NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (I)
PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR (II) IN COMPLIANCE WITH AN
EXEMPTION THEREFROM AND ACCOMPANIED, IF REQUESTED BY INNOVO GROUP, INC., WITH AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH AN EXEMPTION THEREFROM.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN ARTICLE II OF THIS WARRANT
Warrant No. __-____ Number of Shares: 17,500
Date of Issuance: August 29, 2003
INNOVO GROUP, INC.
Common Stock Purchase Warrant
-----------------------------
THIS IS TO CERTIFY THAT, for value received, subsequent to December 31,
2003, PACIFIC SUMMIT SECURITIES, a California corporation (the "Registered
Holder"), or its permitted assigns, is entitled to purchase from INNOVO GROUP,
INC., a Delaware corporation (the "Company"), at the place where the Warrant
Office designated pursuant to Section 2.1 is located, at a purchase price per
share of $3.62 (as adjusted pursuant to the terms of this Warrant, the "Exercise
Price"), 17,500 shares of duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, $0.10 par value per share, of the Company,
and is entitled also to exercise the other appurtenant rights, powers and
privileges hereinafter set forth. The number of shares of the Common Stock
purchasable hereunder and the Exercise Price are subject to adjustment in
accordance with Article III hereof. This Warrant shall expire at 5:00 p.m.,
P.S.T., on August 28, 2008.
Certain Terms used in this Warrant are defined in Article IV.
ARTICLE I
Exercise of Warrant
-------------------
1.1 Method of Exercise. This Warrant may be exercised by the Registered
Holder as a whole subsequent to December 31, 2003, until August 28, 2008, at
which
time this Warrant shall expire and be of no further force or effect. To exercise
this Warrant, the Registered Holder or permitted assignees of all rights of the
Registered Holder shall deliver to the Company, at the Warrant Office designated
in Section 2.1(a), a written notice in the form of the Purchase Form attached as
Exhibit A hereto, stating therein the election of the Registered Holder or such
permitted assignees of the Registered Holder to exercise this Warrant in the
manner provided in the Purchase Form, (b) payment in full of the Exercise Price
(in the manner described below) for all Warrant Shares purchased hereunder, and
(c) this Warrant. Subject to compliance with Section 3.1(a)(vi), this Warrant
shall be deemed to be exercised on the date of receipt by the Company of the
Purchase Form, accompanied by payment for the Warrant Shares to be purchased and
surrender of this Warrant, as aforesaid, and such date is referred to herein as
the "Exercise Date." Upon such exercise (subject as aforesaid), the Company
shall issue and deliver to the Registered Holder a certificate for the full
number of the Warrant Shares purchasable by the Registered Holder hereunder,
against the receipt by the Company of the total Exercise Price payable hereunder
for all such Warrant Shares, (a) in cash or by certified or cashier's check or
(b) if the Common Stock is registered under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), by surrendering Warrant Shares having a Current
Market Price equal to the Exercise Price for all the Warrant Shares so
purchased. The Person in whose name the certificate(s) for Common Stock is to be
issued shall be deemed to have become a holder of record of such Common Stock on
the Exercise Date.
1.2 Net Exercise. Notwithstanding any provisions herein to the contrary, if
the Common Stock is registered under the Exchange Act, and the Current Market
Price of one share of Common Stock is greater than the Exercise Price (at the
date of calculation as set forth below), in lieu of exercising this Warrant by
payment of cash, the Registered Holder may elect to receive Warrant Shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the Warrant Office together with the
properly endorsed Purchase Form in which event the Company shall issue the
Registered Holder a number of shares of Common Stock computed as follows:
X = Y(A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to the
Registered Holder.
Y = the number of shares of Common Stock purchasable under the
Warrant.
A = the Current Market Price of one share of Common Stock (at the
date of such calculation)
B = Exercise Price (as adjusted to the date of such calculation)
1.3 Fractional Shares. No fractional shares of Common Stock shall be issued
upon exercise of this Warrant. Instead of any fractional shares of Common Stock
that would otherwise be issuable upon exercise of this Warrant, the Company
shall pay a cash
2
adjustment in respect of such fractional interest equal to the fair market value
of such fractional interest as determined in good faith by the Board of
Directors.
1.4 Termination. Notwithstanding any other provision of this Warrant, the
right to exercise this Warrant shall terminate upon the first to occur of (a) at
the close of business on August 28, 2008 or (b) the closing date of an Asset
Transfer or Acquisition.
ARTICLE II
Warrant Office; Transfer
------------------------
2.1 Warrant Office. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's office at 0000 X. Xxxxxxx Xxx., Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx
00000, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States of which
written notice has previously been given to the Registered Holder. The Company
shall maintain, at the Warrant Office, a register for the Warrant in which the
Company shall record the name and address of the Registered Holder, as well as
the name and address of each permitted assignee of the rights of the Registered
Holder.
2.2 Ownership of Warrant. The Company may deem and treat the Registered
Holder as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided in this
Article II.
2.3 Transfer of Warrants. The Company agrees to maintain at the Warrant
Office books for the registration and transfer of this Warrant. This Warrant may
be transferred only in compliance with the applicable law and only to
shareholders, officers, and employees of Pacific Summit Securities or to any
person who succeeds to all of the assets of Pacific Summit Securities. The
Company, from time to time, shall register the transfer of this Warrant in such
books upon surrender of this Warrant at the Warrant Office, properly endorsed,
together with a written assignment of this Warrant, substantially in the form of
the Assignment attached as Exhibit B hereto. Upon any such transfer, a new
Warrant shall be issued to the transferee, and the Company shall cancel the
surrendered Warrant. The Registered Holder shall pay all taxes and all other
expenses and charges payable in connection with the transfer of Warrants
pursuant to this Section 2.3.
2.4 Registration Rights. The Company agrees (a) that the Warrant Shares
shall be "Registrable Securities" under the Registration Rights Agreement (the
"Registration Rights Agreement") between the Company and the purchasers of
shares of Common Stock of the Company issued and sold pursuant to the terms of
the Placement Agent Agreement dated as of July 30, 2003, between the Company and
Pacific Summit
3
Securities and (b) that the Registered Holder shall have the rights and
obligations of a Holder set forth on the Registration Rights Agreement.
2.5 No Rights as Shareholder Until Exercise. This Warrant does not entitle
the Registered Holder to any voting rights or other rights as a shareholder of
the Company prior to the exercise hereof. Upon the surrender of this Warrant and
the payment of the aggregate Exercise Price, the Warrant Shares so purchased
shall be and be deemed to be issued to the Registered Holder as the record owner
of such shares as of the close of business on the later of the date of such
surrender or payment.
2.6 Expenses of Delivery of Warrants. Except as provided in Section 2.3
above, the Company shall pay all reasonable expenses, taxes (other than transfer
taxes) and other charges payable in connection with the preparation, issuance
and delivery of Warrants and related Warrant Shares hereunder.
2.7 Compliance with Securities Laws. The Registered Holder (and its
transferees and assigns), by acceptance of this Warrant, covenants and agrees
that such Registered Holder is acquiring the Warrants evidenced hereby, and,
upon exercise hereof, the Warrant Shares, for its own account as an investment
and not with a view to distribution thereof. Neither this Warrant nor the
Warrant Shares issuable hereunder have been registered under the Securities Act
or any state securities laws and no transfer of this Warrant or any Warrant
Shares shall be permitted unless the Company has received notice of such
transfer in the form of the assignment attached hereto as Exhibit B, accompanied
by an opinion of counsel reasonably satisfactory to the Company that an
exemption from registration of such Warrant or Warrant Shares under the
Securities Act is available for such transfer, except that no such opinion shall
be required after the registration for resale of the Warrant Shares has become
effective. Upon any exercise of the Warrants prior to effective registration for
resale or except as in accordance with Rule 144 under the Securities Act,
certificates representing the Warrant Shares shall bear a restrictive legend
substantially identical to that set forth as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state (collectively, the "Acts"). Neither the
shares nor any interest therein may be offered, sold, transferred,
pledged, or otherwise disposed of in the absence of an effective
registration statement with respect to the shares under all of the
applicable Acts, or an opinion of counsel satisfactory to Innovo
Group, Inc. to the effect that such registrations are not required."
(c) Any purported transfer of the Warrant or Warrant Shares not in
compliance with the provisions of this section shall be null and void. Stop
transfer instructions have been or will be imposed with respect to the Warrant
Shares so as to restrict resale or other transfer thereof, subject to this
Section 2.7.
4
ARTICLE III
Anti-Dilution Provisions
------------------------
3.1 Adjustment of Exercise Price and Number of Warrant Shares. The Exercise
Price shall be subject to adjustment from time to time as hereinafter provided
in this Article III. Upon each adjustment of the Exercise Price, except pursuant
to Sections 3.1(a)(iii), (iv), and (v), the Registered Holder shall thereafter
be entitled to purchase, at the Exercise Price resulting from such adjustment,
the number of shares of the Common Stock obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
the Common Stock purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) Exercise Price Adjustments. The Exercise Price shall be subject to
adjustment from time to time as follows:
(i) Adjustment for Stock Splits and Combinations. If the
Company shall, at any time or from time to time after the date hereof
(the "Original Issue Date") while this Warrant remains outstanding,
effect a subdivision of the outstanding Common Stock, the Exercise
Price in effect immediately before such subdivision shall be
proportionately decreased. Conversely, if the Company shall at any time
or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately before such combination shall be
proportionately increased. Any adjustment under this Section 3.1(a)(i)
shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(ii) Adjustment for Common Stock Dividends and Distributions.
If the Company, at any time or from time to time after the Original
Issue Date while this Warrant remains outstanding makes, or fixes a
record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in additional
shares of Common Stock, in each such event the Exercise Price that is
then in effect shall be decreased as of the time of such issuance or,
in the event such record date is fixed, as of the close of business on
such record date, by multiplying the Exercise Price then in effect by a
fraction (i) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and (ii)
the denominator of which is the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date is fixed and such dividend
is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Exercise Price shall be recomputed accordingly as
of the close of business on such record date,
5
and thereafter the Exercise Price shall be adjusted pursuant to this
Section 3.1(a)(ii) to reflect the actual payment of such dividend or
distribution.
(iii) Adjustment for Reclassification, Exchange and
Substitution. If at any time or from time to time after the Original
Issue Date while this Warrant remains outstanding, the Common Stock is
changed into the same or a different number of shares of any class or
classes of stock, whether by recapitalization, reclassification or
otherwise (other than an Acquisition, Asset Transfer, subdivision or
combination of shares, stock dividend, reorganization, merger,
consolidation, or sale of assets provided for elsewhere in this Section
3.1(a)), in any such event the Registered Holder shall have the right
thereafter to convert such stock into the kind and amount of stock and
other securities and property receivable upon such recapitalization,
reclassification or other change by holders of the maximum number of
shares of Common Stock into which such shares of Common Stock could
have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as
provided herein or with respect to such other securities or property by
the terms thereof.
(iv) Reorganizations, Mergers, Consolidations or Sales of
Assets. If at any time or from time to time after the Original Issue
Date while this Warrant remains outstanding, there is a capital
reorganization of the Common Stock (other than an Acquisition, Asset
Transfer, recapitalization, or subdivision, combination,
reclassification, exchange, or substitution of shares provided for
elsewhere in this Section 3.1(a)), as a part of such capital
reorganization, provision shall be made so that the Registered Holder
shall thereafter be entitled to receive upon exercise hereof the number
of shares of stock or other securities or property of the Company to
which a holder of the number of shares of Common Stock deliverable upon
exercise immediately prior to such event would have been entitled as a
result of such capital reorganization, subject to adjustment in respect
of such stock or securities by the terms thereof. In any such case,
appropriate adjustment shall be made in the application of the
provisions of this Section 3.1(a) with respect to the rights of the
Registered Holder after the capital reorganization to the end that the
provisions of this Section 3.1(a) (including adjustment of the Exercise
Price then in effect and the number of shares issuable upon exercise)
shall be applicable after that event and be as nearly equivalent as
practicable.
(v) Rounding of Calculations; Minimum Adjustment. All
calculations under this Section 3.1(a) and under Section 3.1(b) shall
be made to the nearest cent. Any provision of this Section 3.1 to the
contrary notwithstanding, no adjustment in the Exercise Price shall be
made if the amount of such adjustment would be less than one percent,
but any such amount shall be carried forward and an adjustment with
respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate one percent or
more.
6
(vi) Timing of Issuance of Additional Common Stock Upon
Certain Adjustments. In any case in which the provisions of this
Section 3.1(a) shall require that an adjustment shall become effective
immediately after a record date for an event, the Company may defer
until the occurrence of such event issuing to the Registered Holder
after such record date and before the occurrence of such event the
additional shares of Common Stock or other property issuable or
deliverable upon exercise by reason of the adjustment required by such
event over and above the shares of Common Stock or other property
issuable or deliverable upon such exercise before giving effect to such
adjustment; provided, however, that the Company upon request shall
deliver to such Registered Holder a due xxxx or other appropriate
instrument evidencing such Registered Holder's right to receive such
additional shares or other property, and such cash, upon the occurrence
of the event requiring such adjustment.
(vii) Voluntary Adjustment by the Company. The Company may at
any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors, in its sole discretion, of the
Company.
(b) Current Market Price. The "Current Market Price" shall mean, as of
any date, 5% of the sum of the average, for each of the 20 consecutive Trading
Days immediately prior to such date, of either: (i) the high and low sales
prices of the Common Stock on such Trading Day as reported on the composite tape
for the principal national securities exchange on which the Common Stock may
then be listed, or (ii) if the Common Stock shall not be so listed on any such
Trading Day, the high and low sales prices of Common Stock in the
over-the-counter market as reported by the Nasdaq Stock Market for National
Market Securities, or (iii) if the Common Shares shall not be included in the
Nasdaq Stock Market as a National Market Security on any such Trading Day, the
representative bid and asked prices at the end of such Trading Day in such
market as reported by the Nasdaq Stock Market or (iv) if there be no such
representative prices reported by the Nasdaq Stock Market, the lowest bid and
highest asked prices at the end of such Trading Day in the over-the-counter
market as reported by the OTC Electronic Bulletin Board or National Quotation
Bureau, Inc., or any successor organization. For purposes of determining Current
Market Price, the term "Trading Day" shall mean a day on which an amount greater
than zero can be calculated with respect to the Common Stock under any one or
more of the foregoing categories (i), (ii), (iii) and (iv), and the "end"
thereof, for the purposes of categories (iii) and (iv), shall mean the exact
time at which trading shall end on the New York Stock Exchange. If the Current
Market Price cannot be determined under any of the foregoing methods, Current
Market Price shall mean the fair value per share of Common Stock on such date as
determined by the Board of Directors in good faith, irrespective of any
accounting treatment.
(c) Statement Regarding Adjustments. Whenever the Exercise Price shall
be adjusted as provided in Section 3.1(a), and upon each change in the number of
shares of the Common Stock issuable upon exercise of this Warrant, the Company
shall forthwith file, at the office of any transfer agent for this Warrant and
at the principal office of the Company, a statement showing in detail the facts
requiring such adjustment and the
7
Exercise Price and new number of shares issuable that shall be in effect after
such adjustment, and the Company shall also cause a copy of such statement to be
given to the Registered Holder. Each such statement shall be signed by the
Company's chief financial or accounting officer. Where appropriate, such copy
may be given in advance and may be included as part of a notice required to be
mailed under the provisions of Section 3.1(d).
(d) Notice to Holders. In the event the Company shall propose to take
any action of the type described in clause (iii) or (iv) of Section 3.1(a), the
Company shall give notice to the Registered Holder, in the manner set forth in
Section 6.6, which notice shall specify the record date, if any, with respect to
any such action and the approximate date on which such action is to take place.
Such notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Exercise Price and the
number, kind or class of shares or other securities or property which shall be
deliverable upon exercise of this Warrant. In the case of any action which would
require the fixing of a record date, such notice shall be given at least 10 days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least 15 days prior to the taking of such proposed action. Failure
to give such notice, or any defect therein, shall not affect the legality or
validity of any such action.
(e) Treasury Stock. For the purposes of this Section 3.1, the sale or
other disposition of any Common Stock of the Company theretofore held in its
treasury shall be deemed to be an issuance thereof.
3.2 Costs. The Registered Holder shall pay all documentary, stamp, transfer
or other transactional taxes attributable to the issuance or delivery of the
Warrant Shares upon exercise of this Warrant. Additionally, the Company shall
not be required to pay any taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificate for such Warrant Shares.
The Registered Holder shall reimburse the Company for any such taxes assessed
against the Company.
3.3 Reservations of Shares. The Company shall reserve at all times so long
as this Warrant remains outstanding, free from preemptive rights, out of its
treasury Common Stock or its authorized but unissued shares of Common Stock, or
both, solely for the purpose of effecting the exercise of this Warrant,
sufficient shares of Common Stock to provide for the exercise hereof.
3.4 Valid Issuance. All shares of Common Stock which may be issued upon
exercise of this Warrant will upon issuance by the Company be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof attributable to any act or omission by the
Company, and the Company shall take no action which will cause a contrary result
(including without limitation, any action which would cause the Exercise Price
to be less than the par value, if any, of the Common Stock).
8
ARTICLE IV
Terms Defined
-------------
As used in this Warrant, unless the context otherwise requires, the
following terms have the respective meanings set forth below or in the Section
indicated:
Acquisition means (a) any consolidation or merger of the Company with or
into any other corporation or other entity or Person, or any other corporate
reorganization, in which the individuals and entities who were beneficial owners
of the Common Stock immediately prior to such transaction beneficially own,
directly or indirectly, less than 50% of the outstanding securities entitled to
vote generally in the election of directors of the resulting, surviving, or
acquiring corporation in such transaction or (b) any transaction or series of
related transactions to which the Company is a party in which in excess of 50%
of the outstanding securities entitled to vote generally in the election of
director of the Company are transferred, excluding any consolidation or merger
effected exclusively to change the domicile of the Company.
Asset Transfer means a sale, lease, or other disposition of all or
substantially all of the assets of the Company to another Person.
Board of Directors means the Board of Directors of the Company.
Common Stock means the Company's authorized Common Stock, $0.10 par value
per share.
Company means Innovo Group, Inc., a Delaware corporation, and any other
corporation assuming or required to assume the obligations undertaken in
connection with this Warrant.
Current Market Price is defined in Section 3.1(b).
Exchange Act is defined in Section 1.1.
Exercise Date is defined in Section 1.1.
Exercise Price is defined in the Preamble.
Original Issue Date is defined in Section 3.1(a)(i).
Outstanding means when used with reference to Common Stock at any date, all
issued shares of Common Stock (including, but without duplication, shares deemed
issued pursuant to Article III) at such date, except shares then held in the
treasury of the Company.
Person means any individual, corporation, partnership, trust, organization,
association or other entity.
9
Registered Holder is defined in the Preamble.
Securities Act means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, all as the same shall be in effect at the
time.
Trading Day is defined in Section 3.1(b).
Warrant means this Warrant and any successor or replacement Warrant
delivered in accordance with Section 2.3 or 6.8.
Warrant Office is defined in Section 2.1.
Warrant Shares means the shares of Common Stock purchased or purchasable by
the Registered Holder, or the permitted assignees of such Registered Holder,
upon exercise of this Warrant pursuant to Article I hereof.
ARTICLE V
Covenant of the Company
-----------------------
The Company covenants and agrees that this Warrant shall be binding upon
any corporation succeeding to the Company by merger, consolidation, or
acquisition of all or substantially all of the Company's assets.
ARTICLE VI
Miscellaneous
-------------
6.1 Entire Agreement. This Warrant and the Registration Rights Agreement
contain the entire agreement between the Registered Holder and the Company with
respect to the Warrant Shares that it can purchase upon exercise hereof and the
related transactions and supersedes all prior arrangements or understanding with
respect thereto.
6.2 Governing Law. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without regard to
its conflict of law provisions.
6.3 Waiver and Amendment. Any term or provision of this Warrant may be
waived at any time by the party which is entitled to the benefits thereof, and
any term or provision of this Warrant may be amended or supplemented at any time
by the written consent of the parties (it being agreed that an amendment to or
waiver under any of the provisions of Article III of this Warrant shall not be
considered an amendment of the number of Warrant Shares or the Exercise Price).
No waiver by any party of any default, misrepresentation, or breach of warranty
or covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or
10
breach of warranty or covenant hereunder or affect in any way any rights arising
because of any prior or subsequent such occurrence.
6.4 Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
6.5 Copy of Warrant. A copy of this Warrant shall be filed among the
records of the Company.
6.6 Notice. Any notice or other document required or permitted to be given
or delivered to the Registered Holder shall be delivered at, or sent by
certified or registered mail to such Registered Holder at, the last address
shown on the books of the Company maintained at the Warrant Office for the
registration of this Warrant or at any more recent address of which the
Registered Holder shall have notified the Company in writing. Any notice or
other document required or permitted to be given or delivered to the Company,
other than such notice or documents required to be delivered to the Warrant
Office, shall be delivered at, or sent by certified or registered mail to, the
office of the Company at 0000 X. Xxxxxxx Xxx., Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx
00000 or any other address within the continental United States of America as
shall have been designated in writing by the Company delivered to the Registered
Holder.
6.7 Limitation of Liability; Not Stockholders. Subject to the provisions of
Article III, until the exercise of this Warrant, the Registered Holder shall not
have or exercise any rights by virtue hereof as a stockholder of the Company,
including, without limitation, the right to vote, to receive dividends and other
distributions, or to receive notice of, or attend meetings of stockholders or
any other proceedings of the Company. Until the exercise of this Warrant, no
provision hereof, and no mere enumeration herein of the rights or privileges of
the Registered Holder, shall give rise to any liability of such Registered
Holder for the purchase price of any shares of Common Stock or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
6.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of evidence
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory evidence) of the loss, theft, mutilation or destruction of this
Warrant, and, in the case of any such loss, theft or destruction, upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or, in the event of such mutilation upon surrender
and cancellation of this Warrant, the Company will make and deliver a new
Warrant of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant; provided, however, that the original Registered Holder of this Warrant
shall not be required to provide any such bond of indemnity and may in lieu
thereof provide his agreement of indemnity. Any Warrant issued under the
provisions of this Section 6.8 in lieu of any Warrant alleged to be lost,
destroyed or stolen, or in lieu of any mutilated Warrant, shall constitute an
original contractual obligation on the part of the Company.
11
This Warrant shall be promptly canceled by the Company upon the surrender hereof
in connection with any exchange or replacement. The Registered Holder of this
Warrant shall pay all taxes (including securities transfer taxes) and all other
expenses and charges payable in connection with the preparation, execution and
delivery of replacement Warrant(s) pursuant to this Section 6.8.
6.9 Headings. The Article and Section and other headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
6.10 Successors and Assigns. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Registered Holder. The provisions of this Warrant are
intended to be for the benefit of all Registered Holders from time to time of
this Warrant and shall be enforceable by any such Registered Holder or holder of
Warrant Shares.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its
name.
Dated: August 29, 2003
INNOVO GROUP, INC.
By_____________________________
Name:__________________________
Title:_________________________
12
Exhibit A
PURCHASE FORM
To: Innovo Group, Inc. Dated:
--------------------
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ____), hereby irrevocably elects to purchase ________ shares of the
Common Stock covered by such Warrant.
The undersigned herewith makes payment of the full exercise price for such
shares at the price per share provided for in such Warrant, which is $_____ per
share in lawful money of the United States.
[------------------------------]
-------------------------------
Name:__________________________
Title:_________________________
13
Exhibit B
ASSIGNMENT
For value received, _____________________________, hereby sells, assigns and
transfers unto _______________________________ the within Warrant, together with
all right, title and interest therein and does hereby irrevocably constitute and
appoint attorney, to transfer said Warrant on the books of the Company, with
full power of substitution.
--------------------------------
Dated: ___________________, 200_
14
