SCHEDULE 6.3(c)


INVESTOR RIGHTS
AGREEMENT


This Investor Rights Agreement dated as of              ,
2007 (this “Agreement”) is entered into by and among
Innovo Group Inc., a Delaware corporation (the “Company”),
and Joseph M. Dahan, a California resident (the “Investor”).


WHEREAS, the Company and the Investor have entered
into an Agreement and Plan of Merger dated as of February 6, 2007 (the “Merger Agreement”) pursuant to which the Investor shall
receive a number of shares of the common stock, par value $0.10 per share, of
the Company (the “Common Stock”), as set forth
therein;


WHEREAS, in order to induce the Investor to enter into
the Merger Agreement, the Company has agreed to grant certain registration
rights to the Investor with respect to such shares and certain Board
designation rights, in each case, subject to the terms and conditions set forth
herein;


NOW, THEREFORE, in consideration of the foregoing and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:


Section 1.   Definitions.   As used
herein, the following terms have the indicated meanings, unless the context
otherwise requires:


“Agreement”
has the meaning given to such term in the preamble hereto.


“Beneficially Own,”
“Beneficially Owned,” “Beneficial Ownership” and “Beneficial Owner” with respect to any
securities means the Investor having such ownership, control or power to direct
the voting with respect to, or which otherwise enables the Investor to legally
act with respect to, such securities as contemplated hereby, including without
limitation pursuant to any agreement, arrangement or understanding, regardless
of whether in writing. Securities “Beneficially
Owned” shall include securities Beneficially Owned by all other
persons with whom the Investor would constitute a “group” as within the meaning
of Section 13(d) of the Exchange Act.


“Blackout Period”
means, with respect to a Registration Statement, a period in each case
commencing on the day immediately after the Company notifies the Investor that
he is required, pursuant to Section 3(c)(vi), to suspend offers and sales
of Registrable Securities during which the Company, in the good faith judgment
of the Board, determines (because of the existence of, or in anticipation of,
any acquisition, financing activity, or other transaction involving the
Company, or the unavailability for reasons beyond the Company’s control of any
required financial statements, disclosure of information which is in its best
interest not to publicly disclose, or any other event or condition of similar
significance to the Company) that the registration and distribution of (and/or
the registration of the offer and sale of) the Registrable Securities covered
or to be covered by such Registration Statement would be seriously detrimental
to the Company and its stockholders and ending on the earlier of (a) the
date upon which the material non-public information commencing the Blackout
Period is disclosed to the public or ceases to be material and (b) such
time as the Company notifies the Investor that the Company will no longer delay
such filing of such Registration Statement, recommence taking steps to make
such Registration Statement effective, or allow sales pursuant to such
Registration Statement to resume; provided that
no Blackout Period may last for more than 60 consecutive days; provided, further, that during any period of 365 consecutive
days, Blackout Periods may not, in the aggregate, last for more than the
greater of (a) zero days and (b) the result of 90 days minus the number of days that the Investor is required
pursuant to Section 3(d) to discontinue and suspend disposition of
Registrable Securities because of the happening of any event described in Section 3(c)(vi).


“Board”
means the board of directors of the Company.



 1
 









“Business Day”
means any day of the year, other than a Saturday, Sunday, or other day on which
the SEC is required or authorized to close.


“Closing Date”
has the meaning given to such term in the Merger Agreement.


“Common Stock”
has the meaning given to such term in the recitals hereto.


“Company”
has the meaning given to such term in the preamble hereto.


“Effectiveness
Period” has the meaning given to such term in Section 3(c)(i).


“Equity Securities Offering”
means any underwritten registered offering of Relevant Securities, and any
offering or placement of any Relevant Securities pursuant to Rule 144A
under the Securities Act.


“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the SEC promulgated thereunder.


“Family Member” means (a) with
respect to any individual, such individual’s spouse, any descendants (whether
natural or adopted), any trust all of the beneficial interests of which are
owned by any of such individuals or by any of such individuals together with
any organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, the estate of any such individual, and any
corporation, association, partnership, limited liability company or other
entity all of the equity interests of which are owned by those above described
individuals, trusts or organizations and (b) with respect to any trust,
the owners of the beneficial interests of such trust.


“Form S-1”
means such form under the Securities Act as in effect on the date of this
Agreement or any successor registration form thereto under the Securities Act
subsequently adopted by the SEC.


“Form S-3”
means such form under the Securities Act as in effect on the date of this
Agreement or any successor registration form thereto under the Securities Act
subsequently adopted by the SEC.


“Form S-4”
means such form under the Securities Act as in effect on the date of this
Agreement or any successor registration form thereto under the Securities Act
subsequently adopted by the SEC.


“Form S-8”
means such form under the Securities Act as in effect on the date of this
Agreement or any successor registration form thereto under the Securities Act
subsequently adopted by the SEC.


“Inspector”
means any attorney, accountant or other agent retained by the Investor for the
purposes provided in Section 3(c)(ix).


“Investor”
has the meaning given to such term in the preamble hereto.


“Investor Director”
means any member of the Board that was nominated for election to the Board by
the Investor pursuant to and in accordance with Section 2(a).


“Merger Agreement”
has the meaning given to such term in the recitals hereto.


“NASD”
means the National Association of Securities Dealers.


“Piggyback Registration”
has the meaning given to such term in Section 3(b)(i).


“Piggyback Registration
Statement” has the meaning given to such term in Section 3(b)(i).


“register,”
“registered,” and “registration” refer to a registration
effected by preparing and filing a registration statement in compliance with
the Securities Act, and the declaration or ordering of the effectiveness of
such registration statement.


“Registrable
Securities” means the Unlocked Shares, excluding any such Unlocked
Shares (a) that have been publicly sold or may be sold immediately without
registration or the requirement to make filings with the SEC under the
Securities Act either pursuant to Rule 144 of the Securities Act or
otherwise, (b) sold 



 2
 









by a person in a
transaction pursuant to a registration statement filed under the Securities Act
or (c) that are at the time subject to an effective registration statement
under the Securities Act (other than the Registration Statements contemplated
hereby).


“Registration
Expenses” has the meaning given to such term in Section 3(e).


“Registration Statement”
means either any of the Piggyback Registration Statements or the Shelf
Registration Statement; and “Registration Statements”
means, collectively, the Piggyback Registration Statements and the Shelf
Registration Statement.


“Relevant Security”
means the Shares, any other equity security of the Company or any of its
subsidiaries and any security convertible into, or exercisable or exchangeable
for, any Shares or other such equity security.


“SEC”
means the Securities and Exchange Commission or any other federal agency at the
time administering the Securities Act.


“SEC Effective Date”
means, with respect to a Registration Statement, the date as of which such
Registration Statement is originally declared effective by the SEC.


“Securities Act”
means the Securities Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect from time to time.


“Selling Expenses”
has the meaning given to such term in Section 3(e).


“Shares”
means the shares of Common Stock issued to the Investor pursuant to the Merger
Agreement and (a) any and all shares of capital stock or other equity
securities of the Company which are added to or exchanged or substituted for
such shares of Common Stock by reason of the declaration of any stock dividend
or stock split, the issuance of any distribution or the reclassification,
readjustment, recapitalization or other such modification of the capital structure
of the Company; and (b) any and all shares of capital stock or other
equity securities of any other corporation (now or hereafter organized under
the laws of any state or other governmental authority) with which the Company
is merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, for which such shares of Common Stock are exchanged
or substituted in connection with such merger, consolidation, reorganization or
sale, if immediately after such merger, consolidation, reorganization or sale,
the Company or the stockholders of the Company own equity securities having in
the aggregate more than 50% of the total voting power of such other
corporation.


“Shelf Registration Statement” has the
meaning given to such term in Section 3(a).


“Transfer” has
the meaning given to such term in Section 3(a).


“Unlocked Shares” means on the
six month anniversary of the Closing Date 1/6 of the Shares and thereafter at
the end of every additional six month period, an additional 1/6 of the Shares
until the Shares are released in full on the third year anniversary of the
Closing Date.


Section 2.   Board Designation Rights.


(a)   Designation.   Upon
execution of this Agreement, the Investor shall have the right to designate
himself for election to the Board.


(b)   Company Support.   The
Company shall support the nomination of the Investor pursuant to Section 2(a),
and the Company shall use its best efforts to cause the Board (and the Company’s
nominating committee, if any) to recommend the inclusion of such person in the
slate of nominees recommended to stockholders for election as directors at the
next annual meeting of stockholders of the Company.



 3
 









Section 3.   Registration Rights.


(a)   Shelf Registration Statement.   On
the written request of the Investor beginning on or after six months from the
Closing Date of the Shares , the Company shall (i) file with the SEC a
shelf registration statement on Form S-1 (or, if the Company is
eligible to use such form, Form S-3) relating to the registration of
the offer and resale by the Investor of the number of Registrable Securities
specified in such written request (the “Shelf Registration Statement”) and (ii) use
its commercially reasonable efforts to cause the Shelf Registration Statement
to be declared effective by the SEC no later than 60 days after the filing of
the Shelf Registration Statement in response to such written request; provided, however,
that the Company shall not be obligated to effect any such registration
pursuant to this Section 3(a), or keep such registration or the Shelf
Registration Statement effective pursuant to Section 3(c)(i), during any
Blackout Period and provided further that the Company shall not be obligated to
file any such registration statement pursuant to this Section 3(a) within
90 days after the date of the filing of the most recent registration statement
pursuant to this Section 3(a).


(b)   Piggyback Registration Rights.


(i)   Piggyback Registration.   If
after the date that is six (6) months after the Closing Date, the Company
shall determine to register the offer and sale for cash of any of its Common
Stock for its own account, other than (i) a registration relating solely
to employee benefit plans or securities issued or issuable to employees,
consultants (to the extent the securities owned or to be owned by such
consultants could be registered on Form S-8) or any of their Family
Members (including a registration on Form S-8), (ii) a
registration on Form S-4 in connection with a merger, acquisition,
divestiture, reorganization, exchange offer or similar event, or (iii) a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered,
then (subject to Section 3(b)(ii)) the Company shall promptly give to the
Investor written notice thereof, and in no event shall such notice be given
less than 20 calendar days prior to the filing of the registration statement (a
“Piggyback Registration Statement”) with
respect to such registration (a “Piggyback Registration”),
and shall, subject to Section 3(b)(ii), include in the Piggyback
Registration, all of the Registrable Securities specified in a written request,
made within 10 calendar days after receipt of such written notice from the
Company, by the Investor. However, the Company may, without the consent of the
Investor, withdraw the Piggyback Registration Statement prior to its becoming
effective if the Company has elected to abandon the proposal to register the
securities proposed to be registered thereby.


(ii)   Underwriting.   If
a Piggyback Registration is for a registered public offering involving an
underwriting, the Company shall so advise the Investor in writing or as a part
of the written notice given pursuant to Section 3(b)(i). In such event the
right of the Investor to registration pursuant to Section 3(b)(i) shall
be conditioned upon the Investor’s participation in such underwriting and the
inclusion of the Investor’s Registrable Securities in the underwriting to the
extent provided herein. The Investor proposing to distribute his securities
through such underwriting shall (together with the Company) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 3(b)(ii), if the underwriter or the Company
determines that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may exclude some or all Registrable
Securities from such registration and underwriting. The Company shall so advise
the Investor and the number of shares that may be included in the registration
and underwriting shall be allocated:


(A)  first to the
Company; and



 4
 









(B)   then,
subject to written obligations and commitments existing as of the date hereof,
to all selling stockholders, including the Investor, who have requested to sell
in the registration on a pro rata basis according to the number of shares
requested to be included.


No Registrable Securities excluded from the underwriting
by reason of the underwriter’s marketing limitation shall be included in such
registration. If the Investor disapproves of the terms of any such
underwriting, the Investor may elect to withdraw therefrom by written notice to
the Company and the underwriter. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from
such registration.


(c)   Registration
Procedures.   In the case of each registration, qualification,
or compliance effected by the Company pursuant to Section 3(a) and Section 3(b),
the Company will keep the Investor reasonably advised in writing (which may
include e-mail) as to the initiation of each registration, qualification, and
compliance and as to the completion thereof. In addition, the Company hereby
agrees as follows with respect to each Registration Statement:


(i)    The
Company will use its commercially reasonable efforts to cause such Registration
Statement to become and remain effective at least for a period ending with the
first to occur of (A) the sale by the Investor of all Registrable
Securities covered by such Registration Statement, (B) the availability
under Rule 144 for the Investor to immediately, freely resell without
restriction under United States federal securities laws all Registrable
Securities covered by such Registration Statement, or (C) the date that is
two years after the SEC Effective Date of such Registration Statement (provided, however,
that if the Company files a Registration Statement on Form S-1 and
subsequently becomes eligible to use Form S-3, it may file a
post-effective amendment to such Form S-1 on Form S-3
prior to the end of such period and use its commercially reasonable efforts to
cause such Registration Statement as amended to become effective until the end
of such period, and provided further, that if the Company has filed a
Registration Statement and thereafter receives another written request in
accordance with this Agreement to include additional Registrable Securities in
such Registration Statement, the Company may file a post-effective amendment to
such Registration Statement prior to the end of such period and use its
commercially reasonable efforts to cause such Registration Statement as amended
to become effective until the end of such period) (in any such case, the “Effectiveness Period”).


(ii)   If any
Registration Statement becomes subject to review by the SEC, the Company will
promptly respond to all comments and diligently pursue resolution of any
comments to the satisfaction of the SEC.


(iii)  The
Company will prepare and file with the SEC such amendments and supplements to
each Registration Statement and any prospectus used in connection therewith as
may be reasonably necessary to keep such Registration Statement effective
during the applicable Effectiveness Period, and will comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by such Registration Statement during such period in accordance with the
intended method(s) of disposition by the sellers thereof set forth in such
Registration Statement.


(iv)  The Company
will furnish, without charge, to the Investor (A) a reasonable number of
copies of each Registration Statement (including any exhibits thereto other
than exhibits incorporated by reference), each amendment and supplement thereto
as the Investor may request, (B) such number of copies of the prospectus
included in such Registration Statement (including each preliminary prospectus
and any other prospectus filed under Rule 424 under the Securities Act) as
the Investor may request, in conformity with the requirements of the Securities
Act, and (C) such other documents as the Investor may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by
the Investor, but only during the applicable Effectiveness Period.



 5
 









(v)    The
Company will use its commercially reasonable efforts to register or qualify the
Registrable Securities under such other applicable securities or blue sky laws
of such jurisdictions as the Investor reasonably requests as may be necessary
for the marketability of the Registrable Securities (such request to be made by
the time the relevant Registration Statement is deemed effective by the SEC)
and do any and all other acts and things which may be reasonably necessary or
advisable to enable the Investor to consummate the disposition in such
jurisdictions of the Registrable Securities owned by the Investor; provided, however,
that the Company shall not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (v), (B) subject itself to taxation in any
such jurisdiction, or (C) consent to general service of process in any
such jurisdiction.


(vi)  As promptly
as practicable after becoming aware of such event, the Company will notify the
Investor of Registrable Securities being offered or sold pursuant to each
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
which comes to the Company’s attention if as a result of such event the
prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company shall promptly prepare and furnish to the Investor a supplement or
amendment to such prospectus (or prepare and file appropriate reports under the
Exchange Act) so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, unless
suspension of the use of such prospectus otherwise is authorized herein or in
the event of a Blackout Period, in which case no supplement or amendment need
be furnished (or Exchange Act filing made) until the termination of such
suspension or Blackout Period.


(vii) The Company
will comply, and continue to comply during the period that each Registration
Statement is effective under the Securities Act, in all material respects with
the Securities Act and the Exchange Act and with all applicable rules and
regulations of the SEC with respect to the disposition of all securities
covered by such Registration Statement.


(viii)     As
promptly as practicable after becoming aware of such event, the Company will
notify the Investor of the issuance by the SEC of any stop order or other
suspension of effectiveness of such Registration Statement.


(ix)  The Company
will make available for inspection by the Investor and any Inspector retained
by the Investor, at the Investor’s sole expense, all records as shall be
reasonably necessary to enable the Investor to exercise his due diligence
responsibility, and cause the Company’s officers, directors, and employees to
supply all information which the Investor or any Inspector may reasonably
request for purposes of such due diligence; provided,
however, that the Investor shall
hold in confidence and shall not make any disclosure of any record or other
information which the Company determines in good faith to be confidential, and
of which determination the Investor is so notified at the time the Investor
receives such information, unless (w) the Investor has, or obtained,
knowledge of such information without violation of or protection under any
agreements with the Company or, to his knowledge any third party, (x) the
disclosure of such record is reasonably necessary to avoid or correct a
misstatement or omission in each Registration Statement and a reasonable time
prior to such disclosure the Investor shall have informed the Company of the
need to so correct such misstatement or omission and the Company shall have
failed to correct such misstatement of omission, (y) the release of such
record is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction or (z) the information in such
record has been made generally available to the public other than by disclosure
in violation of this Agreement or any other agreement. The Company shall not be
required to disclose any confidential information in such records to any 



 6
 









Inspector until and unless
such Inspector shall have entered into a confidentiality agreement with the
Company with respect thereto, containing terms substantially similar to those
set forth in this Section 3(c)(ix), which agreement shall permit such
Inspector to disclose records to the Investor. The Investor agrees that he
shall, upon learning that disclosure of such records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at the Company’s expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the records deemed confidential. The Company shall hold
in confidence and shall not make any disclosure of information concerning the
Investor provided to the Company pursuant to this Agreement unless (A) disclosure
of such information is reasonably necessary to comply with federal or state
securities laws, (B) disclosure of such information to the SEC’s Staff of
the Division of Corporation Finance is reasonably necessary to respond to
comments raised by such staff in its review of such Registration Statement, (C) disclosure
of such information is reasonably necessary to avoid or correct a misstatement
or omission in such Registration Statement, (D) release of such
information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, or (E) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees that it shall,
upon learning that disclosure of such information concerning the Investor is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Investor and allow the Investor,
at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.


(x)    The
Company will use its commercially reasonable efforts to cause all the
Registrable Securities covered by each Registration Statement to be listed or
quoted on a principal securities market.


(xi)  The Company
will provide a transfer agent and registrar, which may be a single entity, for
the Registrable Securities at all times.


(xii) The Company
will cooperate with the Investor to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be offered pursuant to such Registration Statement
and enable such certificates to be in such denominations or amounts as the
Investor may reasonably request.


(xiii)     The
Company will take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor pursuant to each Registration Statement,
including without limitation making its chief executive officer, president,
chief financial officer and other appropriate officers and personnel available
to participate in marketing efforts with respect to any registered underwritten
public offering.



 7















(d)   Suspension of Offers and Sales.   The
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(c)(vi) or
of the commencement of a Blackout Period, the Investor shall discontinue and
suspend disposition of Registrable Securities pursuant to any Registration
Statement until the Investor’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(c)(vi) or notice of the
end of the Blackout Period, and, if so directed by the Company, the Investor
shall deliver to the Company (at the Company’s expense) all copies (including,
without limitation, any and all drafts), other than permanent file copies, then
in the Investor’s possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.


(e)   Registration Expenses.   All
expenses incident to the Company’s performance of or compliance with this
Agreement, including without limitation all registration and filing fees,
messenger and delivery expenses, printing expenses, internal expenses
(including without limitation all salaries and expenses of its officers and
employees performing legal or accounting duties), all fees and expenses
associated with filings required to be made with the NASD, as may be required
by the rules and regulations of the NASD, fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements
of counsel in connection with blue sky qualifications of the Registrable
Securities), rating agency fees, the fees and expenses incurred in connection
with the listing of the securities to be registered on all securities exchanges
on which similar securities issued by the Company are then quoted or listed,
fees and disbursements of counsel for the Company and its independent certified
public accountants, and the fees and expenses of any other persons retained by
the Company, in connection with the registration hereunder (collectively, the “Registration Expenses”) will be borne by
the Company, but not including any roadshow expenses, fees and expenses of
counsel for the Investor and any underwriting, broker or dealer discounts or
commissions attributable to the sale of Registrable Securities (which are
hereinafter referred to as “Selling Expenses”).
All Selling Expenses shall be borne solely by the Investor.


(f)   Information by the Investor.   The
Investor shall furnish to the Company such information required under
Regulation S-K under the Securities Act regarding the Investor and the
distribution proposed by the Investor as the Company may request in writing. The
Investor will not be entitled to have such Registrable Securities included in a
Registration Statement if the Investor does not furnish such information
requested by the Company.


(g)   Indemnification.


(i)    In the
event of the offer and sale of Registrable Securities under the Securities Act,
the Company shall, and hereby does, indemnify and hold harmless, to the fullest
extent permitted by law, the Investor, each other person who participates as an
underwriter in the offering or sale of such securities, and each other person,
if any, who controls or is under common control with the Investor or any such
underwriter within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, and
expenses to which the Investor or any underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in (A) any
Registration Statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or (B) in
any materials or information provided to investors by, or with the written
approval of, the Company in connection with the marketing of the offering of
the Shares (“Marketing Materials”), including
any road show or investor presentations made to investors by the Company
(whether in person or electronically), or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances in which they were
made not misleading, and the Company shall reimburse the Investor, and each
underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection 



 8
 









with investigating,
defending or settling any such loss, claim, damage, liability, action or
proceeding; provided that the foregoing shall not
apply, and the Company shall not be liable, in any such case (A) to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue statement
or alleged untrue statement in or omission or alleged omission from such
Registration Statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by or on behalf of the Investor specifically stating that it is for
use in the preparation thereof, or (B) to the extent that the Investor
failed to comply with the terms of the plan of distribution mechanics described
in the applicable prospectus. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Investor, or
any such underwriter or controlling person and shall survive the transfer of
such shares by the Investor.


(ii)   As a
condition to including any Registrable Securities to be offered by the Investor
in any Registration Statement, the Investor agrees to be bound by the terms of
this Section 3(g) and to indemnify and hold harmless, to the fullest
extent permitted by law, the Company, its directors and officers, and each
other person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, legal counsel and accountants for the Company, any
underwriter and any controlling person within the meaning of the Securities Act
of any such underwriter, against any losses, claims, damages or liabilities,
joint or several, to which the Company or any such director or officer or
controlling person may become subject under the Securities Act or otherwise, (A) insofar
as such losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon an untrue statement or omission from such Registration Statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of the
Investor specifically stating that it is for use in the preparation thereof, or
(B) to the extent that the Investor failed to comply with the terms of the
plan of distribution mechanics described in the applicable prospectus. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company, or any such director, officer, partner,
underwriter or controlling person and shall survive the transfer of such shares
by the Investor, and the Investor shall reimburse the Company, and each such
director, officer, legal counsel and accountants, underwriter, other
stockholder, and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating, defending, or settling and
such loss, claim, damage, liability, action, or proceeding; provided, however,
that such indemnity agreement found in this Section 3(g)(ii) shall in no
event exceed the gross proceeds from the offering received by the Investor.


(iii)  Promptly
after receipt by an indemnified party of notice of the commencement of any
action or proceeding involving a claim referred to in Section 3(g)(i) or Section 3(g)(ii)
(including any governmental action), such indemnified party shall, if a claim
in respect thereof is to be made against an indemnifying party, give written
notice to the indemnifying party of the commencement of such action; provided, however,
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under Section 3(g)(i)
or Section 3(g)(ii), except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in the reasonable judgment of
counsel to such indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist or the indemnified party may
have defenses not available to the indemnifying party in respect of such claim,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
and, after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the 



 9
 









indemnifying party shall
not be liable to such indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof,
unless in such indemnified party’s reasonable judgment a conflict of interest
between such indemnified and indemnifying parties arises in respect of such
claim after the assumption of the defenses thereof or the indemnifying party
fails to defend such claim in a diligent manner, other than reasonable costs of
investigation. Neither an indemnified nor an indemnifying party shall be liable
for any settlement of any action or proceeding effected without its consent. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement, which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of such claim
or litigation. Notwithstanding anything to the contrary set forth herein, and
without limiting any of the rights set forth above, in any event any party
shall have the right to retain, at its own expense, counsel with respect to the
defense of a claim.


(iv)  In the
event that an indemnifying party does or is not permitted to assume the defense
of an action pursuant to Section 3(g)(iii) or in the case of the expense
reimbursement obligation set forth in Section 3(g)(i) and Section 3(g)(ii),
the indemnification required by Section 3(g)(i) and Section 3(g)(ii) shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills received or expenses, losses,
damages, or liabilities are incurred.


(v)    If the
indemnification provided for in this Section 3(g) is held by a court
of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall (A) contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
as is appropriate to reflect the proportionate relative fault of the
indemnifying party on the one hand and the indemnified party on the other
(determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission relates to information supplied
by the indemnifying party or the indemnified party and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission), or (B) if the allocation provided by
clause (A) above is not permitted by applicable law or provides a lesser
sum to the indemnified party than the amount hereinafter calculated, not only
the proportionate relative fault of the indemnifying party and the indemnified
party, but also the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other, as well as any other relevant
equitable considerations. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any indemnifying party who was not
guilty of such fraudulent misrepresentation.


(vi)  Indemnification
similar to that specified in the preceding subsections of this Section 3(g)
(with appropriate modifications) shall be given by the Company and the Investor
with respect to any required registration or other qualification of securities
under any federal or state law or regulation or governmental authority other
than the Securities Act.


Section 4.   Miscellaneous.


(a)   Assignment of Rights; Successors and
Permitted Assignees.   The Investor may not assign his rights
under this Agreement to any party without the prior written consent of the
Company which shall not be unreasonably withheld. Except as otherwise provided
herein, the provisions of this Agreement shall inure to the benefit of, and be
binding upon, the successors, permitted assignees, heirs, legatees, executors
and administrators of the parties hereto.


(b)   Notices.   All notices
or other communications which are required or permitted under this Agreement
shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or 



 10
 









certified mail, postage
pre-paid, by electronic mail, or by courier or overnight carrier, to the
persons at the addresses set forth below (or at such other address as may be
provided hereunder), and shall be deemed to have been delivered as of the date
so delivered:




	
  If to the Company:

  	
   

  	
  Innovo Group Inc.

  Attn: Dustin A. Huffine

  5901 Eastern Avenue

  Commerce, CA 90040

  Facsimile: (323) 837-3791

  
	
  with a copy
  (which shall not constitute notice) to:

  	
   

  	
  

  Phelps Dunbar LLP

  Attn: Christopher R. Maddux

  111 East Capitol Street, Suite 600

  Jackson, MS 39201

  Facsimile: (601) 352-2300

  
	
  If to the
  Investor:

  	
   

  	
  Joseph M. Dahan

  1810 Rising Glen Road

  Los Angeles, CA 90069

  Facsimile: (   ) 

  
	
  with a copy
  (which shall not constitute notice) to:

  	
   

  	
  

  Greenberg Traurig, LLP

  Attn: David P. Markman

  2450 Colorado Avenue

  Suite 400E

  Santa Monica, CA 90404

  Facsimile: (310) 586-7800

  






 


or at such other address as any party shall have
furnished to the other party in writing.


(c)   Specific Performance.   Each
party to this Agreement agrees that any breach by it of any provision of this
Agreement would irreparably injure the other party and that money damages would
be an inadequate remedy therefor. Accordingly, each party agrees that the other
party shall be entitled to one or more injunctions enjoining any such breach
and requiring specific performance of this Agreement and consents to the entry
thereof, in addition to any other remedy to which such other party is entitled
at law or in equity.


(d)   Counterparts.   This
Agreement may be executed in any number of counterparts, each of which shall be
enforceable against the parties actually executing such counterparts, and all
of which together shall constitute one instrument.


(e)   Amendments.   The
provisions of this Agreement may be amended at any time and from time to time,
and particular provisions of this Agreement may be waived, with and only with
an agreement or consent in writing signed by the Company and by the Investor.


(f)   Headings and Cross References.   The
headings of the several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement. Unless the context requires
otherwise, all cross references in this Agreement refer to sections and
subsections of this Agreement.



 11
 









(g)   Severability.   In the
case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.


(h)   Entire Agreement.   This
Agreement constitutes the full and entire understanding and agreement between
the parties with regard to the subject matter of this Agreement.


(i)   Governing Law.   This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware.


IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the date
first above written.


	
  

  	
   

  	
  THE COMPANY:

  
	
   

  	
   

  	
  INNOVO GROUP INC.

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  INVESTOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Joseph M. Dahan

  



 



 12