EXHIBIT 99.3
FORM OF
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made and entered into as
of __________, 200_, by and between TAG-IT PACIFIC, INC., a Delaware corporation
(the "Company") and ____________ ("INVESTOR")
RECITALS
A. The Company and Investor are party to that certain Stock and Warrant
Purchase Agreement, dated as of __________, 200__ (the "PURCHASE AGREEMENT")
which provides for, among other things, the issuance to the Investor of shares
(the "PURCHASED SHARES") of common stock, par value $.001 per share, of the
Company (the "COMMON STOCK") and Warrants (the "WARRANTS") to purchase
additional shares of Common Stock (the "WARRANT SHARES.")
B. The execution and delivery by the parties of this Agreement is a
condition precedent to the consummation of the transactions contemplated by the
Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the agreements and
mutual covenants contained herein, the parties hereto agree as follows:
1. DEFINITIONS. As used in this Agreement, all capitalized terms and
phrases. Including the term, "Securities," not defined herein have the meaning
set forth in the Purchase Agreement.
2. NON-TRANSFER PERIOD. Other than with respect to transfers in compliance
with the transfer provisions of this Agreement (including Section 3 below) and
the Purchase Agreement to an "Affiliate"(as defined below) who or which agrees
to be bound by all of the transfer restrictions and other provisions set out in
this Agreement, the Investor shall not sell, assign, transfer, pledge,
hypothecate, gift, encumber or otherwise dispose of (or enter into any option,
put, call or straddle or other agreement with respect to)(a "TRANSFER") any of
the Securities during the period commencing on the date of issuance to the
Investor of such Security (with respect to a Security, the "ISSUE DATE") and
ending on the first anniversary of the acquisition by Investor from the Company
of that Security (with respect to each such Security, the "NON-TRANSFER
PERIOD"), unless the Transfer is approved in writing by the Company in its sole
discretion. For purposes of this Agreement, "AFFILIATE" shall mean a person that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the first person and, with
respect to the Investor only, the Investor's spouse and the Investor's and the
Investor's spouse's parents, grandparents, brothers, sisters, children,
grandchildren, nieces and nephews. "CONTROL" (including the terms "controlled
by" and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by
contract, as a trustee or executor, or otherwise. "PERSON" means any individual,
corporation, partnership, limited liability company, 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.
3. PERMITTED TRANSFERS FOLLOWING NON-TRANSFER PERIOD. Following expiration
of the applicable Non-Transfer Period, a Security may not be Transferred unless:
3.1 such Transfer is made in accordance with the provisions of this
Agreement and, as applicable, the Purchase Agreement and the terms of the
applicable Warrant; and
3.2 such Transfer is made pursuant to an effective registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and any applicable
state securities laws, or an exemption from such registration, and prior to any
such Transfer the Investor shall give the Company (A) notice describing the
manner and circumstances of the proposed Transfer and (B) if reasonably
requested by the Company, a written opinion of legal counsel, which shall be
reasonably satisfactory to the Company and its counsel, to the effect that the
proposed Transfer of Shares may be effected without registration under the
Securities Act and any applicable state securities laws. The Company shall have
no obligation to register the Shares for resale under the Securities Act.
4. SHARE CERTIFICATES. Each certificate representing the Shares shall be
stamped with legends in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE ACT AND THE RULES AND REGULATIONS OF THE SECURITIES
AND EXCHANGE COMMISSION THEREUNDER, AND THE SECURITIES LAWS OF ANY SUCH
STATE."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER LIMITATIONS AND RESTRICTIONS SET FORTH IN A STOCKHOLDERS
AGREEMENT BETWEEN THE COMPANY AND THE HOLDER HEREOF, A COPY OF WHICH IS
ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY."
5. VOTING LIMITATION; PROXY. Until the first anniversary of the Issue Date
of the Purchased Shares, the Investor agrees (i) not to vote the Purchased
Shares or Warrant Shares on any matter to which the Investor is entitled to vote
at a meeting of the stockholders of the Company (or to express consent or
dissent to corporate action in writing without a meeting), including, without
limitation, in the election of directors, unless instructed by the Board of
Directors of the Company to do so and, if so instructed, the Investor agrees to
vote the Purchased Shares or Warrant Shares at the meeting (or express consent
or dissent to corporate action in writing without a meeting) only in the manner
instructed by the Board of Directors of the Company, and (ii) unless otherwise
instructed by the Board of Directors of the Company, to attend or be represented
by proxy at all special and annual meetings of the stockholders of the Company
such that the Purchased Shares, and when issued, the Warrant Shares are present
at the meeting for purposes of determining the presence of a quorum.
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6. MISCELLANEOUS.
6.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed as original but all of which
together shall constitute one and the same instrument.
6.2 SEVERABILITY. Wherever possible each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement and shall be interpreted so as to be
effective and valid.
6.3 ASSIGNMENT. This Agreement shall not be assigned without the prior
written consent of the parties hereto and no rights, or any direct or indirect
interest herein, shall be transferable hereunder without the prior written
consent of the other parties hereto.
6.4 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 the addresses indicated
on Schedule A to the Purchase Agreement or at such address as the Investor 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 for
notices under this Section 6.4 by giving written notice of such changed address
or facsimile number to the other parties hereto as provided in this Section 6.4.
6.5 CONSTRUCTION AND INTERPRETATION. Should any provision of this Agreement
require judicial interpretation, the parties hereto agree that the court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against one party by reason of the rule
of construction that a document is to be more strictly construed against the
party that itself or through its agent prepared the same, it being agreed that
the Company, the Investor and their respective agents have participated in the
preparation hereof.
6.6 ENTIRE AGREEMENT. This Agreement and the other written agreements
between the Company and the Investor represent the entire agreement between the
parties concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein; PROVIDED, if there is a conflict between this
Agreement and any other document executed
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contemporaneously herewith with respect to the obligations described herein, the
provision of this Agreement shall control.
6.7 ARBITRATION. Any dispute or controversy other than requests for
immediate equitable relief, arising under, out of, or in connection with or in
relation to this Agreement, and any amendments thereto or the breach thereof,
shall be determined and settled by arbitration to be held in County of Los
Angeles, State of California, in accordance with the rules of the American
Arbitration Association. Any award rendered therein shall be final and binding
on each and all of the Parties and judgment may be entered thereon in any court
of competent jurisdiction.
6.8 COSTS AND ATTORNEYS' FEES. If any action, suit, arbitration or other
proceeding is instituted to remedy, prevent or obtain relief from a default in
the performance by any party to this Agreement of its obligations under this
Agreement, the prevailing party (as determined by the court or other
fact-finder) will be entitled to recover from the losing party all actual costs
incurred in each and every such action, suit, arbitration or other proceeding,
including any and all appeals or petitions therefrom, including, without
limitation, reasonable attorneys' fees and disbursements.
6.9 SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other parties to sustain damages for which it
would not have an adequate remedy at law for money damages, and therefore each
of the parties hereto agrees that in the event of any such breach the aggrieved
parties shall be entitled to the remedy of specific performance of such
covenants and agreements and injunctive and other equitable relief in addition
to any other remedy to which they may be entitled, at law or in equity.
6.10 AMENDMENT AND WAIVER. This Agreement may be amended or modified only
upon the written consent of the Company and the Investor. The obligations of the
Company and the rights of the Investor under the Agreement may be waived only
with the written consent of the Investor.
6.11 GOVERNING LAW. THIS AGREMEENT IS MADE AND ENTERED INTO IN THE STATE OF
CALIFORNIA AND THE LAWS OF SAID STATE SHALL GOVERN THE VALIDITY AND
INTERPRETATION HEREOF AND THE PERFORMANCE BY THE PARTIES HERETO OF THEIR
RESPECTIVE DUTIES AND OBLIGATIONS HEREUNDER.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above-written.
TAG-IT PACIFIC, INC.
By
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Ronda Sallmen
Title: Chief Financial Officer
INVESTOR
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