Document:

exh10_4.htm

 

Exhibit 10.4

 

WARRANT REPRICING, EXERCISE AND LOCKUP AGREEMENT

 

This Warrant Repricing, Exercise and Lockup Agreement (this “Agreement”) is made as of February 19, 2013, by and among Aeolus Pharmaceuticals, Inc., a Delaware corporation (the “Company”) and each of the persons listed on the Schedule of Warrant Holders attached hereto as Exhibit A (the “Holders”).

 

RECITALS

 

Whereas, the Holders are the owners of Warrants to Purchase Common Stock of the Company (Nos. CO-132, 133, 134, 141 and 142) covering an aggregate of 55,399,999 shares of the Company’s common stock, par value $0.001 per share (“Common Stock”), at an exercise price of $0.28 per share (the “$0.28 Warrants”), as set forth on Exhibit A;

 

Whereas, the Holders are the owners of Warrants to Purchase Common Stock of the Company (Nos. CO-143, 144, 146 and 147) covering an aggregate of 3,750,000 shares of Common Stock at an exercise price of $0.50 per share (the “$0.50 Warrants” and, together with the $0.28 Warrants, the “Original Warrants”), as set forth on Exhibit A;

 

Whereas, concurrently with the execution of this Agreement, the Company is entering into a Securities Purchase Agreement, dated as of the date hereof (the “Securities Purchase Agreement”), with certain accredited investors identified on the signature pages thereto (collectively, the “Investors”), pursuant to which the Company has agreed to sell and issue to the Investors, and the Investors have agreed to purchase from the Company, units consisting of shares of Common Stock and Warrants to Purchase Common Stock (the “Financing”);

 

Whereas, pursuant to the Securities Purchase Agreement, it is a condition to closing the Financing that all of the Original Warrants be exercised in full and that the Holders enter into a lock-up agreement with the Company with respect to all Warrant Shares (as defined below);

 

Whereas, in order to facilitate the Financing, the Company believes it is in the best interests of the Company to decrease the exercise price of the Original Warrants to $0.01 per share, with the remaining terms of the Original Warrants being the same (the “Amended Warrants”), contingent upon the Holders exercising the Amended Warrants and agreeing to a lock-up agreement with respect to all Warrant Shares; and

 

Whereas, the Holders have agreed to exercise the Amended Warrants and enter into a lock-up agreement with the Company with respect to all Warrant Shares.

 

Now, Therefore, in consideration of the foregoing recitals and the mutual promises, representations, warranties and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.    Amendment to the Original Warrants.  On the terms and subject to the conditions of this Agreement and in reliance upon the representations, warranties and agreements contained herein, the Company and the Holder hereby agree that, effective as of immediately prior to, and contingent upon, the closing of the Financing (the “Closing Date”), Section 1(b) of each of the Original Warrants is hereby amended to read as follows (with all other terms of the Original Warrants remaining the same):

 

 

 

 

 

“Exercise Price.  For purposes of this Warrant, “Exercise Price” means One Cent ($0.01), subject to adjustment as provided herein.”

 

2.    Exercise of the Amended Warrants.

 

(a) On the terms and subject to the conditions of this Agreement and in reliance upon the representations, warranties and agreements contained herein, on the Closing Date, (a) the Holders shall present and surrender to the Company the Original Warrants and duly executed exercise notices attached as Exhibit A to each of the Original Warrants, indicating exercise pursuant to cashless exercise for the 59,149,999 shares of Common Stock underlying the Amended Warrants (the “Xmark Shares”), and, (b) in the event the Holders exercise the Original Warrants by cash payment, the Holders shall deliver payment of the full exercise price to the Company in cash or by wire transfer in immediately available funds.

 

(b) The Company shall, promptly following the Closing Date, issue and deliver to each Holder a certificate or certificate(s) representing the Warrant Shares purchased by such Holder. The Warrant Shares shall bear the legend required by Section 7(a) of this Agreement.

 

3.    Transfer Restrictions.

 

(a) Each Holder hereby agrees that, prior to the earlier to occur of (i) the Company paying a cash dividend, or making any other cash distribution, to its stockholders (in each case other than pursuant to repurchases of stock from former employees, officers, advisors, sponsors, directors, consultants or other persons who performed services for the Company or any subsidiary in connection with the cessation of such employment or service), and (ii) a Change of Control (such period being referred to herein as the “Lock-Up Period”), such Holder will not offer, sell, contract to sell (including any short sale), pledge, hypothecate, establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), grant any option, right or warrant for the sale of, purchase any option or contract to sell, sell any option, right, warrant or contract to purchase, lend, or otherwise encumber, dispose of or transfer, or grant any rights with respect to, directly or indirectly, (1) any Xmark Shares, or (2) any securities issuable upon conversion, exchange or recapitalization of the Xmark Shares ((1) and (2) collectively, the “Warrant Shares”), or any securities convertible into or exchangeable or exercisable for any Warrant Shares, including the Amended Warrants, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Warrant Shares, whether any such aforementioned transaction is to be settled by delivery of the Warrant Shares or such other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement (collectively, the “Lock-Up”), without, in each case, the prior written consent of the Company, which consent may be withheld in the Company’s sole discretion.  In the event the Company waives the restrictions contained in this Section 3(a), it shall provide the Investors with 90 days advance notice before such waiver shall be deemed effective.  For the avoidance of doubt, each Holder shall have the right to sell, transfer or dispose of the Warrant Shares in connection with a transaction that constitutes a Change of Control.

 

 

 

 

 

(b) For purposes of this Agreement:

 

(i) “Affiliate” means with respect to a specified Person, any other Person who or which is (a) directly or indirectly controlling, controlled by or under common control with the specified Person, or (b) any member, stockholder, director, officer, manager, or comparable principal of, or relative or spouse of, the specified Person. For purposes of this definition, “control”, “controlling”, and “controlled” mean the right to exercise, directly or indirectly, more than fifty percent of the voting power of the stockholders, members or owners and, with respect to any individual, partnership, trust or other entity or association, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity.

 

(ii) “Change of Control” means any Fundamental Transaction other than (A) any reorganization, recapitalization or reclassification of the Common Stock, in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (B) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company.

 

(iii) “Fundamental Transaction” means any of the following transactions, in which the Company shall, directly or indirectly, in one or more related transactions, (A) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person or Persons, and the holders of the Voting Stock (not including any shares of Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such consolidation or merger) immediately prior to such consolidation or merger hold or have the right to direct the voting of less than 50% of the Voting Stock or such voting securities of such other surviving Person immediately following such transaction, or (B) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (C) be the subject of a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (D) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person other than Goodnow Capital, L.L.C., Xmark Opportunity Partners, LLC or an Affiliate of either of the foregoing whereby such other Person acquires more than 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), or (E) be the subject of a change in ownership such that any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) other than Goodnow Capital, L.L.C., Xmark Opportunity Partners, LLC or an Affiliate of either of the foregoing is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock.

 

 

 

 

 

(iv) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

(v) “Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

 

4.    Conditions to Closing.  The obligations of the Company and each of the Holders to consummate the transactions contemplated by this Agreement are subject to the satisfaction of each of the following conditions:

 

(a) The representations and warranties of the Company and each of the Holders contained in Section 6 and Section 5, respectively, of this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date.

 

(b) Each of the Company and each of the Holders shall in all material respects have performed, satisfied and complied with all of its respective covenants, agreements and conditions contained in this Agreement that are required to be performed, satisfied or complied with by it on or before the Closing Date.

 

5.    Representations and Warranties of the Holders. Each Holder hereby represents and warrants to the Company as follows:

 

(a) This Agreement has been duly and validly authorized, executed and delivered by such Holder and constitutes the legal, valid and binding agreement of such Holder, enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights generally or general principles of equity; such Holder has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.

 

(b) Such Holder has good and valid title to the Original Warrants and owns and holds the entire right, title, and interest in and to the Original Warrants, free and clear of any liens, claims or encumbrances (other than those arising as a result of this Agreement) and the Original Warrants are not subject to any contract, agreement, arrangement, commitment or understanding restricting or otherwise relating to the disposition of the Original Warrants.

 

 

 

 

 

(c) Such Holder understands that the Warrant Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of the United States federal and state securities laws and that the Company is relying on part upon the truth and accuracy of, and such Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Holder set forth herein in order to determine the availability of such exemptions and the eligibility of such Holder to acquire the Amended Warrants and the Warrant Shares.

 

(d) Such Holder understands that the certificates representing the Warrant Shares will bear the legend required by Section 7(a) of this Agreement.

 

(e) Such Holder has been furnished with all materials relating to the business, finances and operations of the Company and the offering of the Original Warrants, the Amended Warrants and the Warrant Shares that have been requested by such Holder. Such Holder and its advisors have had the opportunity to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Original Warrants, the Amended Warrants and the Warrant Shares.

 

(f) Such Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D. Such Holder understands and acknowledges that (i) its investment in the Warrant Shares involves a high degree of risk, (ii) it is able to afford a complete loss of such investment in the Warrant Shares, and (iii) it has such knowledge, sophistication and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.  Such Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Warrant Shares.

 

(g) Such Holder is acquiring the Warrant Shares for its own account, not as nominee or agent, and not with a view towards distribution thereof, and such Holder has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the Securities Act or any state securities laws.  Such Holder is acquiring the Warrant Shares hereunder in the ordinary course of its business.  Such Holder does not presently have any agreement or understanding, directly or indirectly, with any person to distribute any of the Warrant Shares.

 

6.    Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to each Holder as follows:

 

(a) The Company has all requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  This Agreement has been duly and validly authorized, executed and delivered by the Company and constitutes the legal, valid and binding agreement of the Company, enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights generally or general principles of equity.

 

 

 

 

 

(b) The Warrant Shares have been duly and validly authorized and, when issued in accordance with the terms of this Agreement and the Amended Warrants, will be validly issued, fully paid and non-assessable and not subject to any preemptive rights or similar rights.

 

7.    Restrictive Legend. 

 

(a) Each Warrant Share (and all securities issued in exchange therefor or in substitution thereof) is required to bear a restricted security legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE OBTAINED FROM THE SECRETARY OF THE COMPANY.”

 

(b) Upon termination of the Lock-Up Period, and upon a Holder’s request, a new certificate or certificates representing the Warrant Shares held by such Holder shall be issued to the Holder without the legend referred to in Section 7(a) of this Agreement.

 

8.    Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (a) upon receipt, when delivered personally; (b) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (c) one (1) business day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 

if to the Company, to:

 

 

Aeolus Pharmaceuticals, Inc.

26361 Crown Valley Parkway, Suite 150

Mission Viejo, California 92691

Attention:  John L. McManus, President and Chief Executive Officer

Facsimile No.:  (949) 481-9829

 

with a copy (which shall not constitute notice) to:

 

Paul Hastings LLP

1117 S. California Avenue

Palo Alto, CA 94304

Attention: Jeffrey T. Hartlin, Esq.

Facsimile No.: (650) 320-1904

 

 

 

 

 

if to a Holder, to:

 

c/o Xmark Opportunity Partners, LLC

90 Grove Street, Suite 201

Ridgefield, Connecticut  06877

Attention:  Mitchell D. Kaye

Facsimile No.:  (203) 438-9949

 

with a copy (which shall not constitute notice) to:

 

Lowenstein Sandler PC

1251 Avenue of the Americas, 18th Floor

New  York, New York  10020

Attention: Peter D. Greene

Facsimile No.: (973) 422-6861

 

or to such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission, or (iii) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (a), (b) or (c) above, respectively.

 

9.    Confidentiality. Each of the Company and each the Holders represents that it has not disclosed any information regarding discussions relating to this Agreement and has directed its representatives not to disclose any such information. Except as may be required by applicable law or regulatory requirement, none of the Company, on the one hand, or any Holder, on the other hand, shall disclose the existence or terms of this Agreement or any of the provisions contained herein without the prior written consent of the other until the earlier of (x) the Closing Date or (y) four (4) business days after the date of this Agreement; provided, however, that nothing contained herein shall prevent (i) any party from promptly making all filings with any governmental entity or supervisory body (including, without limitation, the Company’s ongoing reporting obligations under the Securities Exchange Act of 1934, as amended) as may, in its judgment, be required in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby or (ii) any Holder from disclosing the terms of this Agreement to its respective investors and their representatives provided that each such person shall be advised of their obligation not to disclose any such information except as may be required by applicable law or regulatory requirement.

 

10.    Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.

 

11.    Counterparts. This Agreement may be executed in two or more identical counterparts, including counterparts transmitted by facsimile or .pdf, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by the Company, on the one hand, and each Holder, on the other hand, and delivered to the other.

 

 

 

 

 

12.    No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

13.    Amendment; Waiver; Consent. This Agreement and its terms may not be changed, amended, waived, terminated, augmented, rescinded or discharged (other than in accordance with its terms), in whole or in part, except by a writing executed by each of the parties hereto.

 

14.    Costs and Expenses. Each of the parties hereto shall pay its respective costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Agreement, including, but not limited to, attorneys’ fees.

 

15.    Severability.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

16.    Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

17.    Further Assurances.  Each of the parties hereto shall from time to time execute and deliver all such further documents and do all such further acts and things as another party may reasonably require to effectively carry out or better evidence or perfect the full intent and meaning of this Agreement.

 

[Remainder of Page Intentionally Blank]

 

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Warrant Repricing, Exercise and Lock-Up Agreement as of the date first set forth above.

 

THE COMPANY:

 

Aeolus Pharmaceuticals, Inc.

 

 

 

By: /s/ Russell Skibsted                                                                   

Name: Russell Skibsted

Title: Chief Financial Officer

 

 

HOLDERS:

 

XMARK OPPORTUNITY FUND, L.P.

By:      XMARK OPPORTUNITY GP, LLC, its General Partner

By:      XMARK OPPORTUNITY PARTNERS, LLC, its Sole Member

By:      XMARK CAPITAL PARTNERS, LLC, its Managing Member

 

 

By: /s/ Mitchell D. Kaye                                               

Name: Mitchell D. Kaye

Title: Co-Managing Member

 

 

XMARK OPPORTUNITY FUND, LTD.

By:      XMARK OPPORTUNITY MANAGER, LLC, its Investment Manager

By:      XMARK OPPORTUNITY PARTNERS, LLC, its Sole Member

By:      XMARK CAPITAL PARTNERS, LLC, its Managing Member

 

 

By: /s/ Mitchell D. Kaye                                                

Name: Mitchell D. Kaye

Title: Co-Managing Member

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties have executed this Warrant Repricing, Exercise and Lock-Up Agreement as of the date first set forth above.

 

HOLDERS:

 

XMARK JV INVESTMENT PARTNERS, LLC

By:      XMARK OPPORTUNITY PARTNERS, LLC, its Investment Manager

By:      XMARK CAPITAL PARTNERS, LLC, its Managing Member

 

 

By: /s/ Mitchell D. Kaye                                                  

Name: Mitchell D. Kaye

Title: Co-Managing Member

 

 

 

 

 

Exhibit A

 

Schedule of Warrants

 

	
Name

	
Warrants

	
Warrant  No.

	
Warrant Issuance Date

	
Per Share Exercise Price of Original Warrant

	
Number of Warrant Shares

	
Aggregate Purchase Price for Warrant Shares under Amended Warrants

	
Xmark Opportunity Fund, L.P.

	
CO-132

	
10/6/2009

	
$0.28

	
13,768,928

	
$137,689.28

	
CO-141

	
7/30/2010

	
$0.28

	
3,535,714

	
$35,357.14

	
CO-143

	
8/11/2010

	
$0.50

	
562,500

	
$5,625.00

	
CO-146

	
12/28/2010

	
$0.50

	
562,500

	
$5,625.00

	
Xmark Opportunity Fund, Ltd.

 

	
CO-133

	
10/6/2009

	
$0.28

	
29,345,357

	
$293,453.57

	
CO-142

	
7/30/2010

	
$0.28

	
8,250,000

	
$82,500.00

	
CO-144

	
8/11/2010

	
$0.50

	
1,312,500

	
$13,125.00

	
CO-147

	
12/28/2010

	
$0.50

	
1,312,500

	
$13,125.00

	
Xmark JV Investment Partners, LLC

 

	
CO-134

	
10/6/2009

	
$0.28

	
500,000

	
$5,000.00

	
Totals

	
59,149,999

	
$591,499.99Exhibit 10.1

 

AGREEMENT

 

This Agreement (the “Agreement”) is entered into as of February 18, 2013, by and among Joe’s Jeans Inc., a Delaware corporation (“Joe’s”), Joe’s Jeans Subsidiary, Inc., a Delaware corporation (“Joe’s Subsidiary”) (collectively, the “Company”), and Joseph M. Dahan, a resident of California (“Dahan”).

 

W I T N E S S E T H:

 

WHEREAS, Innovo Group Inc. (now known as Joe’s Jeans Inc.), Joe’s Jeans, Inc. (now known as Joe’s Jeans Subsidiary, Inc.), JD Holdings, Inc., (“Seller”) and Joseph M. Dahan previously entered into that certain Agreement and Plan of Merger dated February 6, 2007, which agreement was amended by the First Amendment to the Agreement and Plan of Merger dated June 25, 2007 (collectively, the “Merger Agreement”) pursuant to which Seller was merged with and into Joe’s Subsidiary and, among other things, the Company acquired all of the goodwill of Seller and the Company agreed to pay an Earn Out Amount (as defined in the Merger Agreement) to Dahan, as the sole shareholder of Seller, for a 120 month period following the closing date of the transactions contemplated by the Merger Agreement;

 

WHEREAS, the Company desires to remove the contingencies related to the Earn Out Amount to Dahan and to fix the overall amount to be paid by the Company for years six through ten;

 

WHEREAS, in consideration of such amendment, Dahan desires to provide certainty of payments to him by removing the contingencies related to the Earn Out Amount, fixing the amount to be received by him and accelerating the timing of the payments to be made to him.  Dahan also desires to receive a release in connection with the amounts previously paid under the Earn Out Amount; and

 

WHEREAS, the parties wish to modify and specify a fixed period for the duration of Dahan’s restrictive covenants in the Merger Agreement.

 

NOW THEREFORE, FOR AND IN CONSIDERATION of the mutual promises, releases, covenants and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.             The Company agrees to pay to Dahan the aggregate amount of $9,167,935.34, payable as set forth in this Agreement (the “Amended Payment Amount”).  Such Amended Payment Amount shall be paid in full satisfaction of the Earn Out Amount previously provided for in the Merger Agreement and no further Earn Out Amounts shall be due or paid pursuant to the terms of the Merger Agreement.  The Amended Payment Amount shall be paid in cash in accordance with the following schedule:

 

 

(1)   Payment in the amount of $63,227.14 shall be made on a weekly basis for a period of one hundred forty five (145) weeks commencing on February 22, 2013 and ending on November 27, 2015.

 

2.             Dahan shall be entitled to the Amended Payment Amount whether or not he is employed by the Company or otherwise providing services to the Company.

 

3.             Dahan warrants that he has not breached the Non-Competition Covenants in section 5.15 (a)(i) or the Non-Solicitation Covenant in section 5.15 (a)(ii) (collectively, the “Restrictive Covenants”) of the Merger Agreement.  Dahan agrees to continue to abide by the Restrictive Covenants through November 30, 2016.  Dahan acknowledges that the Restrictive Covenants, as modified herein, are necessary to protect the Company’s legitimate business interests of the Company, including the acquisition of the goodwill of Seller in the Merger Agreement, and that the Restrictive Covenants, as modified herein, are reasonable in scope and duration.  Except as expressly set forth herein, the provisions of section 5.15 remain in full force and effect.

 

4.             In consideration of the agreements set forth above, Dahan, on behalf of himself and his agents, representatives, predecessors, successors, successors-in-interest, heirs and assigns (each, a “Dahan Releasor” and collectively, the “Dahan Releasors”), does hereby forever release, remise and discharge each of Joe’s and Joe’s Subsidiary and each of their respective affiliates and each of their present and former officers, directors, stockholders, partners, employees, attorneys, agents, trustees, consultants and other representatives, predecessors, successors, successors-in-interest, assigns and heirs (the “Joe’s Releasees”) from any and all claims that are connected with, arise out of, relate to the Merger Agreement and the Earn-Out Amounts (the “Earn-Out Claims”), and hereby agrees and covenants not to assert or prosecute against any or all of the Joe’s Releasees any Earn-Out Claims that any of the Dahan Releasors ever had, may have or hereafter can, may or shall have against or with respect to such person.

 

5.             In consideration of the agreements set forth above, the Company, on behalf of itself and its affiliates, shareholders, partners, officers, directors, managers, employees, subsidiaries, trustees, agents, representatives, and its and their respective predecessors, successors, successors-in-interest and assigns (each, a “Company Releasor” and collectively, the “Company Releasors”), does hereby forever release, remise and discharge Dahan and each of his affiliates, heirs, successors and assigns and each of their present and former officers, directors, stockholders, partners, employees, attorneys, agents, trustees, consultants and other representatives, predecessors, successors, successors-in-interest, assigns and heirs (the “Dahan Releasees”) from any and all Earn-Out Claims, and hereby agrees and covenants not to assert or prosecute against any or all of the Dahan Releasees any Earn-Out Claims that any of the Company Releasors ever had, may have or hereafter can, may or shall have against or with respect to such person.

 

6.             California Civil Code §1542 Waiver.  Each Party acknowledges that it has been advised by legal counsel and is familiar with California Civil Code section 1542, which provides as follows:

 

2

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

Having been informed of the provisions of California Civil Code section 1542, the Dahan Releasors nevertheless hereby waives any rights that it may have under said Section or any similar or equivalent statute or law that may be applicable.

 

7.             This Agreement supersedes any other agreement, including the Merger Agreement, whether written or oral, that may have been made or entered into by the parties hereto respecting the matters contemplated hereby and constitutes the entire agreement of the parties with respect to the subject matter hereof.  This agreement may not be modified, varied, amended or waived, in whole or in part, except by a written agreement signed by each of the parties.  This Agreement shall be governed and construed under and in accordance with the laws of the State of California.  Any dispute arising hereunder shall be resolved through binding arbitration in accordance with the Commercial Arbitration Rules and Mediation Procedures of the American Arbitration Association.  The parties agree that such binding arbitration before a single arbitrator and that any arbitration will occur in Los Angeles, California.  Each party shall bear their own respective costs, fees and expenses.

 

8.             This Agreement was negotiated at arms-length, with all parties receiving advice from independent legal counsel.  The drafting and negotiation of this Agreement has been participated in equally by each of the parties and their legal counsel, and the language herein shall not be construed for or against any particular party.  Accordingly, the parties hereby waive the benefit of California Civil Code section 1654 and any similar or equivalent statute or common law principle providing that in cases of uncertainty, language of a contract should be interpreted most strongly against the drafter of the contract.

 

9.             The parties acknowledge that no other party or its attorneys have made any representations or rendered any advice regarding a party’s tax liability, if any, from the payment to be made pursuant to this Agreement.  The parties further acknowledge their sole responsibility for seeking said tax advice and for remitting to federal and/or state tax authorities any applicable taxes due or information.

 

10.          This Agreement and any agreement executed in connection herewith, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, PDF file or other means of electronic transmission shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding effect as if it were the original signed version thereof delivered in person.  At the request of any party hereto or any party to any such other agreement contemplated hereunder, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties but the failure to do so shall not affect the enforceability of any agreement, or effectiveness of any notice.  No party hereto or to any other such agreement contemplated hereunder shall claim that

 

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this Agreement or such other agreement is invalid, not binding or unenforceable based upon the use of a facsimile machine, PDF file or other means of electronic transmission to deliver a signature, or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine, PDF file or other means of electronic transmission and each such party forever waives any such claim or defense.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.  SIGNATURE PAGE FOLLOWS.]

 

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

 

 

	
 
    	
JOE’S   JEANS INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Marc B. Crossman
    
	
 
    	
Name:
    	
Marc   Crossman
    
	
:
    	
Title:
    	
CEO   and President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JOE’S   JEANS SUBSIDIARY, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Marc B. Crossman
    
	
 
    	
Name:
    	
Marc   Crossman
    
	
 
    	
Title:
    	
CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Joseph M. Dahan
    
	
 
    	
JOSEPH   M. DAHAN

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