Formation Agree: Cover

EXHIBIT 10.35


FORMATION AGREEMENT


OF


AGS HOLDINGS L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY


DATED AS OF OCTOBER 17, 1997


FORMATION AGREEMENT
OF
AGS HOLDINGS L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY


THIS FORMATION AGREEMENT is entered into by TAG-IT PACIFIC L.L.C., a Delaware limited liability company (the "Member"), and is acknowledged and accepted by Mark Dyne and Colin Dyne (collectively, the "Managers"), as of this 17th day of October, 1997.


A G R E E M E N T S:
--------------------


In consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Member hereby agrees as follows:


ARTICLE 1
FORMATION OF LIMITED LIABILITY COMPANY


The Member hereby forms a limited liability company (the "Company") under the provisions of the Delaware Limited Liability Company Act (the "Act") and, except as herein otherwise expressly provided, the rights and liabilities of the Member shall be as provided in that Act, as amended from time to time. On this date, and on behalf of the Company, the Member executed Certificate of Formation, which shall be promptly filed with the Delaware Secretary of State in accordance with and pursuant to the Act.


ARTICLE 2
NAME


The business of the Company shall be conducted under the name "AGS HOLDINGS L.L.C." or such other name as the Managers shall hereafter designate.


ARTICLE 3
DEFINITIONS


As used in this Agreement, the following terms shall have the following meanings:


"ACT" shall mean the Delaware Limited Liability Company Act, as it may be amended from time to time.


"AGREEMENT" shall mean this Formation Agreement, as amended, modified or supplemented from time to time.


"AGS" shall mean AGS Stationery, Inc., a California corporation.


"COMPANY" shall mean the limited liability company formed pursuant to this Agreement, as said company may from time to time be constituted.


"MANAGERS" shall mean Mark Dyne and Colin Dyne.


"MEMBER" shall mean TAG-IT PACIFIC L.L.C., a Delaware limited liability company.


"MEMBERSHIP INTEREST" shall mean the Member's ownership interest in the Company, which includes the Member's share of the profits and losses of the Company, the Member's right to receive distributions of the Company's assets, the Member's right to vote or participate in the management of the Company as permitted in this Agreement, and the Member's right to information concerning the business and affairs of the Company, as provided in this Agreement and under the Act.


"TRANSFER" shall mean any transfer, sale, assignment, gift, pledge or other disposition or encumbrance.


ARTICLE 4
NATURE OF BUSINESS


The business and purpose of the Company is to acquire and hold all of the issued and outstanding shares of stock in AGS, a lower tier subsidiary of the Member, to vote such shares of stock and appoint the board of directors of such corporation, to take all actions as may be appropriate as the sole shareholder of such corporation, and to engage in any lawful act or activity related thereto or for which limited liability companies may be organized under the laws of the State of Delaware.


ARTICLE 5
TERM


The term of the Company shall commence on the date hereof and shall continue until December 31, 2035, unless earlier terminated under the provisions of Article 12.


-2-


ARTICLE 6
PRINCIPAL PLACE OF BUSINESS


The principal business office of the Company shall be located at the principal office of the Member, or at such other place as may be designated by the Managers from time to time.


ARTICLE 7
CAPITAL AND CONTRIBUTIONS


As a contribution to the capital of the Company, the Member has caused the shareholders of AGS to transfer to the Company all of the issued and outstanding shares of capital stock of AGS, pursuant to the terms of that certain Exchange Agreement, dated October 17, 1997, by and among the Member, the Company, AGS, such AGS shareholders and certain other parties. Except as otherwise required by law, the Member shall not be liable to creditors of the Company, and shall not be required to make additional capital contributions to the Company or to restore all or any portion of a deficit balance in the Member's capital account with the Company.


ARTICLE 8
DISTRIBUTIONS AND ALLOCATIONS


For any fiscal year of the Company, distributions in cash or in kind shall be made to the Member, at such times and in such amounts as determined by the Managers. The Managers shall have the absolute discretion to determine the amount of cash to be withheld from distribution as a reserve for contingencies and anticipated obligations of the Company. Each item of the Company's income, gain, loss, deduction or credit ...