EXHIBIT 10.3
AMENDMENT AGREEMENT
This Amendment ("AMENDMENT") is made to that certain Securities
Purchase Agreement ("PURCHASE Agreement") dated as of March 15, 2004 by and
between Island Pacific, Inc. (the "COMPANY") and Midsummer Investment, Ltd.
("PURCHASER"), the 9% Secured Convertible Debenture issued to the Purchaser
pursuant to the Purchase Agreement (the "9% DEBENTURE"), the Common Stock
Purchase Warrant to purchase 434,783 shares of the Company's common stock issued
to the Purchaser pursuant to the Purchase Agreement (the "WARRANT") and the
Registration Rights Agreement dated Marcg 15, 2004 between the Purchaser and the
Company (the "Registration Rights Agreement").
WHEREAS, on June 15, 2005 the Company issued to the Purchaser a Secured
Convertible Term Note due June 15, 2008 (the "TERM NOTE").
WHEREAS, the parties wish to amend certain terms of the 9% Debenture,
the Term Note, the Purchase Agreement and the Registration Rights Agreement,
acknowledge certain obligations of the Company pursuant to the terms of such
documents and in consideration therefor, issue an additional warrant to the
Purchaser and adjust prior existing warrants held by the Purchaser.
WHEREAS, capitalized terms used and not otherwise defined herein that
are defined in the Purchase Agreement shall have the meanings given such terms
in the Purchase Agreement.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. MATURITY DATE. The definition of Maturity Date set forth in
the first sentence of the second paragraph of the Debenture is amended
to extend such Maturity Date to September 30, 2006. Upon the execution
of this Amendment, Purchaser will return the original copy of the 9%
Debenture to the Company to be cancelled and reissued with the extended
Maturity Date. Within ten (10) days of its receipt of the originally
executed 9% Debenture, the Company will deliver a new 9% Debenture to
Purchaser that reflects the extended Maturity Date.
2. ADDITIONAL WARRANT. In consideration for the extension of
the due date as provided for in Section 1, the Company shall deliver to
the Purchaser a non-callable additional warrant (the "ADDITIONAL
WARRANT"), in substantially the form attached hereto as EXHIBIT A to
purchase up to 1,610,005 shares of Common Stock (subject to adjustment
therein) with an exercise price equal to $0.20.
3. PAYMENT OF ACCRUED BUT UNPAID INTEREST. Commencing on April
28, 2006 and on the last Trading Day of each month thereafter until the
last payment on September 29, 2006, with respect to the 9% Debenture,
and on August 28, 2006, with respect to the Term Note, the Company
shall pay the Purchaser, on each such date, the amount of $35,613 as
payment in full of all accrued but unpaid interest on the 9% Debenture
and Term Note. Any failure to make payments in full on such date shall
require the Company to pay Late Fees thereon pursuant to the terms of
the 9% Debenture and Term Note, respectively. Thereafter, to the extent
any amounts remaining outstanding under the 9% Debenture or Term Notes,
the Company shall make regularly scheduled interest payment pursuant to
the terms of the 9% Debentures and Term Notes, respectively.
4. ADJUSTMENT OF PRIOR ISSUED WARRANTS. The exercise prices of
the Warrant, the warrant to purchase 138,158 shares of common stock
dated July 1, 2003, the warrant to purchase 629,143 shares of common
stock dated March 31, 2003 and the warrant to purchase 200,000 shares
of common stock dated November 30, 2004, shall be immediately and
forever reduced to equal $0.01 (subject to adjustment therein) without
any further action required by the Purchaser or the Company to
effectuate such adjustment (although the Purchaser may require the
Company to issue new warrants reflecting such adjustment). Such
adjustment shall be effective immediate and apply to all exercises of
such warrants by the Purchaser from and after the date hereof.
5. DOCUMENTS. The rights and obligations of the Purchaser and
of the Company with respect to the Additional Warrant and the shares of
Common Stock issuable thereunder (the "ADDITIONAL UNDERLYING SHARES")
shall be identical in all respects to the rights and obligations of the
Purchaser and of the Company with respect to the Warrants and the
Underlying Shares issued and issuable pursuant to the Purchase
Agreement. Any rights of the Purchaser or covenants of the Company
which are dependent on the Purchaser holding securities of the Company
or which are determined in magnitude by such Purchaser's purchase of
securities pursuant to the Purchase Agreement shall be deemed to
include any securities purchased or issuable hereunder. The Purchase
Agreement is hereby amended so that the terms "Warrants" and
"Underlying Shares" therein include the Additional Warrant and the
Additional Underlying Shares. Additionally, the Registration Rights
Agreement is hereby amended so that the term "Registrable Securities"
includes in the calculation thereof the Additional Underlying Shares
and "Warrants" includes the Additional Warrant issued hereunder;
PROVIDED, HOWEVER, as to the Additional Underlying Shares only, "date
hereof" where used shall be deemed the date hereof.
6. INCORPORATION BY REFERENCE. Except as set forth in this
Amendment, each of the Purchase Agreement and the Registration Rights
Agreement (with all exhibits attached thereto) are hereby incorporated
by reference and made a part hereof. The Company shall deliver to the
Purchaser an opinion of Company counsel as to the issuance of the
Additional Warrant hereunder substantially in the form of opinion
delivered pursuant to the Purchase Agreement to the purchaser signatory
thereto.
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7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby makes the representations and warranties set forth below to the
Holder that as of the date of its execution of this Amendment:
(a) AUTHORIZATION; ENFORCEMENT. The Company has the
requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Amendment and
otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Amendment by
the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary
action on the part of the Company and no further action is
required by the Company, its board of directors or its
stockholders in connection therewith. This Amendment has been
duly executed by the Company and, when delivered in accordance
with the terms hereof will constitute the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(b) NO CONFLICTS. The execution, delivery and
performance of this Amendment by the Company and the
consummation by the Company of the transactions contemplated
hereby do not and will not: (i) conflict with or violate any
provision of the Company's certificate or articles of
incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or
an event that with notice or lapse of time or both would
become a default) under, result in the creation of any Lien
upon any of the properties or assets of the Company, or give
to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or
both) of, any material agreement, credit facility, debt or
other material instrument (evidencing Company debt or
otherwise) or other material understanding to which the
Company is a party or by which any property or asset of the
Company is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which
the Company is subject (including federal and state securities
laws and regulations), or by which any property or asset of
the Company is bound or affected; except in the case of each
of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse Effect.
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(c) ISSUANCE OF THE ADDITIONAL WARRANTS. The
Additional Warrant is duly authorized and, upon the execution
of this Amendment by a Purchaser, will be duly and validly
issued, fully paid and nonassessable, free and clear of all
Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents. The
Additional Underlying Shares, when issued in accordance with
the terms of the Additional Warrant, will be validly issued,
fully paid and nonassessable, free and clear of all Liens
imposed by the Company. The Company has reserved from its duly
authorized capital stock a number of shares of Common Stock
for issuance of the Additional Underlying Shares at least
equal to the Required Minimum on the date hereof.
(d) OTHER EVENTS OF DEFAULT. As of the date of this
Amendment after giving effect to this Agreement and the
Amendment and Waiver between the Company and Purchaser dated
on or about the date of this Agreement (the "Amendment and
Waiver"), to the knowledge of the Company, no Event of Default
exists.
8. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser represents and warrants to the Company that:
(a) The execution and delivery of this Amendment by
it and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action on
its behalf.
(b) This Amendment has been duly executed and
delivered by the Purchaser and constitutes the valid and
binding obligation of the Holder enforceable against it in
accordance with its terms.
(c) The Purchaser is acquiring the Additional Warrant
and the Additional Underlying Shares as principal for its own
account and not with a view to or for distributing or
reselling such securities or any part thereof, without
prejudice, however, to such Purchaser's right at all times to
sell or otherwise dispose of all or any part of such
securities pursuant to an effective registration statement
under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and
state securities laws. Nothing contained herein shall be
deemed a representation or warranty by such Purchaser to hold
the Additional Warrant and the Additional Underlying Shares
for any period of time or limit such Purchaser's right to sell
such securities pursuant to the Registration Statement or
otherwise in compliance with applicable federal and state
securities laws. Such Purchaser is acquiring the Additional
Warrant and Additional Underlying Shares hereunder in the
ordinary course of its business. Such Purchaser does not have
any agreement or understanding, directly or indirectly, with
any Person to distribute any of such securities.
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(d) The Purchaser's representations and warranties
set forth in Section 3.2(c)-(e) of the Purchase Agreement
remain true and correct as of the date of this Amendment.
(e) As of the date of this Amendment after giving
effect to this Amendment and the Amendment and Waiver, to the
knowledge of the Purchaser, no Event of Default exists.
9. PUBLIC DISCLOSURE. The Company shall publicly disclose this
Amendment in a Current Report on Form 8-K within 4 Trading Days of the
date hereof describing the material terms of the transactions
contemplated hereby and attaching a copy of this Amendment thereto.
10. EFFECT ON PURCHASE AGREEMENT. Except as expressly set
forth above, all of the terms and conditions of the Purchase Agreement,
the Debenture and the Warrant shall continue in full force and effect
after the execution of this Amendment, and shall not be in any way
changed, modified or superseded by the terms set forth herein,
including but not limited to, any other obligations the Company may
have to the Purchaser under the Transaction Documents (such as
anti-dilution rights). The Company covenants and agrees to continue to
honor all provisions of the Purchase Agreement, and shall use best
efforts to facilitate the sale of all shares of Common Stock held by
Purchaser pursuant to Rule 144.
11. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
12. NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be made
in accordance with the provisions of the Purchase Agreement.
13. SURVIVAL. All warranties and representations (as of the
date such warranties and representations were made) made by the parties
herein or in any certificate or other instrument delivered by either
party or on its behalf under this Amendment shall be considered to have
been relied upon by the parties hereto and shall survive the execution
of the Amendment.
14. EXECUTION. This Amendment may be executed in two or more
counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts
have been signed by each party and delivered to the other party, it
being understood that both parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission,
such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
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15. SEVERABILITY. If any provision of this Amendment is held
to be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Amendment
shall not in any way be affected or impaired thereby and the parties
will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate
such substitute provision in this Amendment.
16. GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Amendment shall be
determined pursuant to the Governing Law provision of the Purchase
Agreement.
17. ENTIRE AGREEMENT. This Amendment, together with the
exhibits and schedules thereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral or written, with respect to
such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
18. CONSTRUCTION. The headings herein are for convenience
only, do not constitute a part of this Amendment and shall not be
deemed to limit or affect any of the provisions hereof. The language
used in this Amendment will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
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Executed as of March __, 2006 by the undersigned duly authorized
representatives of the Company and Purchaser:
ISLAND PACIFIC, INC.
By: __________________________________
Name:
Title:
Name of Purchaser: _______________________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER: _______________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
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EXHIBIT A
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FORM OF WARRANT
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