UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)*
INNOVO GROUP INC.
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
457954 50 1
(CUSIP Number)
Gilbert H. Davis, Esq.
Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road
Atlanta, Georgia 30328
(770) 481-7200
(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
August 13, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.<PAGE>
13D
CUSIP No. 457954 50 1
_________________________________________________________________________
1 NAME OF REPORTING PERSON:
J. Eric Hendrickson
_________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
_________________________________________________________________________
3 SEC USE ONLY
_________________________________________________________________________
4 SOURCE OF FUNDS: PF
_________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
_________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States
_________________________________________________________________________
NUMBER OF 7 SOLE VOTING POWER: 500,000
SHARES ____________________________________________________
BENEFICIALLY 8 SHARED VOTING POWER: NONE
OWNED BY ____________________________________________________
EACH 9 SOLE DISPOSITIVE POWER: 500,000
REPORTING ____________________________________________________
PERSON 10 SHARED DISPOSITIVE POWER: NONE
_________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 500,000
_________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 1.1%
________________________________________________________________________
14 TYPE OF REPORTING PERSON: IN
________________________________________________________________________
<PAGE>
Item 1. Security and Issuer.
This Statement relates to shares of the common stock, par
value $.01 per share (the "Common Stock"), of Innovo Group Inc.,
a Delaware corporation (the "Company"). The Company has its
principal executive offices at 27 North Main Street, Springfield,
Tennessee 37172.
Item 2. Identity and Background.
This Statement is filed by John Eric Hendrickson
("Hendrickson"), a resident of the State of Tennessee whose
business address is 27 North Main Street, Springfield, Tennessee
37172. Hendrickson's principal occupation since joining the
Company on August 13, 1997 has been serving as a Director, a Vice
President and the Treasurer of the Company. Hendrickson is a
United States citizen.
To the extent set forth in this Statement, Hendrickson has
acted together with the following persons in connection with the
Common Stock:
(a) Herb J. Newton ("Newton"), a resident of the State of
Georgia whose residence address if 2865 Camp Branch Road, Buford,
Georgia 30519. Newton's principal occupation is the management of
his personal investments. Newton became a Director of the
Company on August 13, 1997. Newton is a United States citizen.
(b) Daniel Allen Page ("Page"), a resident of the State of
Tennessee whose business address is 27 North Main Street,
Springfield, Tennessee 37172. Page's principal occupation since
joining the Company on August 13, 1997 has been serving as a
Director and the Chief Operating Officer of the Company. Page is
a United States citizen.
(c) Lecil Earnest Smith ("Smith"), a resident of the State
of Tennessee whose business address is 27 North Main Street,
Springfield, Tennessee 37172. Smith's principal occupation since
joining the Company on August 13, 1997 has been serving as a
Director and the Chairman and Chief Executive Officer of the
Company. Smith is a United States citizen.
Hendrickson, Newton, Page and Smith are referred to herein
collectively as the "Investor Group."
During the past five years, none of the persons listed above
has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or has been a party to a
civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or
is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Hendrickson used personal funds to acquire the shares
reported as owned by him in this Statement. In the event any
member of the Investor Group determines himself to purchase
additional shares of Company stock, it is currently contemplated
that they will use their respective personal funds. As of the
date of this Statement, no arrangements with third parties have
been made by any member of the Investor Group with respect to
financing the acquisition of additional Company shares.
Item 4. Purpose of Transaction.
On August 13, 1997, the Company issued 6,750,000 shares of
Common Stock to the Investor Group. The Investor Group paid
$1,350,000 for such shares of Common Stock. The purchase by the
Investor Group was made pursuant to a Stock Purchase Agreement
dated August 13, 1997 (the "Stock Purchase Agreement") by and
among the members of the Investor Group, the Company, and
Patricia Anderson-Lasko. The Stock Purchase Agreement is
incorporated herein by reference as Exhibit 7.1, and the
description of its terms herein is qualified in its entirety by
reference to the Stock Purchase Agreement.
The net proceeds to the Company, after the payment of the
costs of the transaction, were approximately $1,300,000. The
Company utilized $150,000 of the net proceeds to repurchase and
cancel its outstanding Class I Common Stock purchase warrants.
The Class I Common Stock purchase warrants had been issued in
fiscal 1996 to the placement agent for certain debt and equity
private placements, and was exercisable through August, 2001 for
the purchase of 1,220,588 shares of Common Stock at a price of
$.17 per share. The remaining net proceeds of approximately
$1,150,000 were used to reduce operating liabilities and add to
the Company's working capital.
Under the terms of the Stock Purchase Agreement, each of the
members of the Investor Group were elected to the Company's board
of directors. Concurrently, Scott Parliament, a member of the
board of directors, resigned. As a result, the board of
directors is now comprised of the following eight individuals:
Smith, Page, Hendrickson, Newton, Patricia Anderson-Lasko,
Alexander Miller, Eleanor Schwartz and Marvin Williamson. The
Stock Purchase Agreement also provides that the Company will
nominate these eight individuals as the Company's nominees for
directors for its next annual stockholders' meeting.
Concurrently and as a condition to the execution of the Stock
Purchase Agreement, the Company executed employment contracts
with each of Smith, Page and Hendrickson, and also executed new
employment contracts with Patricia Anderson-Lasko and Alexander
Miller. Smith became the chief executive officer of the Company
under a two year employment contract that provides for an annual
salary of $30,000 and the grant to Mr. Smith of 1,600,000 non-
qualified stock options. Page became the chief operating officer
of the Company under a two year employment contract that provides
for an annual salary of $30,000 and the grant to Page 1,200,000
non-qualified stock options. Hendrickson became the vice-
president and treasurer on the Company under a two year
employment contract that provides for an annual salary of
$70,000. The new employment contract for Ms. Anderson-Lasko
employs her for a two year term as the Company's president, and
as the president of the Company's Innovo Inc. and NP
International, Inc. subsidiaries, at an annual salary of
$157,500. The new employment contract for Mr. Miller employs him
for a two year term as the Company's manager of investor
relations at an annual salary of $48,000 and grants Mr. Miller
125,000 non-qualified stock options.
Each of the employment contracts of Messrs. Smith, Page,
Hendrickson, Miller and Ms. Anderson-Lasko (i) provide that the
contract shall automatically renew for successive one year terms
unless terminated by either party, and (ii) provide for the
payment of a termination benefit equal to one year's salary,
payable in twelve monthly installments, upon the termination of
employment, for any reason, during the term of the contract. The
employment contracts of Messrs. Smith, Page and Hendrickson, and
of Ms. Anderson-Lasko and Mr. Miller, are incorporated herein by
reference as exhibits (Exhibits 7.2, 7.3, 7.4, 7.5 and 7.6,
respectively), and the descriptions of their terms herein is
qualified in its entirety by reference to the contracts.
The non-qualified stock options granted to Messrs. Smith,
Page and Miller vest and become exercisable in 24 equal monthly
installments over the two year terms of their employment
contracts. Unvested options are forfeited at any termination of
employment. However, the vesting of any unvested and unforfeited
options will accelerate, and vest immediately, upon (i) the
market price of the Company's Common Stock reaching $1.00, or
(ii) a change in the control of the Company which is not approved
by the Company's board of directors. For the purposes of the
employment contracts, a change in control is defined as the
acquisition by any person or group of shares of Common Stock
representing 25 percent of the Company's outstanding Common
Stock. Vested options remain exercisable until August, 2002 at a
price of $.3315 per share, which represents the market price of
the Company's Common Stock at the time the terms of the
employment contracts and options were agreed to in a letter of
intent signed by the Investor Group, the Company, and Ms.
Anderson-Lasko.
As a condition to Stock Purchase Agreement, Ms. Anderson-
Lasko entered into a voting agreement (the "Voting Agreement")
and a resale and right of first refusal agreement (the "Resale
and Right of First Refusal Agreement") with the Investor Group.
Under the Voting Agreement Ms. Anderson-Lasko has agreed to
vote, in the manner directed by the Investor Group, such number
of shares of Common Stock as to which she has sole voting power
as equals one-half of the excess, if any, of the number of
shares of Common Stock as to which Ms. Anderson-Lasko has sole
voting power over the number of shares of Common Stock as to
which the Investor Group has sole or shared voting power.
However, Ms. Anderson-Lasko is not required to vote any shares as
directed by the Investor Group if the Company's net income, as
determined under generally accepted accounting principles and as
reported in the reports filed by the Company under the Securities
Exchange Act of 1934 (the "1934 Act"), is for the twelve month
period ending as of the latest fiscal quarter for which a
quarterly report or annual report has been filed by the Company
with the Securities and Exchange Commission under the 1934 Act as
of the applicable voting date, not greater than (or net loss is
not less than) the net income or loss for the comparable twelve
month period of the prior year. Additionally, Ms. Anderson-Lasko
is not required to vote as directed by the Investor Group if such
vote would be contrary to a recommendation of the Company's board
of directors. The Voting Agreement has a term of two years. As
of the date of this Current Report on Form 8-K, Ms. Anderson-
Lasko would, under the formula in the Voting Agreement, not be
required to vote any shares as directed by the Investor Group.
The Voting Agreement is incorporated herein by reference as
Exhibit 7.7, and the description of its terms herein is qualified
in its entirety by reference to the Voting Agreement.
Under the Resale and Right of First Refusal Agreement Ms.
Anderson-Lasko agreed that until the later of (i) 90 days
following the termination of her employment or other affiliation
with the Company (except for affiliation resulting only from the
ownership of Common Stock), or (ii) one year from the date of the
agreement, she would not reoffer or resell any of 4,000,000
shares of Common Stock purchased by her as the result of her
exercise, in August, 1997, of the 1997 Stock Purchase Right Award
(the "Award Shares"), except for (a) offers and sales of Award
Shares up to an aggregate of 500,000 Award Shares during each six
month period commencing with the six month period that begins on
the first anniversary of the agreement, (b) offers and sales
affected through privately negotiated transactions, provided that
the purchaser in any such privately negotiated transaction agrees
to be bound by the terms of the Resale and Right of First Refusal
Agreement, including such portion of the semi-annual 500,000
share sale limit as may be allocated to it in negotiation between
the purchaser and Ms. Anderson-Lasko, and (c) a sale of any of
the Award Shares in response to an offer made generally to all
stockholders of the Company in connection with a proposed or
intended acquisition of a controlling interest in the Company.
Ms. Anderson-Lasko also granted first to the Investor Group and
second to the Company a right of first refusal to purchase any of
the Award Shares that she might propose to offer or sell,
exercisable generally on terms equal to those of the intended
offer or sale. The Resale and Right of First Refusal Agreement
is incorporated herein by reference as Exhibit 7.8, and the
description of its terms herein is qualified in its entirety by
reference to the Resale and Right of First Refusal Agreement.
In connection with the above described transactions, Smith,
Page and Hendrickson also executed an agreement (the "Williams
Agreement") with William T. Williams, an unaffiliated stockholder
of the Company. Under the Williams Agreement, the Investor Group
will purchase 500,000 shares of Common Stock beneficially owned
by Mr. Williams. Additionally, Mr. Williams agreed, as to
1,500,000 shares of Common Stock beneficially owned by him, not
to reoffer or resell any of such 1,500,000 shares for a period of
one year (except for sales in response to an offer made
generally to all stockholders of the Company in connection with a
proposed or intended acquisition of a controlling interest in the
Company) and granted, first to the Investor Group and second to
the Company, a right of first refusal to purchase any of such
1,500,000 shares that he might propose to offer or sell,
exercisable generally on terms equal to those of the intended
offer or sale. The Williams Agreement is incorporated herein by
reference as Exhibit 7.9, and the description of its terms herein
is qualified in its entirety by reference to the Williams
Agreement.
While each member of the Investor Group reserves the right to
develop plans or proposals in the future regarding the following
items, at the present time none of the persons identified in
response to Item 2 of this Statement has any plans or proposals
which relate to or would result in any of the following except as
discussed above in this Item 4:
(1) An extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company or
any of its subsidiaries;
(2) Sale or transfer of a material amount of assets of the
Company or of any of its subsidiaries;
(3) Any change in the present board of directors or
management of the Company, including any plans or proposals to
change the number or term of directors or to fill any existing
vacancies on the board;
(4) Any material change in the present capitalization or
dividend policy of the Company;
(5) Any other material change in the Company's business or
corporate structure;
(6) Changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Company by any person;
(7) Causing a class of securities of the Company to be
delisted from a national securities exchange or cease to be
authorized to be quoted in an inter-dealer quotation system of a
registered national securities association;
(8) A class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, as amended; or
(9) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
Under the rules and regulations of the Securities and
Exchange Commission ("SEC"), the members of Investor Group own
beneficially the following numbers of shares of Common Stock:
(a) Hendrickson -- 500,000 shares (1.1% of outstanding shares);
(b) Newton -- 2,308,335 (5.2% of outstanding shares); (c) Page --
2,238,330 (5.1% of outstanding shares); and (d) Smith --
3,238,668 (7.3% of outstanding shares). Of the shares
beneficially owned by Page, 100,000 shares are subject to options
that become exercisable within 60 days of the date of this
Statement under the terms of the non-qualified stock options
granted to him as described above in Item 4 above. Of the shares
beneficially owned by Smith, 133,333 shares are subject to
options that become exercisable within 60 days of the date of
this Statement under the terms of the non-qualified stock options
granted to him as described above in Item 4 above.
Each of Hendrickson, Newton, Page and Smith disclaims any
beneficial interest in the shares of Common Stock owned by the
other members of the Investor Group and has sole voting and
dispositive power with respect to all shares of Common Stock
indicated above as owned by him.
The percentages of outstanding shares of Common Stock set out
above are computed based on a total of 37,311,422 shares of
Common Stock indicated as outstanding as of August 13, 1997 in
the Stock Purchase Agreement, as increased by the 6,750,000
shares sold to the Investor Group pursuant to the Stock Purchase
Agreement (for a total outstanding of 44,061,422 shares
outstanding).
During the period beginning 60 days prior to August 13, 1997
and through the date of filing of this Statement, the parties
filing this Statement engaged in the transactions with respect to
the numbers of shares indicated below on the dates and at the
indicated transaction prices per share:
No. Of Shares Price
Date Party Purchased/(Sold) per Share
06/19/97 Hendrickson 10,000 $.34
07/11/97 Hendrickson 30,400 $.31
07/31/97 Hendrickson (40,400) $.68
08/13/97 Hendrickson 500,000 $.20
All purchases and sales except the purchase on August 13, 1997,
which was a purchase of original issue shares directly from the
Company pursuant to the Stock Purchase Agreement, were effected
through brokers in open market transactions via the Nasdaq
SmallCap Market.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
The members of the Investor Group have agreed orally among
themselves that any purchases of Common Stock pursuant to the
Resale and Right of First Refusal Agreement or the Williams
Agreement will be funded by them as they determine at the time,
with any shares so purchased to be divided among the Investor
Group members based on their contributions of funds. In addition,
Smith will determine how to vote any of Ms. Anderson's shares as
to which they may direct voting in the future under the terms of
the Voting Agreement.
Except as described in this Statement, the parties filing
this Statement are not parties to any contract, arrangement,
understanding or relationships with any other person with respect
to shares of Company stock, including but not limited to transfer
or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees
of profits, divisions of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Incorporated by reference or filed as exhibits hereto are
the following:
7.1 Stock Purchase Agreement by and between L. E. Smith, Dan
Page, J. Eric Hendrickson and Herb Newton and Innovo Group
Inc. and Patricia Anderson-Lasko (incorporated by reference
to Exhibit 10.1 to Innovo Group Inc. Current Report on Form
8-K dated August 13, 1997)
7.2 Employment Agreement of L. E. Smith (incorporated by
reference to Exhibit 10.2 to Innovo Group Inc. Current
Report on Form 8-K dated August 13, 1997)
7.3 Employment Agreement of Dan Page (incorporated by reference
to Exhibit 10.3 to Innovo Group Inc. Current Report on Form
8-K dated August 13, 1997)
7.4 Employment Agreement of J. Eric Hendrickson (incorporated by
reference to Exhibit 10.4 to Innovo Group Inc. Current
Report on Form 8-K dated August 13, 1997)
7.5 Employment Agreement of Patricia Anderson-Lasko
(incorporated by reference to Exhibit 10.5 to Innovo Group
Inc. Current Report on Form 8-K dated August 13, 1997)
7.6 Employment Agreement of Alexander Miller (incorporated by
reference to Exhibit 10.6 to Innovo Group Inc. Current
Report on Form 8-K dated August 13, 1997)
7.7 Common Stock Voting Agreement by and between L. E. Smith,
Dan Page, J. Eric Hendrickson and Herb Newton and Patricia
Anderson-Lasko (incorporated by reference to Exhibit 10.7 to
Innovo Group Inc. Current Report on Form 8-K dated August
13, 1997)
7.8 Common Stock Resale and Right of First Refusal Agreement by
and between L. E. Smith, Dan Page, J. Eric Hendrickson and
Herb Newton and Patricia Anderson-Lasko (incorporated by
reference to Exhibit 10.8 to Innovo Group Inc. Current
Report on Form 8-K dated August 13, 1997)
7.9 Common Stock Purchase and Right of First Refusal Agreement
by and between L. E. Smith, Dan Page, J. Eric Hendrickson
and Herb Newton and William T. Williams, Sr., Virginia C.
Williams, William T. Williams, Jr. and Allison Williams ITTN
(incorporated by reference to Exhibit 10.9 to Innovo Group
Inc. Current Report on Form 8-K dated August 13, 1997)
<PAGE>
Signatures
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Date: August 25, 1997 /s/J. Eric Hendrickson
______________________ _______________________
J. Eric Hendrickson
