Document/Exhibit Description Pages Size
1: 8-K Current Report 5 28K
2: EX-1 Underwriting Agreement 28± 136K
3: EX-2 Plan of Acquisition, Reorganization, Arrangement, 7± 30K
Liquidation or Succession
4: EX-3 Articles of Incorporation/Organization or By-Laws 8± 30K
5: EX-4 Instrument Defining the Rights of Security Holders 6± 25K
6: EX-5 Opinion re: Legality 6± 27K
7: EX-6 Opinion re: Discount on Capital Shares 8± 31K
8: EX-7 Opinion re: Liquidation Preference 8± 31K
9: EX-8 Opinion re: Tax Matters 10± 45K
10: EX-9 Voting Trust Agreement 10± 40K
COMMON STOCK PURCHASE AND RIGHT OF
FIRST REFUSAL AGREEMENT
This Common Stock Purchase and Right of First Refusal
Agreement (the "Agreement") is made this 30th day of July, 1997
by and between L.E. Smith, Dan Page and J. Eric Hendrickson
(collectively "Smith, Page and Hendrickson") and William T.
Williams, Sr. and Virginia C. Williams/William T. Williams, Jr.
and Allison Williams ITTN ("Williams").
Recitals
Whereas, pursuant to a letter of intent agreement dated July
29, 1997 by and between Smith, Page and Hendrickson and Innovo
Group Inc. ("Innovo Group") and Patricia Anderson-Lasko, Smith,
Page and Hendrickson propose to purchase, and Innovo Group
proposes to sell to Smith, Page and Hendrickson, certain shares
of the common stock, par value $.01 per share, of Innovo Group
("common stock") (such proposed transaction referred to
hereinafter as the "Share Purchase"); and
Whereas, in May, 1997, Williams acquired 1,500,000 shares of
common stock ("the Conversion Shares") upon the conversion of a
$175,000 Innovo Group 10% Unsecured Convertible Promissory Note,
and acquired 500,000 shares of common stock (the "Warrant
Shares") upon the exercise of an Innovo Group Class J common
stock purchase warrant; and
Whereas, in connection with and as a condition of the Share
Purchase Smith, Page and Hendrickson wish to acquire the Warrant
Shares, and wish to obtain from Williams certain restrictions on
the resale of the Conversion Shares and certain rights to
purchase the Conversion Shares; and
Whereas, Williams is willing to sell to Smith, Page and
Hendrickson the Warrant Shares, on the terms and conditions set
forth herein, and as an inducement to the purchase of the Warrant
Shares, and to the Share Purchase, is willing on the terms and
conditions set forth herein to grant to Smith, Page and
Hendrickson and to Innovo Group (which is deemed an intended
third party beneficiary of this Agreement) certain restrictions
on the resale of the Conversion Shares and certain rights to
purchase the Conversion Shares;
Therefore, Smith, Page and Hendrickson and Williams agree as
follows:
Agreement
1. Closing. The closing of the transactions contemplated by
this Agreement ("the Closing") shall take place at the offices of
Innovo Group immediately following the closing of the Share
Purchase.
2. Purchase of Warrant Shares. Within 10 business days of the
Closing, Smith, Page and Hendrickson shall purchase, and Williams
shall sell to Smith, Page and Hendrickson, the Warrant Shares for
an aggregate price of $67,500.00. Within 10 business days of the
Closing or within thirty (30) days following the Closing, Smith,
Page and Hendrickson shall deliver to Williams payment of
immediately available funds in the form of a cashier's check,
wire transfer, or such other form of payment as Williams may
agree to, and Williams shall deliver to Smith, Page and
Hendrickson the certificate for the Warrant Shares, properly
endorsed and with appropriate stock powers.
3. Restriction on Resale of Conversion Shares. Williams hereby
agrees that, upon and conditioned upon the occurrence of the
Closing, for a period of one year from the Closing he will not,
without the written permission of Smith, Page and Hendrickson,
obtained as to each offer and sale, offer for sale or sell any of
the Conversion Shares, provided, however, that this restriction
shall not apply to a sale of the Conversion Shares in response to
an offer made generally to all stockholders of Innovo Group in
connection with a proposed or intended acquisition of a
controlling interest in Innovo Group ("a Merger Offer").
4. Right of First Refusal on Purchase of Conversion Shares.
Upon and conditioned upon the occurrence of the Closing, Williams
hereby grants, first to Smith, Page and Hendrickson and then to
Innovo Group, the right ("the Right") to purchase any of the
Conversion Shares that he offers or intends to offer for sale
during the period which commences on the first anniversary of
Closing and ends on the second anniversary of Closing ("the Right
Period"). The Right shall entitle Smith, Page and Hendrickson
first, and then Innovo Group to the extent the Right is not
exercised by Smith, Page and Hendrickson, to purchase Conversion
Shares, when and if Conversion Shares are offered by Williams
during the Right Period, at the following prices ("the Right
Prices");
(a) With respect to any offer or sale which Williams
proposes to make ("a Proposed Sale") except for a Proposed
Sale which is in response to a Merger Offer, at a per share
price equal to 75% of the average closing bid price, as
reported on the NASDAQ SmallCap market or on such other
market of exchange as at that time may be the primary
trading market for the common stock, for the five trading
days prior to the receipt by Smith, Page and Hendrickson of
the notice of Proposed Sale ("the Proposed Sale Notice")
delivered to Smith, Page and Hendrickson by Williams
pursuant to section 5(a) below;
(b) With respect to a Proposed Sale in response to a Merger
Offer, at the price and on the terms contained in the Merger
Offer.
5. Notice of Proposed Sale; Exercise of the Right.
(a) At any time during the Right Period as Williams
determines to offer and sell any of the Conversion Shares
(Williams having no obligation to so determine during the
Right Period), he shall first deliver to Smith, Page and
Hendrickson and to Innovo Group a Proposed Sale Notice. The
Proposed Sale Notice shall be delivered to Smith, Page and
Hendrickson not less than five (5) days before Williams
proposes to (i) place an order for the sale of any of the
Conversion Shares, or (ii) sell, in a non-market transaction
(i.e., a private sale) ("a Private Sale") or in response to
a Merger Offer, any of the Conversion Shares. The Notice of
Proposed Sale shall set forth the number of Conversion
Shares Williams proposes to offer or sell ("the Offered
Shares"), the manner (i.e., a market transaction or a
private sale) in which Williams proposed to sell the Offered
Shares, the date on which Williams proposes to offer or sell
the Offered Shares, and, in the case of a Private Sale or a
Merger Offer, the identity of the proposed purchaser of the
Offered Shares and the per share price and other terms or
conditions of the Proposed Sale. If, at the time of the
delivery of the Proposed Sale Notice the reoffer or resale
of the Offered Shares is the subject of an effective
registration statement filed under the Securities Act of
1933 ("the 1933 Act") Williams shall also deliver to Smith,
Page and Hendrickson the prospectus constituting a part of
such registration statement.
(b) Within three (3) business days after the receipt of the
Proposed Sale Notice, Smith, Page and Hendrickson and Innovo
Group shall deliver to Williams a notice ("the Response
Notice") indicating whether, as to what number of Offered
Shares ("the Exercised Shares"), first Smith, Page and
Hendrickson and then Innovo Group elects to exercise the
Right. Smith, Page and Hendrickson and Innovo Group may
exercise the Right;
(i) as to a Proposed Sale that is a Private Sale or in
response to a Merger Offer, either in the aggregate to
none of the Offered Shares or in the aggregate to all
of the Offered Shares:
(ii) as to any other Proposed Sale, for any number to
Offered Shares, up to the total number of Offered
Shares.
The failure of Smith, Page and Hendrickson or Innovo
Group to deliver a Response Notice within the time
period set forth in this subsection (b) shall be deemed
an election by Smith, Page and Hendrickson or Innovo
Group not to exercise the Right with respect to the
Offered Shares.
(c) To the extent that Smith, Page and Hendrickson and
Innovo Group indicate in the response notice that they do
not intend to exercise the Right with respect to Offered
Shares, Williams shall, upon receipt of the Response Notice,
be free to proceed with the Proposed Sale as described in,
or on terms essentially the same as described in, the
Proposed Sale Notice.
(d) To the extent Smith, Page and Hendrickson and Innovo
Group elect to exercise the Right with respect to Offered
Shares, Smith, Page and Hendrickson and Innovo Group shall
deliver to Williams within five (5) days of the delivery of
the Response Notice payment for the Exercised Shares, at the
Right Price, in immediately available funds in the form of a
cashier's check, wire transfer, or such other form of
payment as Williams may agree to, and Williams shall deliver
to Smith, Page and Hendrickson and Innovo Group certificates
for the Exercised Shares, endorsed to Smith, Page and
Hendrickson or Innovo Group as to the number of Exercised
shares being purchased by each, together with appropriate
stock powers. The failure of Smith, Page and Hendrickson or
Williams to deliver such payment within the time period set
forth in this subsection (d) shall be deemed a forfeiture of
the Right with respect to the Exercised Shares, and Williams
shall be free to proceed with the Proposed Sale of the
Exercised Shares as described in, or on terms essentially
the same as described in, the Proposed Sale Notice.
6. Restricted Securities
(a) The Warrant Shares are being offered and sold, and to
the extent not the subject of an effective registrations
statement, the Exercised Shares would be offered and sold,
in a transaction that is exempt from registration under
Sections 4(1) and /or 4(2) of the 1933 Act (such shares
referred to herein as the "Restricted Shares"). As a
result, the Restricted Shares will constitute "restricted
securities" as that term is defined under the 1933 Act.
Accordingly, the Restricted Shares may not be resold, in
whole or in part, unless they are the subject of
registration under the 1933 Act and any applicable state
securities laws, or there is available an exemption from
such registration. A legend, as follows, will be placed on
any certificate or certificates representing the Restricted
Shares:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN THE
SUBJECT OF REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("THE 1933 ACT") OR UNDER ANY STATE SECURITIES LAWS. THE
SHARES HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT
PURPOSES ONLY AND NOT WITH A VIEW TOWARD THE RESALE OR
DISTRIBUTION THEREOF. SUCH SHARES MAY NOT BE TRANSFERRED OR
DISPOSED OF IN THE ABSENCE OF REGISTRATION WITHOUT AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR
DISPOSITION DOES NOT VIOLATE THE 1933 ACT, THE RULES AND
REGULATIONS THEREUNDER, OR ANY APPLICABLE STATE SECURITIES LAWS.
IN CONNECTION WITH COMPLIANCE WITH THE 1933 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, NO TRANSFER OF THESE SHARES
SHALL BE MADE UNLESS THE CONDITIONS SPECIFIED HEREIN ARE
SATISFIED."
7. Representations and Warranties of Smith, Page and Hendrickson.
(a) Each of Smith, Page and Hendrickson have the full power
and authority to enter into this Agreement and have taken
all action or will use their best efforts to take all
action, personal, corporate and otherwise, necessary to
authorize the execution, delivery and performance of this
Agreement, the completion of the transaction contemplated
hereby and the execution and delivery on behalf of Smith,
Page and Hendrickson of any and all instruments necessary or
appropriate in order to effectuate fully the terms and
conditions of this Agreement.
(b) No consent or approval of any court, governmental agency
or other public authority, or of any other person,
corporation or entity with any actual or alleged interest is
required as a condition to (i) the validity or
enforceability of this Agreement of any other instruments to
be executed by Smith, Page and Hendrickson to effectuate
this Agreement, or (ii) the completion or validity of any of
the transactions contemplated by this Agreement. This
Agreement has been properly executed and delivered by Smith,
Page and Hendrickson and constitutes the valid and legally
binding agreement of Smith, Page and Hendrickson and is
enforceable against Smith, Page and Hendrickson in
accordance with its terms.
(c) No fees or commissions are payable by Smith, Page and
Hendrickson by virtue or in connection with the transaction
contemplated by this Agreement.
(d) Smith, Page and Hendrickson are acquiring the Restricted
Shares for their own account and not with a view towards
the resale of distribution thereof. Smith, Page and
Hendrickson are not acting as an underwriter or distributor
as those terms are defined under the 1933 Act.
(e) Each of Smith, Page and Hendrickson are an "accredited
investor" as that term is defined in Regulation D under the
1933 Act and has such knowledge and expertise in financial
and business matters that each of Smith, Page and
Hendrickson is capable of evaluating the merits and risks
involved in an investment in the Warrant Shares or the
Offered Shares;
(f) Smith, Page and Hendrickson understand that the
Restricted Shares are being offered and sold to them in
reliance on specific exemptions from the registration
requirements of Federal and State securities laws and that
Williams is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements
and understandings of Smith, Page and Hendrickson set forth
herein in order to determine the applicability of such
exemptions and the suitability of Smith, Page and
Hendrickson to acquire the Shares.
(g) Smith, Page and Hendrickson understand that the offer
and sale of the Restricted Shares will not have been the
subject of a registration statement filed under the 1933
Act, and as a result will be "restricted securities" as that
term is defined under the 1933 Act. Accordingly, the
Restricted Shares may not be resold, in whole or in part,
unless they are the subject of registration under the 1933
Act and any applicable state securities laws, or there is
available an exemption from such registration. A legend, as
set forth in Section 5 of this Agreement, will be placed on
any certificate or certificates representing the Restricted
Shares.
(h) Each of the representations by Smith, Page and
Hendrickson shall be deemed to be repeated as of the date of
any Response Notice.
8. Representations and Warranties of Williams.
(a) Williams is a __________ duly organized, validly
existing, and in good standing under the laws of the State
of __________, and it has full power and authority to enter
into this Agreement and to carry out the transactions
contemplated hereby. Williams has full power and authority
to carry on its business as it is now being conducted and to
own its assets.
(b) Williams has full power and authority to enter into
this Agreement and has taken all action or will use its best
efforts to take all action, personal, corporate and
otherwise, necessary to authorize the execution, delivery
and performance of this Agreement, the completion of the
transaction contemplated hereby and the execution and
delivery on behalf of Williams of any and all instruments
necessary or appropriate in order to effectuate fully the
terms and conditions of this Agreement. Upon delivery of
the Shares, and the payment therefore, good and clear title
to the Shares will pass, free and clear of all restrictions
on transfer, liens, encumbrances, security interests and
claims whatsoever, to the Smith, Page and Hendrickson.
(c) No consent or approval of any court, governmental agency
or other public authority, or of any other person,
corporation or entity with any actual or alleged interest in
Williams is required as a condition to (i) the validity or
enforceability of this Agreement of any other instruments
to be executed by Williams to effectuate this Agreement, or
(ii) the completion or validity of any of the transactions
contemplated by this Agreement. This Agreement has been
properly executed and delivered by the duly authorized
officer of Williams, and constitutes the valid and legally
binding agreement of Williams and is enforceable against
Williams in accordance with its terms.
(d) Williams knows of no outstanding claims against
Williams for taxes which constitute a lien on the Shares
being offered or sold hereunder.
(e) No fees or commissions are payable by Williams by virtue
or in connection with the transaction contemplated by this
Agreement.
(f) Each of the representations by Williams shall be deemed
to be repeated as of the date of any Proposed Sale Notice.
9. Indemnification.
(a) Each of Smith, Page and Hendrickson, and Williams (each
being a "Party") agrees to indemnify each of other Party,
and their, heirs, successors, assigns, agents and
affiliates, and hold each of the other Party and their
heirs, successors assigns, agents and affiliates, harmless
from and against any and all losses, damages, liabilities,
costs and expenses which it or any of them may sustain or
incur in connection with the breach by the indemnifying
Party of, or any misrepresentation or inaccuracy contained
in, any representation, warranty or covenant made by that
Party herein.
10. Arbitration. Each Party represents, warrants, covenants and
agrees that any controversy or claim brought directly,
derivatively or in a representative capacity by it, him or her in
the capacity as a present or former securityholder, whether
against Innovo Group, Smith, Page and Hendrickson or Williams,
brought by a Party or in the name of a Party, or any
shareholders, officers, directors, agents, affiliates,
associates, employees or controlling persons a Party, including
without limitation any controversy or claim relating this
Agreement or to a purchase or sale of securities of Innovo Group,
shall be settled by arbitration under the Federal Arbitration Act
in accordance with the commercial arbitration rules of the
American Arbitration Association ("AAA") and judgment upon the
award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. In arbitration proceedings under
this Section 9, the parties shall be entitled to any and all
remedies that would be available in the absence of this Section 9
and the arbitrators, in rendering their decision, shall follow
the substantive laws of the State of Delaware. This Section 9
shall apply, without limitation, to actions arising in connection
the offer and sale of Innovo Group common stock or contemplated
by this Agreement under any Federal or State securities laws.
The arbitration of any dispute pursuant to this Section 9 shall
be held in Springfield, Tennessee.
Notwithstanding the foregoing in order to preserve the
status quo pending the resolution by arbitration of a claim
seeking relief of an injunctive or equitable nature, any party,
upon submitting a matter to arbitration as required by this
Section 9, may simultaneously or thereafter seek a temporary
restraining order or preliminary injunction from a court of
competent jurisdiction pending the outcome of the arbitration.
This Section 9 is intended to benefit the shareholders,
agents, affiliates, associates, employees and controlling persons
of each Party, each of whom shall be deemed to be a third party
beneficiary of this Section 9, and each of whom may enforce this
Section 9 to the full extent that the Party could do so if a
controversy or claim were brought against it.
11. Miscellaneous.
(a) Modification; Complete Agreement. This Agreement (i)
may only be modified by a written instrument executed by
Smith, Page and Hendrickson and Williams, (ii) sets forth
the entire understanding between Smith, Page and Hendrickson
and Williams with respect to the subject matter hereof; and
(iii) shall inure to the benefit of, and be binding upon
Innovo Group and Smith, Page and Hendrickson and Williams
their respective heirs, legal representatives and
successors.
(b) Waiver. Any of the terms and conditions of this
Agreement which may be lawfully waived may be waived in
writing at any time by the Party that is entitled to the
benefit thereof. Any waiver of any provision of this
Agreement shall be binding only is set forth in an
instrument in writing signed on behalf of such Party. No
failure to enforce any provision of this Agreement shall be
deemed to or shall constitute a waiver of such provision of
this Agreement, and no waiver of a provision shall be deemed
or constitute a waiver of any other provision of this
Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver.
(c) Governing Law. This Agreement shall be governed by the
laws of the State of Delaware applicable to contracts made
and to be wholly performed therein.
(d) Fees and Expenses. Each Party shall bear their own
respective expenses in connection with the negotiation and
consummation of the transactions contemplated by this
Agreement.
(e) Transfers and Assignments. Neither this Agreement nor
any of the rights of hereunder may be transferred or
assigned except as provided herein.
(f) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the
masculine, feminine or neuter gender, shall include all
other genders.
(g) Headings. The headings contained in this Agreement are
for reference only and shall not affect in any way the
meaning of interpretation of this Agreement.
(h) Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall,
as to that jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of
this Agreement invalid, illegal or unenforceable in any
other jurisdiction.
(i) Notices. All notices or other communications hereunder
shall be in writing and shall be deemed to have been duly
given if delivered personally, sent by express mail or such
other similar service (i.e., Federal Express), or mailed by
certified or registered mail, return receipt requested,
postage prepaid, as follows:
if to Smith, Page or Hendrickson:
L.E. Smith or Dan Page or Eric Hendrickson
27 North Main Street
Springfield, Tennessee 37172
with a copy to:
if to Williams:
William T. Williams , Sr.
2800 S. Ocean Blvd. #21M
Boca Raton, Florida 33432-8381
with a copy to:
if to Innovo Group:
Innovo Group Inc.
27 North Main Street
Springfield, Tennessee 37172
Attn: Patricia Anderson-Lasko, President
with a copy to:
Sims, Moss, Kline & Davis LLP
400 North Park Center
Suite 310
1000 Abernathy Road, NE
Atlanta, Georgia, 30328
Attn: Jerry L. Sims, Esq.
or to such other address as a Party shall have designated to the
other by like notice.
IN WITNESS WHEREOF, Smith, Page and Hendrickson and Williams have
executed this Common Stock Purchase and Right of First Refusal
Agreement on the date first written above.
/s/L.E. Smith
_________________________
L.E. Smith
/s/Dan Page
_________________________
Dan Page
/s/Eric Hendrickson
_________________________
Eric Hendrickson
William T. Williams, Sr. and
Virginia C. Williams/William T. Williams, Jr.
and Allison Williams ITTN
By: /s/William T. Williams, Sr.
_________________________
William T. Williams, Sr.
Title: Partner
____________________
Dates Referenced Herein and Documents Incorporated by Reference
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