SETTLEMENT AGREEMENT AND RELEASE

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Exhibit 10.11

SETTLEMENT AGREEMENT AND RELEASE

        Joe's Jeans, Inc. ("JJI") and Beyond Blue, Inc. ("BBI") have reached the following agreement (the "Agreement" or "Settlement Agreement"), as of the 3 ^rd  day of July, 2007 ("Effective Date"). JJI and BBI together shall be hereinafter referred to as the "Parties."

         WHEREAS, JJI and BBI entered into a Master Distribution Agreement, dated as of January 1, 2004, as amended by that certain First Amendment to Master Distribution Agreement, dated as of February 14, 2005 (collectively, the "MDA"); and

         WHEREAS , JJI and BBI entered into a Dissolution Agreement dated as of February 1, 2007 ("Dissolution Agreement"), pursuant to which, among other things, JJI and BBI agreed to dissolve the MDA, provided, however, that the Parties each reserved certain rights and obligations under the MDA, as more particularly set forth in the Dissolution Agreement; and

         WHEREAS , on May 24, 2007 BBI filed a complaint titled Beyond Blue, Inc. v. Joe's Jeans, Inc., Innovo Group Inc., and Does 1 to 10 , Case No. BC371641 in Los Angeles County Superior Court in the State of California (the "Litigation"); and

         WHEREAS , on May 25, 2007 JJI filed an arbitration claim titled Joe's Jeans, Inc. v. Beyond Blue, Inc., Claim No. 002-OM9-VHS with the American Arbitration Association (the "Arbitration"); and

         WHEREAS , the Parties mutually desire to resolve all claims that each may have against the other, including but not limited to any and all outstanding claims arising out of the MDA, the Dissolution Agreement, or which were made or could have been made in either the Litigation or the Arbitration, and forever release the other party from any liability whatsoever, except as may otherwise be set forth below in this Agreement.

         NOW, THEREFORE , in consideration of the following covenants and agreements and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties have agreed as follows:

        1.     BBI shall pay to JJI a total of Two Hundred Thousand and No/100 (USD $200,000.00) Dollars on or before August 1, 2007. Said payment shall be made by wire transfer of immediately available funds in accordance with the following wire instructions:

BANK NAME: WELLS FARGO BANK
BANK ADDRESS: 420 MONTGOMERY STREET, SAN FRANCISCO, CA 94103
SWIFT CODE: XXXXX
ACCOUNT NAME: JOE'S JEAN—CIT RESTRICTED ACCOUNT
ACCOUNT NUMBER: XXXXX

        2.     Within three (3) business days of the Effective Date of this Agreement, the Parties will jointly submit a Motion to Stay the Arbitration until such time as the conditions set forth in Paragraph 1 have been satisfied. Upon the satisfaction of such conditions, JJI will promptly cause to be filed a dismissal of the Arbitration with prejudice.

        3.     Within three (3) business days of the Effective Date of this Agreement, BBI shall cause its counsel to submit a letter to the counsel of JJI extending to August 13, 2007, the time allotted for filing a response in the Litigation. Thereafter, in the event of a filing of a dismissal of the Arbitration with prejudice (mentioned in paragraph 2. above), BBI shall cause its counsel to simultaneously file a dismissal of the Litigation with prejudice, and shall promptly serve such dismissal with prejudice to JJI.

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        4.     It is understood and agreed that this Settlement Agreement supercedes the MDA and Dissolution Agreement, and/or any other verbal or written agreement between the Parties, and/or by and among the BBI Releasors, the BBI Releasees, the JJI Releasors and the JJI Releasees (collectively hereinafter defined), once this Settlement Agreement is executed by the Parties and that the only continuing rights and obligations between the Parties are those set forth or referenced in this Settlement Agreement.

        5.     The Parties agree that certain trading covenants shall form an integral part of this Agreement, and are listed in Exhibit A .

        6.     Subject to BBI's full and complete compliance with all material obligations set forth in this Agreement, JJI, Innovo Group Inc. and their past, present and future representatives, agents, consultants, shareholders, officers, directors, employees, affiliates, successors and assigns ("JJI Releasors") hereby fully and forever release and discharge BBI and all of its representatives, agents, shareholders, officers, directors, employees, parents, affiliates, successors and assigns ("BBI Releasees") from any and all claims, demands, losses, costs, damages, rights and causes of action, debts, liabilities and obligations whatsoever, at law or in equity, arising out of or related to the Litigation and/or Arbitration, which JJI ever had, now has or hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing, whether or not previously asserted or assertable, known or unknown, other than claims to enforce this Settlement Agreement.

        7.     (a)    In the event of a default by BBI of its obligations set forth in Sections 1 or 3 of this Agreement, which is not cured in accordance with Section 14 hereof, JJI may either: (i) invoke its rights provided by Section 15 hereof and sue to enforce such rights under this Agreement; or (ii) declare the releases provided by this Agreement to be rescinded, thereby restoring all rights, remedies and claims of the parties as existed prior to entering this Agreement, whether under the MDA, Dissolution Agreement or otherwise.

        (b)   In the event of a default by BBI of any of its other material obligations set forth in this Agreement, which is not cured in accordance with Section 14 hereof, JJI may invoke its rights provided by Section 15 hereof and sue to enforce such rights under this Agreement.

        8.     Subject to JJI's full and complete performance with all material obligations in this Agreement, BBI and its representatives, agents, consultants, shareholders, officers, directors, employees, affiliates, successors and assigns ("BBI Releasors") hereby fully and forever release and discharge JJI, Innovo Group Inc. and all of their past, present or future representatives, agents, shareholders, consultants, officers, directors, employees, parents, subsidiaries, affiliates (including but not limited to JD Design, LLC and its successors-in-interest), and their successors and assigns ("JJI Releasees") from any and all claims, demands, losses, costs, damages, rights and causes of action, debts, liabilities and obligations whatsoever, at law or in equity, arising out of or related to the Litigation and/or Arbitration, which BBI ever had, now has or hereafter can, shall or may have for, upon, or by reason of any matter, cause or thing, whether or not previously asserted or assertable, known or unknown, other than claims to enforce this Settlement Agreement.

        9.     (a)    In the event of a default by JJI of its obligations set forth in Section 2 of this Agreement, which is not cured in accordance with Section 14 hereof, BBI may either: (i) invoke its rights provided by Section 15 hereof and sue to enforce such rights under this Agreement; or (ii) declare the releases provided by this Agreement to be rescinded, thereby restoring all rights, remedies and claims of the parties as existed prior to entering this Agreement, whether under the MDA, Dissolution Agreement or otherwise.

        (b)   In the event of a default by JJI of any of its other material obligations set forth in this Agreement, which is not cured in accordance with Section 14 hereof, BBI may invoke its rights provided by Section 15 hereof and sue to enforce such rights under this Agreement.

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        10.   BBI and JJI, and each of them, expressly waives any right and/or benefit conferred upon them by Section 1542 of the California Civil Code, and expressly agree that the mutual release operates to release all claims between BBI and JJI, whether the claims are known or unknown or suspected or unsuspected. Section 1542 provides:

"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."

        11.   JJI shall indemnify and hold BBI, and its subsidiaries and affiliates, and their officers, directors, shareholders, employees, representatives and agents, harmless from and against any and all settlements, claims, demands, causes of action, judgments, damages, losses, costs and expenses (including, but not limited to, attorney's fees and costs) of any kind whatsoever actually or allegedly suffered by any person, persons, product, customer or property arising in any way out of or incidental to, the Products manufactured, sold or distributed by JJI or suffered or incurred by JJI in connection with any allegedly unauthorized use of any trademark, patent, process, idea, method, or device in connection with t