INNOVO GROUP INC
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>11
<FILENAME>ex10_5.txt
<TEXT>
Exhibit 10.5


   LETTER OF INTENT FOR PURCHASE OF THE ASSETS OF THE BLUE
 CONCEPTS DIVISION OF AZTECA PRODUCTIONS INTERNATIONAL, INC.

              STRICTLY PRIVATE AND CONFIDENTIAL

Innovo Group Inc.
5900 S. Eastern Ave., Suite 104
Commerce, California 90040
(323) 725-5516

Hubert Guez
CEO
Azteca Production International, Inc.
5804 E. Slauson Ave.
Commerce, CA 90040

June 10, 2003

Dear Mr.Guez:

Innovo  Group,  Inc., a Delaware corporation, ("Innovo")  is
pleased to submit this letter of intent ("Letter of Intent")
regarding the acquisition of 100% of the assets of the  Blue
Concepts  Division  ("Blue Concepts") of Azteca  Productions
International,   Inc.   ("Azteca")   by   our   wholly-owned
subsidiary   Innovo  Azteca  Apparel,  Inc.  ("IAA").    The
acquisition  of  the  assets of Blue Concepts  by  IAA  from
Azteca shall hereafter be known as the "Transaction" and the
date  of  the consummation of the Transaction shall  be  the
"Close"   or   the  "Closing".   IAA  will   pay   a   total
consideration  of  $21.8  million  (the  "Purchase   Price")
composed  of  a  note/convertible note as  discussed  below,
subject  to  the  terms and conditions  of  this  Letter  of
Intent.  The Transaction, including terms and conditions, is
described in greater detail below.

The  parties to this Letter of Intent shall endeavor in good
faith  to  finalize and execute a definitive asset  purchase
agreement (the "Definitive Purchase Agreement") and  certain
other  ancillary  agreements defining the Transaction  which
shall  include the terms below and such other provisions  as
may be mutually agreed upon.

A.   Definitive Asset Purchase Agreement

1.   General Terms

          (a)   The Purchased Assets:  The Transaction shall
          include the purchase of all of the assets of  Blue
          Concepts including but not limited to:

          All  right,  title and exclusive interest  to  all
          patents,   trademarks,  trade   names,   technical
          processes, know-how or other intellectual property
          associated  with  the business of  Blue  Concepts,
          whether registered or not;

          All  tangible and intangible property  related  to
          the  business of Blue Concepts including  customer
          lists,  records, goodwill, account base and  other
          intangible assets;

          All  contracts  for  purchases from  suppliers  or
          deliveries, to customers of Blue Concepts; and

          Any other assets of any nature whatsoever that are
          related to or used in connection with the business
          of  Blue  Concepts and its goodwill (collectively,
          the "Purchased Assets").

     (b)   Purchase Price: The total consideration  for  the
Purchased  Assets shall be $21.8 million dollars  ("Purchase
Price") payable to Azteca as follows:


    (i)  Purchase Note:  IAA shall execute a promissory note
       equal to the Purchase
       Price  in  favor  of Azteca (the "Note").   The  Note
       shall be a 7 year note with interest only being  paid
       for  the  first  24 month period and  shall  then  be
       fully   amoritorizing  over  the   remaining   5-year
       period.  The Note shall bear interest at the rate  of
       6%  per  annum. The principal amount of the Note  may
       be  offset  by Azteca against the exercise  price  of
       previously  issued  and outstanding  Innovo  warrants
       held  by Azteca or its affiliates, provided that  any
       such  offset  shall be duly authorized and  evidenced
       by  board resolutions of Azteca and/or the affiliate,
       as  the case may be, and shall be in accordance  with
       applicable  law  and  generally  accepted  accounting
       principles.

    (ii)  Purchase  Note Conversion:  As soon as  reasonably
       possible, Innovo shall hold a shareholder meeting to vote on
       the  approval of the conversion of $12,500,000 of the
       principal balance of the Note into 3,125,000 shares of
       Innovo Common Stock ("Converted Shares").  In the event
       shareholder approval is not obtained, the Note shall remain
       in place with the same existing terms and balances.

       (iii)  Locked Up Shares:  In the event the  Converted
       Shares   are  issued  as  contemplated  herein,   the
       Converted  Shares  shall  be  non  transferable   and
       "locked  up"  for the 24 month period  following  the
       issuance  of  the  Converted  Shares.   ("Locked   Up
       Shares").  Azteca shall have the right to  substitute
       other  shares  of Innovo common stock  now  owned  by
       Azteca,  or  acquired by Azteca pursuant  to  warrant
       agreements  to  satisfy its obligation  to  hold  the
       requisite number of Locked Up Shares during the  lock
       up  period. In the event that the thirty day  average
       trading   price   of  the  Company's   common   stock
       immediately preceding the expiration of the 24  month
       lock  up period ("Lockup Date Average") is below  $4,
       the  Company shall issue to Azteca additional  shares
       of  common  stock ("Shortage Shares")  equal  to  the
       difference  of 12,500,000 divided by the Lockup  Date
       Average minus 3,125,000.  The Lockup Date Average  to
       be  used in the aforementioned formula shall  not  be
       less than at $3.   This provision will be subject  to
       shareholder approval by the Company's shareholders.

    (iv) Fairness Opinion:   Prior to the Special Committee of
       the  Board of Directors recommending to the Board  of
       Directors to approve the Definitive Purchase Agreement, a
       fairness opinion shall be obtained by Innovo.


2.   Representations and Warranties.

     The   Definitive  Purchase  Agreement   shall   contain
representations and warranties typical in a  transaction  of
this  size  and  nature.  The Definitive Purchase  Agreement
shall  provide for customary remedies to IAA  for  any  cost
incurred  by  IAA  within three years of the  Closing  as  a
result   of   a   breach  by  Azteca/Blue  Concepts   of   a
representation  and  warranty.  Additionally,  Azteca  shall
represent  that  the  financial income  statements  attached
hereto  as Exhibit 1 fairly represents the financial results
for  the  2002 fiscal year end and first quarter of 2003  of
Blue Concepts, including historical expenses.

3.   Loss of Account

     In  the event, during the 12 month period following the
Closing,  American  Eagle Outfitters,  Inc.  ("AEO")  is  no
longer  a  customer  of IAA any Locked Up  Shares  shall  be
returned  to  the  Company and any amount remaining  on  the
balance of the Note shall be shall be forgiven.

4.   Sales Guarantee

     In  the  event IAA's gross revenues from AEO  does  not
reach  $65 million during either of the two 12 month periods
following  the Closing, the principal balance  of  the  Note
shall be reduced by an amount equal to $65 million minus the
actual  gross  sales  to  AEO during  the  12  month  period
multiplied by 50%.  If this provision is implemented  during
the  first twelve month period and the net revenues from AEO
in  the  subsequent twelve months decreases compared to  the
prior  12 month period, the then existing principal  balance
of the Note shall be reduced by an amount equal to the first
12  months  net revenues from AEO minus the net revenues  in
the second 12 month period multiplied by 50%.

     In  the  event  a portion of the Note is exchanged  for
Converted  Shares and the proceeding formula  results  in  a
reduction of the principal balance of the Note greater  than
the  principal balance of the Note then outstanding,  Locked
Up  shares  shall be returned to Innovo, with the Locked  Up
Shares being valued at $4 per share, in an amount sufficient
to  equal  the  amount of the requisite reduction.   In  the
event  the  gross  revenues of IAA to AEO  decrease  to  $35
million or less in any of the two 12 month periods following
the  Closing  Date,  IAA shall have the right  to  sell  the
Purchased Assets back to Azteca, and Azteca shall  have  the
right  to  buy  back the Purchased Assets for the  remaining
balance  of the Note and any and all Locked Up Shares  shall
be returned to the Company.

     Notwithstanding   anything  in   the   two   proceeding
paragraphs,  in  the event the net revenues decrease  during
the  24  month  period following the Closing, the  principal
balance  of  the Note and the value of the Converted  Shares
shall  not  be reduced below $5 million, unless  AEO  is  no
longer a customer of IAA as addressed in section 3 above  or
if   the  Purchased  Assets  are  sold  back  to  Azteca  as
contemplated in the proceeding paragraph.

5.   No Assumption of Liability

     IAA  shall not assume any liabilities of Azteca or  its
Blue Concepts division as a result of the Transaction.

6.   Conditions Precedent to the Closing

     The Definitive Purchase Agreement shall provide for the
following conditions precedent to closing:

     (a)  Governmental Approvals:  All required governmental
          approvals necessary for the Closing shall have been
          attained.

(b)  Material Adverse Change: There shall have been no
material adverse change in the business, assets, operations,
or prospects of Blue Concepts prior to the Close, relative
to the state of Blue Concepts as of the date of this Letter
of Intent, and Blue Concepts shall notify Innovo of any
material changes.

(c)  Due Diligence:  Innovo shall have concluded its due
diligence and found the results acceptable.

(d)  Documentation:  Innovo shall consider acceptable the
documentation necessary for Closing the Transaction.

     (e)  Approval Process:  Successful completion of Innovo's
          internal approval process (including receipt of Fairness
          Opinion).


B.   Supply Agreement

      IAA and Azteca shall enter into a non-exclusive supply
agreement  for products to be sold by IAA to Blue  Concept's
former   customers.   The  purchase  price  for  the   goods
purchased  from  Azteca or its affiliates  pursuant  to  the
supply  agreement shall be at a price which will allow   IAA
to  have an initial margin per unit of not less than 15%  on
the  goods  sold  to  IAA's new and  Blue  Concept's  former
customers.


C.   Earn out Provision

     So  long as IAA is selling apparel products to AEO, IAA
shall,  on a quarterly basis, pay to Sweets Sportswear,  LLC
an  amount  equal  to 2.5% of the gross  revenues  of  these
products.

D.   Covenants Not to Compete and Non-Solicitation

1.   Covenant Not to Compete.

     For  a period of 48 months beginning as of the Closing,
Azteca,   its   principals,   shareholders,   partners   and
affiliates shall not, directly or indirectly engage (whether
as   owner,   operator,  shareholder,  manager,  consultant,
employee,) in any business with AEO, its subsidiaries or its
affiliates, unless the person is an employee of IAA.

2.   Non-Solicitation.

     With the exception of those employees who are not hired
by IAA, if any, to manage and operate IAA's business, for  a
period  of  24 months beginning on the Closing, Azteca,  its
principals, shareholders, partners and affiliates shall not,
directly  or  indirectly, solicit for  employment  or  hire,
either  as  an employee or as a consultant, any employee  or
independent  contractor  of  IAA  who  was  an  employee  or
independent contractor of Blue Concepts as of the signing of
this Letter of Intent.

E.   Voting Agreement

     The  parties contemplate that the current board members
of  Innovo  shall enter into a Voting Agreement  or  similar
agreement  to  vote all shares of Innovo Common  Stock  that
they  control directly or indirectly in favor of  a  portion
of  the  Note  being converted into shares of Innovo  Common
Stock.


F.   Counterparts

     This letter may be executed in one or more counterparts
which  when  taken together shall constitute  but  a  single
instrument.

G.   Arbitration

        All   claims   demands,   disputes,   controversies,
differences,  or  misunderstandings  between   the   parties
relating  to  this  Letter of Intent  shall  be  settled  by
arbitration,  in accordance with the rules of  the  American
Arbitration Association, and judgment on the award  rendered
by the arbitrator or arbitrators may be entered and enforced
in  any  court  having jurisdiction.  The arbitration  shall
take place in California.

H.   Governing Law

       This   Letter  of  Intent  shall  be  construed   and
interpreted   in  accordance  with  and  governed   by   the
substantive  laws of the State of California, excluding  any
choice-of-law principle that may require application of  the
laws of another jurisdiction.

I.   Public Disclosure

      None  of Blue Concepts, Azteca, Innovo, IAA or any  of
its affiliates will make any disclosure of the existence  of
this  Letter of Intent or any terms of this Letter of Intent
without  the consent of the other party, unless required  by
law.

J.   Legal Effect

      This Letter of Intent is intended to be a statement of
the  mutual  interest  of  the parties  with  respect  to  a
possible  Transaction  and  is  subject  to  execution   and
delivery  of  a  mutually satisfactory  Definitive  Purchase
Agreement  and Definitive Supply Agreement.  Nothing  herein
shall constitute a binding commitment of either party.   The
parties  will become legally obligated with respect  to  the
Transaction  only in accordance with the terms contained  in
the  Definitive  Purchase Agreement  and  Definitive  Supply
Agreement  relating thereto if, as and  when  each  of  such
documents has been executed and delivered by the parties.


     If  the  foregoing meets your approval, please indicate
your  acceptance of the terms set forth in  this  Letter  of
Intent  by  signing in the space provided below and  on  the
enclosed  copy  and  by returning the copy  to  us  for  our
records.



                         Sincerely,


                         INNOVO GROUP INC.



                         By:  /s/ Jay Furrow
                                 Jay Furrow, CEO



Agreed to and accepted this 10th day of
June, 2003.


AZTECA PRODUCTION INTERNATIONAL, INC.


By:  /s/ Hubert Guez
        Hubert Guez, CEO

Agreed to and accepted this 10th day of
June, 2003.


AZTECA PRODUCTION INTERNATIONAL, INC.


By:  /s/ Paul Guez
        Paul Guez, President


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</DOCUMENT>
