Document:

Exhibit 10.67

 

FIRST AMENDMENT TO

MASTER DISTRIBUTION AGREEMENT

 

This First Amendment to the Master
Distribution Agreement (“First Amendment”) is made effective as of February 14,
2005 (the “Effective Date”), by and between JOE’S JEANS, INC., a Delaware corporation,
with its principle place of business at 5900 S. Eastern Avenue, Commerce,
California 90040, USA, (hereinafter referred to as “JOE’S”) and BEYOND BLUE,
INC., a California corporation, with its principle place of business at 815
Moraga Drive, Second Floor, Los Angeles, California 90049, USA (hereinafter
referred to as “BBI”) and collectively know as (the “Parties”).

 

W I T N E S S E T H:

 

WHEREAS, the Parties
entered into that certain Master Distribution Agreement dated effective as of January 1,
2004 pursuant to which the Parties entered into an exclusive distribution
arrangement for the Joe’s and Joe’s Jeans Products in the Territory (the “Master
Agreement”); and

 

WHEREAS, in
connection with the execution of a separate Master Distribution Agreement
between the Parties for the distribution of certain products bearing the indieTM
trademark owned by JOE’S, the Parties wish to amend the Master Agreement to
provide for a lower wholesale price to be paid by BBI to JOE’S as set forth in Section 6.1
of the Master Agreement;

 

NOW, THEREFORE, in
consideration of the foregoing, the Parties to this Agreement hereby agree as
follows:

 

1.                                       The
Parties hereby delete the reference to “twenty-seven and five tenths percent
(27.5%)” set forth in line 2 of Section 6.1 of the Master Agreement in its
entirety and replace it with “twenty-two and one-half percent (22.5%)” which
shall be in force as of the Effective Date hereinabove, subject to the
following conditions:

 

a.                                                               The
Parties hereby acknowledge that the terms of Section 1.2(b) shall remain
in full force and effect up until the expiration of that certain master
distribution and licensing agreement by and between JOE’S and Itochu
Corporation (“Itochu”) dated July 1, 2003 (the “Itochu Agreement”), as
assigned by JOE’S to BBI on August 31, 2004 pursuant to Section 28.1
of the Itochu Agreement.  Upon said
expiration of the Itochu Agreement, the territory of Japan shall be subject to
the wholesale price adjustment of twenty-two and on-half percent (22.5%) as
made pursuant to Paragraph 1 hereinabove; and

 

b.                                                              All
sales made and/or associated to American Retro from the Effective Date through March 31,
2005 shall be and/or remain at a twenty-five percent (25%) discount, and all
sales made and/or associated to American Retro from April 1, 2005 through
the end of the Term of the Master

 

1

 

Agreement (as defined therein) shall be at
twenty-two and one-half percent (22.5%) as made pursuant to Paragraph 1
hereinabove.

 

2.                                       BBI
shall have a right to renew the Master Agreement for a two (2) year period (“Renewal
Period”), which shall be exercised in writing by BBI on or before six (6)
months prior to the expiration of said Master Agreement.  Said Renewal Period shall be subject to the
same terms and conditions of the Master Agreement, save and except for the
following condition:

 

a.               BBI shall achieve
the following Guaranteed Net Wholesale (“GNW”) sales:

 

Year 1 Renewal Period:                                                                      $10,000,000
(“Year 1 Renewal Period”)

Year 2 Renewal Period:                                                                      $12,000,000
(“Year 2 Renewal Period”)

 

In the event that BBI shall fail to meet its
minimum GNW for the Year 1 Renewal Period, then JOE’S shall have the right to
terminate the Agreement with BBI, thereby eliminating Year 2 Renewal Period.

 

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

 

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

 

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

 

2

 

 

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

 

 

	
  BEYOND BLUE, INC.

  	
  JOE’S JEANS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Harry Haralambus

  	
   

  	
  /s/ Jay Furrow

  	
   

  
	
  By: Harry Haralambus

  	
  By: Jay Furrow

  
	
  Title: President

  	
  Title: Chief Executive Officer

  
				

 

3Exhibit 10.68

 

MASTER
DISTRIBUTION AGREEMENT

 

This Master Distribution Agreement (“Agreement”)
is made effective as of February 9, 2005 (the “Effective Date”), by and
between JOE’S JEANS, INC., a Delaware corporation, with its principle place of
business at 5900 S. Eastern Avenue, Commerce, California 90040, USA,
(hereinafter referred to as “JOE’S”) and BEYOND BLUE, INC., a California
corporation, with its principle place of business at 815 Moraga Drive, Second
Floor, Los Angeles, California 90049, USA (hereinafter referred to as “BBI”)
and collectively know as (the “Parties”).

 

W I T
N E S S E T H:

 

WHEREAS, JOE’S is
the owner of the indieTM trademark (“Trademark”) and has been engaged in the manufacture,
design, production, distribution and sale of men’s and women’s denim jeans and
other related clothing products under the Trademark (“Products”) in the United
States, and various other countries and desires to appoint a worldwide master
distributor outside the United States of America (the “Territory”); and

 

WHEREAS, BBI is a
reputable agent for and distributor of products similar to the Products; and

 

WHEREAS, JOE’S
wishes to appoint BBI as, and BBI wishes to be appointed to and assume the
position of, the exclusive distributor of the Products in the Territory.

 

NOW, THEREFORE, the
parties to this Agreement (hereinafter referred to as the “Parties”) hereby
agree as follows:

 

1.                                      Grant
of Distribution Rights.

 

1.1                                 Distribution
Rights

 

Under the terms and conditions of this
Agreement, JOE’S grants to BBI for the term of this Agreement the right to purchase
the Products from JOE’S, to import, advertise, promote, market, distribute and sell
the Products and to use the Trademarks in the advertising, promotion,
marketing, distribution and sale of the Products in the Territory only as
approved by JOE’S in the manner set forth in this Agreement (“Distribution
Rights”).

 

Notwithstanding anything herein to the
contrary, the right to sell or offer for sale or authorize for sale any Product
to the following or by the following means in the Territory is reserved
exclusively to JOE’S (or its designee) and its affiliated companies: (a) United
States Government instrumentalities, agencies, departments or activities,
including, without limitation, Military Post Exchanges, if any, in the
Territory; (b) airport duty free shops, duty free zones and any other areas
similarly designated by local

 

1

 

government and authorities; and (c) the Internet or other electronic
means now known or to be developed (the “Internet”).

 

Neither BBI nor any of its affiliated
companies shall, directly or indirectly, solicit customers for Products in the
United States of America.  Neither BBI
nor any of its affiliated companies shall, directly or indirectly, sell or
offer to sell Products outside the Territory or to anyone that it knows or,
upon reasonable inquiry, should know is likely to resell such Products outside
of the Territory.  BBI shall promptly
refer all inquires it receives concerning sales outside the Territory to JOE’S.

 

1.2                                 Exclusivity
and Competitive Products.

 

(a)                                 During
the effective term of this Agreement (as hereinafter defined), JOE’S shall not
grant to any other person, firm or corporation the Distribution Rights for the
Products in the Territory, nor shall JOE’S distribute, lease, market or sell,
directly or indirectly, the Products in the Territory except through BBI.

 

(b)                                 BBI
shall submit to JOE’S a list of the products other than JOE’S which are
primarily jeans and potentially competitive products to the Products and JOE’S
that it currently distributes or plans to distribute in the Territory (“Competitive
Products”).   When, during the term of
this Agreement, BBI directly or indirectly, through an Affiliate or otherwise,
is considering to act as an official distributor to the retail trade in the
Territory for any product which could be competitive with any of the Products,
BBI will notify JOE’S and use its best efforts to resolve any issues that could
negatively impact BBI’s distribution of the Products.  The contents of this Section are not
intended to be a restriction or impediment in any way to BBI’s efforts to act
as a licensing agent or consultant to entities manufacturing or selling
products which may be considered competitive to the Products; the Parties agree
that this Section 1.2(b) refers to and is intended to be a consideration
for official distribution activities controlled or prompted by any distribution
agreements between BBI and a third party manufacturing or selling Competitive
Products.

 

1.3                                 Term.

 

This Agreement shall come into force as of the Effective Date and shall
remain in full force and effect for a period of four (4) years through August 8,
2009 (the “Term”).  For purposes of this
Agreement, the first year of the Term shall be an eighteen (18) month
period.  The following represent the
collections for each year of the Term:

 

First Year (Period February 9, 2005 to August 8, 2006):

Summer 2005

Fall 2005

Holiday 2005

Spring 2006

Summer 2006

 

2

 

Second Year (Period August 9, 2006 to August 8, 2007)

 

Fall 2006

Holiday 2006

Spring 2007

Summer 2007

 

Third Year (Period August 9, 2007 to August 8, 2008)

 

Fall 2007

Holiday 2007

Spring 2008

Summer 2008

 

Fourth Year (Period August 9, 2008 to August 8, 2009)

 

Fall 2008

Holiday 2008

Spring 2009

Summer 2009

 

Any renewal of the term of this Agreement
shall be determined six (6) months prior to the expiration of the Term by
mutual agreement between the parties.

 

2.                                      Sub-Distribution.

 

The parties hereby agree that within ninety
(90) days from the date of the first shipment to each sub-distributor by BBI, a
standard sub-distribution agreement (the “Sub-Distribution Agreement” or “Sub-Distribution
Agreements”) shall be finalized
for execution by the sub-distributors during the term of this Agreement.  BBI shall be responsible for entering into
the Sub-Distribution Agreements with various sub-distributors (“Sub-Distributors”)
in the Territory, which shall act as local distributors and/or agents to
distribute the Product within certain areas of the Territory as more
specifically defined in the Sub-Distribution Agreements.  BBI shall cooperate with JOE’S regarding
approval or disapproval of any Sub-Distributor, and shall seek final written
approval for Sub-Distributors from JOE’S prior to execution of the
Sub-Distribution Agreements.  BBI shall
be responsible for all aspects of the Sub-Distribution Agreements, including
enforcing the rights and obligations of each Sub-Distributor under said
Sub-Distribution Agreements.  The
Sub-Distribution Agreements shall, at a minimum include the following:

 

1. 
Minimum sample charges to be paid by each Sub-Distributor for samples;

 

2. 
Minimum advertising requirements, including minimum monetary obligations
and approval by BBI and JOE’S of manner and use of advertising expenditures;

 

3

 

3.  An
assignment provision whereby, in the event that this Agreement is terminated
for any reason whatsoever, each Sub-Distribution Agreement shall be assigned to
JOE’S, and each Sub-Distributor shall be bound to JOE’S as the assignee for its
obligations under the Sub-Distribution Agreements, and each Sub-Distribution
Agreement shall remain in full force and effect.

 

Each Sub-Distribution Agreement shall be considered an
Addendum to this Agreement, and shall be incorporated upon each
Sub-Distribution Agreement’s respective execution.

 

3.                                      Sales Promotion

 

3.1                                 Best
Efforts.  BBI agrees to use its best
efforts to promote and stimulate the sale of the Products in the Territory.

 

3.2                                 Marketing.

 

JOE’S shall cooperate with BBI to allow BBI
to use its best efforts to advertise, promote, market and sell the Products in
the Territory.  Twice a year, as
specified herein, BBI shall furnish JOE’S with seasonal marketing plans for the
ensuing year which shall be due no later than the last day of November for
the Spring/Summer Collection and by the last day of April for the
Fall/Winter/Holiday collection.  JOE’S
shall notify BBI of its approval or comment on needed changes to such marketing
plans within one (1) month of receipt of same from BBI.  BBI shall secure JOE’S approval prior to
initiating any changes in its existing or proposed sales and marketing plans.

 

All advertising, promotional and marketing
materials prepared by BBI shall be subject to the prior written approval of JOE’S.  JOE’S shall have ten (10) business days
following receipt of such materials in which to review and approve or
disapprove the materials, which approval JOE’S may withhold in its sole
discretion. If JOE’S does not approve or disapprove any such materials in
writing within that time period, such materials will be deemed to be approved.

 

BBI agrees to attend at least two JOE’S line presentations for the
Products during each year of the Agreement. BBI will attend and show the
Products at a minimum of two trade fairs during each year of the Agreement.

 

4.                                      Orders
For Products, Defects and Deficiencies, Reports and Access.

 

4.1                         Purchase Orders.

 

BBI shall submit purchase orders for the
Products to JOE’S in writing prior to the order cut-off date as communicated by
JOE’S to BBI, which shall set forth at a minimum:

 

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(a)                                  Identification
of the Products ordered;

(b)                                 Quantities;

(c)                                  Sizes;

(d)                                 Requested
delivery dates, and

(e)                                  Shipping
instructions (including shipping address).

 

4.2                                 Acceptance
of Orders.

 

JOE’S shall accept orders placed by BBI in
writing at its principal offices in Los Angeles, U.S.A.  After acceptance, an order may not be
modified or changed except with the written request by BBI and the approval of
JOE’S.

 

4.3                                 Delivery,
Risk and Title

(a)                                  Unless
otherwise agreed in writing, all Products purchased by BBI from JOE’S shall be  packed according to BBI’s reasonable instructions
and made available to BBI’s designated forwarder.  JOE’S shall advise BBI when the Products are
available for shipment.

 

(b)                                 Unless
otherwise agreed, the Products shall be delivered FOB, the JOE’S warehouse or
the warehouse of JOE’S’s supplier  and delivery
shall be deemed to have been completed once the Products have been picked up at
JOE’S’s warehouse by BBI’s freight forwarder.

 

(c)                                  All
title and risk of loss and damage shall pass to BBI when the Products have been
effectively delivered to BBI’s freight forwarder.

 

4.4                                 Modification
of Orders.

 

No accepted purchase order shall be modified
or cancelled except upon the written agreement by both parties.  BBI’s purchase
orders or mutually agreed change orders shall be subject to all provisions of
this Agreement.

 

4.5                                 Import
Documentation.

 

BBI shall be the exporter of record with
respect to all Products.  BBI shall be
responsible, at its expense, for obtaining and maintaining all licenses and
permits and for satisfying all formalities as may be required to import
Products into the Territory in accordance with the then prevailing law or
regulations, and all permits and other governmental approvals for the sale of
the Products in the Territory. BBI shall also bear all transportation costs
associated with shipping the Products from JOE’S to BBI.

 

4.6                                 Defects
and Deficiencies.

 

(a)                      In view of
the administration and expense of shipping defective Products back to the
United States from the Territory, provided that BBI is in compliance with the
terms and conditions of this Agreement, at the end of each season, JOE’S  will pay

 

5

 

to BBI or otherwise credit BBI’s account in
the amount of the value of one percent (1%) of the net invoice price of all
purchases of the Products to accommodate BBI for any damaged or defective
Products which may have been received by BBI. BBI shall destroy and dispose of
such defective products in the Territory, and shall promptly inform JOE’S of
same.

 

(b)                     In the case
of Products that were delivered in quantities less than those set forth in JOE’S’s
invoices with respect thereto, BBI shall give JOE’S notice of such deficiency
within thirty (30) days following delivery to BBI’s warehouse in the Territory.
  If JOE’S, through its own sources, confirms
that the deficiencies in such deliveries existed as of the time of delivery to
the common carrier for shipment, then JOE’S shall allow a credit to BBI for
such deficiencies, as set forth herein. 
JOE’S shall not in any event be responsible for any deficiency that
arises following delivery to the common carrier for shipment.  All claims for deficiencies shall first be
made to BBI’s common carrier, notwithstanding the required notice to JOE’S
specified in this Section. If JOE’S is found to be ultimately responsible for
the deficiency, the invoice price of the goods that were not shipped shall be
deducted from the amount of the next payment to JOE’S to be made by BBI.

 

The refunds and credits set forth in this Section 4.6 may be
offset by JOE’S against any amounts due JOE’S at the time that the refunds or
credits are to be given or applied.

 

4.7                                 Reports.

 

(a)                                  Retail
Sales: If applicanle, for retail sales made by BBI, BBI shall provide to JOE’S
every two (2) weeks with a sales report of the Products by door, by style and
color, by sales price and by day.

 

(b)                                 Sales
to Retail Stores. For its sales to the retail trade, BBI shall provide JOE’S
with  quarterly and annual reports as set
forth below :

 

•                  Quarterly
Reports.  BBI shall, within thirty
(30) business days after the end of each fiscal quarter of JOE’S, deliver to
JOE’S a report of gross sales and net sales (as defined hereinbelow) by price,
by style and color, and by retail entity, including all documentation relevant
to the calculation of Net Sales as defined herein, for the immediately
preceding fiscal quarter and such other financial reports and statements as JOE’S
may reasonably request from time to time. In addition, upon reasonable request
by JOE’S, BBI shall provide to JOE’S a seasonal qualitative and quantitative
recap report by stock keeping unit (“SKU”), pursuant to a template provided by
JOE’S.  For purposes of this Agreement,
Gross Sales shall mean the full amount of all sales of the Products in the
Territory.  Net sales shall be defined as
the gross sales of all of the Products sold in the Territory to the trade by
BBI, less refunds for returned Products and less value added, sales and similar
taxes, if any, incurred in

 

6

 

connection with the sales of the Products
during the applicable period (“Net Sales”).

 

•                  Annual
Reports.  Within thirty (30) days
following the end of the fiscal year of JOE’S, BBI shall deliver to JOE’S an
annual report of gross sales and Net Sales including all documentation relevant
to the calculation of Net Sales as defined herein for the immediately preceding
calendar year.

 

4.8                                 Access.

 

JOE’S independent auditors, shall, upon reasonable
advance notice, have access to BBI’s records, at mutually agreeable times
during the term of this Agreement for the purpose of:  (a) review BBI’s inventory of
Products;  (b) reviewing and
auditing BBI’s books and records relating to the reports to be given by BBI to
JOE’S, including without limitation, all books, records and supporting documentation
relative to BBI’s Net Sales, advertising of the Products and advertising and
marketing expenditures; and/or (c) reviewing BBI’s compliance with this
Agreement. In no case shall such a review take place more than once every two
(2) years, unless, however, JOE’S independent auditors shall require a review
more than once every two years for an unforeseen reason such as a governmental
inquiry, audit, investigation or other reason beyond JOE’S control in the
ordinary course of business.

 

5.                                      Guaranteed
Purchases and Sales

 

5.1                                 Guaranteed
Purchase Amount 

 

BBI
shall purchase all Products exclusively from JOE’S or from sources acceptable
to JOE’S.  BBI shall purchase the minimum
U.S. dollar amounts of Products from JOE’S on a seasonal basis,
as set forth below, at JOE’S’s invoice price to BBI.

 

The annual guaranteed purchase amount shall include the
amount of purchases ordered by BBI but cancelled by JOE’S after acceptance by
JOE’S.

 

5.2                                 Guaranteed
Wholesale Sales:

 

BBI shall achieve the Guaranteed Net Wholesale (“GNW”) sales of $20,000,000
over the entire Term, more particularly as set forth below:

 

Year 1:                                                        $3,500,000

Year 2:                                                        $4,500,000

Year 3:                                                        $5,500,000

Year 4:                                                        $6,500,000

 

Notwithstanding the foregoing, in the event that BBI fails
to meet its GNW minimums in Year 1, then BBI shall have the right to carry
forward the shortfall in GNW

 

7

 

sales during Year 1 to Year 2 (“Year 1 GNW Shortfall Amount”).  In such event, said Year 2 GNW sales shall be
increased to include the Year 1 GNW Shortfall Amount (“Revised Year 2 GNW
Minimum”).  The parties acknowledge that
BBI’s right to carry forward Year 1 sales as a result of any shortfall shall
only be applicable to Year 1 sales and no other subsequent years during the Term
of this Agreement.

 

For purposes of this Agreement, GNW shall be defined
as the minimum amount of purchases by BBI from JOE’S at prices set forth
pursuant to Section 6.1 of this Agreement.

 

6.                                      Prices
and Payments.

 

6.1                                 Wholesale
Prices.

 

JOE’S shall invoice BBI for Products on a FOB warehouse basis at JOE’S’s
then current wholesale line price less twenty percent (20%).  All prices invoiced to BBI include packing in
accordance with BBI’s reasonable packing requirements.  If both parties agree to change the current
pricing, the new pricing shall be negotiated in good faith between the parties.

 

6.2                                 Payment
Terms.

 

BBI shall make payment to JOE’S within sixty (60) days of receipt of
each invoice delivered to BBI pursuant to Section 6.1 hereinabove.

 

6.3                                 Retail
Prices.

 

BBI and JOE’S may work together to determine appropriate suggested
retail prices in the Territory to be presented strictly in compliance with law;
provided however, that BBI reserves the
right to sell Products at such prices as BBI, in its discretion, shall
determine. BBI shall provide JOE’S on a seasonal basis with a list of its
retail prices to be charged to its customers for the Products.

 

7.                                      Trademarks.

 

7.1                                 Use
of Trademarks.

 

All Products shall be sold only under the Trademarks, which may be
registered, at JOE’S absolute discretion and control, in the Territory in JOE’S
or its affiliate’s name and at JOE’S expense. 
BBI shall sell the Products only with their original packaging to the
extent that it is legally acceptable under law within the Territory, or with
agreed changes to labels where necessary for local regulatory purposes.  BBI shall only use the Trademarks in a manner
approved by JOE’S and consistent with all applicable laws within the Territory.

 

8

 

The Trademarks are and shall remain at all times the property of JOE’S
and/or its affiliates.  BBI recognizes
that the Trademarks belong to JOE’S and/or its affiliates.  BBI is granted no rights with respect to the
Trademarks except the right to market, advertise, distribute and sell Products,
which bear the Trademarks.  BBI warrants
that it shall never do anything to jeopardize the ownership of JOE’S or its
affiliates’ Trademarks, including but not limited to:  (a) claiming any right, title or
interest in or to the Trademarks by registration or otherwise, other than the
right to use the same under all the terms and conditions of this Agreement;
(b) questioning the validity of the Trademarks; (c) using its own
name, trade names or trademarks or those of any other person or entity in
connection or association with the Trademarks or the name of JOE’S or any of
JOE’S affiliates; or (d) applying the Trademarks to any product, package
or container without the express written approval of JOE’S.  BBI shall promptly assign to JOE’S any rights
it might acquire in or to the Trademarks through use or otherwise, except the
right to use the Trademarks under the terms and conditions hereof.

 

BBI shall not at any time use, in any combination or manner, the name
of JOE’S, any Trademark or any other trademark or trade name of JOE’S or its
affiliates in any way in advertisements except in either
(a) advertisements which have been supplied by JOE’S to BBI and to which
BBI has made no change of substance; or (b) advertisements submitted by
BBI to JOE’S and approved by JOE’S.

 

BBI shall give prompt notice in writing to JOE’S of any infringement or
possible infringement of the Trademarks that may come to its attention.  If requested by JOE’S to do so,  BBI shall, pursuant to JOE’S’s direction and
control, and at JOE’S’s expense, take such action as may be necessary or
advisable to stop any infringement of the Trademarks or other acts of unfair
competition.  If any sum is recovered in
any such suit, JOE’S shall be solely entitled thereto.  JOE’S, at its own cost and expense and in its
absolute discretion and control, may (in its own name or in the name of BBI or
in both names) take such action as it deems necessary to prevent infringement
of the Trademarks or other acts of unfair competition or to defend the BBI or
its customers in suits, administrative or otherwise, brought against them in
connection with the use of the Trademarks.

 

BBI shall formally assign to JOE’S any cause of action it may have
against an infringer of the Trademarks upon the request of JOE’S, and shall
execute all documents and do all acts deemed necessary by JOE’S for JOE’S to
control any infringement suit or proceeding which relates to the Trademarks to
the extent it is legally possible under the applicable law in the Territory.

 

JOE’S shall indemnify and hold BBI harmless from and against any claim
of alleged infringement of any right of a third party due to use of the
Trademarks in accordance with this Agreement.

 

7.2                                 Registration.

 

JOE’S has registered or applied to register the Trademarks for the
Products in the Territory.  In addition,
in the event JOE’S believes that it is advisable to effect any filing

 

9

 

or obtain any governmental approval or sanction for the use by BBI of
any of the Trademarks pursuant to this Agreement, the parties shall fully
cooperate in order to do so.  All
expenses relating to the registration of the Trademarks in the Territory for the
Products, as well as the making of any filing or obtaining any governmental
approvals for the use the Trademarks by BBI shall be borne by JOE’S.  

 

.

 

8.                                       Representations
and Warranties.

 

8.1                                 JOE’S
represents and warrants to BBI that:

 

(a)                                  JOE’S
has full authority to enter into this Agreement;

(b)                                 JOE’S
has (i) registered; (ii) applied to register; or (iii) shall use its best
efforts to register the Trademarks for the Products in the Territory;

(c)                                  Execution,
delivery and performance of this Agreement, including the grant of Distribution
Rights set forth in this Agreement, will not violate the terms or any
agreement, order or other arrangement binding upon JOE’S or the Trademarks; and

 

8.2                                 BBI
represents and warrants to JOE’S that:

 

(a)                                  BBI
has full authority to enter into this Agreement; and

(b)                                 Execution,
delivery and performance of this Agreement will not violate the terms or any
agreement, order or other arrangement binding upon BBI; and

(c)                                  BBI
will market and sell the Products only in a first class manner and in full
compliance with the terms of this Agreement.

 

9.                                      Termination.

 

9.1                                 Termination.

 

Notwithstanding the provisions of Section 1.4 above, this
Agreement may be terminated in accordance with the following provisions:

 

Either party may terminate this Agreement at any time by giving written
notice to the other party if:

 

(a)                     Other than as
specified herein, any breach of this Agreement which, if capable of being
cured, is not cured within thirty (30) days after written notice thereof,
except that any failure of  BBI  to make timely payments hereunder must be
cured within ten (10) days after notice thereof;

 

(b)                    on fifteen (15) days notice for any breach of this
Agreement of Sections  relating to
Confidentiality, Representations and Warranties, Sales Outside the Territory,
Trademarks;

 

10

 

(c)                     failure of
either party to satisfy any final judgment against it.

 

9.2                                 Rights
and Obligations on Termination.

 

(a)                      Upon termination
or expiration of this Agreement, all Distribution Rights, rights to use the
Trademarks, and other rights granted to BBI under this Agreement shall
immediately terminate.  BBI shall
immediately cease using the Trademarks in any way, and BBI shall deliver to JOE’S
or, upon JOE’S request, shall destroy all advertising, sales, promotional and
other materials and literature bearing the Trademarks or containing trade secrets
of JOE’S.

 

(b)                     Notwithstanding
the provisions in Section 9.2 (a) above, BBI may liquidate and sell its
then existing inventory of Products on a non-exclusive basis for a period of
ninety (90) days after the later of
(A) the termination or expiration date, or (B) the date of final
delivery of all Products which are on order on the termination or expiration
date.  If BBI has not disposed of all
Products by the end of the (90) day inventory liquidation period hereunder, BBI
may (i) sell to JOE’S such remaining Products at the  price paid by BBI pursuant to Section 6.1
hereinabove less 50%.

 

(c)                      Termination
of this Agreement shall not release either party from the obligation to make
payment of all amounts then or thereafter due and payable and accrued prior to
the termination of this Agreement;

 

10.                               Indemnity.

 

10.1                           BBI’s
Indemnity.

 

Except to the extent that the same can be shown to have been caused
substantially by JOE’S, BBI agrees to indemnify, defend and hold harmless JOE’S,
its officers, directors, shareholders, agents, and employees from and against
any and all obligations, liabilities, claims, demands, suits, actions, causes
of action, damages and expenses (including but not limited to reasonable
attorneys’ fees and costs) caused by or arising from (a)  advertising,
promotion, marketing, distribution or sale of the Products by BBI or any other
activity undertaken by BBI or its affiliated companies pursuant to this
Agreement; (b) unauthorized use by BBI of the Trademarks or JOE’S trade secrets
or other confidential information; (c) its performance under this Agreement;
and (d) compliance with law as set forth in this Agreement.

 

10.2                           JOE’S
Indemnity.

 

(a)                                  JOE’S
agrees to indemnify, defend and hold harmless BBI, its officers, directors,
shareholders, agents and employees from and against any and all obligations,
liabilities, claims, demands, suits, actions, causes of action, damages and
expenses (including reasonable attorneys’ fees and costs) caused by or arising
from (i) BBI’s authorized use of the Trademarks in accordance with this
Agreement;

 

11

 

(ii) JOE’S conduct as a wholesaler of
the Products; (iii) compliance with Product Regulations as set forth in Section 11.2
hereof; or (iv) compliance with applicable labor laws by JOE’S or any of its
manufacturers or contractors.

 

(b)                                 JOE’S
shall also defend and hold BBI harmless from any claim or liabilities arising
from any alleged defect in the Products, including, but not limited to, product
liability and tort claims arising out of the Products or use of the Products.

 

11.                               Compliance
with Product Regulations and Law.

 

11.1                           Definition.

 

As used in this Section, “Product Regulations” shall mean all
governmental and quasi-governmental statutes, regulations and rules applicable
to the Products, including without limitation all safety and health oriented
statutes, regulations and rules applicable to the Products in the Territory.

 

11.2                           Products.

 

Notwithstanding the provisions in Section 12 of this Agreement, JOE’S
will be responsible for causing the Products to be manufactured in accordance
with all Product Regulations in the Territory known to JOE’S.  If BBI gives notice to JOE’S that any Product
does not comply with any Product Regulation in the Territory, JOE’S will
promptly take such actions as may be reasonably necessary or advisable to cure
such noncompliance.  If JOE’S, upon
conferring with BBI, determines that cure of the noncompliance for any given
Product will be so difficult or costly as to make such cure commercially
unreasonable, JOE’S may terminate the Distribution Rights with respect to
specifically such Product, giving BBI as much advance notice as is legally and
practically possible.

 

11.3                           Compliance
with Law.

 

BBI shall take the necessary steps to encourage sub-distributors to
comply with all applicable laws, regulations, ordinances, decisions, and other
issuances having the effect of law in the Territory regarding the relationships
and transactions contemplated by this Agreement, including but not limited to
the importation, storage, warehousing, advertising, marketing, packaging, and
other aspects of selling and distributing the Products.  Further, BBI will, as soon as possible
following its notice thereof, advise JOE’S of any change in manufacturing,
sale, packaging, labeling or other legal requirements with respect to the sale
and distribution of the Products in the Territory.

 

12

 

 

12.                               Miscellaneous.

 

12.1                           Force
Majeure.

 

Neither party shall be held responsible for damages caused by any delay
or default due to any contingency beyond its control preventing performance
hereunder, including without limitation, war, terrorist acts, government
regulations, embargoes, export, shipping or remittance restrictions, strikes,
lockouts, accidents, fires, delays or defaults caused by carriers, floods or
governmental seizure, control or rationing. The party claiming Force Majeure shall
immediately notify the other party of the nature of the event of Force Majeure,
and its cause and possible consequences, and shall take all reasonably possible
steps necessary to minimize such delay; provided, however, that if any party fails to perform as required under this
Agreement for a period of forty-five (45) days for any of the reasons set forth
herein, the other party may elect to terminate this Agreement with no further
obligations hereunder.

 

12.2                           Relationship.

 

This Agreement does not make either party an employee, agent, partner,
or legal representative of the other party for any purpose whatsoever.  Neither party is granted any right or
authority to assume or to create any obligation or responsibility, express or
implied, on behalf of or in the name of the other party or to do anything for
which the other party or any of its affiliated companies may become directly or
contingently liable.  In fulfilling its
obligations pursuant to this Agreement, each party shall be acting as an
independent contractor. 

 

12.3                           Confidentiality

 

Each party agrees that it shall not disclose, unless otherwise
permitted herein or required by law, to any third party which is not related or
connected to the execution and/or obligations of this Agreement, and shall use
for the sole purpose of this Agreement any proprietary technical, economic,
financial or marketing information which it may receive from the other party
pursuant to this Agreement. The foregoing sentence does not apply to any
information which (1) is already known to the receiving party prior to the
execution of this Agreement; (2) becomes hereafter lawfully available to it
from a third party without breach of this Agreement; (3) is in or comes into
the public domain without act or fault of the receiving party; or (4) is
acquired by the receiving party independently of disclosure of the confidential
information by the disclosing party. In addition, neither party shall use any
of the trade secrets or confidential information of the other party for any purpose
not specifically authorized by this Agreement.

 

13

 

12.4                           Assignment.

 

BBI shall not assign or otherwise transfer any of its rights or
obligations under this Agreement except with the prior written consent of JOE’S.

 

12.5                           Notices
and Approvals.

 

All notices and approvals provided for herein shall be given in writing
at the addresses set forth below (or such other address as the party may have
specified to the other party in writing in accordance with this Paragraph 12.5,
by personal delivery, facsimile with confirmation of receipt or via courier:

 

	
  If to JOE’S:

  	
   

  	
  JOE’S JEANS, INC.

  
	
   

  	
   

  	
  5804 East Slauson Avenue

  
	
   

  	
   

  	
  Commerce, California 90040

  
	
   

  	
   

  	
  U.S.A.

  
	
   

  	
   

  	
  Attn: Samuel J. Furrow, Jr.

  
	
   

  	
   

  	
  And by Facsimile to: 323.201-3846

  
	
   

  	
   

  	
   

  
	
  And to:

  	
   

  	
  INNOVO GROUP INC.

  
	
   

  	
   

  	
  5804 E. Slauson Avenue

  
	
   

  	
   

  	
  Commerce, California 90040

  
	
   

  	
   

  	
  Attention : Dustin A. Huffine and

  
	
   

  	
   

  	
  Marc B. Crossman

  
	
   

  	
   

  	
  And by Facsimile : 323.201-3846

  
	
   

  	
   

  	
   

  
	
  If to BBI:

  	
   

  	
  BEYOND BLUE, INC.

  
	
   

  	
   

  	
  815 Moraga Drive, Second Floor

  
	
   

  	
   

  	
  Los Angeles, California 90049

  
	
   

  	
   

  	
  Attn : Harry Haralambus

  
	
   

  	
   

  	
  And by Facsimile : 310.472-1327

  

 

Any notice given in accordance with this Section 12.5 shall be
deemed to have been given on the date of the addressee’s receipt in the case of
personal delivery or three (3) days after sending notice via courier or upon
confirmed facsimile transmission.

 

12.6                           Entire
Agreement.

 

This Agreement, constitute the entire agreement of the parties with
respect to the subject matter hereof, and supersedes all previous agreements by
and between JOE’S and BBI as well as all prior proposals, oral or written, and
all prior negotiations, conversations or discussions between the parties
related to this Agreement.  Each of JOE’S
and BBI acknowledges that it has not been induced to enter into this Agreement
by any representations or statements, oral or written, not expressly contained
herein, and that no

 

14

 

other agreement, statement or promise not contained in this Agreement
shall be valid or binding.

 

12.7                           Amendment.

 

This Agreement shall not be deemed or construed to be modified,
amended, rescinded, cancelled or waived, in whole or in part, except by written
amendment signed by the parties.

 

12.8                           Publicity.

 

This Agreement is confidential and no party shall issue press releases
or engage in other types of publicity of any nature dealing with the commercial
and legal details of this Agreement without the other party’s prior written
approval, which approval shall not be unreasonably withheld.  However, approval of such disclosure shall be
deemed to be given to the extent such disclosure is required to comply with
governmental rules, regulations or other governmental requirements.  In such event, the publishing party shall
furnish a copy of such disclosure to the other party prior to the disclosure
and give the other party as much notice as reasonably possible and the
opportunity to comment on the contents thereof and take such other action as
may be legally permissible to prevent the disclosure or otherwise protect its
interests.

 

12.9                           Severability.

 

If any term, provision, covenant or condition of this Agreement is held
by a court of competent jurisdiction or other competent authority to be
invalid, void or unenforceable, the remainder of the provisions shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
by the such term, provision, covenant or condition.

 

12.10                     Counterparts.

 

This Agreement shall be executed in two or more counterparts in the
English language, and each such counterpart shall be deemed an original
hereof.  In case of any conflict between
the English version and any translated version of this Agreement, the English
version shall govern.

 

12.11                     Waiver.

 

Failure of either party to enforce at any time any of the provision of
this Agreement or any right with respect hereto or failure to exercise any
provisions, rights or elections provided for herein shall in no way be
considered to be a waiver of such provisions, rights or elections or in no way
affect the validity of this Agreement. 
The failure of either party to exercise any of the said provision,
rights or election shall not preclude or prejudice such party from later
enforcing or exercising the same or any other provisions, rights or elections
which it may have under this Agreement.

 

15

 

12.12                    Arbitration.

 

(a)                                  All
disputes, claims and controversies concerning the validity, interpretation,
performance or breach of this Agreement shall, if not amicably solved by the
parties hereto, be referred to arbitration in Los Angeles, California under the then current Commercial Arbitration Rules for
International Commercial Arbitration of the American Arbitration Association
(the “Rules”).  In the event of any
conflict between the Rules and this paragraph, the provisions of this paragraph
shall govern.

 

(b)                                 Each
party shall appoint one arbitrator within thirty (30) days after receipt by the
respondent of the demand for arbitration, and the two arbitrators appointed by
the parties shall, within thirty (30) days after their appointment, appoint a
third presiding arbitrator.  If either
party fails to nominate an arbitrator, or if the two arbitrators appointed by
the parties are unable to appoint a presiding arbitrator within the stated
periods, the second or presiding arbitrator, as the case may be, shall be
appointed according to the procedures of Rule 13 of the Rules.  All arbitrators shall be fluent in English
and all hearings shall be conducted in the English language.

 

(c)                                  The
arbitrators shall, by majority vote, tender a written decision stating reasons
therefor.  Any cash award shall be
payable in United States dollars, net of fees, taxes and other charges.  The prevailing party shall be entitled to
recover its share of the costs and reasonable attorneys’ fees, as determined by
the arbitrators.

 

(d)                                 The
award shall include interest from the date of any damages incurred for breach
or other violation of the Agreement, and from the date of the award until paid
in full, at a rate to be fixed by the arbitrator(s), but in no event less than
the London Interbank Offering Rate (LIBOR) per annum quoted for the
corresponding period by The Wall Street Journal in U.S. Dollars for
immediately available funds.

 

(e)                                  The
arbitration award shall be final and binding upon the parties hereto, any third
party beneficiaries hereof and their respective successors, assigns, heirs and
legal representatives.  Judgment upon the
arbitration award may be entered and execution had in any court of competent
jurisdiction or application may be made to such court for a judicial acceptance
of the award and an order of enforcement.

 

(f)                                    The
parties expressly waive their rights to submit matters in dispute to the courts
in California and furthermore, hereby expressly waive any recourse against the
decisions of the arbitration panel, including the final award, except as may be
needed to enforce the decisions or awards of the arbitration panel as set forth
below.

 

(g)                                 Notwithstanding
the parties’ agreement to arbitrate herein, the parties hereby agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and any party hereto in its sole

 

16

 

discretion may apply to the Federal District Court
sitting in Los Angeles County, California or any other court of law or equity
of competent jurisdiction for specific performance and/or injunctive relief
(without posting a bond or other security) in order to enforce or prevent any
violation of the provisions of this Agreement.

 

12.13                     Cost
and Expense.

 

In the event of any dispute arising out of or relating to this
Agreement, whether suit or other proceeding is commenced or not, and whether in
mediation, arbitration, at trial, on appeal, in administrative proceedings or
in bankruptcy (including without limitation any adversary proceeding or
contested matter in any bankruptcy case), each party shall pay its own costs
and expenses incurred, including attorneys’ fees.

 

12.14                     Governing
Law.

 

This Agreement shall be governed by, and interpreted and construed in
accordance with, the laws of the State of California.

 

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

 

	
  BEYOND
  BLUE, INC.

  	
  JOE’S JEANS, INC.

  
	
   

  	
   

  
	
  /s/ Harry Haralambus

  	
   

  	
  /s/ Jay Furrow

  	
   

  
	
  By: Harry Haralambus

  	
  By: Jay Furrow

  
	
  Title: President

  	
  Title: Chief Executive Officer

  
				

 

17

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