EXHIBIT 99.2
THIS WARRANT AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE
HEREUNDER MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION
THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
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FORM OF
WARRANT TO PURCHASE COMMON STOCK
OF
TAG-IT PACIFIC, INC.
---------------
THIS CERTIFIES THAT, for value received, [ ], or his or her permitted
registered assigns ("HOLDER"), is entitled, subject to the terms and conditions
of this Warrant, at any time or from time to time after the issuance date of
this Warrant (the "EFFECTIVE DATE"), and before 5:00 p.m. Pacific Time on
December 28, 2005 (the "EXPIRATION DATE"), to purchase from TAG-IT PACIFIC,
INC., a Delaware corporation (the "COMPANY"), up to [ ]shares of Common Stock of
the Company at a price per share equal to the Purchase Price (as defined below).
Both the number of shares of Common Stock purchasable upon exercise of this
Warrant and the Purchase Price are subject to adjustment and change as provided
herein.
1. CERTAIN DEFINITIONS. As used in this Warrant the following terms shall have
the following respective meanings:
1.1 "ADJUSTED PRICE" shall mean, initially, [$ ]as may be adjusted from
time to time pursuant to Section 4 hereof.
1.2 "COMMON STOCK" shall mean the Common Stock of the Company and any other
securities at any time receivable or issuable upon exercise of this Warrant.
1.3 "FAIR MARKET VALUE" of a share of Common Stock as of a particular date
shall mean:
(a) If traded on a securities exchange or the Nasdaq National Market, the
Fair Market Value shall be deemed to be the average of the closing prices of the
Common Stock of the Company on such exchange or market over the five (5) trading
days ending immediately prior to the applicable date of valuation;
(b) If traded over-the-counter, the Fair Market Value shall be deemed to be
the average of the closing bid and asked quotations averaged over the fifteen
(15)-day period ending immediately prior to the applicable date of valuation;
and
(c) If there is no public market, the Fair Market Value shall be the value
thereof, as agreed upon in good faith by the Company and the Holder; provided,
however, that if the Company and the Holder cannot agree on such value, such
value shall be determined by an independent valuation firm experienced in
valuing businesses jointly selected in good faith by the Company and the Holder.
Fees and expenses of the valuation firm shall be paid for by the Company.
1.4 "PURCHASE PRICE" shall mean the Adjusted Price multiplied by 1.10 plus
25% of the amount, if any, by which the Fair Market Value as of the date of
exercise exceeds the Adjusted Price; provided, in no event shall the Purchase
Price exceed $5.25 (subject to SECTION 4 below).
1.5 "REGISTERED HOLDER" shall mean any Holder in whose name this Warrant is
registered upon the books and records maintained by the Company.
1.6 "WARRANT" as used herein, shall include this Warrant and any warrant
delivered in substitution or exchange therefor as provided herein.
2. EXERCISE OF WARRANT
2.1 PAYMENT. Subject to compliance with the terms and conditions of this
Warrant and applicable securities laws, this Warrant may be exercised, in whole
or in part at any time or from time to time, on or before the Expiration Date by
the delivery (including, without limitation, delivery by facsimile) of the form
of Notice of Exercise attached hereto as EXHIBIT 1 (the "NOTICE OF EXERCISE"),
duly executed by the Holder, at the principal office of the Company, and as soon
as practicable after such date, surrendering
(a) this Warrant at the principal office of the Company, and
(b) payment in cash (by check) or by wire transfer of an amount equal to
the product obtained by multiplying the number of shares of Common Stock being
purchased upon such exercise by the then effective Purchase Price (the "EXERCISE
AMOUNT").
2.2 NET ISSUE EXERCISE. In lieu of the payment methods set forth in SECTION
2.1(B) above, the Holder may elect to exchange all or some of this Warrant for
shares of Common Stock equal to the value of the amount of the Warrant being
exchanged on the date of exchange. If Holder elects to exchange this Warrant as
provided in this SECTION 2.2, Holder shall tender to the Company the Warrant for
the amount being exchanged, along with written notice of Holder's election to
exchange some or all of the Warrant, and the Company shall issue to Holder the
number of shares of the Common Stock computed using the following formula:
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X = Y (A-B)
-----------
A
Where: X = the number of shares of Common Stock to be issued
to Holder.
Y = the number of shares of Common Stock purchasable
under the amount of the Warrant being exchanged
(as adjusted to the date of such calculation).
A = the Fair Market Value of one share of the Common
Stock.
B = Purchase Price (as adjusted to the date of
such calculation).
2.3 STOCK CERTIFICATES; FRACTIONAL SHARES. As soon as practicable on or
after the date of any exercise of this Warrant but in any event within 5
business days after its receipt of the Exercise Amount, the Company shall issue
and deliver to the person or persons designated by the Holder a certificate or
certificates for the aggregate number of whole shares of Common Stock issuable
upon such exercise, together with cash in lieu of any fraction of a share equal
to such fraction of the current Fair Market Value of one whole share of Common
Stock as of such date of exercise. No fractional shares or scrip representing
fractional shares shall be issued upon an exercise of this Warrant.
2.4 PARTIAL EXERCISE; EFFECTIVE DATE OF EXERCISE. In case of any partial
exercise of this Warrant, the Company shall cancel this Warrant upon surrender
hereof and shall execute and deliver a new Warrant of like tenor and date for
the balance of the shares of Common Stock purchasable hereunder. This Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above. The person
entitled to receive the shares of Common Stock issuable upon exercise of this
Warrant shall be treated for all purposes as the holder of record of such shares
as of the close of business on the date the Company receives the Notice of
Exercise, subject to receipt of the Exercise Amount.
2.5 VESTING. The warrants shall vest fully upon issuance.
3. VALID ISSUANCE: TAXES. All shares of Common Stock issued upon the exercise of
this Warrant shall be validly issued, fully paid and non-assessable. The Company
shall not be required to pay any tax or other charge imposed in connection with
any transfer involved in the issuance of any certificate for shares of Common
Stock in any name other than that of the Registered Holder of this Warrant, and
in such case the Company shall not be required to issue or deliver any stock
certificate or security until such tax or other charge has been paid, or it has
been established to the Company's reasonable satisfaction that no tax or other
charge is due.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of shares of
Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities or property receivable or issuable upon exercise of this
Warrant) and the Purchase Price are subject to adjustment upon occurrence of the
following events:
4.1 ADJUSTMENT FOR STOCK SPLITS, STOCK SUBDIVISIONS OR COMBINATIONS OF
SHARES. The Adjusted Price of this Warrant shall be proportionally decreased and
the number of shares of
Page 3
Common Stock issuable upon exercise of this Warrant (or any shares of stock or
other securities at the time issuable upon exercise of this Warrant) shall be
proportionally increased to reflect any stock split or other subdivision of the
Company's Common Stock. The Adjusted Price of this Warrant shall be
proportionally increased and the number of shares of Common Stock issuable upon
exercise of this Warrant (or any shares of stock or other securities at the time
issuable upon exercise of this Warrant) shall be proportionally decreased to
reflect any reverse stock split, consolidation or combination of the Company's
Common Stock.
4.2 ADJUSTMENT FOR DIVIDENDS OR DISTRIBUTIONS OF STOCK OR OTHER SECURITIES
OR PROPERTY. In case the Company shall make or issue, or shall fix a record date
for the determination of eligible holders entitled to receive, a dividend or
other distribution with respect to the Common Stock (or any shares of stock or
other securities at the time issuable upon exercise of the Warrant) payable in
(a) securities of the Company (including debt instruments), or (b) assets
(excluding cash dividends paid or payable solely out of retained earnings),
then, in each such case, the Holder of this Warrant on exercise hereof at any
time after the consummation, effective date or record date of such dividend or
other distribution, shall receive, in addition to the shares of Common Stock (or
such other stock or securities) issuable on such exercise prior to such date,
and without the payment of additional consideration therefor, the securities or
such other assets of the Company to which such Holder would have been entitled
upon such date if such Holder had exercised this Warrant on the date hereof and
had thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and all such additional securities or
other assets distributed with respect to such shares as aforesaid during such
period giving effect to all adjustments called for by this SECTION 4.
4.3 RECLASSIFICATION. If the Company, by reclassification of securities or
otherwise, shall change any of the securities as to which purchase rights under
this Warrant exist into the same or a different number of securities of any
other class or classes, this Warrant shall thereafter represent the right to
acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities that were subject to the
purchase rights under this Warrant immediately prior to such reclassification or
other change, and the Adjusted Price therefore shall be appropriately adjusted,
all subject to further adjustment as provided in this SECTION 4. No adjustment
shall be made pursuant to this SECTION 4.3 upon any conversion or redemption of
the Common Stock which is the subject of SECTION 4.5.
4.4 ADJUSTMENT FOR CAPITAL REORGANIZATION, MERGER OR CONSOLIDATION. In case
of any capital reorganization of the capital stock of the Company (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or any merger or consolidation of the Company with or into
another corporation, or the sale of all or substantially all the assets of the
Company then, and in each such case, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
Holder of this Warrant shall thereafter be entitled to receive upon exercise of
this Warrant, during the period specified herein and upon payment of the
Purchase Price then in effect, the number of shares of stock or other securities
or property (including cash) to which the holder of the shares deliverable upon
exercise of this Warrant would have been entitled to receive in such
reorganization, consolidation, merger, sale or transfer if this Warrant had been
exercised immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this SECTION 4. The
foregoing provisions of this SECTION 4.4 shall similarly apply to successive
reorganizations,
Page 4
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation that are at the time receivable upon the exercise of this
Warrant.
4.5 CONVERSION OF COMMON STOCK. In case all or any portion of the
authorized and outstanding shares of Common Stock of the Company are redeemed or
converted or reclassified into other securities or property pursuant to the
Company's Certificate of Incorporation or otherwise, or the Common Stock
otherwise ceases to exist, then, in such case, the Holder of this Warrant, upon
exercise hereof at any time after the date on which the Common Stock is so
redeemed or converted, reclassified or ceases to exist (the "TERMINATION DATE"),
shall receive, in lieu of the number of shares of Common Stock that would have
been issuable upon such exercise immediately prior to the Termination Date, the
securities or property that would have been received if this Warrant had been
exercised in full and the Common Stock received thereupon had been
simultaneously converted immediately prior to the Termination Date, all subject
to further adjustment as provided in this Warrant. Additionally, the Adjusted
Price shall be immediately adjusted such that the aggregate Purchase Price of
the maximum number of securities or other property for which this Warrant is
exercisable immediately after the Termination Date is equal to the aggregate
Purchase Price of the maximum number of shares of Common Stock for which this
Warrant was exercisable immediately prior to the Termination Date, all subject
to further adjustment as provided herein.
4.6 FULL RATCHET ADJUSTMENT FOR ISSUANCE OF ADDITIONAL STOCK. If at any
time after the Effective Date and prior to the first anniversary of the
Effective Date the Company shall issue any Additional Stock (as defined below)
without consideration or for a consideration per share less than the Adjusted
Price in effect on the date immediately prior to the date of issuance of such
Additional Stock, the Adjusted Price in effect immediately prior to each such
issuance shall automatically be adjusted on a full ratchet basis such that the
new Adjusted Price of the shares subject to exercise under this Warrant shall be
equal to the value of the consideration paid per each share of Additional Stock
issued. For purposes of this SECTION 4.6, "ADDITIONAL STOCK" shall mean any
shares of Common Stock issued or issuable by the Company, other than (i) shares
of Common Stock issued pursuant to any stock split, stock subdivision, stock
dividend, redemption, conversion or other reclassification of securities, or
recapitalization, each as may be contemplated in SECTIONS 4.1 through 4.3 and
SECTION 4.5 above, (ii) shares of Common Stock, or options or warrants to
purchase Common Stock, issued or issuable to employees, consultants or directors
of the Company for the primary purpose of soliciting or retaining their
employment or services directly or pursuant to a stock option plan or restricted
stock plan approved by the Board of Directors of the Company, (iii) shares of
Common Stock of the Company issuable upon exercise of warrants, options, notes
or other rights to acquire securities of the corporation outstanding as of
December 30, 2001, and (iv) any shares of Common Stock, or warrants to purchase
shares of Common Stock (and any shares of Common Stock issued upon exercise of
such warrants) issued pursuant to that certain Stock and Warrant Purchase
Agreement dated December 28, 2001 between the Company and the parties set forth
on the signature page thereto.
4.7 DETERMINATION OF VALUE OF CONSIDERATION OTHER THAN CASH OR MARKETABLE
SECURITIES. If the per-share consideration payable to the Holder hereof for
shares in connection with any transaction is in a form other than cash or
marketable securities, then for purposes of any adjustment required pursuant to
the provisions of this Section4, the value of such consideration shall be shall
be the value as agreed upon in good faith by the Company and the Holder;
provided, however, that if the Company and the Holder cannot agree on such
value, such value shall be
Page 5
determined by an independent valuation firm experienced in valuing such property
jointly selected in good faith by the Company and the Holder. All Fees and
expenses of the valuation firm shall be paid for by the Company. In all events,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to
the end that the provisions of this Warrant shall be applicable after that
event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.
5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in the Purchase
Price, or number or type of shares issuable upon exercise of this Warrant, the
Chief Financial Officer or Controller of the Company shall compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of the adjusted Purchase
Price. The Company shall promptly send (by facsimile and by either first class
mail, postage prepaid or overnight delivery) a copy of each such certificate to
the Holder. In addition, if at any time prior to the Expiration Date:
5.1 the Company shall declare any dividend payable in any securities or
make any distribution to its stockholders;
5.2 the Company shall offer to its stockholders as a class any additional
shares of Common Stock or securities convertible into Common Stock or any right
to subscribe to Common Stock or securities convertible or exchangeable into
Common Stock; or
5.3 a dissolution or winding up of the Company (other than in connection
with a consolidation, merger or sale of all or substantially all of its
property, assets and business as an entirety) shall be proposed;
then in any one or more of such events, the Company shall give notice
in writing of such event to the Holder at least 10 days prior to the
date fixed as a record date or the date of closing the transfer books
for the determination of the stockholders entitled to such dividend,
distribution or subscription rights, or for the determination of
stockholders entitled to vote on such proposed dissolution,
liquidation or winding up. Such notice shall specify such record date
or date of the closing of the transfer books, as the case may be.
6. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory to the
Company of the ownership of and the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to it, and (in the case
of mutilation) upon surrender and cancellation of this Warrant, the Company will
execute and deliver in lieu thereof a new Warrant of like tenor as the lost,
stolen, destroyed or mutilated Warrant.
7. RESERVATION OF COMMON STOCK. The Company hereby covenants 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 are from time to time issuable upon exercise of this Warrant and,
from time to time, will take all steps necessary to amend its Certificate of
Incorporation to provide sufficient reserves of shares of Common Stock issuable
upon exercise of this Warrant. All such shares shall be duly authorized, and
when issued upon such exercise, shall be validly issued, fully paid and
non-assessable, free and clear of all liens, security
Page 6
interests, charges and other encumbrances or restrictions on sale and free and
clear of all preemptive rights, except encumbrances or restrictions arising
under federal or state securities laws. Issuance of this Warrant shall
constitute full authority to the Company's Officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the exercise of this Warrant.
8. TRANSFER AND EXCHANGE. Subject to the terms and conditions of this Warrant
and compliance with all applicable securities laws, this Warrant and all rights
hereunder may be transferred to any Registered Holder's parent, subsidiary or
affiliate or to any officer, director, partner or member of any such parent,
subsidiary or affiliate, in whole or in part, on the books of the Company
maintained for such purpose at the principal office of the Company referred to
above, by the Registered Holder hereof in person, or by duly authorized
attorney, upon surrender of this Warrant properly endorsed and upon payment of
any necessary transfer tax or other governmental charge imposed upon such
transfer. Upon any permitted partial transfer, the Company will issue and
deliver to the Registered Holder a new Warrant or Warrants with respect to the
shares of Common Stock not so transferred. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that when this
Warrant shall have been so endorsed, the person in possession of this Warrant
may be treated by the Company, and all other persons dealing with this Warrant,
as the absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented hereby, any notice to the contrary
notwithstanding; provided, however that until a transfer of this Warrant is duly
registered on the books of the Company, the Company may treat the Registered
Holder hereof as the owner for all purposes.
9. RESTRICTIONS ON TRANSFER. By acceptance hereof, the Holder acknowledges that
this Warrant and the capital stock of the Company that may be issued upon its
exercise have not been registered under the Securities Act, and Holder agrees
not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose
of this Warrant or any capital stock issued upon its exercise in the absence of
(i) an effective registration statement under the Securities Act as to this
Warrant or such securities and registration or qualification of this Warrant or
such securities under any applicable Blue Sky or state securities laws then in
effect, or (ii) an opinion of counsel, reasonably satisfactory to the Company,
that such registration and qualification are not required. In the reasonable
discretion of the Company, the Company may condition any transfer of all or any
portion of this Warrant or the capital stock of the Company that may be issued
upon its exercise (other than a disposition satisfying the conditions set forth
in clause (i) of SECTION 9(I) above) upon the transferee's delivery to the
Company of a written agreement, in form and substance reasonably satisfactory to
the Company, whereby the transferee makes such representations and warranties to
and for the benefit of the Company as are comparable to the representations and
warranties of the Holder set forth in SECTION 10 below.
10. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder
hereby represents, warrants and covenants that any shares of stock purchased
upon exercise of this Warrant shall be acquired for investment only and not with
a view to, or for sale in connection with, any distribution thereof; that the
Holder has had such opportunity as such Holder has deemed adequate to obtain
from representatives of the Company such information as is necessary to permit
the Holder to evaluate the merits and risks of its investment in the Company;
that the Holder is able to bear the economic risk of holding such shares as may
be acquired pursuant to the exercise of this Warrant for an indefinite period;
that the Holder understands that the shares of stock acquired pursuant to the
exercise of this Warrant will not be registered under the 1933 Act (unless
otherwise
Page 7
required pursuant to exercise by the Holder of the registration rights, if any,
granted to the Registered Holder) and will be "restricted securities" within the
meaning of Rule 144 under the 1933 Act and that the exemption from registration
under Rule 144 will not be available for at least one (1) year from the date of
exercise of this Warrant, subject to any special treatment by the SEC for
exercise of this Warrant pursuant to SECTION 2.2, and even then will not be
available unless a public market then exists for the stock, adequate information
concerning the Company is then available to the public, and other terms and
conditions of Rule 144 are complied with; and that all stock certificates
representing shares of stock issued to the Holder upon exercise of this Warrant
or upon conversion of such shares may have affixed thereto a legend
substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF,
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT
SUBJECT TO, SUCH REGISTRATION.
11. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company. In
the absence of affirmative action by such Holder to purchase Common Stock by
exercise of this Warrant or Common Stock upon conversion thereof, no provisions
of this Warrant, and no enumeration herein of the rights or privileges of the
Holder hereof shall cause such Holder hereof to be a stockholder of the Company
for any purpose.
12. NOTICES. Except as may be otherwise provided herein, all notices, requests,
waivers and other communications made pursuant to this Agreement shall be in
writing and shall be conclusively deemed to have been duly given (a) when hand
delivered to the other party; (b) when received when sent by facsimile at the
address and number set forth below; (c) three business days after deposit in the
U.S. mail with first class or certified mail receipt requested postage prepaid
and addressed to the other party as set forth below; or (d) the next business
day after deposit with a national overnight delivery service, postage prepaid,
addressed to the parties as set forth below with next-business-day delivery
guaranteed, provided that the sending party receives a confirmation of delivery
from the delivery service provider.
Page 8
To Holder: To the Company:
TAG-IT PACIFIC, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Each person making a communication hereunder by facsimile shall promptly
confirm by telephone to the person to whom such communication was
addressed each communication made by it by facsimile pursuant hereto. A
party may change or supplement the addresses given above, or designate
additional addresses, for purposes of this SECTION 12 by giving the
other party written notice of the new address in the manner set forth
above.
13. HEADINGS. The headings in this Warrant are for purposes of convenience in
reference only, and shall not be deemed to constitute a part hereof.
14. LAW GOVERNING. This Warrant shall be construed and enforced in accordance
with, and governed by, the laws of the State of California.
15. NO IMPAIRMENT. The Company will not, by amendment of its Certificate of
Incorporation or bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Registered Holder of this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase the par value of any shares of stock issuable
upon the exercise of this Warrant above the amount payable therefore upon such
exercise, and (b) will take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock upon exercise of this Warrant.
16. SEVERABILITY. If any term, provision, covenant or restriction of this
Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
17. COUNTERPARTS. For the convenience of the parties, any number of counterparts
of this Warrant may be executed by the parties hereto and each such executed
counterpart shall be, and shall be deemed to be, an original instrument.
Page 9
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the
Effective Date.
HOLDER TAG-IT PACIFIC, INC.
--------------------------------- --------------------------------------
By: By
--------------------------------- --------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Chief Financial Officer
--------------------------------- --------------------------------------
SIGNATURE PAGE TO
WARRANT TO PURCHASE COMMON STOCK
Page 10
EXHIBIT 1
NOTICE OF EXERCISE
(To be executed upon exercise of Warrant)
To: TAG-IT PACIFIC, INC.
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
the securities of TAG-IT PACIFIC, Inc., as provided for therein, and (check the
applicable box):
[ ] tenders herewith payment of the exercise price in full in the form of
cash or a certified or official bank check or wire transfer in same-day
funds in the amount of $____________ for _________ such securities.
[ ] Elects the Net Issue Exercise option pursuant to Section 2.2 of the
Warrant, and accordingly requests delivery of a net of ______________
of such securities.
Please issue a certificate or certificates for such securities in the name of,
and pay any cash for any fractional share to (please print name, address and
social security number):
Name:
-------------------------------------------------------------
Address:
-------------------------------------------------------------
Signature:
-------------------------------------------------------------
Note: The above signature should correspond exactly with the name on the first
page of this Warrant Certificate.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher whole number of shares.
EXHIBIT 2
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, the undersigned hereby sells, assigns and transfers unto the
parties set forth below all or such portion of the Warrants represented by the
within Warrant Certificate set forth below, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
____________________________ attorney, to transfer said Warrant Certificate on
the books of the within-named Company with respect to the number of Warrants set
forth below, with full power of substitution in the premises:
NAME(S) OF ASSIGNEE(S) ADDRESS # OF WARRANTS
------------------------------- ------------------------- --------------
And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants registered by said
Warrant Certificate.
Dated:
-------------------------------------------------------------
Signature:
-------------------------------------------------------------
Notice: The signature to the foregoing Assignment must correspond to the name as
written upon the face of this security in every particular, without alteration
or any change whatsoever.
