EXHIBIT 10.2
SUBSIDIARY GUARANTY
New York, New York June 15, 2005
FOR VALUE RECEIVED, and in consideration of note purchases from, loans made
or to be made or credit otherwise extended or to be extended by Midsummer
Investments Ltd. ("Midsummer") to or for the account of Island Pacific, Inc., a
Delaware corporation ("Debtor"), from time to time and at any time and for other
good and valuable consideration and to induce Midsummer, in its discretion, to
purchase such notes, make such loans or extensions of credit and to make or
grant such renewals, extensions, releases of collateral or relinquishments of
legal rights as Midsummer may deem advisable, each of the undersigned (and each
of them if more than one, the liability under this Guaranty being joint and
several) (jointly and severally referred to as "Guarantors" or "the
undersigned") unconditionally guaranties to Midsummer, its successors, endorsees
and assigns the prompt payment when due (whether by acceleration or otherwise)
of all present and future obligations and liabilities of any and all kinds of
Debtor to Midsummer and of all instruments of any nature evidencing or relating
to any such obligations and liabilities upon which Debtor or one or more parties
and Debtor is or may become liable to Midsummer, whether incurred by Debtor as
maker, endorser, drawer, acceptor, guarantors, accommodation party or otherwise,
and whether due or to become due, secured or unsecured, absolute or contingent,
joint or several, and however or whenever acquired by Midsummer, whether arising
under, out of, or in connection with (i) that certain Securities Purchase
Agreement dated as of the date hereof by and between the Debtor and Midsummer
(the "Securities Purchase Agreement") and (ii) each Related Agreement referred
to in the Securities Purchase Agreement (the Securities Purchase Agreement and
each Related Agreement, as each may be amended, modified, restated or
supplemented from time to time, are collectively referred to herein as the
"Documents"), or any documents, instruments or agreements relating to or
executed in connection with the Documents or any documents, instruments or
agreements referred to therein or otherwise, or any other indebtedness,
obligations or liabilities of the Debtor to Midsummer, hereafter arising, direct
or indirect, liquidated or unliquidated, absolute or contingent, due or not due
and whether under, pursuant to or evidenced by a note, agreement, guaranty,
instrument or otherwise (all of which are herein collectively referred to as the
"Obligations"), and irrespective of the genuineness, validity, regularity or
enforceability of such Obligations, or of any instrument evidencing any of the
Obligations or of any collateral therefor or of the existence or extent of such
collateral, and irrespective of the allowability, allowance or disallowance of
any or all of the Obligations in any case commenced by or against Debtor under
Title 11, United States Code, including, without limitation, obligations or
indebtedness of Debtor for post-petition interest, fees, costs and charges that
would have accrued or been added to the Obligations but for the commencement of
such case. Notwithstanding anything set forth herein to the contrary, the
definition of "Obligations" shall not include any present and future obligations
or liabilities of any and all kinds of Debtor to Midsummer to the extent arising
under, out of, or in connection with (i) that certain Securities Purchase
Agreement dated as of March 15, 2004 by and between the Debtor and Midsummer
(the "March 2004 Purchase Agreement") and (ii) each Related Agreement referred
to in the March 2004 Purchase Agreement. Terms not otherwise defined herein
shall have the meaning assigned such terms in [the Securities Purchase
Agreement. In furtherance of the foregoing, the undersigned xxxxxx agrees as
follows:
1. No Impairment. Midsummer may at any time and from time to time, either
before or after the maturity thereof, without notice to or further consent of
the undersigned, extend the time of payment of, exchange or surrender any
collateral for, renew or extend any of the Obligations or increase or decrease
the interest rate thereon, or any other agreement with Debtor or with any other
party to or person liable on any of the Obligations, or interested therein, for
the extension, renewal, payment, compromise, discharge or release thereof, in
whole or in part, or for any modification of the terms thereof or of any
agreement between Midsummer and Debtor or any such other party or person, or
make any election of rights Midsummer may deem desirable under the United States
Bankruptcy Code, as amended, or any other federal or state bankruptcy,
reorganization, moratorium or insolvency law relating to or affecting the
enforcement of creditors' rights generally (any of the foregoing, an "Insolvency
Law") without in any way impairing or affecting this Guaranty. This instrument
shall be effective regardless of the subsequent incorporation, merger or
consolidation of Debtor, or any change in the composition, nature, personnel or
location of Debtor and shall extend to any successor entity to Debtor, including
a debtor in possession or the like under any Insolvency Law.
2. Guaranty Absolute. Subject to Section 5(c), each of the undersigned
jointly and severally guarantees that the Obligations will be paid in accordance
with the terms of the Documents and/or any other document, instrument or
agreement creating or evidencing the Obligations, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of Debtor with respect thereto. Guarantors hereby
knowingly accept the full range of risk encompassed within a contract of
"continuing guaranty" which risk includes the possibility that Debtor will
contract additional indebtedness for which Guarantors may be liable hereunder
after Xxxxxx's financial condition or ability to pay its lawful debts when they
fall due has deteriorated, whether or not Debtor has properly authorized
incurring such additional indebtedness. The undersigned acknowledge that (i) no
oral representations, including any representations to extend credit or provide
other financial accommodations to Debtor, have been made by Midsummer to induce
the undersigned to enter into this Guaranty and (ii) any extension of credit to
the Debtor shall be governed solely by the provisions of the Documents. The
liability of each of the undersigned under this Guaranty shall be absolute and
unconditional, in accordance with its terms, and shall remain in full force and
effect without regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by, any circumstance or occurrence whatsoever,
including, without limitation: (a) any waiver, indulgence, renewal, extension,
amendment or modification of or addition, consent or supplement to or deletion
from or any other action or inaction under or in respect of the Documents or any
other instruments or agreements relating to the Obligations or any assignment or
transfer of any thereof, (b) any lack of validity or enforceability of any
Document or other documents, instruments or agreements relating to the
Obligations or any assignment or transfer of any thereof, (c) any furnishing of
any additional security to Midsummer or its assignees or any acceptance thereof
or any release of any security by Midsummer or its assignees, (d) any limitation
on any party's liability or obligation under the Documents or any other
documents, instruments or agreements relating to the Obligations or any
assignment or transfer of any thereof or any invalidity or unenforceability, in
whole or in part, of any such document, instrument or agreement or any term
thereof, (e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to
Debtor, or any action taken with respect to this Guaranty by any trustee or
receiver, or by any court, in any such proceeding, whether or not the
undersigned shall have notice or knowledge of any of the foregoing, (f) any
exchange, release or nonperfection of any collateral, or any release, or
amendment or waiver of or consent to departure from any guaranty or security,
for all or any of the Obligations or (g) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the undersigned,
all except to the extent agreed to in writing by Xxxxxxxxx. Any amounts due from
the undersigned to Midsummer shall bear interest until such amounts are paid in
full at the highest rate then applicable to the Obligations. Obligations include
post-petition interest whether or not allowed or allowable.
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3. Waivers.
(a) This Guaranty is a guaranty of payment and not of collection.
Midsummer shall be under no obligation to institute suit, exercise rights or
remedies or take any other action against Debtor or any other person liable with
respect to any of the Obligations or resort to any collateral security held by
it to secure any of the Obligations as a condition precedent to the undersigned
being obligated to perform as agreed herein and each of the Guarantors hereby
waives any and all rights which it may have by statute or otherwise which would
require Midsummer to do any of the foregoing. Each of the Guarantors further
consents and agrees that Midsummer shall be under no obligation to marshal any
assets in favor of Guarantors, or against or in payment of any or all of the
Obligations. The undersigned hereby waives all suretyship defenses and any
rights to interpose any defense, counterclaim or offset of any nature and
description which the undersigned may have or which may exist between and among
Midsummer, Debtor and/or the undersigned with respect to the undersigned's
obligations under this Guaranty, or which Debtor may assert on the underlying
debt, including but not limited to failure of consideration, breach of warranty,
fraud, payment (other than cash payment in full of the Obligations), statute of
frauds, bankruptcy, infancy, statute of limitations, accord and satisfaction,
and usury
(b) Each of the undersigned further waives (i) notice of the
acceptance of this Guaranty, of the making of any such loans or extensions of
credit, and of all notices and demands of any kind to which the undersigned may
be entitled, including, without limitation, notice of adverse change in Debtor's
financial condition or of any other fact which might materially increase the
risk of the undersigned and (ii) presentment to or demand of payment from anyone
whomsoever liable upon any of the Obligations, protest, notices of presentment,
non-payment or protest and notice of any sale of collateral security or any
default of any sort.
(c) Notwithstanding any payment or payments made by the undersigned
hereunder, or any setoff or application of funds of the undersigned by
Midsummer, the undersigned shall not be entitled to be subrogated to any of the
rights of Midsummer against Debtor or against any collateral or guarantee or
right of offset held by Midsummer for the payment of the Obligations, nor shall
the undersigned seek or be entitled to seek any contribution or reimbursement
from Debtor in respect of payments made by the undersigned hereunder, until all
amounts owing to Midsummer by Debtor on account of the Obligations are paid in
full and Midsummer' obligation to extend credit pursuant to the Documents have
been terminated. If, notwithstanding the foregoing, any amount shall be paid to
the undersigned on account of such subrogation rights at any time when all of
the Obligations shall not have been paid in full and Midsummer' obligation to
extend credit pursuant to the Documents shall not have been terminated, such
amount shall be held by the undersigned in trust for Midsummer, segregated from
other funds of the undersigned, and shall forthwith upon, and in any event
within two (2) business days of, receipt by the undersigned, be turned over to
Midsummer in the exact form received by the undersigned (duly endorsed by the
undersigned to Midsummer, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as Midsummer may determine, subject
to the provisions of the Documents. Any and all present and future debts and
obligations of Debtor to any of the undersigned are hereby waived and postponed
in favor of, and subordinated to the full payment and performance of, all
present and future debts and Obligations of Debtor to Midsummer.
4. Security. All sums at any time to the credit of the undersigned and any
property of the undersigned in Midsummer' possession or in the possession of any
bank, financial institution or other entity that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with, Midsummer (each such entity, an "Affiliate") shall be deemed held
by Midsummer or such Affiliate, as the case may be, as security for any and all
of the undersigned's obligations to Midsummer and to any Affiliate of Midsummer,
no matter how or when arising and whether under this or any other instrument,
agreement or otherwise.
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5. Representations and Warranties. Each of the undersigned respectively,
hereby jointly and severally represents and warrants (all of which
representations and warranties shall survive until all Obligations are satisfied
in full and the Documents have been irrevocably terminated), that:
(a) Corporate Status. It is a corporation, partnership or limited
liability company, as the case may be, duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization indicated on
the signature page hereof and has full power, authority and legal right to own
its property and assets and to transact the business in which it is engaged.
(b) Authority and Execution. It has full power, authority and legal
right to execute and deliver, and to perform its obligations under, this
Guaranty and has taken all necessary corporate, partnership or limited liability
company, as the case may be, action to authorize the execution, delivery and
performance of this Guaranty.
(c) Legal, Xxxxx and Binding Character. This Guaranty constitutes its
legal, valid and binding obligation enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting the
enforcement of creditor's rights and general principles of equity that restrict
the availability of equitable or legal remedies.
(d) Violations. The execution, delivery and performance of this
Guaranty will not violate any requirement of law applicable to it or any
contract, agreement or instrument to it is a party or by which it or any of its
property is bound or result in the creation or imposition of any mortgage, lien
or other encumbrance other than to Midsummer on any of its property or assets
pursuant to the provisions of any of the foregoing, which, in any of the
foregoing cases, could reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect.
(e) Consents or Approvals. No consent of any other person or entity
(including, without limitation, any creditor of the undersigned) and no consent,
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guaranty by it, except to the extent that the failure to
obtain any of the foregoing could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
(f) Litigation. No litigation, arbitration, investigation or
administrative proceeding of or before any court, arbitrator or governmental
authority, bureau or agency is currently pending or, to the best of its
knowledge, threatened (i) with respect to this Guaranty or any of the
transactions contemplated by this Guaranty or (ii) against or affecting it, or
any of its property or assets, which, in each of the foregoing cases, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect.
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(g) Financial Benefit. It has derived or expects to derive a financial
or other advantage from each and every loan, advance or extension of credit made
under the Documents or other Obligation incurred by the Debtor to Midsummer.
6. Acceleration.
(a) If any breach of any covenant or condition or other event of
default shall occur and be continuing under any agreement made by Debtor or any
of the undersigned to Midsummer, or either Debtor or any of the undersigned
should at any time become insolvent, or make a general assignment, or if a
proceeding in or under any Insolvency Law shall be filed or commenced by, or in
respect of, any of the undersigned, or if a notice of any lien, levy, or
assessment is filed of record with respect to any assets of any of the
undersigned by the United States of America or any department, agency, or
instrumentality thereof, or if any taxes or debts owing at any time or times
hereafter to any one of them becomes a lien or encumbrance upon any assets of
the undersigned in Midsummer' possession, or otherwise, any and all Obligations
shall for purposes hereof, at Midsummer' option, be deemed due and payable
without notice notwithstanding that any such Obligation is not then due and
payable by Debtor.
(b) Each of the undersigned will promptly notify Midsummer of any
default by such undersigned in its respective performance or observance of any
term or condition of any agreement to which the undersigned is a party if the
effect of such default is to cause, or permit the holder of any obligation under
such agreement to cause, such obligation to become due prior to its stated
maturity and, if such an event occurs, Midsummer shall have the right to
accelerate such undersigned's obligations hereunder.
7. Payments from Guarantors. Midsummer, in its sole and absolute
discretion, with or without notice to the undersigned, may apply on account of
the Obligations any payment from the undersigned or any other guarantors, or
amounts realized from any security for the Obligations, or may deposit any and
all such amounts realized in a non-interest bearing cash collateral deposit
account to be maintained as security for the Obligations.
8. Costs. The undersigned shall timely reimburse Midsummer for all costs,
fees and expenses (including expenses for legal services of every kind)
reasonably incurred to the enforcement or protection of the rights of Midsummer
hereunder or under any of the Obligations.
9. No Termination. This is a continuing irrevocable guaranty and shall
remain in full force and effect and be binding upon the undersigned, and each of
the undersigned's successors and assigns, until all of the Obligations have been
paid in full and Midsummer' obligation to extend credit pursuant to the
Documents has been irrevocably terminated. If any of the present or future
Obligations are guarantied by persons, partnerships or corporations in addition
to the undersigned, the death, release or discharge in whole or in part or the
bankruptcy, merger, consolidation, incorporation, liquidation or dissolution of
one or more of them shall not discharge or affect the liabilities of any
undersigned under this Guaranty.
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10. Recapture. Anything in this Guaranty to the contrary notwithstanding,
if Midsummer receives any payment or payments on account of the liabilities
guaranteed hereby, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver, or any other party under
any Insolvency Law, common law or equitable doctrine, then to the extent of any
sum not finally retained by Midsummer, the undersigned's obligations to
Midsummer shall be reinstated and this Guaranty shall remain in full force and
effect (or be reinstated) until payment shall have been made to Midsummer, which
payment shall be due on demand.
11. Books and Records. The books and records of Midsummer showing the
account between Midsummer and Debtor shall be admissible in evidence in any
action or proceeding, shall be binding upon the undersigned for the purpose of
establishing the items therein set forth and shall constitute prima facie proof
thereof.
12. No Waiver. No failure on the part of Midsummer to exercise, and no
delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Midsummer of any
right, remedy or power hereunder preclude any other or future exercise of any
other legal right, remedy or power. Each and every right, remedy and power
hereby granted to Midsummer or allowed it by law or other agreement shall be
cumulative and not exclusive of any other, and may be exercised by Midsummer at
any time and from time to time.
13. Waiver of Jury Trial. EACH OF THE UNDERSIGNED DOES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED ON OR WITH RESPECT TO THIS GUARANTY OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO. THE UNDERSIGNED DOES
HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF MIDSUMMER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT MIDSUMMER WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
14. Governing Law; Jurisdiction; Amendments. THIS INSTRUMENT CANNOT BE
CHANGED OR TERMINATED ORALLY, AND SHALL BE GOVERNED, CONSTRUED AND INTERPRETED
AS TO VALIDITY, ENFORCEMENT AND IN ALL OTHER RESPECTS IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT HAVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAWS. EACH OF THE UNDERSIGNED EXPRESSLY CONSENTS TO THE JURISDICTION AND
VENUE OF THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR ALL
PURPOSES IN CONNECTION HEREWITH. ANY JUDICIAL PROCEEDING BY THE UNDERSIGNED
AGAINST MIDSUMMER INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY
WAY ARISING OUT OF, RELATED TO OR CONNECTED HEREWITH SHALL BE BROUGHT ONLY IN
THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK OR THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE UNDERSIGNED
FURTHER CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS
(INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO
EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN
CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF
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THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A
REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE
PERMISSIBLE UNDER THE RULES OF SAID COURTS. EACH OF THE UNDERSIGNED WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL
NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON
FORUM NON CONVENIENS.
15. Severability. To the extent permitted by applicable law, any provision
of this Guaranty which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
16. Amendments, Waivers. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the undersigned therefrom shall in any
event be effective unless the same shall be in writing executed by each of the
undersigned directly affected by such amendment and/or waiver and Midsummer.
17. Notice. All notices, requests and demands to or upon the undersigned,
shall be in writing and shall be deemed to have been duly given or made (a) when
delivered, if by hand, (b) three (3) days after being sent, postage prepaid, if
by registered or certified mail, (c) when confirmed electronically, if by
facsimile, or (d) when delivered, if by a recognized overnight delivery service
in each event, to the numbers and/or address set forth beneath the signature of
the undersigned.
18. Successors. Midsummer may, from time to time, without notice to the
undersigned, sell, assign, transfer or otherwise dispose of all or any part of
the Obligations and/or rights under this Guaranty. Without limiting the
generality of the foregoing, Midsummer may assign, or grant participations to,
one or more banks, financial institutions or other entities all or any part of
any of the Obligations. In each such event, Midsummer, its Affiliates and each
and every immediate and successive purchaser, assignee, transferee or holder of
all or any part of the Obligations shall have the right to enforce this
Guaranty, by legal action or otherwise, for its own benefit as fully as if such
purchaser, assignee, transferee or holder were herein by name specifically given
such right. Midsummer shall have an unimpaired right to enforce this Guaranty
for its benefit with respect to that portion of the Obligations which Midsummer
has not disposed of, sold, assigned, or otherwise transferred.
19. Release. Nothing except cash payment in full of the Obligations shall
release any of the undersigned from liability under this Guaranty.
[REMAINDER OF THIS PAGE IS BLANK.
SIGNATURE PAGE IMMEDIATELY FOLLOWS]
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IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned this
15th day of June, 2005.
PAGE DIGITAL INCORPORATED
By: _______________________
Name:
Title:
Address:
IP RETAIL TECHNOLOGIES
INTERNATIONAL, INC.
By: _______________________
Name:
Title:
Address:
SABICA VENTURES, INC.
By: _______________________
Name:
Title:
Address:
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