EXHIBIT 10.7
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS (I)
PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR (II) IN COMPLIANCE WITH AN
EXEMPTION THEREFROM AND ACCOMPANIED, IF REQUESTED BY TAG-IT PACIFIC, INC., WITH
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER
IS IN COMPLIANCE WITH AN EXEMPTION THEREFROM.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON
ITS EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN ARTICLE II OF THIS WARRANT
Warrant No. CS-009 Number of Shares: 215,754
Date of Issuance: November 9, 2004 (subject to adjustment)
TAG-IT PACIFIC, INC.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY THAT, for value received, subsequent to December 9,
2004, XXXXXXX XXXXXX XXXXXX INC., or its permitted assigns (the "REGISTERED
HOLDER"), is entitled to purchase from TAG-IT PACIFIC, INC., a Delaware
corporation (the "COMPANy"), at the place where the Warrant Office designated
pursuant to Section 2.1 is located, at a purchase price per share of $3.65 (as
adjusted pursuant to the terms of this Warrant, the "EXERCISE PRICE"), 215,754
shares of duly authorized, validly issued, fully paid and nonassessable shares
of Common Stock, $0.001 par value per share, of the Company, and is entitled
also to exercise the other appurtenant rights, powers and privileges hereinafter
set forth. The number of shares of the Common Stock purchasable hereunder and
the Exercise Price are subject to adjustment in accordance with Article III
hereof. This Warrant shall expire at 5:00 p.m., Los Angeles time, on November 9,
2009.
Certain Terms used in this Warrant are defined in Article IV.
ARTICLE I
EXERCISE OF WARRANT
1.1 METHOD OF EXERCISE. This Warrant may be exercised by the
Registered Holder as a whole or in part from time to time subsequent to December
9, 2004, until November 9, 2009, at which time this Warrant shall expire and be
of no further force or effect; PROVIDED, HOWEVER, that the minimum number of
Warrant Shares that may be purchased on a single exercise shall be 10,000 or the
entire number of shares remaining
available for exercise hereunder, whichever is less. To exercise this Warrant,
the Registered Holder or permitted assignees of all rights of the Registered
Holder shall deliver to the Company, at the Warrant Office designated in Section
2.1(a), a written notice in the form of the Purchase Form attached as Exhibit A
hereto, stating therein the election of the Registered Holder or such permitted
assignees of the Registered Holder to exercise this Warrant in the manner
provided in the Purchase Form, (b) payment in full of the Exercise Price (in the
manner described below) for all Warrant Shares purchased hereunder, and (c) this
Warrant. Subject to compliance with Section 3.1(a)(vi), this Warrant shall be
deemed to be exercised on the date of receipt by the Company of the Purchase
Form, accompanied by payment for the Warrant Shares to be purchased and
surrender of this Warrant, as aforesaid, and such date is referred to herein as
the "EXERCISE DATE." Upon such exercise (subject as aforesaid), the Company
shall issue and deliver to the Registered Holder a certificate for the full
number of the Warrant Shares purchasable by the Registered Holder hereunder,
against the receipt by the Company of the total Exercise Price payable hereunder
for all such Warrant Shares, (a) in cash or by certified or cashier's check or
(b) by surrendering Warrant Shares having a Current Market Price equal to the
Exercise Price for all the Warrant Shares so purchased. The Person in whose name
the certificate(s) for Common Stock is to be issued shall be deemed to have
become a holder of record of such Common Stock on the Exercise Date.
1.2 NET EXERCISE. Notwithstanding any provisions herein to the
contrary, if the Current Market Price of one share of Common Stock is greater
than the Exercise Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant by payment of cash, the Registered Holder may elect
to receive Warrant Shares equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the Warrant Office together with the properly endorsed Purchase Form in which
event the Company shall issue the Registered Holder a number of shares of Common
Stock computed as follows:
X = Y(A-B)
------
A
Where: X = the number of shares of Common Stock to be issued to
the Registered Holder.
Y = the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the
Warrant being canceled (at the date of such
calculation)
A = the Current Market Price of one share of Common Stock
(at the date of such calculation)
B = Exercise Price (as adjusted to the date of such
calculation)
1.3 FRACTIONAL SHARES. No fractional shares of Common Stock shall
be issued upon exercise of this Warrant. Instead of any fractional shares of
Common Stock that would otherwise be issuable upon exercise of this Warrant, the
Company shall pay a cash adjustment in respect of such fractional interest equal
to the fair market value of such fractional interest as determined in good faith
by the Board of Directors.
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1.4 TERMINATION. Notwithstanding any other provision of this
Warrant, the right to exercise this Warrant shall terminate upon the first to
occur of (a) at the close of business on November 9, 2009 or (b) the closing
date of an Asset Transfer or Acquisition.
1.5 RESTRICTIONS ON EXERCISE AMOUNT. The Holder may not acquire a
number of Warrant Shares to the extent that, upon such exercise, the number of
shares of Common Stock then beneficially owned by such Registered Holder and its
Affiliates and any other persons or entities whose beneficial ownership of
Common Stock would be aggregated with the Registered Holder's for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (including shares held by any "group" of which the holder is a member, but
excluding shares beneficially owned by virtue of the ownership of securities or
rights to acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein), exceeds 4.99%
of the total number of shares of Common Stock of the Company then issued and
outstanding. For purposes hereof, "group" has the meaning set forth in Section
13(d) of the Exchange Act and applicable regulations of the Securities and
Exchange Commission, and the percentage held by the Registered Holder shall be
determined in a manner consistent with the provisions of Section 13(d) of the
Exchange Act. Each delivery of a notice of exercise by a Registered Holder will
constitute a representation by such Registered Holder that it has evaluated the
limitation set forth in this paragraph and determined, based on the most recent
public filings by the Company with the Commission, that the issuance of the full
number of shares of Warrant Shares requested in such notice of exercise is
permitted under this paragraph. The holders of Common Stock of the Company shall
be third party beneficiaries of this Section 1.5 and the Company may not waive
this Section 1.5 without the consent of holders of a majority of its Common
Stock.
ARTICLE II
WARRANT OFFICE; TRANSFER
2.1 WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "WARRANT OFFICE"), which office shall
initially be the Company's office at 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000, and may subsequently be such other office of
the Company or of any transfer agent of the Common Stock in the continental
United States of which written notice has previously been given to the
Registered Holder. The Company shall maintain, at the Warrant Office, a register
for the Warrant in which the Company shall record the name and address of the
Registered Holder, as well as the name and address of each permitted assignee of
the rights of the Registered Holder.
2.2 OWNERSHIP OF WARRANT. The Company may deem and treat the
Registered Holder as the holder and owner hereof (notwithstanding any notations
of ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided in this
Article II.
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2.3 TRANSFER OF WARRANTS. The Company agrees to maintain at the
Warrant Office books for the registration and transfer of this Warrant. This
Warrant may be transferred in whole or in part to any person or entity as long
as (a) such transfer is effected in accordance with applicable securities laws;
(b) such transferee agrees in writing to become subject to the terms of this
Warrant; and (c) the Company is given written notice by such Registered Holder
of such transfer, stating the name and address of the transferee or assignee and
identifying the portion of this Warrant being transferred. The Company, from
time to time, shall register the transfer of this Warrant in such books upon
surrender of this Warrant at the Warrant Office, properly endorsed, together
with a written assignment of this Warrant, substantially in the form of the
Assignment attached as Exhibit B hereto. Upon any such transfer, a new Warrant
shall be issued to the transferee, and the Company shall cancel the surrendered
Warrant. The Registered Holder shall pay all taxes and all other expenses and
charges payable in connection with the transfer of Warrants pursuant to this
Section 2.3.
2.4 REGISTRATION RIGHTS. The Company agrees (a) that the Warrant
Shares shall be "Registrable Securities" under the Registration Rights Agreement
(the "Registration Rights Agreement") between the Company and the purchasers of
shares of Common Stock of the Company issued and sold pursuant to the terms of
the Placement Agent Agreement dated as of November 9, 2004, between the Company
and Xxxxxxx Xxxxxx Xxxxxx Inc. and (b) that the Registered Holder shall have the
rights and obligations of a Holder set forth on the Registration Rights
Agreement.
2.5 NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant does not
entitle the Registered Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon the surrender of
this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares
so purchased shall be and be deemed to be issued to the Registered Holder as the
record owner of such shares as of the close of business on the later of the date
of such surrender or payment.
2.6 EXPENSES OF DELIVERY OF WARRANTS. Except as provided in
Section 2.3 above, the Company shall pay all reasonable expenses, taxes (other
than transfer taxes) and other charges payable in connection with the
preparation, issuance and delivery of Warrants and related Warrant Shares
hereunder.
2.7 COMPLIANCE WITH SECURITIES LAWS. The Registered Holder (and
its transferees and assigns), by acceptance of this Warrant, covenants and
agrees that such Registered Holder is acquiring the Warrants evidenced hereby,
and, upon exercise hereof, the Warrant Shares, for its own account as an
investment and not with a view to distribution thereof. Neither this Warrant nor
the Warrant Shares issuable hereunder have been registered under the Securities
Act or any state securities laws and no transfer of this Warrant or any Warrant
Shares shall be permitted unless the Company has received notice of such
transfer in the form of the assignment attached hereto as EXHIBIT B,
accompanied, if requested by the Company, by an opinion of counsel reasonably
satisfactory to the Company that an exemption from registration of such Warrant
or Warrant Shares under the Securities Act is available for such transfer,
except that no such opinion shall be required after the registration for resale
of the Warrant Shares has
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become effective. Upon any exercise of the Warrants prior to effective
registration for resale or except as in accordance with Rule 144 under the
Securities Act, certificates representing the Warrant Shares shall bear a
restrictive legend substantially identical to that set forth as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state (collectively, the "Acts"). Neither the
shares nor any interest therein may be offered, sold, transferred,
pledged, or otherwise disposed of in the absence of an effective
registration statement with respect to the shares under all of the
applicable Acts, or an opinion of counsel satisfactory to the Company
to the effect that such registrations are not required."
Any purported transfer of the Warrant or Warrant Shares not in
compliance with the provisions of this section shall be null and void. Stop
transfer instructions have been or will be imposed with respect to the Warrant
Shares so as to restrict resale or other transfer thereof, subject to this
Section 2.7.
ARTICLE III
ANTI-DILUTION PROVISIONS
3.1 ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price shall be subject to adjustment from time to time as hereinafter
provided in this Article III. Upon each adjustment of the Exercise Price, except
pursuant to Sections 3.1(a)(iii), (iv), and (v), the Registered Holder shall
thereafter be entitled to purchase, at the Exercise Price resulting from such
adjustment, the number of shares of the Common Stock obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares of the Common Stock purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) EXERCISE PRICE ADJUSTMENTS. The Exercise Price shall be
subject to adjustment from time to time as follows:
(i) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Company shall, at any time or from time to time after the date hereof
(the "ORIGINAL ISSUE DATE") while this Warrant remains outstanding,
effect a subdivision of the outstanding Common Stock, the Exercise
Price in effect immediately before such subdivision shall be
proportionately decreased. Conversely, if the Company shall at any time
or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately before such combination shall be
proportionately increased. Any adjustment under this Section 3.1(a)(i)
shall become effective at the close of business on the date the
subdivision or combination becomes effective.
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(ii) ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND DISTRIBUTIONS.
If the Company, at any time or from time to time after the Original
Issue Date while this Warrant remains outstanding makes, or fixes a
record date for the determination of holders of Common Stock entitled
to receive, a dividend or other distribution payable in additional
shares of Common Stock, in each such event the Exercise Price that is
then in effect shall be decreased as of the time of such issuance or,
in the event such record date is fixed, as of the close of business on
such record date, by multiplying the Exercise Price then in effect by a
fraction (i) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and (ii)
the denominator of which is the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution;
provided, HOWEVER, that if such record date is fixed and such dividend
is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Exercise Price shall be recomputed accordingly as
of the close of business on such record date, and thereafter the
Exercise Price shall be adjusted pursuant to this Section 3.1(a)(ii) to
reflect the actual payment of such dividend or distribution.
(iii) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND
SUBSTITUTION. If at any time or from time to time after the Original
Issue Date while this Warrant remains outstanding, the Common Stock is
changed into the same or a different number of shares of any class or
classes of stock, whether by recapitalization, reclassification or
otherwise (other than an Acquisition, Asset Transfer, subdivision or
combination of shares, stock dividend, reorganization, merger,
consolidation, or sale of assets provided for elsewhere in this Section
3.1(a)), in any such event the Registered Holder shall have the right
thereafter to convert such stock into the kind and amount of stock and
other securities and property receivable upon such recapitalization,
reclassification or other change by holders of the maximum number of
shares of Common Stock into which such shares of Common Stock could
have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as
provided herein or with respect to such other securities or property by
the terms thereof.
(iv) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF
ASSETS. If at any time or from time to time after the Original Issue
Date while this Warrant remains outstanding, there is a capital
reorganization of the Common Stock (other than an Acquisition, Asset
Transfer, recapitalization, or subdivision, combination,
reclassification, exchange, or substitution of shares provided for
elsewhere in this Section 3.1(a)), as a part of such capital
reorganization, provision shall be made so that the Registered Holder
shall thereafter be entitled to receive upon exercise hereof the number
of shares of stock or other securities or property of the Company to
which a holder of the number of shares of Common Stock deliverable upon
exercise immediately prior to such event would have been entitled as a
result of such capital reorganization, subject to adjustment in respect
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of such stock or securities by the terms thereof. In any such case,
appropriate adjustment shall be made in the application of the
provisions of this Section 3.1(a) with respect to the rights of the
Registered Holder after the capital reorganization to the end that the
provisions of this Section 3.1(a) (including adjustment of the Exercise
Price then in effect and the number of shares issuable upon exercise)
shall be applicable after that event and be as nearly equivalent as
practicable.
(v) ROUNDING OF CALCULATIONS; MINIMUM ADJUSTMENT. All
calculations under this Section 3.1(a) and under Section 3.1(b) shall
be made to the nearest cent. Any provision of this Section 3.1 to the
contrary notwithstanding, no adjustment in the Exercise Price shall be
made if the amount of such adjustment would be less than one percent,
but any such amount shall be carried forward and an adjustment with
respect thereto shall be made at the time of and together with any
subsequent adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate one percent or
more.
(vi) TIMING OF ISSUANCE OF ADDITIONAL COMMON STOCK UPON
CERTAIN ADJUSTMENTS. In any case in which the provisions of this
Section 3.1(a) shall require that an adjustment shall become effective
immediately after a record date for an event, the Company may defer
until the occurrence of such event issuing to the Registered Holder
after such record date and before the occurrence of such event the
additional shares of Common Stock or other property issuable or
deliverable upon exercise by reason of the adjustment required by such
event over and above the shares of Common Stock or other property
issuable or deliverable upon such exercise before giving effect to such
adjustment; PROVIDED, HOWEVER, that the Company upon request shall
deliver to such Registered Holder a due xxxx or other appropriate
instrument evidencing such Registered Holder's right to receive such
additional shares or other property, and such cash, upon the occurrence
of the event requiring such adjustment.
(vii) VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at
any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors, in its sole discretion, of the
Company.
(b) CURRENT MARKET PRICE. The "CURRENT MARKET PRICE" shall mean,
as of any date, 5% of the sum of the average, for each of the 20 consecutive
Trading Days immediately prior to such date, of either: (i) the high and low
sales prices of the Common Stock on such Trading Day as reported on the
composite tape for the principal national securities exchange on which the
Common Stock may then be listed, or (ii) if the Common Stock shall not be so
listed on any such Trading Day, the high and low sales prices of Common Stock in
the over-the-counter market as reported by the Nasdaq Stock Market for National
Market Securities, or (iii) if the Common Shares shall not be included in the
Nasdaq Stock Market as a National Market Security on any such Trading Day, the
representative bid and asked prices at the end of such Trading Day in such
market as reported by the Nasdaq Stock Market or (iv) if there be no such
representative prices reported by the Nasdaq Stock Market, the lowest bid and
highest asked prices at
7
the end of such Trading Day in the over-the-counter market as reported by the
OTC Electronic Bulletin Board or National Quotation Bureau, Inc., or any
successor organization. For purposes of determining Current Market Price, the
term "TRADING DAY" shall mean a day on which an amount greater than zero can be
calculated with respect to the Common Stock under any one or more of the
foregoing categories (i), (ii), (iii) and (iv), and the "end" thereof, for the
purposes of categories (iii) and (iv), shall mean the exact time at which
trading shall end on the New York Stock Exchange. If the Current Market Price
cannot be determined under any of the foregoing methods, Current Market Price
shall mean the fair value per share of Common Stock on such date as determined
by the Board of Directors in good faith, irrespective of any accounting
treatment.
(c) STATEMENT REGARDING ADJUSTMENTS. Whenever the Exercise Price
shall be adjusted as provided in Section 3.1(a), and upon each change in the
number of shares of the Common Stock issuable upon exercise of this Warrant, the
Company shall forthwith file, at the office of any transfer agent for this
Warrant and at the principal office of the Company, a statement showing in
detail the facts requiring such adjustment and the Exercise Price and new number
of shares issuable that shall be in effect after such adjustment, and the
Company shall also cause a copy of such statement to be given to the Registered
Holder. Each such statement shall be signed by the Company's chief financial or
accounting officer. Where appropriate, such copy may be given in advance and may
be included as part of a notice required to be mailed under the provisions of
Section 3.1(d).
(d) NOTICE TO HOLDERS. In the event the Company shall propose to
take any action of the type described in clause (iii) or (iv) of Section 3.1(a),
the Company shall give notice to the Registered Holder, in the manner set forth
in Section 6.6, which notice shall specify the record date, if any, with respect
to any such action and the approximate date on which such action is to take
place. Such notice shall also set forth such facts with respect thereto as shall
be reasonably necessary to indicate the effect of such action (to the extent
such effect may be known at the date of such notice) on the Exercise Price and
the number, kind or class of shares or other securities or property which shall
be deliverable upon exercise of this Warrant. In the case of any action which
would require the fixing of a record date, such notice shall be given at least
10 days prior to the date so fixed, and in case of all other action, such notice
shall be given at least 15 days prior to the taking of such proposed action.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any such action.
(e) TREASURY STOCK. For the purposes of this Section 3.1, the sale
or other disposition of any Common Stock of the Company theretofore held in its
treasury shall be deemed to be an issuance thereof.
3.2 COSTS. The Registered Holder shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the issuance or delivery
of the Warrant Shares upon exercise of this Warrant. Additionally, the Company
shall not be required to pay any taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificate for such
Warrant Shares. The Registered Holder shall reimburse the Company for any such
taxes assessed against the Company.
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3.3 RESERVATIONS OF SHARES. The Company shall reserve at all times
so long as this Warrant remains outstanding, free from preemptive rights, out of
its treasury Common Stock or its authorized but unissued shares of Common Stock,
or both, solely for the purpose of effecting the exercise of this Warrant,
sufficient shares of Common Stock to provide for the exercise hereof.
3.4 VALID ISSUANCE. All shares of Common Stock which may be issued
upon exercise of this Warrant will upon issuance by the Company be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof attributable to any act or omission
by the Company, and the Company shall take no action which will cause a contrary
result (including without limitation, any action which would cause the Exercise
Price to be less than the par value, if any, of the Common Stock).
ARTICLE IV
TERMS DEFINED
As used in this Warrant, unless the context otherwise requires, the
following terms have the respective meanings set forth below or in the Section
indicated:
ACQUISITION means (a) any consolidation or merger of the Company with
or into any other corporation or other entity or Person, or any other corporate
reorganization, in which the individuals and entities who were beneficial owners
of the Common Stock immediately prior to such transaction beneficially own,
directly or indirectly, less than 50% of the outstanding securities entitled to
vote generally in the election of directors of the resulting, surviving, or
acquiring corporation in such transaction or (b) any transaction or series of
related transactions to which the Company is a party in which in excess of 50%
of the outstanding securities entitled to vote generally in the election of
director of the Company are transferred, excluding any consolidation or merger
effected exclusively to change the domicile of the Company.
ASSET TRANSFER means a sale, lease, or other disposition of all or
substantially all of the assets of the Company to another Person.
BOARD OF DIRECTORS means the Board of Directors of the Company.
COMMON STOCK means the Company's authorized Common Stock, $0.001 par
value per share.
COMPANY means Tag-It Pacific, Inc., a Delaware corporation, and any
other corporation assuming or required to assume the obligations undertaken in
connection with this Warrant.
CURRENT MARKET PRICE is defined in Section 3.1(b).
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EXCHANGE ACT is defined in Section 1.1.
EXERCISE DATE is defined in Section 1.1.
EXERCISE PRICE is defined in the Preamble.
ORIGINAL ISSUE DATE is defined in Section 3.1(a)(i).
OUTSTANDING means when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Article III) at such date, except shares then held in
the treasury of the Company.
PERSON means any individual, corporation, partnership, trust,
organization, association or other entity.
REGISTERED HOLDER is defined in the Preamble.
SECURITIES ACT means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, all as the same shall be in effect at the
time.
TRADING DAY is defined in Section 3.1(b).
WARRANT means this Warrant and any successor or replacement Warrant
delivered in accordance with Section 2.3 or 6.8.
WARRANT OFFICE is defined in Section 2.1.
WARRANT SHARES means the shares of Common Stock purchased or
purchasable by the Registered Holder, or the permitted assignees of such
Registered Holder, upon exercise of this Warrant pursuant to Article I hereof.
ARTICLE V
COVENANT OF THE COMPANY
The Company covenants and agrees that this Warrant shall be binding
upon any corporation succeeding to the Company by merger, consolidation, or
acquisition of all or substantially all of the Company's assets.
ARTICLE VI
MISCELLANEOUS
6.1 ENTIRE AGREEMENT. This Warrant and the Registration Rights
Agreement contain the entire agreement between the Registered Holder and the
Company with
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respect to the Warrant Shares that it can purchase upon exercise hereof and the
related transactions and supersedes all prior arrangements or understanding with
respect thereto.
6.2 GOVERNING LAW. This Warrant shall be governed by and construed
in accordance with the internal laws of the State of Delaware, without regard to
its conflict of law provisions.
6.3 WAIVER AND AMENDMENT. Any term or provision of this Warrant
may be waived at any time by the party which is entitled to the benefits
thereof, and any term or provision of this Warrant may be amended or
supplemented at any time by the written consent of the parties (it being agreed
that an amendment to or waiver under any of the provisions of Article III of
this Warrant shall not be considered an amendment of the number of Warrant
Shares or the Exercise Price). No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising because of any prior or subsequent such
occurrence.
6.4 ILLEGALITY. In the event that any one or more of the
provisions contained in this Warrant shall be determined to be invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
6.5 COPY OF WARRANT. A copy of this Warrant shall be filed among
the records of the Company.
6.6 NOTICE. Any notice or other document required or permitted to
be given or delivered to the Registered Holder shall be delivered at, or sent by
certified or registered mail to such Registered Holder at, the last address
shown on the books of the Company maintained at the Warrant Office for the
registration of this Warrant or at any more recent address of which the
Registered Holder shall have notified the Company in writing. Any notice or
other document required or permitted to be given or delivered to the Company,
other than such notice or documents required to be delivered to the Warrant
Office, shall be delivered at, or sent by certified or registered mail to, the
office of the Company at 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx,
Xxxxxxxxxx 00000 or any other address within the continental United States of
America as shall have been designated in writing by the Company delivered to the
Registered Holder.
6.7 LIMITATION OF LIABILITY; NOT STOCKHOLDERS. Subject to the
provisions of Article III, until the exercise of this Warrant, the Registered
Holder shall not have or exercise any rights by virtue hereof as a stockholder
of the Company, including, without limitation, the right to vote, to receive
dividends and other distributions, or to receive notice of, or attend meetings
of stockholders or any other proceedings of the Company. Until the exercise of
this Warrant, no provision hereof, and no mere enumeration herein of the rights
or privileges of the Registered Holder, shall give rise to any liability of such
Registered Holder for the purchase price of any shares of Common Stock or as a
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stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
6.8 EXCHANGE, LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of
evidence satisfactory to the Company (an affidavit of the Registered Holder
shall be satisfactory evidence) of the loss, theft, mutilation or destruction of
this Warrant, and, in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or, in the event of such mutilation upon surrender
and cancellation of this Warrant, the Company will make and deliver a new
Warrant of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant; PROVIDED, HOWEVER, that the original Registered Holder of this Warrant
shall not be required to provide any such bond of indemnity and may in lieu
thereof provide his agreement of indemnity. Any Warrant issued under the
provisions of this Section 6.8 in lieu of any Warrant alleged to be lost,
destroyed or stolen, or in lieu of any mutilated Warrant, shall constitute an
original contractual obligation on the part of the Company. This Warrant shall
be promptly canceled by the Company upon the surrender hereof in connection with
any exchange or replacement. The Registered Holder of this Warrant shall pay all
taxes (including securities transfer taxes) and all other expenses and charges
payable in connection with the preparation, execution and delivery of
replacement Warrant(s) pursuant to this Section 6.8.
6.9 HEADINGS. The Article and Section and other headings herein
are for convenience only and are not a part of this Warrant and shall not affect
the interpretation thereof.
6.10 SUCCESSORS AND ASSIGNS. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Registered Holder. The provisions of this Warrant are
intended to be for the benefit of all Registered Holders from time to time of
this Warrant and shall be enforceable by any such Registered Holder or holder of
Warrant Shares.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: November 9, 2004
TAG-IT PACIFIC, INC.
By /s/ Xxxxx Xxxx
---------------------------
Name: Xxxxx Xxxx
Title: Chief Executive Officer
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Exhibit A
PURCHASE FORM
To: Tag-It Pacific, Inc. Dated:__________, 200__
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ____), hereby irrevocably elects to purchase ________ shares of the
Common Stock covered by such Warrant.
The undersigned herewith makes payment of the full exercise price for
such shares at the price per share provided for in such Warrant, which is $_____
per share in lawful money of the United States.
[------------------------------]
-------------------------------
Name:__________________________
Title:_________________________
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Exhibit B
ASSIGNMENT
For value received, _____________________________, hereby sells, assigns and
transfers unto _______________________________ the within Warrant, together with
all right, title and interest therein and does hereby irrevocably constitute and
appoint _______________________ attorney, to transfer said Warrant on the books
of the Company, with full power of substitution.
--------------------------------
Dated: ___________________, 200_
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