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Innovo revises Merger Agreement with JD Holdings
26 Jun '07
2 min read
Innovo Group Inc announced that it has amended its previously announced Merger Agreement dated February 6, 2007 with JD Holdings Inc for the acquisition of the Joe's Jeans brand from its namesake owner, Joe Dahan.
In connection with the revised Merger Agreement, the Company and Mr. Dahan revised the Employment Agreement executed with Mr. Dahan to reduce the initial term of the Employment Agreement from ten years to five years.
Additionally, as part of this amendment, the parties have provided for an earn-out payable to Mr. Dahan based on a percentage of the gross profit of sales of Joe's products. This percentage will be dependent upon gross profit hurdles the Company has to achieve before Mr. Dahan receives earn-out payments. The term of the earn-out is for a period of ten years.
Marc Crossman, President and CEO of the Company, commented, "We believe the revisions to the Merger Agreement are in the bests interests of the Company. With the gross profit hurdles required for the earn-out to be paid, this revision not only better aligns the seller's interest in the Company's overall profitability but also provides the Company with downside protection over the course of the earn-out period. We anticipate filing our preliminary proxy statement for this Merger within the next several days."
The proposed transaction is subject to customary conditions to closing, including Company stockholder approval. The Company plans to file a proxy statementand to hold its annual meeting for stockholders to vote on this transaction and other necessary matters.
The revised amendment also extends the date by which the transaction must be closed from its original June 30, 2007 deadline to December 31, 2007. Additional details on these transactions are described in a related Form 8-K, to be filed with the SEC and available at www.sec.gov.
In connection with the revised Merger Agreement, the Company and Mr. Dahan revised the Employment Agreement executed with Mr. Dahan to reduce the initial term of the Employment Agreement from ten years to five years.
Additionally, as part of this amendment, the parties have provided for an earn-out payable to Mr. Dahan based on a percentage of the gross profit of sales of Joe's products. This percentage will be dependent upon gross profit hurdles the Company has to achieve before Mr. Dahan receives earn-out payments. The term of the earn-out is for a period of ten years.
Marc Crossman, President and CEO of the Company, commented, "We believe the revisions to the Merger Agreement are in the bests interests of the Company. With the gross profit hurdles required for the earn-out to be paid, this revision not only better aligns the seller's interest in the Company's overall profitability but also provides the Company with downside protection over the course of the earn-out period. We anticipate filing our preliminary proxy statement for this Merger within the next several days."
The proposed transaction is subject to customary conditions to closing, including Company stockholder approval. The Company plans to file a proxy statementand to hold its annual meeting for stockholders to vote on this transaction and other necessary matters.
The revised amendment also extends the date by which the transaction must be closed from its original June 30, 2007 deadline to December 31, 2007. Additional details on these transactions are described in a related Form 8-K, to be filed with the SEC and available at www.sec.gov.
Innovo Group Inc
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