This WARRANT AGREEMENT (this "Agreement") is made and entered into as of the 26th day of November,
1997, by and between Tag-It Pacific, Inc., Inc., a Delaware corporation (the "Company"), and Troop Meisinger
Steuber & Pasich, LLP ("Holder"). In consideration of these premises and the mutual covenants and agreements
hereinafter set forth, and other good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Company and Holder agree as follows:
1. GRANT OF WARRANT.
In consideration of the sum of $10.00, the Company hereby grants to Holder the right and option (the
"Warrant"), upon the terms and subject to the conditions set forth in this Agreement, to purchase all or any
portion of such number of shares of Common Stock of the Company (the "Warrant Shares") as is equal to the
quotient of (i) 120% of the actual fees, costs and disbursements billed by Holder to the Company and its affiliates
in connection with the Company's initial public offering, divided by (ii) an amount equal to 90% of the greater of
$7.50 or the actual initial issuance price of a share of the Company's Common Stock in its initial public offering,
at an exercise price per share equal to 90% of the actual initial issuance price of a share of the Company's
Common Stock in the initial public offering (the "Exercise Price").
2. TERM OF WARRANT.
The Warrant shall terminate and expire at 5:00 p.m., Los Angeles time, on December 31, 2002 (the "Warrant
Expiration Date"), unless sooner terminated as provided herein.
(a) The Warrant is immediately exercisable with respect to all Warrant Shares.
(b) Notwithstanding anything to the contrary contained in this Agreement, the Warrant may not be exercised, in
whole or in part, unless and until any then-applicable requirements of all state and federal laws and regulatory
agencies shall have been fully complied with to the satisfaction of the Company and its counsel.
4. EXERCISE OF WARRANT.
There is no obligation t