INTERCREDITOR AGREEMENT

     This INTERCREDITOR AGREEMENT ("AGREEMENT") made as of October 4, 2000 by
and among Mark I. Dyne, an individual ("JUNIOR LENDER"), Sanwa Bank California
("SENIOR LENDER"), Tag-It Pacific, Inc. (" PACIFIC"), Tag-It, Inc. ("TAG-IT"),
Talon International, Inc. ("TALON") and A.G.S. Stationery, Inc. ("AGS"; Tag-It,
Talon and AGS are collectively referred to herein as the "Borrowers").


                             PRELIMINARY STATEMENTS:


     A. The Borrowers are parties to a Credit Agreement, dated as of September
30, 2000 (the "SENIOR LOAN AGREEMENT"), pursuant to which Senior Lender made a
revolving credit line available (the "SENIOR LOAN") to the Borrowers in the
maximum principal amount of $9,400,000.00. Borrowers have each entered into
Security Agreements in favor of the Senior Lender, dated as of September 30,
2000 (the "SENIOR SECURITY AGREEMENTS"), granting Senior Lender a security
interest in the Collateral (as such term is defined in the Senior Security
Agreements) to secure Borrowers' obligations under the Senior Loan Agreement. In
addition, Tag-It has executed in favor of Senior Lender a Promissory Note, dated
October 11, 2000, in the principal amount of $556,435.79 (the "SENIOR NOTE").
The Senior Security Agreement executed by Tag-It also secures the obligations of
Tag-It under the Senior Note.

     B. Pacific has entered into a Pledge Agreement (the "SENIOR PLEDGE
AGREEMENT") in favor of the Senior Lender, dated as of September 30, 2000,
pledging to Senior Lender all of the shares of stock owned by Pacific in Tag-It,
Talon and ASG to secure a Guaranty, dated as of September 30, 2000 (the "SENIOR
GUARANTY"), in favor of Senior Lender. The Guaranty guarantees all the
obligations under the Senor Loan Agreement. The Senior Note, the Senior Loan
Agreement, the Senior Security Agreements, the Senior Pledge Agreement and the
Senior Guaranty are hereinafter referred to as the "SENIOR LOAN DOCUMENTS".

     C. Junior Lender has agreed to lend to Pacific the principal amount of
$500,000 (the "JUNIOR Loan"). The Junior Loan is evidenced by a Convertible
Secured Subordinated Promissory Note dated October 4, 2000 in the face principal
amount of $500,000 (the "JUNIOR NOTE") and is secured by a certain Security
Agreement dated as of October 4, 2000 in favor of Junior Lender (the "JUNIOR
PACIFIC SECURITY AGREEMENT"). In addition, each Borrower has executed a
Guaranty, dated as October 4, 2000 (the "JUNIOR GUARANTEES"), in favor of Junior
Lender guaranteeing the obligations of Pacific under the Junior Note and each
Borrower has executed a Security Agreement, dated as of October 4, 2000 (these
Security Agreements and the Junior Pacific Security Agreement are referred to
collectively as the "JUNIOR SECURITY AGREEMENTS"), in favor of Junior Lender
granting Junior Lender a security interest in each Borrower's assets as security
for its obligations under the Junior Guarantees. The Junior Loan, the Junior
Note, the Junior Guarantees and the Junior Security Agreements are hereinafter
referred to as the "JUNIOR LOAN DOCUMENTS".


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     D. Senior Lender, as a condition to consenting to the making of the Junior
Loan and the execution of the Junior Loan Documents, has required that Junior
Lender and Borrower enter into this Agreement.

     NOW, THEREFORE, the parties agree as follows:

     SECTION 1. PRIORITIES. (a) The Junior Loan and the Junior Loan Documents
and all advances made thereunder are hereby, and shall continue to be, subject
and subordinate in lien and in payment to the Senior Loan, the Senior Note and
the Senior Loan Documents, including any extensions, replacements,
modifications, substitutions, amendments and renewals of any thereof, whether
for principal, interest, fees, expenses or otherwise, and all advances made
thereunder without regard to the application of such advances, together with all
interest, prepayment premiums and all other sums due under the Senior Loan
Agreement and the Senior Note; provided the Junior Lender may receive from
Pacific payments of interest pursuant to the terms of the Junior Note. All of
the terms, covenants and conditions of the Junior Loan Documents are hereby, and
shall continue to be, subordinate and inferior to all of the terms, covenants
and conditions of the Senior Loan Documents.

     (b) The priorities set forth in this Agreement are applicable irrespective
of the manner or order of creation, attachment or perfection of any of such
liens or security interests or any priority that might otherwise be available to
the Senior Lender or the Junior Lender pursuant to contract or under applicable
law and notwithstanding any representation or warranty of the Borrowers to the
contrary in the Senior Loan Documents or the Junior Loan Documents or any other
representation or warranty of the Borrowers with respect to the Collateral.

     SECTION 2. EXERCISE OF REMEDIES. (a) Until the date on which all
obligations of the Borrowers and Pacific now or hereafter existing under the
Senior Loan Documents, whether such obligations are for principal, interest,
fees, indemnities, expenses or otherwise (such obligations being the
"OBLIGATIONS"), shall have been paid in full, the Senior Lender, in its sole
discretion and to the exclusion of the Junior Lender, shall have, whether or not
any Event of Default under the Senior Loan Agreement, the Senior Note or any
other Senior Loan Document shall have occurred and be continuing, the sole and
exclusive (as between the Senior Lender, on the one hand, and the Junior Lender,
on the other) right to take all action with respect to the Collateral,
including, without limitation, the right to release, with or without
consideration, the Collateral from the lien of the Senior Security Agreements,
to exercise or direct voting and other consensual rights, to foreclose or
forebear from foreclosure in respect of the Collateral and to accept the
Collateral in full or partial satisfaction of any Obligation.

     (b) The Junior Lender shall not ask, demand, sue for or otherwise exercise
any right or remedy in respect of the Junior Guarantees, the Junior Security
Agreements or any other Junior Loan Document, or take or receive from Pacific or
the Borrowers, directly or indirectly, in cash or other property or by set-off
or in any other manner, whether pursuant to any judicial or non-judicial
enforcement, collection, execution, levy or foreclosure proceedings or
otherwise, including by deed in lieu of foreclosure, any payment of all or any
of the Junior Loan or the Junior Guarantees, the Collateral or any part thereof
or interest therein, in each case until the date on which all Obligations shall
have been paid in full, EXCEPT the payment of interest as is provided for under
the Junior Note. Without limiting the generality of the foregoing, the Junior
Lender shall not, until such time, exercise or assert any right to exercise any
voting rights in respect of Collateral, exercise


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any power of attorney in respect of the Collateral or otherwise assert any
claim, right or remedy in respect of the Junior Guarantees, the Junior Security
Agreements or any other Junior Loan Document, except as specifically permitted
by this Agreement. Until the date on which all Obligations shall have been paid
in full, the Junior Lender's only right under the Junior Guarantees, the Junior
Security Agreements or any other Junior Loan Document is for the obligations
under the Junior Note to be guaranteed and secured to the extent provided for in
the Junior Guarantees, the Junior Security Agreements or any other Junior Loan
Document and, after payment in full of the Obligations, to receive the
Collateral or any remainder of the proceeds, if any, of the Collateral to the
extent and at the time provided in Section 9 of this Agreement.

     (c) Until the date on which all Obligations shall have been paid in full,
the Junior Lender shall not commence, or join with any creditor other than the
Senior Lender in commencing, any enforcement, collection, execution, levy or
foreclosure proceeding with respect to the Collateral, whether pursuant to the
Junior Security Agreements, any other Junior Loan Document or otherwise.

     (d) The Junior Lender shall not contest, or bring (or join in) any action
or proceeding for the purpose of contesting, the validity, perfection or
priority of, or seeking to avoid, this Agreement or any rights of the Senior
Lender in or with respect to the Collateral or the validity or reasonableness of
any action or failure to act in respect of the Collateral by the Senior Lender,
including, without limitation, the timing, method or manner of (i) any consent
to disposition by the Borrowers or any subsidiary of the Borrowers of the
Collateral or (ii) disposing of or liquidating the Collateral, the terms,
including the price and percentage of consideration received in cash, of any
such disposition or liquidation or any failure to dispose of or liquidate the
Collateral, including any acceptance of the Collateral by the Senior Lender in
full or partial satisfaction of the Obligations.

     SECTION 3. RIGHTS OF SUBROGATION. The Junior Lender agrees that no payment
or distribution to the Senior Lenders pursuant to the provisions of this
Agreement shall entitle the Junior Lender to exercise any rights of subrogation
in respect thereof until the date on which all Obligations shall have been paid
in full.

     SECTION 4. FURTHER ASSURANCES. The Junior Lender will, at the expense of
the Borrowers, at any time and from time to time promptly execute and deliver
all further instruments and documents, and take all further action, that the
Senior Lender may reasonably request, in order to protect any right or interest
granted or purported to be granted hereby or to enable the Senior Lender to
exercise and enforce its rights and remedies hereunder.

     SECTION 5. NO CHANGE IN THE JUNIOR SECURITY AGREEMENT. Prior to the payment
in full of the Obligations, if the Junior Lender wishes to sell, assign, pledge,
encumber or otherwise dispose of any of its rights in the Collateral or under
the Junior Loan Documents to any third party, Junior Lender may do so provided
Junior Lender obtains from the third party an acknowledgement of the terms of
this Agreement and an agreement, satisfactory to Senior Lender, to be bound by
the terms of this Agreement. Junior Lender may amend or otherwise modify the
obligations of Pacific or the Borrowers under the Junior Loan Documents without
the prior written consent of the Senior Lender provided such amendment or
modification does not affect the rights and remedies of the Senior Lender under
the terms of the Senior Loan Documents or hereunder. Junior Lender, Pacific and
the Borrowers agree not to enter into any other security agreement, pledge
agreement or similar agreement pursuant to which Junior Lender is granted a lien
against or security interest in any of


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Pacific's or the Borrowers' assets unless such lien or security interest is
expressly made subordinate to the liens and security interests of Senior Lender
and subject to the other terms of this Agreement.

     SECTION 6. WAIVER OF MARSHALLING AND SIMILAR RIGHTS. The Junior Lender
waives, to the fullest extent permitted by applicable law, any requirement
regarding, and agrees not to demand, request, plead or otherwise claim the
benefit of, any marshalling, appraisement, valuation or other similar right that
may otherwise be available under applicable law or any other similar rights a
creditor or secured creditor may have under applicable law.

     SECTION 7. This Agreement shall continue to be effective or be reinstated,
as case may be, if at any time any payment of any of the Obligations is
rescinded or must otherwise be returned by the Senior Lender upon the
insolvency, bankruptcy or reorganization of Pacific or any Borrower, or
otherwise, all as though such payment had not been made.

     SECTION 8. OBLIGATIONS UNIMPAIRED/ NO THIRD PARTY BENEFICIARIES. Nothing in
this Agreement shall impair as between Pacific and each Borrower on the one
hand, and the Senior Lender on the other, the Obligations. Except as
specifically provided for herein, this Agreement is not intended to nor shall it
be deemed to impair any rights, obligations, remedies or duties as between
Pacific and each Borrower on the one hand, and the Junior Lender on the other
hand. No person or entity, other than the Senior Lender and its successors and
assigns, including any other creditor of Pacific or the Borrowers, shall be
entitled to claim the benefits of this Agreement.

     SECTION 9. DELIVERY OF THE COLLATERAL; UPON DISCHARGE OF OBLIGATIONS. (a)
All certificates or instruments representing or evidencing the Collateral shall
be held by the Senior Lender until the date on which all Obligations shall have
been paid in full. Any portion of the Collateral that is received by the Junior
Lender contrary to the provisions of this Agreement shall be received in trust
for the benefit of the Senior Lender, shall be segregated from other funds and
property held by the Junior Lender and shall forthwith be delivered over to the
Senior Lender in the form so received to be held by the Senior Lender in
accordance with the terms of the Senior Security Agreements.

     (b) Upon the date on which all Obligations shall have been paid in full,
the Senior Lender shall promptly deliver to the Junior Lender the Collateral
then held or thereafter received by it.

     SECTION 10. AMENDMENTS, ETC. No amendment of this Agreement shall be
effective unless in writing, signed by the parties hereto. No waiver of any
provision of this Agreement nor consent to any departure by the Junior Lender
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Senior Lender, and then such waiver or consent shall be
effective only in the specific instance and for specific purpose for which
given.

     SECTION 11. NO LIABILITY OF THE AGENT. This Agreement shall not create an
agency relationship between the Senior Lender and the Junior Lender. The Senior
Lender, its officers, directors, employees and agents shall not be responsible,
directly or indirectly, to the Junior Lender for any action taken or omitted by
the Senior Lender hereunder, or otherwise, nor shall they be liable or
responsible for any loss, cost or expense suffered or incurred by the Junior
Lender, other than any such loss, cost or expense caused by the gross negligence
or willful misconduct of the Senior Lender, its officers, directors, employees
or agents. Without limiting the generality of the


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foregoing, the Senior Lender, its officers, directors, employees and agents make
no representation or warranty and shall not be deemed to have made any
representation or warranty:

     (a) as to the accuracy, validity, legality or enforceability of this
Agreement or the Senior Loan Documents or any report, certificate, instrument or
agreement delivered pursuant hereto or thereto; or

     (b) as to the validity, sufficiency, perfection or value of the Collateral.

     SECTION 12. ADDRESSES FOR NOTICES. All demands, notices and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and, if to the Junior Lender, mailed or telegraphed or delivered
to it, addressed to it at its address at 6355 Topanga Canyon, Suite 120 Woodland
Hills, CA 91367, and if to the Senior Lender, mailed or telegraphed or delivered
to it, addressed to it at its address at _______________________, and if to
Pacific and the Borrowers mailed or telegraphed or delivered to it, addressed to
it at its address at Tag-It Pacific, Inc., 3820 S. Hill Street, Los Angeles CA
90037, attn: Ronda Sallmen, Chief Financial Office, or as to each party at such
other address as shall be designated by such party in a written notice to each
other party complying as to delivery with the terms of this Section. All such
demands, notices and other communications shall, when mailed or telegraphed, be
effective when deposited in the mails or delivered to the telegraph company, as
the case may be, addressed as aforesaid.

     SECTION 13. NO WAIVER; REMEDIES. No failure on the part of the Senior
Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

     SECTION 14. CONTINUING AGREEMENT; ASSIGNMENTS OF OBLIGATIONS. This
Agreement is a continuing agreement and shall (i) remain in full force and
effect until the date on which all Obligations shall have been paid in full,
(ii) be binding upon the Junior Lender, Pacific and the Borrowers and their
respective successors and assigns and (iii) inure to the benefit of and be
enforceable by the Senior Lender and its successors, transferees and assigns

     SECTION 15. GOVERNING LAW; JURISDICTION. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of California. Any
legal action, suit or proceeding against Junior Lender, Pacific, the Borrowers
and/or Senior Lender arising out of or relating to this Agreement shall be
initiated in a federal court located in the City and County of Los Angeles,
State of California (or if there shall not be federal jurisdiction in such
court, a state court located within the City and County of Los Angeles, State of
California) and, by execution and delivery of this Agreement, each of Junior
Lender, Pacific, the Borrowers and Senior Lender irrevocably accepts the
exclusive jurisdiction of the aforementioned courts, and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this Agreement.

     SECTION 16. SEVERABILITY. If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired.


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     SECTION 17. AGREEMENT WITH RESPECT TO CONVERSION OF THE JUNIOR NOTE.
Nothing herein shall affect or be deemed to affect the right of the Junior
Lender to exercise at any time its rights of conversion contained in Section 2
of the Junior Note.

     IN WITNESS WHEREOF, the Senior Lender, the Junior Lender, Pacific and the
Borrowers have caused this Intercreditor Agreement to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.

                                          SANWA BANK CALIFORNIA


                                          By  /S/ D. THOMAS HERMAN
                                             ----------------------------------
                                              Title:  Vice President


                                                 /S/ MARK I. DYNE
                                          -------------------------------------
                                                   MARK I. DYNE


                                          TAG-IT PACIFIC, INC.


                                          By  /S/ RONDA SALLMEN
                                              ---------------------------------
                                              Title:  CFO


                                          TAG-IT, INC.


                                          By  /S/ RONDA SALLMEN
                                              ---------------------------------
                                              Title:  CFO



                                          TALON INTERNATIONAL, INC.


                                          By  /S/ RONDA SALLMEN
                                              ---------------------------------
                                              Title:  CFO


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                                          A.S.G. STATIONERY, INC.


                                          By  /S/ RONDA SALLMEN
                                              ---------------------------------
                                              Title:  CFO