TAG IT PACIFIC INC
EXHIBIT 10.53
<DOCUMENT>
<TYPE>EX-10.53
<SEQUENCE>15
<FILENAME>0015.txt
<DESCRIPTION>EXHIBIT 10.53
<TEXT>


     This SUPPLY AGREEMENT (this "AGREEMENT") is made as of this 15th day of
December, 2000 (the "EFFECTIVE DATE"), by and among, Tag-It Pacific, Inc., a
Delaware Corporation with its corporate office at 3820 South Hill Street, Los
Angeles, CA 90037 ("TAG-IT") on the one hand, Hubert Guez, Paul Guez and Azteca
 Production International, Inc., AZT International SA D RL, Commerce Investment
Group, LLC (collectively, the "GUEZ GROUP") and all present and future apparel
affiliates of those entities (all present and future apparel companies which are
directly or indirectly majority owned or controlled by Hubert Guez, including,
without limitation, those listed here, are collectively the "COVERED
COMPANIES").

                                    RECITALS

     A.   Tag-It is a single-source provider of brand identity and trim programs
          to manufacturers of apparel and licensed consumer products.

     B.   The Covered Companies are, among other things, manufacturers of
          apparel products.

     C.   Tag-It and the Guez Group desire to enter into this Agreement, which
          will expressly bind each of the Covered Companies whereby Tag-It will
          be a supplier of trim products for certain customers of the Covered
          Companies under the terms and conditions set forth in this Agreement.

     NOW THEREFORE, and in consideration of the mutual promises, covenants,
representations and good and valuable consideration set forth herein, the
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

1.   PRODUCTS, ORDERS AND PRICING.

     1.1  SUPPLY. Tag-It shall manufacture and/or procure, and shall be the
          supplier of the trim products (the "PRODUCTS"), as described in
          SCHEDULE 1.1 attached hereto, to the following customers of Covered
          Companies during the Term of this Agreement: *** and other customers
          as mutually agreed (collectively, the "Customers"). Guez and Azteca
          shall cause each of the Covered Companies to purchase trim services
          (including trim procurement and inventory management services) from
          Tag-It. Tag-It may perform its obligations hereunder directly, through
          owned and/or controlled subsidiaries and through independent
          contractors.

     1.2  PRICING. The purchase price that the Covered Companies will pay Tag-It
          for each of the Products is also listed in SCHEDULE 1.1, ***. Tag-It
          and the Covered Companies will conduct a pricing review once annually
          at such time as may be reasonably requested by the Covered Companies.

----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.


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<PAGE>


     1.3  MINIMUM OBLIGATION. The Guez Group shall cause the Covered Companies
          to purchase during each successive Contract Year a minimum annual
          aggregate total of Ten Million Dollars ($10,000,000) of Products from
          Tag-It (the "MINIMUM Obligation"). Each member of the Guez Group
          represents and warrants to Tag-It that the Minimum Obligation is an
          amount which is at least equal to the aggregate trim purchases by the
          Customers for the 12 month period ended November 30, 2000. For
          purposes of this Agreement, the first "CONTRACT YEAR" shall commence
          on the Effective Date and end on March 31, 2001 and successive
          Contract Year's shall mean and refer to each period of twelve (12)
          successive calendar months during the Term commencing on April l and
          ending March 31.

     1.4  DELIVERY SCHEDULES. The Covered Companies shall provide Tag-It with
          reasonable lead time for all orders for purchase and Tag-It shall
          timely fulfill all orders for purchases received from the Covered
          Companies and shall deliver the Products to wherever so instructed by
          the Covered Companies according to a reasonable delivery schedule. The
          parties hereto shall in good faith negotiate delivery schedules.

     1.5  RISK OF LOSS. Tag-It shall bear the risk of loss of, or damage to, the
          Products, until delivery in accordance with instructions from the
          Covered Companies, including common carriers.

     1.6  PURCHASE OF COVERED COMPANIES' CURRENT INVENTORY. Tag-It shall
          purchase $4,000,000 of the on-hand trim inventory of the Covered
          Companies less any inventory which the parties mutually agree is
          obsolete and in the event the parties cannot agree as to the quantity
          of obsolete inventory such determination shall be made by an
          arbitrator pursuant to the terms of Section 9.7 ("PURCHASED
          INVENTORY"). SCHEDULE 1.6, attached hereto, sets forth a listing of
          the Purchased Inventory. The Purchased Inventory shall be delivered to
          Tag-It, F.O.B. Puebla, Mexico together with a schedule of the Covered
          Companies' cost. The purchase price for the Inventory shall be the
          Covered Companies' cost and shall be paid in common stock of Tag-It
          based upon the closing market price of such common stock on December
          l3, 2000 ($4.00 per share) (the "Shares"). The Shares issued shall be
          "restricted stock" under federal securities law and the member of the
          Guez Group which is the holder of the Shares shall be referred to
          herein as the "Holder".

     1.7  HOLD PERIOD. The Shares will be "restricted" stock and shall be
          subject to other sale restrictions described in that certain Right of
          First Refusal and Sale Agreement between the parties executed
          concurrently with this Agreement.

2.   PAYMENT FOR THE PRODUCTS.

     2.1  INVOICES. Tag-It shall invoice the Covered Companies upon shipment,
          and payments by the Covered Companies shall be made directly to Tag-It
          net *** (***) days.

----------------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.


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<PAGE>


3.   PRODUCT QUALITY.

     3.1  QUALITY SPECIFICATIONS. The quality of the Products, including, among
          other things, the technical specifications in manufacturing the
          products, shall meet the reasonable specifications and standards of
          both parties, and shall be in accordance with the industry's
          generally-accepted specifications and quality standards.

     3.2  INSPECTION OF THE PRODUCTS. The Covered Companies and their
          representatives may, from time to time, upon reasonable notice and
          during regular business hours, inspect the manufacture of Products and
          conduct related quality control. In connection therewith, Tag-It shall
          provide reasonable assistance and access to Tag-It's facilities,
          personnel and materials. Tag-It shall comply with the Covered
          Companies' reasonable quality and inspection procedures during
          production and after shipment.

     3.3  PRODUCT QUALITY, PERFORMANCE AND PRICING DISPUTE RESOLUTION. If any
          dispute should arise concerning the performance by Tag-It of its
          obligations under Sections 1.2, 1.4, 1.5, and 3.1 and is not resolved
          within 60 days following receipt by Tag-It of a written notice given
          by the Covered Parties, such dispute shall be submitted to arbitration
          pursuant to the provisions of Section 9.7 below. Further, if the
          dispute is resolved, either as a result of agreement or the entry of a
          final order by a court of competent jurisdiction or any arbitrator
          empowered by the parties to finally resolve such dispute, in favor of
          the Covered Companies, then Tag-It shall have an additional 30-day
          period following such resolution in order to cure any failure to
          perform its obligations under Sections 1.2, 1.4, 1.5, and 3.1 and
          following such cure shall be fully reinstated of all rights hereunder
          without prejudice.

4.   TERM AND TERMINATION.

     4.1  TERM. The term of this Agreement shall continue from the Effective
          Date for a period of three (3) years ("TERM").

     4.2  RENEWAL TERM. This Agreement will automatically renew for consecutive
          three (3) year terms under the same terms and conditions set forth
          herein ("RENEWAL TERM") unless terminated by either party upon
          delivering written notice to the other party at least two hundred and
          seventy (270) days prior to the end of the then existing term.

5.   REPRESENTATIONS AND WARRANTIES.

     5.1  MUTUAL REPRESENTATIONS AND WARRANTIES. Each party represents and
          warrants to the other that:

          5.1.1 it has the right and authority to enter into this Agreement and
               to perform all of its respective obligations and undertakings
               herein;

          5.1.2 this Agreement is its valid and binding obligation, enforceable
               in accordance with its terms and has been duly and validly
               authorized by all necessary corporate or other action;


                                     Page 3
<PAGE>


          5.1.3 the rights and privileges granted or to be granted hereunder are
               and will at all times be free and clear of any liens, claims,
               charges or encumbrances;

          5.1.4 it has not done or omitted to do, nor will do or omit to do, any
               act or thing that would or might impair, encumber, or diminish
               the other party's full enjoyment of the rights and privileges
               granted and to be granted under this Agreement; and

          5.1.5 it is duly organized and existing in good standing under the
               laws of the jurisdiction in which it is organized, is duly
               qualified and in good standing as a foreign corporation in every
               state in which the character of its business requires such
               qualifications, and has the power to own its property and to
               carry on its business as now being conducted.

     5.2  REPRESENTATIONS, WARRANTIES AND COVENANTS OF GUEZ GROUP.

          5.2.1 AS TO BINDING SUCCESSORS. Additionally, each member of the Guez
               Group represents, warrants and agrees that each shall cause all
               present and future Covered Companies and any successors of the
               Covered Companies to be bound to the terms and conditions of this
               Agreement, and each covenants and agrees to assume and perform
               the Covered Companies' obligations hereunder. Failure of any such
               successor company to assume the obligations of the Covered
               Companies under this Agreement will constitute a breach of this
               Agreement by the Guez Group.

          5.2.2 IN CONNECTION WITH PURCHASE OF SHARES. Each member of the Guez
               Group understands that the Shares have not been registered under
               the Securities Act and that the Shares are being offered and sold
               pursuant to an exemption from registration contained in the
               Securities Act based in part upon the representations contained
               in this Agreement. Each member of the Guez Group hereby
               represents, warrants and covenants as follows:

               (a)  ECONOMIC RISK. Each have substantial experience in
                    evaluating and investing in private placement transactions
                    of securities in companies similar to Tag-It so that it is
                    capable of evaluating the merits and risks of its investment
                    in Tag-It and has the capacity to protect its own interests.
                    Holder must bear the economic risk of this investment
                    indefinitely unless the Shares are registered pursuant to
                    the Securities Act, or an exemption from registration is
                    available. Holder also understands that there is no
                    assurance that any exemption from registration under the
                    Securities Act will be available and that, even if
                    available, such exemption may not allow Holder to transfer
                    all or any portion of the Shares under the circumstances, in
                    the amounts or at the times Holder might propose.

               (b)  ACQUISITION FOR OWN ACCOUNT. It is acquiring the Shares for
                    their own account for investment only, and not with a view
                    towards their distribution.


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<PAGE>


               (c)  PROTECT THEIR INTEREST. Guez and Azteca represent that by
                    reason of their, or of their managements' business or
                    financial experience, Guez and Azteca have the capacity to
                    protect their own interests in connection with the
                    transactions contemplated in this Agreement. Further, Guez
                    and Azteca are aware of no publication of any advertisement
                    in connection with the transactions contemplated in this
                    Agreement.

               (d)  ACCREDITED INVESTOR. Each represents that it is an
                    accredited investor within the meaning of Regulation D under
                    the Securities Act.

               (e)  COMPANY INFORMATION. It has had an opportunity to discuss
                    Tag-It's business, management and financial affairs with
                    directors, officers and management of Tag-It and has had the
                    opportunity to ask questions of and receive answers from
                    Tag-It and its management regarding the terms and conditions
                    of this investment. The foregoing, however, does not limit
                    or modify the representations and warranties of Tag-It in
                    Section 5.1 of this Agreement or the right of Guez and
                    Azteca to rely thereon.

               (f)  RULE 144. Guez and Azteca acknowledge and agree that the
                    Shares must be held indefinitely unless they are
                    subsequently registered under the Securities Act or an
                    exemption from such registration is available. Each Guez and
                    Azteca has been advised or is aware of the provisions of
                    Rule 144 promulgated under the Securities Act as in effect
                    from time to time, which permits limited resale of shares
                    purchased in a private placement subject to the satisfaction
                    of certain conditions, including, among other things: the
                    availability of certain current public information about
                    Tag-It, the resale occurring following the required holding
                    period under Rule 144 and the number of shares being sold
                    during any three-month period not exceeding specified
                    limitations.

               (g)  LEGEND. The certificates representing the Shares will bear
                    the following legend:

          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 SOLD, ASSIGNED,
          TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED OF, EXCEPT
          PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
          ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM SUCH
          REGISTRATION.


                                     Page 5
<PAGE>


6.   NON-SOLICITATION.

     6.1  Both during the Term of this Agreement and for the one (1) year
          following termination for any reason of this Agreement, (i) each
          member of the Guez Group and each of the Covered Companies agrees that
          it shall not solicit, divert, take away, or attempt to solicit,
          divert, or take away any of Tag-It's employees, except that if the
          Agreement is terminated for reasons other than the breach of the Guez
          Group, then the Guez Group may immediately hire any Tag-It employee
          who was an employee of the Guez Group on the Effective Date and (ii)
          Tag-It agrees that, except as approved by Hubert Guez, it shall not
          solicit, divert, take away, or attempt to solicit, divert, or take
          away any of the Guez Group's employees.

7.   CONFIDENTIAL INFORMATION.

     7.1  Each party acknowledges and agrees that it may have access to
          information, including, but not limited to, pricing information,
          intellectual property, trade secrets, business information, ideas and
          expressions, which are proprietary to and/or embody the substantial
          creative efforts of the other party ("CONFIDENTIAL INFORMATION"). The
          parties agree that Confidential Information will remain the sole and
          exclusive property of the disclosing party ("DISCLOSING PARTY"), and
          the receiving party ("RECEIVING PARTY") agrees to maintain and
          preserve the confidentiality of such information, including, but
          without limitation, taking such steps to protect and preserve the
          confidentiality of the Confidential Information as it takes to
          preserve and protect the confidentiality of its own confidential
          information. All materials and information disclosed by either party
          to the other will be presumed to be Confidential Information and will
          be so regarded by the Receiving Party unless, the Receiving Party can
          prove that the materials or information are not Confidential
          Information. For the purposes of this section:

     7.2  The parties agree that the Confidential Information will be disclosed
          for use by the Receiving Party only for the limited and sole purpose
          of carrying out the terms of this Agreement.

     7.3  The Receiving Party agrees not to disclose or permit any other person
          or entity access to the Confidential Information, except that such
          disclosure will be permitted to an employee, agent, representative or
          independent contractor of the Receiving Party requiring access to the
          same.

     7.4  The Receiving Party agrees (i) not to alter or remove any
          identification of any copyright, trademark or other proprietary rights
          notice which indicates the ownership of any part of the Confidential
          Information, and (ii) to notify the Disclosing Party of the
          circumstances surrounding any possession, use or knowledge of the
          Confidential Information by any person or entity other than those
          authorized by this Agreement.

     7.5  Confidential Information will exclude any information that (i) has
          been or is obtained by the Receiving Party from a source independent
          of the Disclosing Party and not receiving such information from the
          Disclosing Party, (ii) is or becomes


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<PAGE>


          generally available to the public other than as a result of an
          unauthorized disclosure by the Disclosing Party or its personnel, or
          (iii) is independently developed by the Receiving Party without
          reliance in any way on the Confidential Information provided by the
          Disclosing Party; or (iv) the Receiving Party is required to disclose
          under judicial order, regulatory requirement, or statutory
          requirement, provided that the Receiving Party provides written notice
          and an opportunity for the Disclosing Party to take any available
          protective action prior to such disclosure.

8.   INDEMNIFICATION.

     8.1  TAG-IT'S INDEMNIFICATION. Tag-It hereby agrees to indemnify, defend,
          and hold the Covered Companies harmless from any claims, losses,
          liabilities, causes of action and costs (including reasonable
          attorneys' fees) arising from, or on account of, or related to the
          material breach by Tag-It of its obligations, representations and
          warranties hereunder.

     8.2  THE GUEZ GROUP INDEMNIFICATION. Each member of the Guez Group hereby
          agrees on their own behalf and to cause the Covered Companies to
          jointly and severally indemnify, defend, and hold Tag-It harmless from
          any claims, losses, liabilities, causes of action and costs (including
          reasonable attorneys' fees) arising from, or on account of, or related
          to any material breach by Guez Group or any Covered Company of its
          obligations, representations and warranties hereunder.

9.   GENERAL.

     9.1  GOVERNING LAW. 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.

     9.2  ENTIRE AGREEMENT. This Agreement, including the Schedules attached
          thereto, and the Voting Agreement, Investor Rights Agreement and Right
          of First Refusal and Sale Agreement in the forms attached hereto as
          exhibits constitute the entire agreement and understanding between the
          parties and integrates all prior discussions between them related to
          its subject matter. No modification of any of the terms of the
          agreement will be valid unless in writing and signed by an authorized
          representative of each party.

     9.3  ASSIGNMENT. This Agreement may not be assigned by the Covered
          Companies to any other person, firm, or entity without the express
          written approval of Tag-It and any attempt at assignment in violation
          of this section will be null and void.

     9.4  NOTICES. All legal notices required or permitted hereunder will be
          given in writing addressed to the respective parties as set forth
          below and will either be (i) personally delivered, (ii) transmitted by
          postage prepaid certified mail, return receipt requested, or (iii)
          transmitted by nationally recognized private express courier, and will
          be deemed to have been given on the date of receipt if delivered
          personally, or three (3)


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<PAGE>


          days after deposit in mail or express courier. Either party may change
          its address for purposes hereof by written notice to the other in
          accordance with the provisions of this Section. The addresses for the
          parties are as follows:

          TAG-IT PACIFIC, INC.            GUEZ GROUP C/O
          3820 South Hill St.             AZTECA PRODUCTION INTERNATIONAL, INC.
          Los Angeles, CA 90037           5804 E. Slauson Ave.
          Attn:  Colin Dyne               Commerce, CA 90040
          Fax Number:  (323) 231-7039     Attn:  Deborah Greaves, Esq.
                                          Fax Number:

          WITH COPIES TO:
          Troop Steuber Pasich Reddick & Tobey, LLP
          2029 Century Park East, 24th Floor
          Los Angeles, CA 90067-3010
          Attn:  Murray Markiles
          Fax Number:  (310) 728-2233

     9.5  RIGHTS TO INJUNCTIVE RELIEF. All parties acknowledge that remedies at
          law may be inadequate to provide full compensation in the event of a
          material breach relating to either party's obligations,
          representations, and warranties hereunder, and the non-breaching party
          will therefore be entitled to seek injunctive relief in the event of
          any such material breach.

     9.6  FORCE MAJEURE. No party will be liable for, or will be considered to
          be in breach of or default under this Agreement on account of, any
          delay or failure to perform as required by this Agreement as a result
          of any causes or conditions that are beyond such party's reasonable
          control (such as war, riot, insurrection, rebellion, strike, lockout,
          unavoidable casualty, or damage to personnel, material or equipment,
          fire, flood, storm, earthquake, tornado, or any act of God) and that
          such party is unable to overcome through the exercise of commercially
          reasonable diligence. If any force majeure event occurs, the affected
          party will give prompt written notice to the other party and will use
          commercially reasonable efforts to minimize the impact of the event.
          However, if a force majeure event detrimentally affects a party's
          performance of a material covenant set forth herein, the other party
          can immediately terminate this Agreement.

     9.7  ARBITRATION. With the exception of the parties right to pursue
          injunctive relief hereunder, the parties agree that any dispute or
          claim in law or equity arising out of this Agreement shall be decided
          by neutral, binding arbitration and not by court action, except as
          provided by California law for judicial review of arbitration
          proceedings. The arbitration shall be conducted in accordance with the
          Commercial Arbitration Rules of the American Arbitration Association
          (AAA). The parties to an arbitration may agree in writing to use
          different rules and/or arbitrator(s). In all other respects, the
          arbitration shall be conducted in accordance with Part III, Title 9 of
          the CALIFORNIA CODE OF CIVIL PROCEDURE. Judgment upon the award
          rendered by the arbitrator(s) may be entered in any court having
          jurisdiction thereof. The parties shall have the right to discovery in
          accordance with CODE OF CIVIL PROCEDURE ss.


                                     Page 8
<PAGE>


          1283.05. There shall be three arbitrators, one to be chosen directly
          by each party, and the third arbitrator to be selected by the two
          arbitrators so chosen.

          BY SIGNING THIS AGREEMENT YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING
          OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION
          DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU
          ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
          LITIGATED IN A COURT OR JURY TRIAL. YOU ARE GIVING UP YOUR JUDICIAL
          RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY
          INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO
          SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE
          COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF
          CIVIL PROCEDURE.

     9.8  WAIVER. The waiver, express or implied, by either party of any breach
          of this Agreement by the other party will not waive any subsequent
          breach by such party of the same or a different kind.

     9.9  HEADINGS. The headings to the Sections and Schedules of this Agreement
          are included merely for convenience of reference and will not affect
          the meaning of the language included therein.

     9.10 INDEPENDENT CONTRACTORS. The parties acknowledge and agree that they
          are dealing with each other hereunder as independent contractors.
          Nothing contained in this Agreement will be interpreted as
          constituting either party the joint venturer, employee or partner of
          the other party or as conferring upon either party the power of
          authority to bind the other party in any transaction with third
          parties.

     9.11 SEVERABILITY. In the event any provision of this Agreement is held by
          a court or other tribunal of competent jurisdiction to be
          unenforceable, such provision will be reformed only to the extent
          necessary to make it enforceable, and the other provisions of this
          Agreement will remain in full force and effect.

     9.12 COUNTERPARTS. This Agreement may be executed in two or more
          counterparts, each of which will be deemed an original, but all of
          which together will constitute one and the same instrument. For
          purposes hereof, a facsimile copy of this Agreement, including the
          signature pages hereto, will be deemed to be an original.
          Notwithstanding the foregoing, the parties will deliver original
          execution copies of this Agreement to one another as soon as
          practicable following execution thereof.

     9.13 COOPERATION IN DRAFTING. All parties have cooperated in the drafting
          and preparation of this Agreement, and it will not be construed more
          favorably for or against any party.

     9.14 ATTORNEY'S FEES. Should either party hereto initiate a legal or
          administrative action or arbitration proceeding (an "ACTION") to
          enforce any of the terms or conditions of


                                     Page 9
<PAGE>


          this Agreement, the prevailing party (as determined by the court,
          arbitrator or other fact-finder) will be entitled to recover from the
          losing party all reasonable costs of the Action, including without
          limitation attorneys' fees and costs.

     9.15 SURVIVAL. Sections 5, 6, 7, 8 and 9 will survive termination or
          expiration of this Agreement.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.


                                    TAG-IT PACIFIC, INC.

                                    By:    /S/ COLIN DYNE
                                         -------------------------------------
                                    Name:
                                           -----------------------------------
                                    Title:
                                            ----------------------------------


                                    AZTECA PRODUCTION INTERNATIONAL, INC.

                                    By:    /S/ HUBERT GUEZ
                                         -------------------------------------
                                    Name:
                                           -----------------------------------
                                    Title:
                                            ----------------------------------


                                    HUBERT GUEZ

                                    By:    /S/ HUBERT GUEZ
                                         -------------------------------------


                                    PAUL GUEZ

                                    By:    /S/ PAUL GUEZ
                                         -------------------------------------


                                    Page 10
<PAGE>


                                    AZT INTERNATIONAL SA D RL

                                    By:    /S/ HUBERT GUEZ
                                         -------------------------------------
                                    Name:
                                           -----------------------------------
                                    Title:
                                            ----------------------------------


                                    COMMERCE INVESTMENT GROUP, LLC

                                    By:    /S/ HUBERT GUEZ
                                         -------------------------------------
                                    Name:
                                           -----------------------------------
                                    Title:
                                            ----------------------------------



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<PAGE>


                                  SCHEDULE 1.1
                              PRODUCTS AND PRICING

     The Products to be sold by Tag-It shall be all trim items and packaging
items as may generally be offered by Tag-It to its customers from time to time.
The prices for the Products shall be as specified in writing by Tag-It to the
Covered Companies from time to time during the term.


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<PAGE>


                                  SCHEDULE 1.6
                               PURCHASED INVENTORY

     $3,960,000 of inventory located as of the date hereof at the Covered
Companies' warehouse facilities in Commerce, CA as has been previously
identified in writing by the parties.


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</TEXT>
</DOCUMENT>
