SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 16, 1998
TAG-IT PACIFIC, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-13669 95-4654481
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3820 South Hill Street
Los Angeles, California 90037
(Address of Principal Executive Offices)
(213) 234-9606
(Registrant's Telephone Number)
<PAGE>
ITEM 5. OTHER EVENTS
Reference is made to the two press releases of Registrant, issued on
October 19, 1998 and October 27, 1998, respectively, which contain information
meeting the requirements of this Item 5, and which are incorporated herein by
this reference. Copies of these press releases are attached to this Form 8-K as
Exhibits 99.1 and 99.2, respectively.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
October 28, 1998 TAG-IT PACIFIC, INC.
By: /s/ Francis Shinsato
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Francis Shinsato
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibits Page Number
99.1 Press Release dated October 19, 1998. 5
99.2 Press Release dated October 27, 1998. 6
99.3 Binding Letter of Understanding, dated October 14, 1998. 8
99.4 Side Letter Agreement, dated October 14, 1998. 13
Exhibit 99.1
NEWS BULLETIN RE: Tag-It Pacific, Inc.
3820 South Hill Street
Los Angeles, CA 90037
For further information: 234-9606
TRADED: AMEX:TAG
AT THE COMPANY:
Investor Relations Department
(213) 234-9606 Ext. 185
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FOR IMMEDIATE RELEASE
OCTOBER 19, 1998
TAG-IT PACIFIC, INC. CLOSES SALE OF
2,390,000 SHARES OF ITS COMMON STOCK
LOS ANGELES, Calif.-- (BUSINESS WIRE) -- October 19, 1998 -- Tag-It Pacific,
Inc. (AMEX: TAG), one of the world' leading single-source providers of brand
identity programs to the fashion driven apparel and licensed consumer product
industries, today announced that it sold 2,390,000 shares of its Common Stock to
a strategic investor for an aggregate price of $2,688,750 (or $1.125 per share).
Because of a confidentiality agreement, Tag-It Pacific is prevented from
disclosing more detailed information at this time. Further information regarding
this investment will be provided within the next ten days.
Tag-It Pacific is a single-source provider of complete brand identity programs
to manufacturers of fashion driven apparel and licensed consumer product
industries. The Company designs and produces high quality paper, metal and
injection molded boxes, woven and leather labels, paper hanging and bar coded
tags, metal jean buttons, custom shopping bags. Tag-It Pacific also designs
and/or manufactures products for a variety of major brand and private label
oriented companies including Guess?, Calvin Klein, Tommy Hilfiger, Sony
Signatures, Warner Bros. and Carol Little, among others.
# # #
Exhibit 99.2
NEWS ANNOUNCEMENT
FOR IMMEDIATE RELEASE
KG INVESTMENT PURCHASES 37 PERCENT
EQUITY STAKE IN TAG-IT PACIFIC
LOS ANGELES, CA - OCTOBER 27, 1998 - Tag-It Pacific, Inc. (AMEX:TAG), one of the
world's leading single-source providers of brand identity programs to the
apparel and licensed consumer product industries, today provided details and
identified the investment company that recently completed a $2.7 million
investment in Tag-It Pacific.
KG Investment, LLC, a Los Angeles-based private investment company, purchased
2.39 million restricted shares of Tag-It Pacific Common Stock for an aggregate
price of $2,688,750.
KG Investment is owned by Gerard Guez and Todd Kay. Messrs. Guez and Kay have
over 35 years of combined experience in the apparel industry where they have
developed substantial expertise in the private label casual apparel business,
having developed strong relationships with many specialty retail and mass
merchandise store chains.
Colin Dyne, Chief Executive Officer of Tag-It Pacific, commented: "We share KG
Investment's enthusiasm for the potential of Tag-It's strategic growth plan. It
is gratifying to welcome industry leaders of their experience and accomplishment
as major long-term shareholders of the Company."
The investment amounts to an approximate 37% equity stake in Tag-It Pacific, and
the shares purchased by KG Investment, LLC are restricted securities as defined
by Rule 144 under the Securities Act of 1933. KG Investment has also agreed that
it will not seek to dispose of its shares prior to October 16, 2000, except to
certain affiliated parties, without prior written consent of Tag-It Pacific. KG
Investment has also agreed to certain additional restrictions on the transfer
and voting of the shares it purchased and has been granted piggyback
registration rights.
Tag-It Pacific is a single-source provider of complete brand identity programs
to the fashion driven apparel, private label apparel and licensed consumer
product industries. The Company designs and produces high quality paper, metal
and injection molded boxes, woven and leather labels, paper hanging and bar
coded tags, metal jeans buttons and custom shopping bags. Companies and brands
utilizing Tag-It designed and/or manufactured products include Guess?, Calvin
Klein, Tommy Hilfiger, Sony Signatures, Warner Bros. and Carol Little, among
others.
This news release contains forward-looking statements and opinions of Tag-It
Pacific's management. Neither Gerard Guez, Todd Kay nor any of the companies
with which they are affiliated have any contractual obligation to engage in
business with, or develop business for, Tag-It Pacific. All forward-looking
statements and opinions are necessarily speculative and readers are advised not
to place undue reliance on any such forward-looking statements or opinions,
which speak only as of the date made. Actual results could vary materially from
those anticipated for a variety of reasons, including, without limitation, the
risk factors set forth in the Company's quarterly report on Form 10-Q for the
quarter ended June 30, 1998, which readers are advised to review in connection
with this news release.
# # #
CONTACT:
David C. Collins
Jaffoni & Collins
212/835-8500, [email protected]
Exhibit 99.3
TAG-IT PACIFIC
October 14, 1998
Gerard Guez
RE: Binding Letter of Understanding
Dear Gerard:
This letter sets forth the agreement by you to invest in Tag-It
Pacific, Inc. (the "Company").
Gerard Guez, or if this agreement is assigned to and agreed to in
writing by Todd Kay and/or Tarrant Apparel Group, Tarrant Apparel Group and/or
Todd Kay, as applicable (in any case, the "Investor"), agrees to purchase
2,390,000 newly issued shares of the Company's common stock at a per share price
of $1 1/8. The closing of the purchase of the shares hereunder shall occur on
October 16, 1998. Both parties agree to make no public disclosures regarding the
transaction documented by this agreement prior to October 23, 1998, except that
the Company can issue a press release disclosing the number of shares sold and
the sales price. The Investor agrees that:
1. Prior to the termination of the Non-Transfer Period (as defined
below), the Investor shall not be permitted to sell or transfer any of
its shares, except for bona fide pledges as security for indebtedness,
unless the transfer (i) is approved by the Company in its sole
discretion, (ii) is to the Company, (iii) is to any trust or other
entity controlled by the Investor for personal tax or estate reasons
and the transferee agrees in writing to be bound by each of the terms
of this Agreement and that certain letter agreement (the "Side
Agreement") of even date herewith among the Dyne Shareholders (as
defined below) and the Investor to the same extent as if such
transferee were the "Investor" hereunder, (iv) to a limited liability
company which is and at all times remains wholly owned (beneficially
and of record) and controlled by Gerard Guez, Todd Kay and the Tarrant
Apparel Group and which agrees in writing to be bound by each of the
terms of this Agreement and the Side Agreement to the same extent as
if such transferee were the "Investor" hereunder, or (v) to Tarrant
Apparel Group, provided Tarrant Apparel Group agrees in writing to be
bound by each of the terms of this Agreement and the Side Agreement to
the same extent as if such transferee were the "Investor" hereunder.
Any approvals granted by the Board shall be in its sole and absolute
discretion. The "Non-Transfer Period" is defined as two years from the
date of acquisition of the Company shares pursuant to this agreement.
2. Following the Non-Transfer Period, the Investor may sell or transfer
any of such shares provided that any such sale (i) is in accordance
with the volume restrictions set forth in Rule 144, or (ii) is part of
a secondary offering initiated by the Company, or (iii) is a block
sale in a bona fide private transaction to a third party financial or
strategic investor. To the extent that a block sale or any other sale
not contemplated by the preceding clauses (i) or (ii) is executed, the
Company shall have the right of first refusal, which right will be
assignable, to purchase such shares upon the same (or economically
equivalent) terms and conditions as are set forth in the proposed
block sale.
3. During the Non-Transfer Period, the Investor shall agree to not vote
in favor of any merger, asset sale or other extraordinary transaction
involving the Company, if such transaction is not approved by the
majority of the Board of Directors; provided, however, in the event
that the price to be paid per share pursuant to such transaction is at
least $8.00 per share, the Investor shall not be prohibited from
voting in favor of such transaction. The value of any non-cash
consideration shall be determined by the Board, with the advice of its
outside investment banker.
4. During the Non-Transfer Period, neither the Investor, nor any person
or entity affiliated with or controlled by the Investor, shall
purchase any additional shares of the Company's common stock, without
the Company's consent, in its sole and absolute discretion (except as
provided in the Side Agreement). The Company will prior to the closing
procure from the Dyne Shareholders (Harold Dyne, Colin Dyne, Mark
Dyne, Larry Dyne and Jonathan Burstein) an agreement that during the
Non-Transfer Period, none of the Dyne Shareholders, nor any person or
entity affiliated with or controlled by the Dyne Shareholders, shall
purchase any additional shares of Company common stock, other than
from each other or the Company, without the Investors consent, in its
sole and absolute discretion (except as provided in the Side
Agreement).
5. Of the shares purchased hereunder by Investor, 386,778 of such shares,
as adjusted for stock splits, stock dividends and other similar
transactions, shall be referred to herein as the "Neutral Shares." So
long as the Dyne Shareholders hold more than 1,000,000 shares of the
Company's common stock, the Neutral Shares shall be voted in the same
proportion as all other outstanding shares of the Company are voted on
all matters presented to the Company's shareholders. A legend shall be
placed on the certificate(s) representing the Neutral Shares to
reflect these restrictions and Investor agrees to cause any and all
transferee to sign an agreement to be subject to such restrictions.
The number of Neutral Shares shall be reduced share by share by any
shares of Company common stock purchased by the Dyne Shareholders from
the Company. The specific shares that will cease to be Neutral Shares
shall be designated by the Investor.
6. During the Non-Transfer Period, the Investor shall have the right to
vote its shares, other than the Neutral Shares, in accordance with its
own objectives; provided, that neither the Investor, nor an entity
affiliated with or controlled by the Investor, shall promote or
initiate, or encourage another party to promote or initiate, a proxy
solicitation or vote contest in opposition to the management or the
Board of the Company, nor shall the Investor, nor any entity
affiliated with or controlled by the Investor, solicit proxies against
the management or the Board of the Company.
7. The Investor agrees that until after the Annual Meeting of
Stockholders of the Company held in 2000, the Investor shall vote its
shares in the same proportion as all other outstanding shares voted
with respect to the election of directors by the Company; provided,
however, that, except as set forth above, the Investor shall be
entitled to cast its votes with respect to shares, other than the
Neutral Shares, on other matters raised before the shareholders in its
sole and absolute discretion. Notwithstanding the foregoing, Investor
agrees to vote its shares to approve any amendment increasing the
number of shares of Company common stock reserved for issuance under
the Company's stock incentive plan, up to a maximum 900,000 shares, as
adjusted for stock splits, stock dividends and other similar
transactions.
8. Until after the Annual Meeting of Stockholders of the Company held in
2000, the Investor agrees not to nominate, or cause to be nominated,
any directors for election at any annual meeting.
9. The Investor shall be granted piggyback registration rights in order
to sell shares through a secondary offering pari passu with those
rights granted to the Dyne Shareholders. The Investor shall have the
right to sell the same proportion of Company shares held by it as any
shares being sold by the Dyne Shareholders, subject to any
restrictions imposed on each of these groups by the underwriter as
well as general market conditions. All expenses incurred in effecting
any such registration, including, without limitation, all registration
and filing fees, printing expenses, expenses of compliance with Blue
Sky laws, fees and disbursements of counsel for the Company, and
expenses of any audits incidental to or required by such registration
shall be borne by the Company; provided, however, that the Investor
shall bear its own legal expenses (if it retains separate counsel) and
all underwriting discounts or brokerage fees or commissions relating
to the sale of its shares pursuant to such registration.
10. The Company's shareholder rights plan will be amended to allow the
Investor to acquire the shares purchased hereunder without triggering
such plan.
11. The parties intend that the principal terms and conditions will be set
forth in a definitive agreement which shall be executed by all
parties, however if a definitive purchase and shareholder agreement is
not executed prior to the closing date, this Agreement shall be
binding. The shares issuable hereunder shall be restricted securities
under the Securities Act of 1933, as amended, and will contain
appropriate securities legends and legends referencing this agreement.
The Investor represents that it is an accredited investor as that term
is defined by Rule 501 under the Securities Act of 1933, as amended.
The Investor will make no public announcement of the matters
contemplated hereby until such time as the Investor is required to
make such disclosure under Section 13 or 16 of the Securities Exchange
Act of 1934, as amended. The Company represents and warrants that its
Annual Report on Form 10-K for the year ended December 31, 1997,
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998
and June 30, 1998, and Proxy Statement for the 1998 Annual Meeting of
Stockholders, as of the date each was filed with the Securities and
Exchange Commission, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements, in light of the
circumstances under which they were made, not misleading.
12. This letter represents the entire agreement between us pertaining to
the subject matter hereof. There are no warranties, representations or
other agreements between us in connection with the subject matter
hereof except as set forth or referred to herein. The agreement
contained herein shall bind and inure to the benefit of the
successors, assigns, personal representatives, heirs and legatees of
the respective parties. The agreement contained herein may be amended
or modified only by the written agreement of each of us. You and we
agree that this document has been executed and delivered in the State
of California and shall be construed, enforced and governed by the
laws thereof. In the event of any action, suit or proceeding brought
under or in connection with this agreement exclusive venue and
jurisdiction shall lie with the state and federal courts sitting in
the County of Los Angeles, City of Los Angeles, State of California,
and the prevailing party therein shall be entitled to recover, and the
other party hereto agrees to pay, the prevailing party's costs and
expenses in connection therewith, including reasonable attorneys fees.
If the foregoing accurately sets forth our agreement and understanding,
please countersign this letter where indicated.
Very truly yours,
TAG-IT PACIFIC, INC.
By: /s/ Colin Dyne
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Agreed to and Accepted:
October __, 1998
/s/ Gerard Guez
- ----------------------------
Gerard Guez
Exhibit 99.4
October 14, 1998
Gerard Guez
Dear Gerard:
This letter sets forth the agreement between you and the Dyne
Shareholders (Harold Dyne, Colin Dyne, Mark Dyne, Larry Dyne and Jonathan
Burstein) regarding the shares of Tag-It Pacific, Inc. (the "Company") common
stock held by the Dyne Shareholders and the Investor (as that term is defined in
the letter agreement (the "Letter Agreement") entered into concurrently between
the Investor and Tag-It).
The Dyne Shareholders hereby grant you a right of first refusal with
respect to any proposed sale or other transfer of their shares of the Company's
common stock to a third party. The Dyne Shareholders shall give you notice of
any such transfer (the "Notice") and you will have the right to purchase such
shares proposed to be transferred on the same price and terms as set forth in
the Notice. If you do not purchase such shares within 7 days of receipt of the
Notice, the Dyne Shareholders shall have the right to sell or otherwise transfer
such shares at a price per share equal to or greater than the price set forth in
the Notice at any time during the 60 day period following the expiration of such
7 day period. Any shares purchased hereunder by you shall be deemed to be
Neutral Shares as that term is defined under the Letter Agreement
You hereby grant to the Dyne Shareholders a right of first refusal with
respect to any proposed sale or other transfer of the Investor's shares of the
Company's common stock to a third party. You shall give the Mark Dyne notice of
any such transfer (the "Shareholder Notice") and the Dyne Shareholders will have
the right to purchase such shares proposed to be transferred on the same price
and terms as set forth in the Shareholder Notice. If the Dyne Shareholders do
not purchase such shares within 7 days of receipt of the Shareholder Notice, the
Investor shall have the right to sell or otherwise transfer such shares at a
price per share equal to or greater than the price set forth in the Shareholder
Notice at any time during the 60 day period following the expiration of such 7
day period.
This letter represents the entire agreement between us pertaining to
the subject matter hereof. There are no warranties, representations or other
agreements between us in connection with the subject matter hereof except as set
forth or referred to herein. The agreement contained herein shall bind and inure
to the benefit of the successors, assigns, personal representatives, heirs and
legatees of the respective parties. The agreement contained herein may be
amended or modified only by the written agreement of each of us. You and we
agree that this document has been executed and delivered in the State of
California and shall be construed, enforced and governed by the laws thereof. In
the event of any action, suit or proceeding brought under or in connection with
this agreement exclusive venue and jurisdiction shall lie with the state and
federal courts sitting in the County of Los Angeles, City of Los Angeles, State
of California, and the prevailing party therein shall be entitled to recover,
and the other party hereto agrees to pay, the prevailing party's costs and
expenses in connection therewith, including reasonable attorneys fees.
If the foregoing accurately sets forth our agreement and understanding,
please countersign this letter where indicated.
Very truly yours,
DYNE SHAREHOLDERS
/s/ Harold Dyne
---------------------------
Harold Dyne
/s/ Colin Dyne
---------------------------
Colin Dyne
/s/ Mark Dyne
---------------------------
Mark Dyne
/s/ Larry Dyne
---------------------------
Larry Dyne
/s/ Jonathan Burstein
---------------------------
Jonathan Burstein
Agreed to and Accepted:
October __, 1998
/s/ Gerard Guez
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Gerard Guez
