, recapitalization or other such modification of the capital
structure of the Company; and (b) any and all shares of capital stock or other equity securities of
any other corporation (now or hereafter organized under the laws of any state or other governmental
authority) with which the Company is merged, which results from any consolidation or reorganization
to which the Company is a party, or to which is sold all or substantially all of the shares or
assets of the Company, for which such shares of Common Stock are exchanged or substituted in
connection with such merger, consolidation, reorganization or sale, if immediately after such
merger, consolidation, reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting power of such other
corporation.



“Shelf Registration Statement” has the meaning given to such term in Section 3(a).



“Transfer” has the meaning given to such term in Section 3(a).



“Unlocked Shares” means on the six month anniversary of the Closing Date 1/6 of the Shares and
thereafter at the end of every additional six month period, an additional 1/6 of the Shares until
the Shares are released in full on the third year anniversary of the Closing Date.



Section 2. Board Designation Rights.



(a) Designation. Upon execution of this Agreement, the Investor shall have the right
to designate himself for election to the Board.



(b) Company Support. The Company shall support the nomination of the Investor
pursuant to Section 2(a), and the Company shall use its best efforts to cause the Board (and the
Company’s nominating committee, if any) to recommend the inclusion of such person in the slate of
nominees recommended to stockholders for election as directors at the next annual meeting of
stockholders of the Company.



Section 3. Registration Rights.



(a) Shelf Registration Statement. On the written request of the Investor beginning on
or after six months from the Closing Date of the Shares , the Company shall (i) file with the SEC a
shelf registration statement on Form S-1 (or, if the Company is eligible to use such form, Form
S-3) relating to the registration of the offer and resale by the Investor of the number of
Registrable Securities specified in such written request (the “Shelf Registration Statement”) and
(ii) use its commercially reasonable efforts to cause the Shelf Registration Statement to be
declared effective by the SEC no later than 60 days after the filing of the Shelf Registration
Statement in response to such written request; provided, however, that the Company shall not be
obligated to effect any such registration pursuant to this Section 3(a), or keep such registration
or the Shelf Registration Statement effective pursuant to Section 3(c)(i), during any Blackout
Period and provided further that the Company shall not be obligated to file any such registration
statement pursuant to this Section 3(a) within 90 days after the date of the filing of the most
recent registration statement pursuant to this Section 3(a).



(b) Piggyback Registration Rights.




(i) Piggyback Registration. If after the date that is six (6) months after the
Closing Date, the Company shall determine to register the offer and sale for cash of any of
its Common Stock for its own account, other than (i) a registration relating solely to
employee benefit plans or securities issued or issuable to employees, consultants (to the
extent the securities owned or to be owned by such consultants could be registered on Form
S-8) or any of their Family Members (including a registration on Form S-8), (ii) a
registration on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization, exchange offer or similar event, or (iii) a registration in which the only
Common Stock being registered is Common Stock issuable upon conversion of debt securities
that are also being registered, then (subject to Section 3(b)(ii)) the Company shall
promptly give to the Investor written notice thereof, and in no event shall such notice be
given less than 20 calendar days prior to the filing of the registration statement (a
“Piggyback Registration Statement”) with respect to such registration (a “Piggyback
Registration”), and shall, subject to Section 3(b)(ii), include in the Piggyback
Registration, all of the Registrable Securities specified in a written request, made within
10 calendar days after receipt of such written notice from the Company, by the Investor.
However, the Company may, without the consent of the Investor, withdraw the Piggyback
Registration Statement prior to its becoming effective if the Company has elected to abandon
the proposal to register the securities proposed to be registered thereby.




(ii) Underwriting. If a Piggyback Registration is for a registered public
offering involving an underwriting, the Company shall so advise the Investor in writing or
as a part of the written notice given pursuant to Section 3(b)(i). In such event the right
of the Investor to registration pursuant to Section 3(b)(i) shall be conditioned upon the
Investor’s participation in such underwriting and the inclusion of the Investor’s
Registrable Securities in the underwriting to the extent provided herein. The Investor
proposing to distribute his securities through such underwriting shall (together with the
Company) enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 3(b)(ii), if the underwriter or the Company determines that
marketing factors require a limitation of the number of shares to be underwritten, the
underwriter may exclude some or all Registrable Securities from such registration and
underwriting. The Company shall so advise the Investor and the number of shares that may be
included in the registration and underwriting shall be allocated:




(A) first to the Company; and




(B) then, subject to written obligations and commitments existing as of the
date hereof, to all selling stockholders, including the Investor, who have requested
to sell in the registration on a pro rata basis according to the number of shares
requested to be included.




No Registrable Securities excluded from the underwriting by reason of the underwriter’s
marketing limitation shall be included in such registration. If the Investor disapproves of
the terms of any such underwriting, the Investor may elect to withdraw therefrom by written
notice to the Company and the underwriter. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from such
registration.



(c) Registration Procedures. In the case of each registration, qualification, or
compliance effected by the Company pursuant to Section 3(a) and Section 3(b), the Company will keep
the Investor reasonably advised in writing (which may include e-mail) as to the initiation of each
registration, qualification, and compliance and as to the completion thereof. In addition, the
Company hereby agrees as follows with respect to each Registration Statement:




(i) The Company will use its commercially reasonable efforts to cause such Registration
Statement to become and remain effective at least for a period ending with the first to
occur of (A) the sale by the Investor of all Registrable Securities covered by such
Registration Statement, (B) the availability under Rule 144 for the Investor to immediately,
freely resell without restriction under United States federal securities laws all
Registrable Securities covered by such Registration Statement, or (C) the date that is two
years after the SEC Effective Date of such Registration Statement (provided, however, that
if the Company files a Registration Statement on Form S-1 and subsequently becomes eligible
to use Form S-3, it may file a post-effective amendment to such Form S-1 on Form S-3 prior
to the end of such period and use its commercially reasonable efforts to cause such
Registration Statement as amended to become effective until the end of such period, and
provided further, that if the Company has filed a Registration Statement and thereafter
receives another written request in accordance with this Agreement to include additional
Registrable Securities in such Registration Statement, the Company may file a post-effective
amendment to such Registration Statement prior to the end of such period and use its
commercially reasonable efforts to cause such Registration Statement as amended to become
effective until the end of such period) (in any such case, the “Effectiveness Period”).




(ii) If any Registration Statement becomes subject to review by the SEC, the Company
will promptly respond to all comments and diligently pursue resolution of any comments to
the satisfaction of the SEC.




(iii) The Company will prepare and file with the SEC such amendments and supplements to
each Registration Statement and any prospectus used in connection therewith as may be
reasonably necessary to keep such Registration Statement effective during the applicable
Effectiveness Period, and will comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration Statement during such
period in accordance with the intended method(s) of disposition by the sellers thereof set
forth in such Registration Statement.




(iv) The Company will furnish, without charge, to the Investor (A) a reasonable number
of copies of each Registration Statement (including any exhibits thereto other than exhibits
incorporated by reference), each amendment and supplement thereto as the Investor may
request, (B) such number of copies of the prospectus included in such Registration Statement
(including each preliminary prospectus and any other prospectus filed under Rule 424 under
the Securities Act) as the Investor may request, in conformity with the requirements of the
Securities Act, and (C) such other documents as the Investor may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by the Investor, but only
during the applicable Effectiveness Period.




(v) The Company will use its commercially reasonable efforts to register or qualify the
Registrable Securities under such other applicable securities or blue sky laws of such
jurisdictions as the Investor reasonably requests as may be necessary for the marketability
of the Registrable Securities (such request to be made by the time the relevant Registration
Statement is deemed effective by the SEC) and do any and all other acts and things which may
be reasonably necessary or advisable to enable the Investor to consummate the disposition in
such jurisdictions of the Registrable Securities owned by the Investor; provided, however,
that the Company shall not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this paragraph (v),
(B) subject itself to taxation in any such jurisdiction, or (C) consent to general service
of process in any such jurisdiction.




(vi) As promptly as practicable after becoming aware of such event, the Company will
notify the Investor of Registrable Securities being offered or sold pursuant to each
Registration Statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event which comes to the
Company’s attention if as a result of such event the prospectus included in such
Registration Statement contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein not
misleading, and the Company shall promptly prepare and furnish to the Investor a supplement
or amendment to such prospectus (or prepare and file appropriate reports under the Exchange
Act) so that, as thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein not
misleading, unless suspension of the use of such prospectus otherwise is authorized herein
or in the event of a Blackout Period, in which case no supplement or amendment need be
furnished (or Exchange Act filing made) until the termination of such suspension or Blackout
Period.




(vii) The Company will comply, and continue to comply during the period that each
Registration Statement is effective under the Securities Act, in all material respects with
the Securities Act and the Exchange Act and with all applicable rules and regulations of the
SEC with respect to the disposition of all securities covered by such Registration
Statement.




(viii) As promptly as practicable after becoming aware of such event, the Company will
notify the Investor of the issuance by the SEC of any stop order or other suspension of
effectiveness of such Registration Statement.




(ix) The Company will make available for inspection by the Investor and any Inspector
retained by the Investor, at the Investor’s sole expense, all records as shall be reasonably
necessary to enable the Investor to exercise his due diligence responsibility, and cause the
Company’s officers, directors, and employees to supply all information which the Investor or
any Inspector may reasonably request for purposes of such due diligence; provided, however,
that the Investor shall hold in confidence and shall not make any disclosure of any record
or other information which the Company determines in good faith to be confidential, and of
which determination the Investor is so notified at the time the Investor receives such
information, unless (w) the Investor has, or obtained, knowledge of such information without
violation of or protection under any agreements with the Company or, to his knowledge any
third party, (x) the disclosure of such record is reasonably necessary to avoid or correct a
misstatement or omission in each Registration Statement and a reasonable time prior to such
disclosure the Investor shall have informed the Company of the need to so correct such
misstatement or omission and the Company shall have failed to correct such misstatement of
omission, (y) the release of such record is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or (z) the information in such
record has been made generally available to the public other than by disclosure in violation
of this Agreement or any other agreement. The Company shall not be required to disclose any
confidential information in such records to any Inspector until and unless such Inspector
shall have entered into a confidentiality agreement with the Company with respect thereto,
containing terms substantially similar to those set forth in this Section 3(c)(ix), which
agreement shall permit such Inspector to disclose records to the Investor. The Investor
agrees that he shall, upon learning that disclosure of such records is sought in or by a
court or governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow the Company, at the Company’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order for, the
records deemed confidential. The Company shall hold in confidence and shall not make any
disclosure of information concerning the Investor provided to the Company pursuant to this
Agreement unless (A) disclosure of such information is reasonably necessary to comply with
federal or state securities laws, (B) disclosure of such information to the SEC’s Staff of
the Division of Corporation Finance is reasonably necessary to respond to comments raised by
such staff in its review of such Registration Statement, (C) disclosure of such information
is reasonably necessary to avoid or correct a misstatement or omission in such Registration
Statement, (D) release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, or (E) such information has
been made generally available to the public other than by disclosure in violation of this or
any other agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning the Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Investor and allow
the Investor, at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.




(x) The Company will use its commercially reasonable efforts to cause all the
Registrable Securities covered by each Registration Statement to be listed or quoted on a
principal securities market.




(xi) The Company will provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times.




(xii) The Company will cooperate with the Investor to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to such Registration Statement and enable such
certificates to be in such denominations or amounts as the Investor may reasonably request.




(xiii) The Company will take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor pursuant to each Registration Statement, including
without limitation making its chief executive officer, president, chief financial officer
and other appropriate officers and personnel available to participate in marketing efforts
with respect to any registered underwritten public offering.



(d) Suspension of Offers and Sales. The Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in Section 3(c)(vi) or
of the commencement of a Blackout Period, the Investor shall discontinue and suspend disposition of
Registrable Securities pursuant to any Registration Statement until the Investor’s receipt of the
copies of the supplemented or amended prospectus contemplated by Section 3(c)(vi) or notice of the
end of the Blackout Period, and, if so directed by the Company, the Investor shall deliver to the
Company (at the Company’s expense) all copies (including, without limitation, any and all drafts),
other than permanent file copies, then in the Investor’s possession, of the prospectus covering
such Registrable Securities current at the time of receipt of such notice.



(e) Registration Expenses. All expenses incident to the Company’s performance of or
compliance with this Agreement, including without limitation all registration and filing fees,
messenger and delivery expenses, printing expenses, internal expenses (including without limitation
all salaries and expenses of its officers and employees performing legal or accounting duties), all
fees and expenses associated with filings required to be made with the NASD, as may be required by
the rules and regulations of the NASD, fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), rating agency fees, the fees and expenses incurred
in connection with the listing of the securities to be registered on all securities exchanges on
which similar securities issued by the Company are then quoted or listed, fees and disbursements of
counsel for the Company and its independent certified public accountants, and the fees and expenses
of any other persons retained by the Company, in connection with the registration hereunder
(collectively, the “Registration Expenses”) will be borne by the Company, but not including any
roadshow expenses, fees and expenses of counsel for the Investor and any underwriting, broker or
dealer discounts or commissions attributable to the sale of Registrable Securities (which are
hereinafter referred to as “Selling Expenses”). All Selling Expenses shall be borne solely by the
Investor.



(f) Information by the Investor. The Investor shall furnish to the Company such
information required under Regulation S-K under the Securities Act regarding the Investor and the
distribution proposed by the Investor as the Company may request in writing. The Investor will not
be entitled to have such Registrable Securities included in a Registration Statement if the
Investor does not furnish such information requested by the Company.



(g) Indemnification.




(i) In the event of the offer and sale of Registrable Securities under the Securities
Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent
permitted by law, the Investor, each other person who participates as an underwriter in the
offering or sale of such securities, and each other person, if any, who controls or is under
common control with the Investor or any such underwriter within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages or liabilities, joint or several,
and expenses to which the Investor or any underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in (A) any Registration Statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or (B) in any materials or information provided to investors by, or with
the written approval of, the Company in connection with the marketing of the offering of the
Shares (“Marketing Materials”), including any road show or investor presentations
made to investors by the Company (whether in person or electronically), or any omission or
alleged omission to state therein a material fact required to be stated therein or necessary
to make the statements therein in light of the circumstances in which they were made not
misleading, and the Company shall reimburse the Investor, and each underwriter and
controlling person for any legal or any other expenses reasonably incurred by them in
connection with investigating, defending or settling any such loss, claim, damage,
liability, action or proceeding; provided that the foregoing shall not apply, and the
Company shall not be liable, in any such case (A) to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises out of or
is based upon an untrue statement or alleged untrue statement in or omission or alleged
omission from such Registration Statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly executed by or
on behalf of the Investor specifically stating that it is for use in the preparation
thereof, or (B) to the extent that the Investor failed to comply with the terms of the plan
of distribution mechanics described in the applicable prospectus. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on behalf of the
Investor, or any such underwriter or controlling person and shall survive the transfer of
such shares by the Investor.




(ii) As a condition to including any Registrable Securities to be offered by the
Investor in any Registration Statement, the Investor agrees to be bound by the terms of this
Section 3(g) and to indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers, and each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, legal counsel and accountants for
the Company, any underwriter and any controlling person within the meaning of the Securities
Act of any such underwriter, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or controlling person may
become subject under the Securities Act or otherwise, (A) insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon an untrue statement or omission from such
Registration Statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement or omission was
made in reliance upon and in conformity with written information furnished to the Company
through an instrument duly executed by or on behalf of the Investor specifically stating
that it is for use in the preparation thereof, or (B) to the extent that the Investor failed
to comply with the terms of the plan of distribution mechanics described in the applicable
prospectus. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company, or any such director, officer, partner,
underwriter or controlling person and shall survive the transfer of such shares by the
Investor, and the Investor shall reimburse the Company, and each such director, officer,
legal counsel and accountants, underwriter, other stockholder, and controlling person for
any legal or other expenses reasonably incurred by them in connection with investigating,
defending, or settling and such loss, claim, damage, liability, action, or proceeding;
provided, however, that such indemnity agreement found in this Section 3(g)(ii) shall in no
event exceed the gross proceeds from the offering received by the Investor.




(iii) Promptly after receipt by an indemnified party of notice of the commencement of
any action or proceeding involving a claim referred to in Section 3(g)(i) or Section
3(g)(ii) (including any governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party, give written notice to the
indemnifying party of the commencement of such action; provided, however, that the failure
of any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Section 3(g)(i) or Section 3(g)(ii), except to
the extent that the indemnifying party is actually prejudiced by such failure to give
notice. In case any such action is brought against an indemnified party, unless in the
reasonable judgment of counsel to such indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist or the indemnified party may have defenses
not available to the indemnifying party in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense thereof, unless
in such indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties arises in respect of such claim after the assumption of
the defenses thereof or the indemnifying party fails to defend such claim in a diligent
manner, other than reasonable costs of investigation. Neither an indemnified nor an
indemnifying party shall be liable for any settlement of any action or proceeding effected
without its consent. No indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement, which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect of such claim or litigation.
Notwithstanding anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any party shall have the right to retain, at its own
expense, counsel with respect to the defense of a claim.




(iv) In the event that an indemnifying party does or is not permitted to assume the
defense of an action pursuant to Section 3(g)(iii) or in the case of the expense
reimbursement obligation set forth in Section 3(g)(i) and Section 3(g)(ii), the
indemnification required by Section 3(g)(i) and Section 3(g)(ii) shall be made by periodic
payments of the amount thereof during the course of the investigation or defense, as and
when bills received or expenses, losses, damages, or liabilities are incurred.




(v) If the indemnification provided for in this Section 3(g) is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to any loss,
liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall (A) contribute to the amount paid or
payable by such indemnified party as a result of such loss, liability, claim, damage or
expense as is appropriate to reflect the proportionate relative fault of the indemnifying
party on the one hand and the indemnified party on the other (determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material fact or
omission relates to information supplied by the indemnifying party or the indemnified party
and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission), or (B) if the allocation provided by
clause (A) above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, not only the proportionate
relative fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified party on the
other, as well as any other relevant equitable considerations. No indemnified party guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty of such
fraudulent misrepresentation.




(vi) Indemnification similar to that specified in the preceding subsections of this
Section 3(g) (with appropriate modifications) shall be given by the Company and the Investor
with respect to any required registration or other qualification of securities under any
federal or state law or regulation or governmental authority other than the Securities Act.



Section 4. Miscellaneous.



(a) Assignment of Rights; Successors and Permitted Assignees. The Investor may not
assign his rights under this Agreement to any party without the prior written consent of the
Company which shall not be unreasonably withheld. Except as otherwise provided herein, the
provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors,
permitted assignees, heirs, legatees, executors and administrators of the parties hereto.



(b) Notices. All notices or other communications which are required or permitted
under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at such other address as
may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered:



	 	 	 	 	 
	If to the Company:
	 	Joe’s Jeans Inc. (formerly Innovo Group Inc.)
	 
	 	Attn:  Dustin A. Huffine
	 
	 	5901 Eastern Avenue
	 
	 	Commerce, CA  90040
	 
	 	Facsimile:  (323) 837-3791
	 
	 	Phelps Dunbar LLP
	 
	 	Attn:  Christopher R. Maddux
	 
	 	111 East Capitol Street, Suite 600
	with a copy (which shall not
	 	Jackson, MS  39201
	constitute notice) to:
	 	Facsimile:  (601) 352-2300
	If to the Investor:
	 	Joseph M. Dahan
	 
	 	1810 Rising Glen Road
	 
	 	Los Angeles, CA 90069
	 
	 	Greenberg Traurig, LLP
	 
	 	Attn:  David P. Markman
	 
	 	2450 Colorado Avenue
	 
	 	Suite 400E
	with a copy (which shall not
	 	Santa Monica, CA 90404
	constitute notice) to:
	 	Facsimile:  (310) 586-7800






or at such other address as any party shall have furnished to the other party in writing.



(c) Specific Performance. Each party to this Agreement agrees that any breach by it
of any provision of this Agreement would irreparably injure the other party and that money damages
would be an inadequate remedy therefor. Accordingly, each party agrees that the other party shall
be entitled to one or more injunctions enjoining any such breach and requiring specific performance
of this Agreement and consents to the entry thereof, in addition to any other remedy to which such
other party is entitled at law or in equity.



(d) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.



(e) Amendments. The provisions of this Agreement may be amended at any time and from
time to time, and particular provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and by the Investor.



(f) Headings and Cross References. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement. Unless the context requires otherwise,
all cross references in this Agreement refer to sections and subsections of this Agreement.



(g) Severability. In the case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.



(h) Entire Agreement. This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the subject matter of this Agreement.



(i) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.




THE COMPANY:




JOE’S JEANS INC.


(formerly INNOVO GROUP INC.)



	 	 	 
	By:

	 	/s/ Marc B. Crossman
	 

	 	 
	Name:

	 	Marc B. Crossman
	
 
	 	 
	Title:

	 	President and CEO
	
 
	 	 







	 	 	INVESTOR:






/s/ Joseph M. Dahan




	 	 	Joseph M. Dahan