SCHEDULE 6.2(c)


EMPLOYMENT
AGREEMENT


THIS EMPLOYMENT AGREEMENT
(this “Agreement”) is entered into as of the 6th day
of February, 2007, by and among Joseph M.
Dahan (“Employee”) and Innovo
Group Inc., a Delaware corporation (the “Company”).


W I T N E S S E T H:


WHEREAS,
the Company desires to employ Employee on the terms and conditions set forth in
this Agreement and Employee desires to be employed by the Company on such terms
and conditions;


WHEREAS,
in connection with the employment, the Company and the Employee have entered
into a separate merger agreement with an entity in which Employee is the sole
stockholder (the “Merger”);


WHEREAS,
the parties wish to execute this Agreement as of the date hereof to become
effective without further action by the parties if and when all of the
conditions set forth in Section I.B. are met; and


NOW, THEREFORE,
in consideration of the respective representations, warranties and covenants
hereinafter set forth, the parties agree as follows:


I.                   EMPLOYMENT.


A.             The
Company agrees to employ Employee and Employee agrees to remain in the employ
of the Company, upon the terms and subject to the conditions provided herein.


B.              This
Agreement shall become effective immediately after the date on which all of the
following conditions precedent have been fulfilled:


i)                  The
Company and Employee have executed this Agreement and consummated the Merger.


C.              Nothing herein shall
require the Company to use anything other than its good faith efforts to
fulfill the conditions described above. Notwithstanding anything to the
contrary, it is expressly understood that the obligations contained in this
Agreement shall not become effective or enforceable against the parties until
the Effective Date occurs. “Effective Date” shall mean the date when the condition
of Section I.B. is satisfied.


II.              POSITION, DUTIES AND RESPONSIBILITIES.


A.             Employee
shall serve as Creative Director of the Brand or in such other capacity or
capacities as shall be mutually agreed upon from time to time by Employee and
Company. For the purpose of this Agreement, the term “Brand” shall mean the Joe’s®
and Joe’s Jeans® branded products, with the exceptions set forth in this
Agreement. Employee shall report
directly to the Chief Executive Officer of Company (the “CEO”), and shall hold the
title of “Creative Director” of the Brand.


B.              Employee’s
duties and responsibilities as Creative Director shall include, but not be
limited to, overseeing, directing and exploiting the Brand. Such oversight,
direction and exploitation shall include management and supervision of the
creative process of the Brand which results in the final product of the Brand
entering the marketplace.


C.              Employee
recognizes the duties and responsibilities set forth hereinabove are essential
and material services being provided to the Company, and as a result thereof
Employee shall devote 



 1
 









substantially all of his
business time, attention and efforts in the faithful performance of his duties
hereunder in a manner that shall faithfully and diligently further the business
and interests of the Company. Notwithstanding the foregoing, Employee shall be
entitled to spend certain business time and attention on charitable or personal
causes, provided that such time and attention does not materially interfere
with his duties and responsibilities under this Agreement.


D.             In
the performance of Employee’s duties, he shall use reasonable best efforts to
ensure that the quality of his performance and work in connection with the
Brand maintain the image and presence of the Brand at a level consistent with
such image as of the date of the execution of this Agreement.


E.              Employee
further acknowledges and agrees that, as a result of his fiduciary obligations
to the Company in connection with his position as an employee of the Company
and a member of its Board of Directors, he shall not take personal advantage of
any business opportunity that arises during his employment with the Company
which may be a benefit to the Company (except as otherwise permitted under Section II.F)
unless all material facts regarding such opportunity are promptly reported to
the Board for consideration by the Company and the disinterested members of the
Board determine to reject the opportunity and to approve Employee’s
participation therein.


F.               Employee
and Company further acknowledge that Employee’s spouse is involved in certain
aspects of the apparel industry which, as of the date of the Merger, are not
directly competitive to the Brand. Employee agrees that this relationship and
said spouse’s involvement in the apparel industry shall in no way interfere
with his ability to perform his duties and responsibilities hereunder. The
Employee and Company agree that any direct or indirect financial or pecuniary
interest which Employee may have in any such business may not be deemed a
violation of this Agreement. Company agrees that so long as Employee’s spouse’s
involvement in the apparel industry continues to not directly compete with the
Brand in the premium denim apparel market that such involvement shall not be
deemed a violation of Employee’s obligations hereunder.


G.            Employee
and Company acknowledge that as Creative Director of the Brand for the Company,
Employee shall have the authority to perform his duties and responsibilities
without interference by the Company. However, without the prior written consent
of Company, Employee shall not cause or permit the Company to:


i)                  sell,
exchange, lease, mortgage, pledge, charge or otherwise transfer or encumber all
or any portion of any material assets of the Company or any subsidiary;


ii)              enter
into any material transaction or series of related material transactions
involving capital expenditures, which in the aggregate are deemed to be
material, including incoming lease commitments, purchases of equipment or
inventory or other expenditures that are not consistent with any established
budget of the Company then in effect;


iii)          enter
into or amend any material agreement, commitment or other transaction, or any
series of related agreements, commitments or other transactions between the
Company and any affiliate; or


iv)            take
any material action outside the ordinary course of business.


v)                For
the purposes of this Section II.G., “material” shall mean an amount,
action, inaction, item of significance or importance which if spent, obligated,
performed or not performed or altered may result in an adverse effect upon the
condition (financial or 



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otherwise), earnings,
business or business prospects, properties or operations of the Company and its
subsidiaries, considered as one enterprise.


III.         COMPENSATION AND BENEFITS.


A.             So
long as this Agreement is in full force and effect and except as otherwise set
forth herein, the Company shall pay Employee an annual base salary in
accordance with the following Gross Profit (defined hereinbelow) calculations
(the “Salary”); provided, however, in no event shall Employee’s Salary be less
than Nine Hundred Fifty Thousand ($950,000) Dollars (“Minimum Salary Amount”)
which shall be creditable on an annual basis against the following Salary
calculation amounts:


i)                  7%
of Gross Profit up to $22,500,000; plus


ii)              an
additional 3% of Gross Profit of any dollar amount within the next $9,000,000
of Gross Profit above $22,500,000 in Gross Profit; plus


iii)          an
additional 2% of Gross Profit of any dollar amount within the next $9,000,000
of Gross Profit above $31,500,000 in Gross Profit; plus


iv)            an
additional 1% of Gross Profit of any dollar amount of Gross Profit above
$40,500,000 of Gross Profit.


If 7% of Gross Profit for any fiscal year is less than
the Minimum Salary for that fiscal year period, such shortfall shall not be
taken into account for the calculations under this Section III.A for any
subsequent fiscal year.


By way of example, in the event the Company achieves
Gross Profit of Ten Million ($10,000,000) Dollars during its fiscal year, then
Employee shall be entitled to receive the Minimum Salary for that fiscal year
period, notwithstanding the fact that the formula calculated out as set forth
in Section III.A(i) above would only equal $700,000.


Further by way of example, in the event the Company
achieves Gross Profit of Twenty-Five Million ($25,000,000) Dollars during its
fiscal year, then Employee shall be entitled to receive total cash compensation
of $1,650,000 for that fiscal year, calculated as follows:




	
  $22,500,000 x 7%
  =

  	
   

  	
  $1,575,000 (includes Minimum Salary)

  
	
  [$25,000,000 -
  $22,500,000] x 3% =

  	
   

  	
  $75,000

  	
   

  
	
  Total Compensation:

  	
   

  	
  $1,650,000

  	
   

  
						






 


Finally by way of example, in the event the Company
achieves Gross Profit of Forty-Five Million ($45,000,000) Dollars during its
fiscal year, then Employee shall be entitled to receive total cash compensation
of $2,070,000 for that fiscal year, calculated as follows:




	
  $22,500,000 x 7%
  =

  	
   

  	
  $1,575,000 (includes Minimum Salary)

  
	
  [$31,500,000 -
  $22,500,000] x 3% =

  	
   

  	
  $270,000

  
	
  [$40,500,000 -
  $31,500,000] x 2% =

  	
   

  	
  $180,000

  
	
  [$45,000,000 -
  $40,500,000] x 1% =

  	
   

  	
  $45,000

  	
   

  
	
  Total Compensation:

  	
   

  	
  $2,070,000

  	
   

  






 


For purposes of this Agreement, the phrase “Gross
Profit” shall be defined as Net Sales of the Brand less Cost of Goods Sold for
the Brand as such is reported in the Company’s periodic filings with the
Securities and Exchange Commission (“SEC”) and fiscal year shall mean the
fiscal year as reported therein.



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The Minimum Salary Amount shall be made to Employee
pursuant to this Section III.A shall be made in accordance with the
Company’s regular payroll policy and subject to withholding for taxes as
required by law. Any additional Salary amounts shall be paid in advance on a
monthly basis within ten (10) business days after the end of the preceding
month. On a quarterly and annual basis, after the Company reports its Gross
Profit in its SEC filings, the Company and Employee shall reconcile the
additional Salary payments made in advance to the Employee pursuant to this
Agreement. To the extent the advance additional Salary payments made to the
Employee do not equal the amount of additional Salary actually earned by
Employee for any quarter or fiscal year, as determined on the basis of the
Company’s SEC filings for such fiscal period, (i) the Company shall
recover any overpayment from Employee as an offset against future payments of
additional Salary; and (ii) the Company shall promptly pay any
underpayment to Employee. In the event that this Agreement is terminated
pursuant to Section V.F., then Employee shall receive his pro rata Minimum
Salary Amount and additional Salary otherwise due as of the date of termination.
Additional Salary amounts shall be calculated as soon as practicable after the
date of termination.


B.              Employee
shall also be entitled to receive those benefits outlined in the Company’s
Employee Handbook in effect during the Term of this Agreement and any
additional benefits received by other named executive officers of Company, if
any.


C.              Employee
is authorized to incur necessary and customary expenses in connection with the
business of the Company, including expenses for entertainment, trade
association meetings, travel, promotion and similar matters, consistent with
the Company’s policies as in effect from time to time. The Company will pay or
reimburse Employee for such expenses in accordance with the established expense
reimbursement policy then in effect for employees of the Company.


IV.           TERM. Employee’s employment shall
commence on the Effective Date, and shall terminate ten years from the
Effective Date, unless terminated sooner as provided in this Agreement (the “Term”).


V.                TERMINATION.


A.             If
Employee is determined to be Disabled (as defined below), Employee’s employment
may be terminated upon sixty (60) days written notice. If Employee’s employment
is terminated under this Section V.A of this Agreement, then the Company shall pay to Employee (or his
legal representative) his salary through the date of termination as well as any
benefits to which Employee may be entitled as of the date of termination under
the benefit plans referred to in Section III.B
of this Agreement, but the Company will be responsible for no other payments of
any nature to employee if termination occurs under this provision.


For purposes of
this Agreement, “Disabled” shall mean the Employee is unable, as a result of a
medically determinable physical or mental illness or incapacity and
notwithstanding reasonable accommodation by the Company, to satisfactorily
perform his duties under this Agreement for a continuous period of 180
consecutive days, or for shorter periods aggregating 270 days during any period
of 12 consecutive months, without any hope or expectation of an ability to
resume such duties in the immediate future. Notwithstanding the foregoing, if
an insurance company providing group long-term disability insurance for the
Company’s employees determines that Employee is entitled to disability benefit
payments thereunder, then it shall conclusively be determined that the Employee
is Disabled. If no such insurance is then in force or if no such determination
has been made, the determination of whether the Employee is Disabled, in the
absence of an insurance company determination for disability benefits, shall be
made by a majority of the independent members of the Company’s Board of
Directors (as “independent director” is defined by Nasdaq corporate governance
rules) (the “Independent Directors”) based on the advice and determination of a
competent medical doctor selected and compensated by the Company. If a physical
examination, medical reports and 



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advice
or other evidence is required to enable such determination, Employee shall
submit to such examination by such medical doctor and shall consent to the
transfer and disclosure to the Company of such information. If Employee
withdraws or refuses to provide such consent, then solely for the purposes of
this Agreement, there shall be a presumption upon which the Company may rely
that Employee is Disabled.


B.              The
Company may terminate Employee’s employment for cause (“Cause”) if:


i)                  the
Employee is convicted of or enters a plea of guilty or nolo contendere to a felony or a crime
involving moral turpitude;


ii)              the
Employee materially breaches any provision of this Agreement and such breach is
not cured within forty five (45) days of receipt by Employee of written notice
thereof;


iii)          the
Employee encourages, solicits, persuades or attempts to persuade, any Company
employee, consultant, contractor, customer, or potential customer to engage in
any of the acts prohibited by this Agreement; or


iv)            the
Employee violates any of the Company’s policies and procedures as established
from time to time and set forth in the Company’s employee handbook or the
Company’s Code of Ethics for which such violation constitutes a breach of such
Code of Ethics or warrants termination of employment, including the Company’s
sexual harassment policy, or otherwise engages in an act that constitutes
sexual harassment.



 5















If Employee’s employment is terminated under this Section V.B
of this Agreement, then the
Company shall pay to Employee his salary through the date of termination as
well as any benefits to which Employee may be entitled as of the date of
termination under the benefit plans referred to in Section III.B of this Agreement, but the Company will be
responsible for no other payments of any nature to Employee if termination
occurs under this provision.


C.              The
Company may terminate Employee’s employment without Cause at any time upon two (2) weeks’
written notice to Employee. If Employee is terminated without Cause, Employee
will be entitled to receive, in addition to his Salary through the date of
termination (as determined and calculated under the provisions of Section III.A)
as well as any benefits to which Employee may be entitled as of the date of
termination under the benefit plans referred to in Section III.B of this Agreement, an amount equal to the then
present value of the remaining Minimum Salary Amounts (and any additional
Salary amounts) due to Employee through the end of the Term of the Agreement (“Termination
Severance”). The Company shall pay the Termination Severance to Employee within
60 days of the date of termination; provided, however, that to the extent
required to avoid taxation under Section 409A(a) of the Internal
Revenue Code (the “Code”) the Company shall pay the Termination Severance on
the date that is six months plus one day after the date of termination. Notwithstanding
the foregoing, if the Company’s funds are not sufficient to pay the Termination
Severance as scheduled without jeopardizing the Company’s solvency, the Company
shall pay the Termination Severance during the first calendar year in which the
Company’s funds are sufficient to do so without jeopardizing the solvency of
the Company. The Company shall also pay a portion of Employee’s COBRA premium
under the same terms as it pays the Company’s other employees’ health insurance
premiums for a period of one (1) year. Any such payments made pursuant to
this Section V.C will be subject to all standard and regular withholdings.


D.             Employee
may terminate Employee’s employment upon written notice to the Company within
30 days of any event that constitutes “Good Reason,” defined to mean (i) any
material breach of this Agreement by the Company which is not cured within
thirty (30) days of receipt by the Company of written notice thereof; or (ii) Employee’s
decision to terminate employment at any time after 18 months following a Change
in Control (as hereinafter defined). If Employee terminates for Good Reason,
Employee will be entitled to receive an amount equal to the Termination
Severance, as defined in Section V.C hereinabove. The Company shall pay
Employee the Termination Severance within 60 days of the date of termination;
provided, however, that to the extent required to avoid taxation under Section 409A(a) of
the Code, the Company shall pay the Termination Severance on the date that is
six months plus one day after the date of termination. Notwithstanding the
foregoing, if the Company’s funds are not sufficient to pay the Termination
Severance as scheduled without jeopardizing the Company’s solvency, the Company
shall pay the Termination Severance during the first calendar year in which the
Company’s funds are sufficient to do so without jeopardizing the solvency of
the Company. The Company shall also pay a portion of Employee’s COBRA premium
under the same terms as it pays the Company’s other employees’ health insurance
premiums for a period of one (1) year. Any such payments made pursuant to
this Section V.D will be subject to all standard and regular withholdings.


E.              If
a Change in Control (as hereinafter defined) occurs during the Term of this
Agreement and at any time within 18 months following such Change in Control
either the Company terminates the Employee’s employment without Cause, or the
Employee terminates employment with the Company for Good Reason, then the
Employee shall be entitled to an amount equal to the Termination Severance, as
defined in Section V.C hereinabove. The Company shall pay Employee the
Termination Severance within 60 days of the date of termination; provided, 



 6
 









however, that to the
extent required to avoid taxation under Section 409A(a) of the Code,
the Company shall pay the Termination Severance on the date that is six months
plus one day after the date of termination. Any such payments made pursuant to
this Section V.E will be subject to all standard and regular withholdings.
For purposes of this Agreement, “Change in Control” shall be deemed to have
occurred upon the closing of a transaction which: (i) the Company sells or
otherwise disposes of all or substantially all of its assets; (ii) there
is a merger or consolidation of Company with any other corporation or
corporations, provided that the shareholders of Company, as a group, do not
hold, immediately after such event, at least fifty percent (50%) of the voting
power of the surviving or successor corporation; (iii) any person or
entity, including any “person” as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), becomes the “beneficial owner” (as defined in Rule 13(d-3)
under the Exchange Act) of Common Stock of Company representing fifty percent
(50%) or more of the combined voting power of the voting securities of Company
(exclusive of persons who are now officers or directors of Company); or (iv) the
approval by the shareholders of a liquidation or dissolution of the Company.


F.               Employee
may terminate this Agreement at any time for any reason upon ten business days’
notice. In the event of termination under this Section V.F., then Employee
shall receive his pro rata Minimum Salary Amount and additional Salary
otherwise due as of the date of termination. Any additional Salary amounts
shall be calculated as soon as practicable after the date of termination.


VI.                      DISCLOSURE OF INFORMATION. Employee
shall not, at any time during or after the expiration of the Term, disclose to
any Person, except as required by law or as may be necessary to perform the
duties and responsibilities hereunder, any non-public information (including,
without limitation, non-public information obtained prior to the date hereof)
concerning the business, clients or affairs of the Company, or any affiliate of
the Company, for any reason or purpose whatsoever unless such information
becomes publicly available or known for any reason other than in an
unauthorized act of Employee. Employee shall not make any use of any of such
non-public information for his own purpose or for the benefit of any Person
except the Company. Upon the termination of Employee’s employment at the
Company, Employee shall return to the Company all property of the Company and
any affiliate of the Company then in the possession of Employee and all
drawings, designs, sketches, books, records, computer tapes, discs or other
electronic media and all other material containing non-public information
concerning the business, clients or affairs of the Company or any affiliate of
the Company. Employee shall not retain copies of any material required to be
returned to the Company.


VII.                 INTELLECTUAL PROPERTY. Employee
shall promptly disclose, grant and assign to the Company for its use and
benefit any and all marks, designs, logos, inventions, improvements, business
processes, technical information and suggestions relating in any way to the
business conducted by the Company, or any affiliate of the Company, which he
may develop or which may be acquired by Employee during the term of Employee’s
employment at the Company (whether or not during usual working hours), together
with all trademarks, patent applications, letters patent, copyrights and
reissues thereof that may at any time be granted for or upon any such mark,
design, logo, invention, improvement, process or technical information, if
applicable. In connection therewith:


A.             Employee
shall without charge, but at the expense of the Company, promptly at all times
hereafter execute and deliver such applications, assignments, descriptions and
other instruments as may be necessary or proper in the sole opinion of the
Company to vest title to any such marks, designs, logos, inventions,
improvements, business processes, technical information, trademarks, patent
applications, patents, copyrights or reissues thereof in the Company and to
enable it to obtain and maintain the entire right and title thereto throughout
the world;



 7
 









B.              Employee
shall render to the Company at its expense all such assistance as it may
require in the prosecution of applications for said trademarks, patents,
copyrights or reissues thereof, in the prosecution or defense of interferences
which may be declared involving any said trademarks, applications, patents or
copyrights and in any litigation in which the Company or any of its affiliates
may be involved relating to any such trademarks, patents, inventions,
improvements, processes or technical information; and


C.              for
the avoidance of doubt, the foregoing provisions shall be deemed to include an
assignment of future copyrights in accordance with Section 201 of the
Copyright Act of 1986 and any amendment or re-enactment thereof relating in any
way to the business conducted by the Company or any affiliate of the Company.


VIII.            HEADINGS. Section and other
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.


IX.                      INTEGRATED AGREEMENT. This Agreement
constitutes the entire understanding and agreement among the parties hereto with
respect to the subject matter hereof, and there are no other agreements,
understandings, restrictions, representations or warranties among the parties
other than those set forth herein or provided for herein.


X.                           AMENDMENTS. This Agreement may be
amended or modified at any time in any or all respects, but only by an
instrument in writing executed by the parties hereto.


XI.                      CHOICE OF LAW. The validity of the
Agreement, the construction of its terms, and the determination of the rights
and duties of the parties hereto shall be governed by and construed in
accordance with the internal laws of the State of California excluding
conflicts of law principles. Each party irrevocably (i) submits to the
exclusive jurisdiction of any California state or federal court sitting in the
Southern District of California, with respect to matters arising out of or
relating hereto, (ii) agrees that all claims with respect to such action
or proceeding may be heard and determined in such California state or federal
court, (iii) waives to the fullest possible extent, the defense of an
inconvenient forum, (iv) waives the right to a trial by jury and (v) agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.


XII.                 NO STRICT CONSTRUCTION. The language
used in this Agreement shall be deemed to be the language chosen by the parties
to express their collective mutual intent, and no rule of strict construction
shall be applied against any Person. The term “including” as used herein shall
be by way of example and shall not be deemed to constitute a limitation of any
term or provision contained herein.


XIII.            ATTORNEY’S FEES AND COSTS. If an
action at law or in equity is necessary to enforce or interpret any provision
of this Agreement, each party shall bear its own expenses associated with
enforcing or interpreting such provision.



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XIV.            NOTICES. All notices and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand and received by the
addressee, or (b) delivered by a nationally recognized overnight delivery
service and received by the addressee, in each case as follows:




	
  If to Employee:

  	
  Joseph
  M. Dahan

  
	
   

  	
  1810
  Rising Glen Road

  
	
   

  	
  Los Angeles, CA 
  90069

  
	
  With a copy to:

  	
  David P. Markman

  
	
   

  	
  Greenberg Traurig

  
	
   

  	
  2450 Colorado Avenue

  
	
   

  	
  Suite 400E

  
	
   

  	
  Santa Monica, CA 
  90404

  
	
  If to the Company:

  	
  Marc Crossman or Chief Executive Officer

  
	
   

  	
  Innovo Group Inc.

  
	
   

  	
  5901 S. Eastern Avenue

  
	
   

  	
  Commerce, CA 
  90040

  
	
  With a copy to:

  	
  Dustin Huffine or General Counsel

  
	
   

  	
  Innovo Group Inc.

  
	
   

  	
  5901 S. Eastern Avenue

  
	
   

  	
  Commerce, CA 
  90040

  






 


or to such other
addresses as a party may designate by notice to the other parties.


XV.                 ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, estate, legatees and legal
representatives. The rights and obligations of the Company under this Agreement
may be assigned to or assumed by any other Person. Employees’ rights or
obligations hereunder may not be assigned to or assumed by any other Person. Any
assignment by the Company shall not affect the Employee’s duties or
responsibilities under this Agreement.


XVI.                    SEVERABILITY. Each provision of the
Agreement is intended to be severable. In the event that any one or more of the
provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable, the same shall not affect the validity or
enforceability of any other provision of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provisions had
never been contained herein. Notwithstanding the foregoing, however, no
provision shall be severed if it is clearly apparent under the circumstances
that the parties would not have entered into the Agreement without such
provision.


XVII.               SURVIVAL.  The
provisions of Sections VI through XVII shall survive the termination of the
employment period or termination of this Agreement.


XVIII.               DISPUTE RESOLUTION PROCEDURES.


A.              Arbitration.


i)                  Agreement to Arbitrate Disputes.  The Company and Employee hereby agree that any dispute with
any party (including the Company’s affiliates, successors, predecessors,
contractors, employees and agents) that may arise from Employee’s employment
with the Company or the termination of Employee’s employment with the Company
and that cannot be resolved after negotiation and mediation, if applicable,
must be submitted for resolution by mandatory, binding arbitration. The
arbitration requirement applies to all 



 9
 









statutory, contractual
and/or common law claims arising from employment with the Company including but
not limited to claims arising under Title VII of the Civil Rights Act of 1964,
the Age Discrimination in Employment Act, the Equal Pay Act of 1963, the
California Fair Employment and Housing Act, the California Labor Code Sections
200, et seq., 970 and 1050 et seq., the Fair Labor Standards Act and claims of
defamation under California Civil Code Section 44, et seq.
or common law. Both the Company and the Employee shall be precluded from
bringing or raising in court or another forum any dispute that was or could
have been submitted to binding arbitration. This arbitration requirement does not apply to claims for workers’
compensation benefits, claims arising under ERISA (29 U.S.C. § 1001 et seq.) or provisional remedies under California Code of
Civil Procedure Section 1281.8.


ii)              Conduct of Arbitration.  Binding arbitration under this Agreement shall be conducted
in Los Angeles County, California, in accordance the applicable rules of
Judicial Arbitration and Mediation Service (JAMS) or any successor or related
service and any applicable state or local laws. The arbitration shall be
conducted before a neutral arbitrator selected by both parties in accordance
with such rules. The arbitrator shall be a neutral and impartial lawyer with
excellent academic and professional credentials (i) who is or has been
practicing law for at least 15 years, specializing in either employment
litigation or general corporate and commercial matters, and (ii) who has
had both training and experience as an arbitrator or a judge and who has
successfully arbitrated at least ten cases. Any dispute with any party which
arises from Employee’s employment with the Company or termination of employment
with the Company must be submitted to binding arbitration within the applicable
statute of limitations prescribed by law; provided, however, that the
applicable limitations period will be deemed to be tolled after the provision
of a Dispute Notice during any period within which the parties are actively
engaged in negotiation pursuant to Section VIII.A or mediation pursuant to
Section VIII.B. For this purpose, the parties will be “actively engaged”
during the period subsequent to either party providing the other party with a
Dispute Notice through the date either party provides written notice to the
other party that the negotiation or mediation is terminated (other than the
termination of a negotiation by a Mediation Notice, in which case the tolling
will continue). With the exception of a filing fee that shall not exceed the
cost to file a comparable claim in state or federal court, the Company shall
pay the fees and costs of the Arbitrator, and each party shall pay for its own
costs and attorneys’ fees. However, the Arbitrator may award costs and or
attorneys’ fees to the prevailing party to the extent permitted by law. The
parties will be permitted to conduct discovery as provided by the California
Code of Civil Procedure Section 1283.05. The arbitrator shall, within
thirty days of the conclusion of the arbitration, issue a written opinion
setting forth the factual and legal bases for his or her decision. Judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.


iii)          Acknowledgment.  EMPLOYEE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT, AND
UNDERSTANDS AND AGREES TO ITS TERMS. EMPLOYEE HAS ENTERED INTO THIS AGREEMENT
VOLUNTARILY, AND HAS NOT RELIED UPON ANY PROMISES OR REPRESENTATIONS OTHER THAN
THOSE CONTAINED HEREIN. EMPLOYEE UNDERSTANDS HE IS GIVING UP HIS RIGHT TO A
JURY TRIAL BY ENTERING INTO THIS AGREEMENT.


XIX.                    DIRECTOR AND OFFICER INSURANCE. Company
shall maintain during the Term of this Agreement and for no less than 6 years
thereafter, adequate director and officer insurance to 



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cover any real or
threatened claims, proceedings or lawsuits arising out of or related to Employee’s
employment by Company and performance of his duties and responsibilities under
this Agreement.


XX.                         CODE SECTION 409A. The Company
and Employee acknowledge and agree that the interpretation of Section 409A
of the Code and its application to the terms of this Agreement is uncertain and
may be subject to change as additional guidance and interpretations become
available. Anything to the contrary herein notwithstanding, all benefits or
payments provided by the Company to the Employee that would be deemed to
constitute “nonqualified deferred compensation” within the meaning of Section 409A
of the Code are intended to comply with Section 409A and, in the event
that any such benefit or payment is deemed to not comply with Section 409A,
the Company and Employee agree to renegotiate in good faith any such benefit or
payment so that either (i) Section 409A will not apply, or (ii) compliance
with Section 409A will be achieved. In any event, the Company makes no
representation or warranty and the Company shall have no liability to Employee
or any other person if any provisions of this Agreement are determined to
constitute “nonqualified deferred compensation” within the meaning of Section 409A
of the Code and the terms of such provisions do not satisfy the additional
conditions applicable to nonqualified deferred compensation under Section 409A
of the Code.


[Signature Page to
Follow]



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IN WITNESS
WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.




	
  

  	
  EMPLOYEE

  
	
   

  	
  /s/ JOSEPH M. DAHAN

  	
   

  
	
   

  	
  Joseph M. Dahan

  
	
   

  	
  INNOVO GROUP INC.

  
	
   

  	
  By:

  	
  /s/ MARC CROSSMAN

  	
   

  
	
   

  	
  Name:

  	
  Marc Crossman

  
	
   

  	
  Title:

  	
  President and CEO

  
						






 



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