EXHIBIT 10.15
TAG-IT PACIFIC, INC.
COMMON STOCK WARRANT
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR HYPOTHECATED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
This certifies that, for good and valuable consideration, receipt of
which is hereby acknowledged, Xxxx Capital Partners LLC ("HOLDER") is entitled
to purchase, subject to the terms and conditions of this Warrant (this
"WARRANT"), from Tag-It Pacific, Inc., a Delaware corporation (the "COMPANY"),
One Hundred Seventy Two Thousand Five Hundred (172,500) fully paid and
nonassessable shares of the Company's common stock, $0.001 par value per share
("COMMON STOCK"), in accordance with Section 2 hereof at any time beginning on
August 30, 2003 (the "COMMENCEMENT DATE") and ending at 5:00 p.m. Pacific Time
on May 30, 2008 unless earlier terminated as provided herein (the "EXERCISE
PERIOD"). The shares of Common Stock for which this Warrant is exercisable, as
adjusted from time to time pursuant to the terms hereof, are hereinafter
referred to as the "SHARES."
1. EXERCISE PRICE. The initial exercise price for the Shares
shall be Five Dollars and Six Cents ($5.06) per share. Such price shall be
subject to adjustment pursuant to the terms hereof (such price, as adjusted from
time to time, is hereinafter referred to as the "EXERCISE PRICE").
2. EXERCISE AND PAYMENT.
(a) CASH EXERCISE. At any time during the Exercise Period,
Holder may exercise this Warrant, in whole or in part, from time to time, by
delivering this Warrant and the Notice of Exercise annexed hereto (the "NOTICE
OF EXERCISE") duly completed and executed by Holder to the Company at the
principal executive offices of the Company, together with payment in the amount
obtained by multiplying the Exercise Price then in effect by the number of
Shares thereby purchased, as designated in the Notice of Exercise. Payment may
be made in cash or by check payable to the order of the Company.
(b) NET ISSUANCE. In lieu of payment of the Exercise Price
described in Section 2(a) hereof, Holder may elect to receive, without the
payment by Holder of any additional consideration, shares equal to the value (as
determined below) of this Warrant or any portion hereof by the surrender of this
Warrant or such portion to the Company, with the Net Issuance Election
Notice annexed hereto (the "NET ISSUANCE ELECTION") duly executed, at the
principal executive offices of the Company. Thereupon, the Company shall issue
to Holder such number of fully paid and nonassessable Shares as is computed
using the following formula:
where: X = Y (A-B)
-------
A
X = the number of Shares to be issued to Holder pursuant to
this Section 2.
Y = the number of Shares covered by this Warrant in respect of
which the Net Issuance Election is made pursuant to this
Section 2(b).
A = the fair market value of one share of Common Stock, as
determined in accordance with the provisions of this Section
2(b).
B = the Exercise Price in effect under this Warrant at the
time the Net Issuance Election is made pursuant to this
Section 2(b).
For purposes of this Section 2(b), the "fair market value" per share of the
Common Stock shall mean:
(i) If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading privileges on such an
exchange, or is listed on the National or SmallCap Market of the National
Association of Securities Dealers Automated Quotations System (the "NASDAQ
NATIONAL MARKET" and "NASDAQ SMALLCAP MARKET", respectively) or other
over-the-counter quotation system, the "fair market value" per share of Common
Stock shall be the last reported sale price of the Common Stock on such
exchange, the Nasdaq National Market, the Nasdaq SmallCap Market or other
over-the-counter quotation system on the last business day before the date the
Net Issuance Election is made or if no such sale is made on such day, the mean
of the closing bid and asked prices such day on such exchange, the Nasdaq
National Market, the Nasdaq SmallCap Market or other over-the-counter quotation
system; and
(ii) If the Common Stock is not so listed or
admitted to unlisted trading privileges and bid and ask prices are not reported,
the "fair market value" shall be the price per share which the Company could
obtain from a willing buyer for shares sold by the Company for authorized but
unissued shares, as determined by the Board of Directors (the "BOARD") in good
faith.
3. RESERVATION OF SHARES. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant such number of shares of Common Stock or other shares of capital stock
of the Company as may be issuable from time to time upon exercise of this
Warrant. All such shares shall be duly authorized and, when issued in accordance
with the terms and conditions of this Warrant, shall be validly issued, fully
paid and nonassessable, free and clear of all liens, security interests, charges
and other encumbrances or restrictions on sale and free and clear of all
preemptive rights.
4. DELIVERY OF STOCK CERTIFICATE OR CERTIFICATES. Within a
reasonable time after exercise of this Warrant, in whole or in part, the Company
shall issue in the name of and deliver to Holder a certificate or certificates
representing the number of fully paid and nonassessable shares of
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Common Stock which Holder shall have requested in the Notice of Exercise or Net
Issuance Election, as applicable. If this Warrant is exercised in part, the
Company shall cancel this Warrant in its entirety and shall deliver to Holder a
new warrant for the unexercised portion of this Warrant at the time of delivery
of such stock certificate or certificates.
5. NO FRACTIONAL SHARES. No fractional shares or scrip
representing fractional shares will be issued upon exercise of this Warrant. If
upon any exercise of this Warrant a fraction of a share results, the Company
will, in lieu of issuance of any fractional share, pay Holder the difference
between the fair market value of the fractional share (as determined in
accordance with Section 2(b) hereof) and the portion of the Exercise Price
allocable to such fractional share.
6. LISTING. Prior to the issuance of any shares of Common Stock
upon exercise of this Warrant, the Company shall secure the listing of such
shares of Common Stock upon each national securities exchange or automated
quotation system, if any, upon which the Common Stock is then listed (subject to
official notice of issuance upon exercise of this Warrant) and shall maintain,
so long as any other shares of Common Stock shall be so listed, such listing of
all shares of Common Stock from time to time issuable upon the exercise of this
Warrant; and the Company shall so list on each national securities exchange or
automated quotation system, as applicable, and shall maintain such listing of,
any other shares of capital stock of the Company issuable upon the exercise of
this Warrant if and so long as any shares of the same class shall be listed on
such national securities exchange or automated quotation system, as applicable.
7. CHARGES, TAXES AND EXPENSES. The Company shall pay all
transfer taxes or other incidental charges, if any, in connection with the
transfer from the Company to Holder of the Shares issued pursuant to the
exercise hereof; PROVIDED, HOWEVER, that in the event that any certificate or
certificates for Shares are to be issued in a name other than the name of
Holder, this Warrant, when surrendered for exercise, shall be accompanied by the
Assignment Form attached hereto duly executed by Xxxxxx; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
8. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to the Company,
and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new warrant of like tenor and dated as of such
cancellation, in lieu of this Warrant.
9. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed
day for the taking of any action or the expiration of any right required or
granted herein shall be a Saturday, Sunday or a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding weekday that
is not a legal holiday.
10. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The
Exercise Price and the number of and kind of securities purchasable upon
exercise of this Warrant shall be subject to adjustment from time to time as
follows:
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(a) SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. If the
Company shall at any time during the Exercise Period subdivide its outstanding
securities as to which purchase rights under this Warrant exist, by split-up or
otherwise, or combine its outstanding securities as to which purchase rights
under this Warrant exist, the number of Shares as to which this Warrant is
exercisable as of the date of such subdivision, split-up or combination will be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate adjustments also will be
made to the Exercise Price, but the aggregate purchase price payable for the
total number of Shares purchasable under this Warrant as of such date shall
remain unchanged.
(b) STOCK DIVIDEND. If at any time during the Exercise Period
the Company declares a dividend or other distribution on Common Stock payable in
Common Stock or Convertible Securities (as defined below) without payment of any
consideration by such holders for the additional shares of Common Stock or the
Convertible Securities (including any additional shares of Common Stock issuable
pursuant to the terms of any Convertible Securities), then the number of Shares
for which this Warrant may be exercised shall be increased as of the record date
(or the date of such dividend or other distribution if no record date is set)
for determining which holders of Common Stock shall be entitled to receive such
dividend or other distribution, in proportion to the increase in the number of
outstanding shares (and shares of Common Stock issuable pursuant to the terms of
the Convertible Securities) of Common Stock as a result of such dividend or
other distribution, and the Exercise Price shall be adjusted so that the
aggregate amount payable for the purchase of all the Shares issuable hereunder
immediately after the record date (or on the date of such distribution, if
applicable) for such dividend or other distribution will equal the aggregate
amount so payable immediately before such record date (or on the date of such
distribution, if applicable). As used herein, "CONVERTIBLE SECURITIES" means
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for, with or without payment of additional
consideration, shares of Common Stock, either immediately or upon the arrival of
a specified date or the happening of a specified event or both.
(c) OTHER DISTRIBUTIONS. If at any time during the Exercise
Period the Company distributes to holders of its Common Stock, other than as
part of its dissolution or liquidation or the winding up of its affairs, any
shares of its capital stock, any evidence of indebtedness or any of its assets
(other than cash or a distribution of Common Stock or Convertible Securities for
which an adjustment to the Exercise Price is made pursuant to Section 10(b)
hereof), then the Company may, at its option, either (i) decrease the Exercise
Price of this Warrant by an appropriate amount based upon the value distributed
on each share of Common Stock as determined in good faith by the Board or (ii)
provide by resolution of the Board that upon exercise of this Warrant, Holder
hereof shall thereafter be entitled to receive, in addition to the Shares of
Common Stock otherwise receivable upon exercise hereof, the number of shares or
other securities or property which would have been received had this Warrant
been exercised in full at the time of such distribution.
(d) MERGER. If at any time during the Exercise Period there
shall be a merger or consolidation of the Company with or into another
corporation whereby the Company is not the surviving corporation, then Holder
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the aggregate Exercise Price
then in effect, the number of shares or other securities or property of the
successor corporation resulting
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from such merger or consolidation, which would have been received by Holder for
the Shares subject to this Warrant had this Warrant been exercised at such time.
(e) RECLASSIFICATION, ETC. If at any time during the Exercise
Period there shall be a change or reclassification of the securities as to which
this Warrant is exercisable into the same or a different number of securities of
any other class or classes, then Holder shall thereafter be entitled to receive
upon exercise of this Warrant, during the Exercise Period and upon payment of
the Exercise Price then in effect, the number of shares or other securities or
property resulting from such change or reclassification, which would have been
received by Holder for the Shares subject to this Warrant had this Warrant been
exercised prior to such time.
11. RIGHTS AS STOCKHOLDER; NOTICE TO HOLDERS. Nothing contained in
this Warrant will be construed as conferring upon Holder or its permitted
transferees the right to vote or to receive dividends or to consent or to
receive notice as a stockholder in respect of any meeting of stockholders for
the election of directors of the Company or of any other matter, or any rights
whatsoever as stockholders of the Company. The Company will notify Holder by
registered mail if at any time prior to the expiration or exercise in full of
the Warrant, any of the following events occur:
(a) a dissolution, liquidation or winding up of the Company
shall be proposed at a duly authorized meeting of the Board;
(b) a capital reorganization or reclassification of the Common
Stock (other than a subdivision or combination of the outstanding Common Stock
and other than a change in the par value of the Common Stock) or any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and that does not result in any reclassification or change of Common
Stock outstanding) or in the case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety; or
(c) a taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend) or other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other rights.
Such giving of notice will be simultaneous with the giving of
notice to the holders of Common Stock. Such notice must specify the record date
or the date of closing the stock transfer books, as the case may be. Failure to
provide such notice will not affect the validity of any action taken in
connection with such dividend, distribution or subscription rights, or proposed
merger, consolidation, sale, conveyance, dissolution, liquidation or winding up.
12. RESTRICTED SECURITIES. Holder understands that this Warrant
and, subject to the last sentence of this Section 12, the Shares purchasable
hereunder constitute "restricted securities" under the federal securities laws
inasmuch as they have not been registered under the Securities Act of 1933, as
amended (the "SECURITIES ACT") and are, or will be, acquired from Company in
transactions not involving a public offering and accordingly may not, under such
laws and applicable regulations,
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be resold or transferred without registration under the Securities Act or an
applicable exemption from such registration. Unless the Shares are subsequently
registered pursuant to Section 15 of this Warrant, Xxxxxx further acknowledges
that the securities legend on Exhibit A to the Notice of Exercise attached
hereto shall be placed on any Shares issued to Holder upon exercise of this
Warrant. Notwithstanding the foregoing, if a Holder exercises a net issuance
under Section 2(b) hereof, the Shares will be deemed to be purchased under
Section 3(a)(9) of the Securities Act and will not be "restricted securities" or
subject to legend if the Warrant has been held for a period of one year or more.
13. CERTIFICATION OF INVESTMENT PURPOSE. Unless a current
registration statement under the Securities Act shall be in effect with respect
to the securities to be issued upon exercise of this Warrant, Holder covenants
and agrees that, at the time of exercise hereof, it will deliver to the Company
a written certification executed by Xxxxxx that the securities acquired by
Holder upon exercise hereof are for the account of such Holder and acquired for
investment purposes only and that such securities are not acquired with a view
to, or for sale in connection with, any distribution thereof.
14. DISPOSITION OF SHARES; TRANSFERABILITY.
(a) Xxxxxx hereby agrees not to make any disposition of any
Shares purchased hereunder unless and until:
(i) Holder shall have notified the Company of the
proposed disposition (by executing and delivering to the Company the Assignment
Form attached hereto) and provided a written summary of the terms and conditions
of the proposed disposition; and
(ii) Holder shall have complied with all requirements
of this Warrant applicable to the disposition of
the Shares.
The Company shall NOT be required to (i) transfer on
its books any Shares which have been sold or transferred in violation of the
provisions of this Section 14 or (ii) treat as the owner of the Shares, or
otherwise accord voting or dividend rights to, any transferee to whom the Shares
have been transferred in contravention of the terms of this Warrant.
(b) TRANSFER. This Warrant shall be transferable only on the
books of the Company maintained at its principal office set forth in Section
14(c), or wherever its principal office may then be located, upon delivery
thereof duly endorsed by Holder or by its duly authorized attorney or
representative, accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of transfer, the Company shall
execute and deliver new warrants to the transferee entitled thereto.
(c) LIMITATIONS ON TRANSFER. This Warrant may not be sold,
transferred, assigned or hypothecated (any such action, a "TRANSFER") by Xxxxxx
except to (i) one or more persons, each of whom on the date of transfer is an
officer of Holder; (ii) a general partnership or general partnerships, the
general partners of which are Holder and one or more persons, each of whom on
the date of transfer is an officer of Holder; (iii) a successor to Holder in any
merger or consolidation;
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(iv) a purchaser of all or substantially all of Holder's assets; or (v) any
person receiving this Warrant from one or more of the persons listed in this
SECTION 14(C) at such person's death pursuant to will, trust or the laws of
intestate succession,. This Warrant may be divided or combined, upon request to
the Company by Holder, into a certificate or certificates representing the right
to purchase the same aggregate number of Shares. If at the time of a Transfer, a
Registration Statement is not in effect to register this Warrant, the Company
may require Holder and the transferee to make such representations, and may
place such legends on certificates representing this Warrant, as may be
reasonably required in the opinion of counsel to the Company to permit a
Transfer without such registration.
15. REGISTRATION RIGHTS. Reference is made to that certain
Registration Rights Agreement, dated May 23, 2003, by and among the Company and
the investors listed on the signature page thereto (the "REGISTRATION RIGHTS
AGREEMENT") (capitalized terms used in this Section 15 and not defined shall
have the meanings given such terms in the Registration Rights Agreement, except
that Holder shall mean the holder of this Warrant and "Holder" shall have the
meaning under the Registration Rights Agreement). The Company hereby agrees that
Holder shall have all of the same rights with respect to the Shares as each of
the "Holders" under the Registration Rights Agreement has with respect to the
Registrable Securities, as if Holder were a "Holder" and the Shares were
"Registrable Securities" under the Registration Rights Agreement, except that
Holder shall not be entitled to any liquidated damages under Section 2(b) of the
Registration Rights Agreement for any reason whatsoever. Xxxxxx agrees that it
shall be bound by and perform all of the obligations of a "Holder" under the
Registration Rights Agreement with respect to the Shares, including, without
limitation, the obligation to indemnify the Company as provided in Section 5(b)
thereunder.
16. MISCELLANEOUS.
(a) CONSTRUCTION. Unless the context indicates otherwise, the
term "Holder" shall include any transferee or transferees of this Warrant
pursuant to Section 14(b), and the term "Warrant" shall include any and all
warrants outstanding pursuant to this Warrant, including those evidenced by a
certificate or certificates issued upon division, exchange, substitution or
transfer pursuant to Section 14 hereof.
(b) RESTRICTIONS. By receipt of this Warrant, Xxxxxx makes the
same representations with respect to the acquisition of this Warrant as Holder
is required to make upon the exercise of this Warrant and acquisition of the
Shares purchasable hereunder as set forth in the Form of Investment Letter
attached as Exhibit A to the Notice of Exercise attached hereto.
(c) NOTICES. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or three
(3) days following deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified (or
one (1) day following timely deposit with a reputable overnight courier with
next day delivery instructions), or upon confirmation of receipt by the sender
of any notice by facsimile transmission, at the address indicated below or at
such other address as such party may designate by ten (10) days' advance written
notice to the other parties.
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To Holder: Xxxx Capital Partners LLC
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxx, CFO
To the Company: Tag-It Pacific, Inc.
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, CFO
(d) GOVERNING LAW. This Warrant shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
(e) ENTIRE AGREEMENT. This Warrant, the exhibits and schedules
hereto, and the documents referred to herein, constitute the entire agreement
and understanding of the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, whether oral or written, between the parties hereto with respect
to the subject matter hereof.
(f) BINDING EFFECT. This Warrant and the various rights and
obligations arising hereunder shall inure to the benefit of and be binding upon
the Company and its successors and assigns, and Xxxxxx and its successors and
assigns.
(g) WAIVER; CONSENT. This Warrant may not be changed, amended,
terminated, augmented, rescinded or discharged (other than by performance), in
whole or in part, except by a writing executed by the parties hereto, and no
waiver of any of the provisions or conditions of this Warrant or any of the
rights of a party hereto shall be effective or binding unless such waiver shall
be in writing and signed by the party claimed to have given or consented
thereto.
(h) SEVERABILITY. If one or more provisions of this Warrant
are held to be unenforceable under applicable law, such provision shall be
excluded from this Warrant and the balance of the Warrant shall be interpreted
as if such provision were so excluded and the balance shall be enforceable in
accordance with its terms.
(i) COUNTERPARTS. This Warrant may be signed in several
counterparts, each of which shall constitute an original.
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IN WITNESS WHEREOF, the parties hereto have executed this
Common Stock Warrant effective as of the date hereof.
DATED: May 30, 2003 THE COMPANY:
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Tag-It Pacific, Inc., a Delaware corporation
By: /S/ XXXXX XXXX
-----------------------------------------
Its: CHIEF EXECUTIVE OFFICER
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HOLDER:
XXXX CAPITAL PARTNERS LLC, a California limited
liability company
By: /S/ ILLEGIBLE
-----------------------------------------
Its: CHIEF FINANCIAL OFFICER
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NOTICE OF EXERCISE
To: Tag-It Pacific, Inc.
1. The undersigned hereby elects to purchase _____________
shares of common stock, $0.001 par value per share ("STOCK") of Tag-It Pacific,
Inc., a Delaware corporation (the "COMPANY") pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price pursuant to
the terms of the Warrant.
2. Attached as Exhibit A is an investment representation
letter addressed to the Company and executed by the undersigned as required by
Section 14 of the Warrant.
3. Please issue a certificate or certificates representing the
shares of Stock purchased hereunder in the names and in the denominations
indicated on Exhibit A attached hereto.
4. Please issue a new Warrant for the unexercised portion of
the attached Warrant, if any, in the name of the undersigned.
Holder:
----------------------------
Dated: _______________
-----------------------------------
By:
--------------------------------
Its:
-------------------------------
EXHIBIT A TO NOTICE OF EXERCISE
FORM OF INVESTMENT LETTER
Tag-It Pacific, Inc.
0000 Xx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Ladies and Gentlemen:
The undersigned hereby makes the following certifications and representations
with respect to the __________ (__________) shares (the "Shares") of Common
Stock of TAG-IT PACIFIC INC., a Delaware corporation (the "Company"), which are
being acquired by the undersigned.
The undersigned represents and warrants that the undersigned is acquiring the
Shares solely for the undersigned's account for investment and not with a view
to or for sale or distribution of the Shares or any part thereof. The
undersigned also represents that the entire legal and beneficial interests of
the Shares the undersigned is acquiring is being acquired for, and will be held
for, the undersigned's account only.
The undersigned understands that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), on the basis that no
distribution or public offering of the Shares is to be effected. The undersigned
realizes that the basis for the exemption may not be present if, notwithstanding
the undersigned's representations, the undersigned has in mind merely acquiring
the Shares for a fixed or determinable period in the future, or for a market
rise, or for sale if the market does not rise. The undersigned has no such
intention.
The undersigned recognizes that the Shares being acquired by the undersigned
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. The
undersigned recognizes that the Company has no obligation to register the Shares
or to comply with any exemption from such registration.
The undersigned is aware that the Shares may not be sold pursuant to Rule 144
adopted under the Securities Act ("Rule 144") unless certain conditions are met
and until the undersigned has held the Shares for at least one year. Among the
conditions for use of the Rule is the availability of current information to the
public about the Company. The undersigned understands that the Company has not
made such information available and has no present plans to do so.
The undersigned further agrees not to make any disposition of all or any part of
the Shares being acquired in any event unless and until:
1. The Shares are transferred pursuant to Rule 144, and the Company shall have
received from the undersigned documentation acceptable to the Company that a
sale of the Shares has occurred in accordance with all of the provisions of Rule
144; or
2. The Company shall have received a letter secured by the undersigned from the
Securities and Exchange Commission stating that no action will be recommended to
the Commission with respect to the proposed disposition; or
3. There is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with said registration statement; or
4. (i) The undersigned shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, (ii) the undersigned
shall have furnished the Company with an opinion of counsel for the undersigned
to the effect that such disposition will not require registration of such Shares
under the Securities Act, and (iii) such opinion of counsel for the undersigned
shall have been concurred in by the Company's counsel and the Company shall have
advised the undersigned of such concurrence.
The undersigned understands and agrees that all certificates evidencing the
Shares to be issued to the undersigned may bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
Very truly yours,
By:
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Its:
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NET ISSUANCE ELECTION NOTICE
To: Tag-It Pacific, Inc. Date:_____________
The undersigned hereby elects under Section 2 of the attached
Warrant to surrender the right to purchase ___________ shares of Common Stock
pursuant to the attached Warrant. The Certificate(s) for the shares issuable
upon such net issuance election shall be issued in the name of the undersigned
or as otherwise indicated below.
Signature:
Name for Registration:
Mailing Address:
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights
evidenced thereby are hereby assigned to
_______________________________________________ whose address is
---------------------------------------------------------------.
---------------------------------------------------------------
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
