INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "AGREEMENT") is made as of December
15, 2000, by and among TAG-IT PACIFIC, INC., a Delaware corporation (the
"COMPANY"), COMMERCE INVESTMENT GROUP, LLC, and the investors who have signed a
Investor Rights Agreement Joinder substantially in the form of EXHIBIT A
attached to this Agreement ("INVESTOR"); collectively, the "Investors").
RECITALS
This Agreement is being entered into by and among the parties hereto in
connection with that certain Supply Agreement, dated as of the date hereof and
entered into by and among the parties hereto (the "SUPPLY AGREEMENT"), pursuant
to which the Investors are acquiring shares of the Company's common stock, par
value $0.001 per share (the shares so acquired, the "SHARES"). Capitalized terms
not otherwise defined herein shall have the meanings set forth in the Supply
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. REGISTRATION RIGHTS.
1.1 DEFINITIONS. For purposes of this Section 1:
"1934 ACT" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC (or any other federal agency at the time
administering the Securities Exchange Act of 1934, as amended) promulgated
thereunder.
"ACT" means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC (or any other federal agency at the time administering
the Securities Act of 1933, as amended) promulgated thereunder.
"AFFILIATE" means, with respect to a Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with, such Person in question. For the purposes of this definition, "CONTROL"
(including, with correlative meanings, the terms "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or any
duly constituted committee of that Board which has been delegated the authority
to take the specific action in question.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, warrants, subscription rights, participations or other equivalents
(however designated) of capital stock.
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"COMMON STOCK" means the Company's common stock, par value $0.001 per
share.
"DYNE SHAREHOLDERS" means Xxxxx Xxxx, Xxxx Xxxx and any Affiliate of Xxxxx
Xxxx or Xxxx Xxxx.
"ELIGIBLE OFFERING" means any public offering of Common Stock by the
Company other than: (i) any registration relating solely to the sale of
securities to participants in a Company stock plan, (ii) any registration
relating to corporate reorganization or other transaction under Rule 145 of the
Act, (iii) any registration on any form (other than Form X-0, X-0 or S-3) which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities, and (iv) any registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered.
"FORM S-3" means such form under the Act as in effect on the date hereof or
any registration form under the Act subsequently adopted by the SEC which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
"HOLDER" means any person owning or having the right to acquire Registrable
Securities or an assignee pursuant to Section l.8 hereof.
"PERSON" means any individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government bureau or agency or other subdivision thereof or other entity of any
kind or nature.
"POTENTIAL MATERIAL EVENT" means any of the following: (a) the possession
by the Company of material information not ripe for disclosure in a registration
statement, as determined in good faith by the Chief Executive Officer or the
Board of Directors of the Company, that disclosure of such information in a
Registration Statement would be detrimental to the business and affairs of the
Company; or (b) any material engagement or activity by the Company which would,
in the good faith determination of the Chief Executive Officer or the Board of
Directors of the Company, be adversely affected by disclosure in a Registration
Statement at such time.
"QUALIFIED OFFERING" means a firmly underwritten public offering of the
Company's Common Stock pursuant to an effective registration statement filed
with the SEC.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Act, and the declaration or ordering of effectiveness of
such registration statement or document by the SEC.
"REGISTRABLE SECURITIES" means (i) the Shares, (ii) any Common Stock issued
as (or issuable upon the conversion or exercise of the Shares, any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of the shares referenced
in (i) above, and (iii) any Common Stock issued by way of a stock split of the
shares referenced in (i) or (ii) above.
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"REGISTRABLE SECURITIES OUTSTANDING" shall be determined by the number of
shares of Common Stock outstanding which are, and the number of shares of Common
Stock issuable pursuant to then exercisable or convertible securities which are,
Registrable Securities.
"SEC" means the Securities and Exchange Commission.
1.2 REGISTRATION RIGHTS WITH RESPECT TO THE SECURITIES.
(a) FILING. The Company agrees that it will prepare and file with the SEC,
within fifteen business days of the execution of the Supply Agreement, a
Registration Statement on Form S-3 under the Securities Act, at the sole expense
of the Company (except as provided in Section (d) hereof), in respect of the
Investor, so as to permit a public offering and resale of the Registrable
Securities under the Act by the Investor as a selling stockholder and not as an
underwriter.
(b) EFFECTIVENESS. The Company shall use its best efforts to cause such
Registration Statement to become effective within 90 days from the respective
Closing Date or, if earlier, within five (5) days of SEC clearance to request
acceleration of effectiveness. The Registration Statement shall include
appropriate language regarding reliance upon Rule 416 to the extent permitted by
the Commission. The Company will notify the Investor of the effectiveness of the
Registration Statement within one Trading Day of such event.
(c) EFFECTIVENESS PERIOD. The Company will maintain the Registration
Statement or post-effective amendment filed under this Section 1.2 effective
under the Securities Act until for a period of two years from the date on which
it became effective (the "EFFECTIVENESS PERIOD").
(d) EXPENSES. All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of the
Registration Statement under Section 1.2(a) and in complying with applicable
Federal and State securities and Blue Sky laws (including, without limitation,
all attorneys' fees of the Company) shall be borne by the Company. The Investor
shall bear the cost of underwriting and/or brokerage discounts, fees and
commissions, if any, applicable to the Securities being registered and the fees
and expenses of their counsel. The Investor and its counsel shall have a
reasonable period, not to exceed five (5) -- Trading Days, to review any
amendment to the Form S-3 previously provided to the Investor pursuant to the
Purchase Agreement thereto, prior to filing with the Commission, and the Company
shall provide the Investor with copies of any comment letters received from the
Commission with respect thereto within two (2) Trading Days of receipt thereof.
The Company shall qualify any of the Securities for sale in such states as the
Investor reasonably designates and shall furnish indemnification in the manner
provided in Section 1.7 hereof. However, the Company shall not be required to
qualify in any state which will require an escrow or other restriction relating
to the Company and/or the sellers, or which will require the Company to qualify
to do business in such state or require the Company to file therein any general
consent to service of process. The Company at its expense will supply the
Investor with copies of the applicable Registration Statement and the prospectus
included therein and other related documents in such quantities as may be
reasonably requested by the Investor.
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(e) BLACKOUT PERIOD. If at any time or from time to time after the
effective date of any Registration Statement, the Company notifies the Investor
in writing of the existence of a Potential Material Event (as defined in Section
1.1 above), the Investor agrees not to offer or sell any securities or engage in
any other transaction involving or relating to securities, from the time of the
giving of notice with respect to a Potential Material Event until the Investor
receives written notice from the Company that such Potential Material Event
either has been disclosed to the public or no longer constitutes a Potential
Material Event; PROVIDED, however, that the Company may not so suspend the right
to such holders of securities for more than 30 days in the aggregate (90 days in
the case of an acquisition requiring the filing of audited financial statements
of the acquired business under Form 8-K) during any twelve month period, during
the period the Registration Statement is required to be in effect, and if such
period is exceeded, such event shall be a Registration Default. If a Potential
Material Event shall occur prior to the date a Registration Statement is
required to be filed, then the Company's obligation to file such Registration
Statement shall be delayed without penalty for not more than 20 days, and such
delay or delays shall not constitute a Registration Default. The Company must,
if lawful, give the Investor notice in writing at least two Trading Days prior
to the first day of the blackout period.
1.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least 30 days prior to filing any
registration statement under the Securities Act for purposes of effecting a
public offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but EXCLUDING Form S-4 or S-8 registration statements, and will afford
each such Holder an opportunity to include in such registration statement all or
any part of the Registrable Securities then held by such Holder. Each Holder
desiring to include in any such registration statement all or any part of the
Registrable Securities held by such Holder shall, within 20 days after receipt
of the above-described notice from the Company, so notify the Company in
writing, and in such notice shall inform the Company of the number of
Registrable Securities such Holder wishes to include in such registration
statement. If a Holder decides not to include all of its Registrable Securities
in any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the terms
and conditions set forth herein.
(a) UNDERWRITING. If a registration statement under which the Company gives
notice under this Section 1.3 is for an underwritten offering, then the Company
shall so advise the Holders of Registrable Securities. In such event, the right
of any such Holder's Registrable Securities to be included in a registration
pursuant to this Section 1.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter(s) determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the managing
underwriter(s) may exclude shares (including Registrable Securities) from the
registration and the underwriting, and the number of shares that may be included
in the registration and the underwriting shall be allocated, FIRST, to the
Company, SECOND to Dyne Shareholders and other registration rights granted by
the Company prior to the date of this Investor Rights Agreement and THIRD, to
each of the Holders requesting inclusion of their Registrable Securities in such
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registration statement on a pro rata basis based on the total number of
Registrable Securities then held by each such Holder. If any Holder disapproves
of the terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter, delivered at
least ten (10) business days prior to the effective date of the registration
statement. Any Registrable Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration. For any
Holder which is a partnership or corporation, the partners, retired partners,
shareholders and members of such Holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "HOLDER," and any pro rata
reduction with respect to such "Holder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "Holder", as defined in this sentence.
(b) EXPENSES. The Company shall pay all expenses incurred in connection
with a registration pursuant to this Section 1.3 (excluding underwriters' or
brokers' discounts and commissions and the fees and disbursements of special
counsel for the Selling Holder or Holders), including, without limitation all
federal and "blue sky" registration and qualification fees, printers' and
accounting fees, and fees and disbursements of counsel for the Company.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its commercially reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to 20 days;
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) furnish to the Holders such number of copies of a prospectus, including
a preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by them that are
included in such registration;
(d) use all reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(e) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering;
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(f) notify each Holder of Registrable Securities covered by such
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
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such Holder prepare and file an amendment to
any such prospectus as may be necessary;
(g) furnish, at the request of any Holder requesting registration of
Registrable Securities, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, an opinion, dated as of such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is given to the underwriters in the underwritten public offering
and reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters and to the Holders requesting
registration of Registrable Securities;
(h) furnish, at the request of any Holder requesting registration of
Registrable Securities, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities;
(i) cause all Registrable Securities registered pursuant hereunder to be
listed on each securities exchange on which similar securities issued by the
Company are then listed; and
(j) cause the Company's officers, directors and independent certified
public accountants to provide all information reasonably requested by a
representative of any Holder of Registrable Securities and any attorney or
accountant retained by such Holder, in connection with such registration.
1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 1 that the
selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them and the intended method of
disposition of such securities, as shall be required to timely effect the
registration of their Registrable Securities.
1.6 DELAY OF REGISTRATION. No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
1.7 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Section 1:
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(a) BY THE COMPANY. To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers, directors and
members of each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended, (the "EXCHANGE ACT"), against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "VIOLATION"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; or
(iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any federal or state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any federal
or state securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the
indemnity agreement contained in this subsection 1.7(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
(b) BY SELLING HOLDERS. To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder's partners, directors or officers or any person who
controls such Holder within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities (joint or several) to
which the Company or any such director, officer, controlling person, underwriter
or other such Holder, partner or director, officer or controlling person of such
other Holder may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or other Holder, partner, officer, director or
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controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, however,
that the indemnity agreement contained in this subsection 1.7(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; and PROVIDED FURTHER, that the total
amounts payable in indemnity by a Holder under this Section 1.7(b) in respect of
any Violation shall not exceed the net proceeds received by such Holder in the
registered offering out of which such Violation arises.
(c) NOTICE. Promptly after receipt by an indemnified party under this
Section 1.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.7, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.7.
(d) DEFECT ELIMINATED IN FINAL PROSPECTUS. The foregoing indemnity
agreements of the Company and Holders are subject to the condition that, insofar
as they relate to any Violation made in a preliminary prospectus but eliminated
or remedied in the amended prospectus on file with the SEC at the time the
registration statement in question becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the "FINAL PROSPECTUS"), such
indemnity agreement shall not inure to the benefit of any person if a copy of
the Final Prospectus was furnished to the indemnified party and was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act.
(e) SURVIVAL. The obligations of the Company and Holders under this Section
1.7 shall survive the completion of any offering of Registrable Securities in a
registration statement, and otherwise, and the termination of this Agreement.
(f) SETTLEMENT. No indemnified party, in the defense of any such claim or
litigation, shall, except with the consent of each 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 to such claim or
litigation.
1.8 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Section may be assigned (but
only with all related obligations) by a Holder to a transferee or assignee of
such securities which (i) is a subsidiary, parent
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entity, partner, member, limited partner, retired partner or stockholder of a
Holder, (ii) is a Holder's family member or trust for the benefit of an
individual Holder or (iii) a purchaser in a private transaction within
twenty-four months of the date of this Agreement; provided: (a) the Company is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement, including without limitation the provisions of
Section 3.9 below; (c) the assignee holds a minimum of l00,000 shares of
Registrable Securities and (d) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act.
1.9 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that in
connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Securities Act, Holder shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to any of the Registrable Securities without the prior
written consent of the Company or its underwriters, for such period of time from
and after the effective date of such registration statement as may be reasonably
requested by the Company or such underwriters.
1.10 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after the effective date of the
first registration under the Securities Act filed by the Company for an offering
of its securities to the general public;
(b) use its commercially reasonable efforts to file with the Commission in
a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements); and
(c) as long as a Holder owns any Registrable Securities, to furnish to the
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
90 days after the effective date of the first registration statement filed by
the Company for an offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
the reporting requirements of the Exchange Act), a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
of the Company as a Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Holder to sell any such securities
without registration (at any time after the Company has become subject to the
reporting requirements of the Exchange Act).
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2. AMENDMENT.
2.1 Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investor (and/or any of their permitted successors or assigns) holding
shares of Common Stock representing and/or exercisable into at least a majority
of all the Shares. Any amendment or waiver effected in accordance with this
Section 2.1 shall be binding upon the Investor, each Holder, each permitted
successor or assignee of such Investor or Holder and the Company.
3. GENERAL PROVISIONS.
3.1 NOTICES. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) hand delivered, (ii) deposited in the
mail, registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice
or other communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the first business day
following the date of sending by reputable courier service, fully prepaid,
addressed to such address, or (c) upon actual receipt of such mailing, if
mailed. The addresses for such communications shall be:
If to the Company:
Tag-It Pacific, Inc. Guez Group c/o
0000 Xxxxx Xxxx Xx. XXXXXX PRODUCTION INTERNATIONAL, INC.
Xxx Xxxxxxx, XX 00000 0000 X. Xxxxxxx Xxx.
Attn: Xxxxx Xxxx Xxxxxxxx, XX 00000
Fax Number: (000) 000-0000 Attn: Xxxxxxx Xxxxxxx, Esq.
Fax Number:
WITH COPIES TO:
Troop Xxxxxxx Pasich Reddick & Xxxxx, LLP
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxx
Fax Number: (000) 000-0000
Or at such address as such Holder or permitted assignee shall have furnished to
the Company in writing. The parties hereto may from time to time change their
address or facsimile number
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for notices under this Section 3.1 by giving written notice of such changed
address or facsimile number to the other parties hereto as provided in this
Section 3.1. 3.2 ENTIRE AGREEMENT. This Agreement, the Voting Agreement, the
Right of First Refusal and Sale Agreement, and the Supply Agreement between the
parties in the form attached hereto as exhibits, together with all the Exhibits
to this Agreement, constitute and contain the entire agreement and understanding
of the parties with respect to the subject matter hereof and supersedes any and
all prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties respecting the subject matter hereof.
3.3 GOVERNING LAW/VENUE. This Agreement shall be interpreted in accordance
with the laws of the State of California, without regard to the conflicts of
laws principles thereof. The parties agree and Guez specifically agrees on
behalf of each Covered Company that jurisdiction over and venue in any legal
proceeding arising out of or relating to this Agreement will exclusively be in
the state or federal courts located in California.
3.4 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, then such provision(s) shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision(s) were so excluded and shall be enforceable in accordance with
its terms.
3.5 SURVIVAL. The representations, warranties, covenants, and agreements
made herein shall survive any investigation made by any Holder and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
3.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise
any right, power, or remedy accruing to any Holder, upon any breach, default or
noncompliance of the Company under this Agreement shall impair any such right,
power, or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent, or approval of any kind or character of any Holder's
part of any breach, default or noncompliance under the Agreement or any waiver
on such Holder's part of any provisions or conditions of this Agreement must be
in writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement, by law, or otherwise
afforded to Holders, shall be cumulative and not alternative.
3.7 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure to
the benefit of, and shall be binding upon, the successors
and permitted assigns of the parties hereto.
3.8 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3.9 COSTS AND ATTORNEYS' FEES. In the event that any dispute among the
parties results in litigation, the prevailing party in such dispute shall be
entitled to recover from the other party all reasonable fees, costs and expenses
of enforcing any right of the prevailing party, including
Page 11
without limitation, reasonable attorneys' fees and expenses; provided, however,
that in the case of any negotiated settlement of any litigation or arbitration
between the parties, there shall be no "prevailing party" for purposes of this
Section 3.9. As used herein, the term "attorneys' fees" shall be deemed to mean
the full and actual cost of any legal services actually performed in connection
with the matters involved, calculated on the basis of usual fees charged by the
attorneys performing such services.
3.10 ADJUSTMENTS FOR STOCK SPLITS AND CERTAIN OTHER CHANGES. Wherever in
this Agreement there is a reference to a specific number of shares of Common
Stock of the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock, the
specific number of shares so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the affect on the outstanding shares of such
class or series of stock by such subdivision, combination or stock dividend.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
TAG-IT PACIFIC, INC.
By: /S/ XXXXX XXXX
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Commerce Investment Group, LLC
By: /S/ XXXXXX XXXX
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Page 12
EXHIBIT A
FORM OF INVESTOR RIGHTS AGREEMENT JOINDER
By signing and returning this Investor Rights Agreement Joinder, the
undersigned agrees to be a party to that certain Investor Rights Agreement,
dated as of December __, 2000 by and among the Company and Commerce Investment
Group, LLC, a copy of which has been presented to the undersigned along with
this Investor Rights Agreement Joinder. The undersigned shall have all rights,
and shall observe all the obligations, applicable to an "INVESTOR" as set forth
in the Investor Rights Agreement as if the undersigned had originally signed the
Investor Rights Agreement.
Date:
---------------------
INVESTOR:
---------------------------------
[Signature]
---------------------------------
[Please print name]
Address:
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