Innovo Group Inc.
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
April 4, 1997
Ms. Xxxxxxxx Xxxxxxxx-Xxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Dear Xx. Xxxxxxxx-Xxxxx:
Stock Purchase Right Award
__________________________
The following letter sets forth the terms and conditions under
which you are hereby offered the opportunity to purchase shares of
the common stock, par value $.01 per share (the "Common Stock") of
Innovo Group Inc. (the "Company") pursuant to the Stock Purchase
Right Award (the "Award") granted to you by the Company's board of
directors. THIS LETTER CONSTITUTES PART OF A PROSPECTUS COVERING
THE OFFERING AND ISSUANCE OF THESE SHARES THAT HAS BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("THE ACT").
1. Number of Shares. Pursuant to the Award you may purchase up
to 4 million shares of Common Stock, which number shall be
adjusted in the event of any split, reverse split,
distribution, dividend or other adjustment with respect to the
Common Stock.
2. Purchase Price. The purchase price for any shares you elect
to purchase under the Award shall be $.28125 per share.
3. Vesting and Exercisability. The Award is fully vested. You
may exercise your right to purchase shares under the Award, in
any amount up to an aggregate of 4 million shares, at any time
during the period (a) beginning on April 30, 1997, and (b)
ending on the earlier of (i) the termination of your
employment with the Company (except in the event that your
employment with the Company is terminated due to death or
disability, in which case the Award may be exercised, either
by you, or your estate, heir or other legal representative,
for a period of thirty (30) days following such termination),
or (ii) April 30, 2002.
4. Manner of Payment. You may pay for any shares purchased under
the Award by the delivery to the Company of the purchase price
in (i) cash, or (ii) the form of a non-recourse promissory
Note ("a Note") having the terms set forth below.
5. Terms of a Note. A Note delivered for the purchase of shares
shall be non-recourse, except that it shall be collateralized
by any shares purchased by the delivery of that Note, and by
any dividends or distribution made subsequent to the date of
such purchase with respect to the shares purchased by the
delivery of that Note. A Note shall be due, without interest,
on April 30, 2002. A Note may be paid, at maturity, or
prepaid without penalty in whole or in part, by the delivery
to the Company of (i) cash, or (ii) other shares (i.e. shares
not purchased pursuant to the Award) of the common stock of
the company owned by you which you have owned for a period of
at least six (6) months as of the date such shares are
tendered to the Company in payment of a Note. Shares tendered
to the Company in payment of a Note shall (i) be valued, for
the purpose of determining the amount of a Note paid
therewith, at the closing bid price of the Company's Common
Stock, as reported by the primary trading market for the
Company's Common Stock, as of the date of delivery, and (ii)
shall be accompanied by the appropriate forms of stock powers
and assignments in blank.
6. Escrow of Note and Shares; Release of Shares Upon Payment of
Note; Effect of Non-Payment of a Note. Any shares purchased
by you by the delivery of a Note shall be held in escrow,
under the administration of the Secretary of the Company,
together with (i) such Note, and (ii) any dividends or
distributions made with respect to such shares after the date
of such Note. Upon the payment or prepayment of all or a
portion of a Note, such shares, determined by dividing the
amount paid by $.28125, together with any dividends or
distributions with respect thereto held in the escrow, shall
be delivered to you. In the event of non-payment of a Note or
a part thereof, the shares, determined by dividing any unpaid
amounts by $.28125, together with any dividends and
distributions with respect thereto, shall be delivered to the
Company. You shall have the right to vote any shares in
escrow.
7. Termination of Employment. Except as set forth in paragraph
3 above, the termination of your employment will not have any
effect on your rights under the Award. Specifically, but
without limitation, the termination of your employment will
not affect your rights with respect to shares purchased prior
to the date of such termination, or with respect to shares
held in escrow as of the date of such termination.
8. Registration Under the Act. The Company has filed with the
Securities and Exchange Commission (the "Commission") and had
declared effective under the Act a registration statement on
Form S-8 (the "Registration Statement"). The Company is,
together with this letter, providing you with a copy of the
Registration Statement.
9. Available Information; Incorporation by Reference. The
Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files periodic reports,
other reports, and proxy statements with the Commission. Such
reports, proxy statements and other information can be
inspected and copied at prescribed rates at the public
reference facilities of the Commission at Rom 0000, 000 Xxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, and at the following
regional offices of the Commission: New York Regional Office,
0 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000;
and Chicago Regional Office, 3190 Northwestern Atrium Center,
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000.
Copies thereof can also be obtained from the Public Reference
Room of the Commission, 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx,
X.X. 00000.
The following documents filed by the Company under the
Exchange Act ar incorporated herein, and in the Registration
Statement, by reference: (i) the Company's Annual Report on Form
10-K for the year ended November 30, 1996, (ii) the Company's
current report on Form 8-K dated March 14, 1997, (iii) the
Company's Quarterly Report on Form 10-Q for the quarter ended
February 28, 1997, and (iv) all documents which the Company may
subsequently file pursuant to Sections 13(a), 13 (d) 14 and 15 of
the Exchange Act until such time as the Company files a post-
effective amendment to the Registration Statement which indicates
that all securities offered have been sold or which deregisters all
such securities remaining unsold.
Copies of the documents described in (i), (ii) and (iii) above
have been delivered to you together herewith, and copies of the
documents described in (iv) above, when filed, may be obtained
without charge by written or oral request to Schren L. Head,
Secretary, Innovo Group Inc., 00 Xxxxx Xxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000, telephone 000-000-0000.
Sincerely,
INNOVO GROUP INC.
By:/s/Schren L. Head
____________________
Xxxxxx X. Xxxx,
Corporate Secretary
Purchase Form
Stock Purchase Right Award
Xxxxxx X. Xxxx, Secretary
Innovo Group Inc.
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Dear Ms. Xxxx:
Pursuant to the Stock Purchase Right Award (the "Award"), I
hereby elect to purchase _____ shares, at a per share price of
$.28125 for an aggregate price of $_____. The aggregate purchase
price is hereby tendered in the form of (i) cash of $_____, and/or
(ii) a Note in the amount of $_____.
Signed:
___________________________
Xxxxxxxx Xxxxxxxx-Xxxxx
Date:____________________________