SCHEDULE 6.2(c) EMPLOYMENTAGREEMENT

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

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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:

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:

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.

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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,

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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.