EXHIBIT 4.3
ISLAND PACIFIC, INC. AND CERTAIN OF ITS SUBSIDIARIES
MASTER SECURITY AGREEMENT
To: Multi-Channel Holdings, Inc.
c/o Golden Gate Private Equity, Inc.
Xxx Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxx and Xxxxxx Xxxxx
Facsimile: (000) 000-0000
Date: April 18, 2005
To Whom It May Concern:
1. To secure the payment of all Obligations (as hereafter defined),
Island Pacific, Inc., a Delaware corporation (the "Company"), each of the other
undersigned parties (other than Multi-Channel Holdings, Inc., ("Multi-Channel"))
and each other entity that is required to enter into this Master Security
Agreement (each an "Assignor" and, collectively, the "Assignors") hereby assigns
and grants to Multi-Channel a continuing security interest in all of the
following property now owned or at any time hereafter acquired by any Assignor,
or in which any Assignor now has or at any time in the future may acquire any
right, title or interest (the "Collateral"): all cash, cash equivalents,
accounts, deposit accounts (including, without limitation, the Restricted
Accounts (the "Restricted Accounts") maintained at each of Silicon Valley Bank
(Account Name: Cash Collateral Account, Account Number: 3300397264; Account
Name: Payroll Account, Account Number: 3300397279; Account Name: Operating
Accounting, Account Number: 3300400459) referred to in the Silicon Valley Bank
Restricted Account Agreement) and California Bank and Trust (Account Name:
Checking, Account Number: 00-000000-00; Account Name: Payroll, Account Number:
00-000000-00; Account Name: Administrative Division, Account Number:
00-000000-00; Account Name: Money Market, Account Number: 00-000000-00; Account
Name: Store Solutions Division, Account Number: 00-000000-00; Account Name: IPI
Acquisition, Inc. d/b/a Page Digital, Account Number: 21-400231-01) referred to
in the California Bank and Trust Restricted Account Agreement), inventory,
equipment, goods, documents, instruments (including, without limitation,
promissory notes), contract rights, general intangibles (including, without
limitation, payment intangibles and an absolute right to license on terms no
less favorable than those current in effect among our affiliates), chattel
paper, supporting obligations, investment property (including, without
limitation, all equity interests owned by any Assignor), letter-of-credit
rights, trademarks, trademark applications, tradestyles, patents, patent
applications, copyrights, copyright applications and other intellectual property
in which any Assignor now have or hereafter may acquire any right, title or
interest, all proceeds and products thereof (including, without limitation,
proceeds of insurance) and all additions, accessions and substitutions thereto
or therefore; provided, however, that the Collateral shall not include
non-assignable real estate leases to which any Assignor is a party. In the event
any Assignor wishes to finance the acquisition in the ordinary course of
business of any hereafter acquired equipment and has obtained a commitment from
a financing source to finance such equipment from an unrelated third party,
Multi-Channel agrees to release its security interest on such hereafter acquired
equipment so financed by such third party financing source. Except as otherwise
defined herein, all capitalized terms used herein shall have the meaning
provided such terms in the Note Purchase Agreement referred to below.
2. The term "Obligations" as used herein shall mean and include all
debts, liabilities and obligations owing by each Assignor to Multi-Channel
arising under, out of, or in connection with: (i) that certain Note Purchase
Agreement dated as of the date hereof by and between the Company and
Multi-Channel (the "Note Purchase Agreement") and (ii) the Related Agreements
referred to in the Note Purchase Agreement (the Note 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"), and
in connection with 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, and in connection with any other
indebtedness, obligations or liabilities of any Assignor to Multi-Channel,
whether now existing or 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, in each
case, 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 any Assignor under Xxxxx 00,
Xxxxxx Xxxxxx Code, including, without limitation, obligations or indebtedness
of each Assignor 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.
3. Each Assignor hereby jointly and severally represents, warrants and
covenants to Multi-Channel that:
(a) it is a corporation, partnership or limited liability
company, as the case may be, validly existing, in good standing and
organized under the respective laws of its jurisdiction of organization
set forth on Schedule A, and each Assignor will provide Multi-Channel
thirty (30) days' prior written notice of any change in any of its
respective jurisdiction of organization;
(b) its legal name is as set forth in its respective
Certificate of Incorporation or other organizational document (as
applicable) as amended through the date hereof and as set forth on
Schedule A, and it will provide Multi-Channel thirty (30) days' prior
written notice of any change in its legal name;
(c) its organizational identification number (if applicable)
is as set forth on Schedule A hereto, and it will provide Multi-Channel
thirty (30) days' prior written notice of any change in any of its
organizational identification number;
(d) it is the lawful owner of the respective Collateral and it
has the sole right to grant a security interest therein and will defend
the Collateral against all claims and demands of all persons and
entities other than Laurus;
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(e) it will keep its respective Collateral free and clear of
all attachments, levies, taxes, liens, security interests and
encumbrances of every kind and nature ("Encumbrances"), except (i) the
liens and security interests securing the Laurus Indebtedness (the
"Laurus Encumbrance"); (ii) Encumbrances securing the Obligations;
(iii) Encumbrances permitted under Section 6(m)(v) of the Note Purchase
Agreement ; and (iv) Encumbrance that do not secure indebtedness in
excess of $50,000 and are removed or otherwise released within ten (10)
days of the creation thereof;
(f) it will, at its and the other Assignors joint and several
cost and expense keep the Collateral in good state of repair (ordinary
wear and tear excepted) and will not waste or destroy the same or any
part thereof other than ordinary course discarding of items no longer
used or useful in its or such other Assignors' business;
(g) it will not without Multi-Channel's prior written consent,
sell, exchange, lease or otherwise dispose of the Collateral, whether
by sale, lease or otherwise, except for the sale of inventory in the
ordinary course of business and for the disposition or transfer in the
ordinary course of business during any fiscal year of obsolete and
worn-out equipment or equipment no longer necessary for its ongoing
needs, having an aggregate fair market value of not more than $50,000
and only to the extent that:
(i) the proceeds of any such disposition are used to
acquire replacement Collateral which is subject to
Multi-Channel's perfected security interest, or are used to
repay Obligations or to pay general corporate expenses; and
(ii) following the occurrence of an Event of Default
which continues to exist the proceeds of which are remitted to
Laurus in accordance with the terms of the Subordination
Agreement to be held as cash collateral for the Laurus
Indebtedness, and upon payment in full of the Laurus
Indebtednes, to Multi-Channel to be held as cash collateral
for the Obligations;
(h) it will insure or cause the Collateral to be insured in
Multi-Channel's name against loss or damage by fire, theft, burglary,
pilferage, loss in transit and such other hazards as Multi-Channel
shall specify in amounts and under policies by insurers acceptable to
Multi-Channel and all premiums thereon shall be paid by such Assignor
and the policies delivered to Multi-Channel. If any such Assignor fails
to do so, Multi-Channel may procure such insurance and the cost thereof
shall be promptly reimbursed by the Assignors, jointly and severally,
and shall constitute Obligations;
(i) it will at all reasonable times allow Multi-Channel or
Multi-Channel' representatives free access to and the right of
inspection of the Collateral;
(j) such Assignor (jointly and severally with each other
Assignor) hereby indemnifies and saves Multi-Channel harmless from all
loss, costs, damage, liability and/or expense, including reasonable
attorneys' fees, that Multi-Channel may sustain or incur to enforce
payment, performance or fulfillment of any of the Obligations and/or in
the enforcement of this Master Security Agreement or in the prosecution
or defense of any action or proceeding either against Multi-Channel or
any Assignor concerning any matter growing out of or in connection with
this Master Security Agreement, and/or any of the Obligations and/or
any of the Collateral except to the extent caused by Multi-Channel's
own gross negligence or willful misconduct (as determined by a court of
competent jurisdiction in a final and nonappealable decision).
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4. The occurrence of any of the following events or conditions shall
constitute an "Event of Default" under this Master Security Agreement:
(a) Breach of any covenant, warranty, representation or
statement made or furnished to Multi-Channel by any Assignor or on any
Assignor's benefit was false or misleading in any material respect when
made or furnished, and if subject to cure, shall not be cured for a
period of fifteen (15) days; provided that, if such breach is of a
nature that it can not be cured within fifteen (15) days and Assignor
has taken reasonable steps to cure such default within fifteen (15)
days, upon written notice to and the consent of Multi-Channel, the
Assignor will have a commercially reasonable amount of time to cure
such breach before such breach shall be deemed an Event of Default;
(b) the loss, theft, substantial damage, destruction, sale or
encumbrance to or of any of the Collateral or the making of any levy,
seizure or attachment thereof or thereon except to the extent:
(i) such loss is covered by insurance proceeds which
are used to replace the item or repay Laurus or, if the Laurus
Indebtedness has been paid in full, Multi-Channel; or
(ii) said levy, seizure or attachment does not secure
indebtedness in excess of $100,000 and such levy, seizure or
attachment has not been removed or otherwise released within
ten (10) days of the creation or the assertion thereof;
(c) any Assignor shall become insolvent, cease operations,
dissolve, terminate our business existence, make a general assignment
for the benefit of creditors, suffer the appointment of a receiver,
trustee, liquidator or custodian of all or any part of Assignors'
property;
(d) any proceedings under any bankruptcy or insolvency law
shall be commenced by or against any Assignor and if commenced against
any Assignor shall not be dismissed within thirty (30) days;
(e) the Company shall repudiate, purport to revoke or fail to
perform any or all of its obligations under the Note (after passage of
applicable cure period, if any); or
(f) an Event of Default shall have occurred and be continuing
beyond any applicable grace period under and as defined in any
Document.
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5. Upon the occurrence of any Event of Default and at any time
thereafter, Multi-Channel may declare all Obligations immediately due and
payable and Multi-Channel shall have the remedies of a secured party provided in
the Uniform Commercial Code as in effect in the State of California, this
Agreement and other applicable law. Upon the occurrence of any Event of Default
and at any time thereafter following the expiration of the applicable cure
period, Multi-Channel will have the right to take possession of the Collateral
and to maintain such possession on our premises or to remove the Collateral or
any part thereof to such other premises as Multi-Channel may desire. Upon
Multi-Channel's request, each of the Assignors shall assemble or cause the
Collateral to be assembled and make it available to Multi-Channel at a place
designated by Multi-Channel. If any notification of intended disposition of any
Collateral is required by law, such notification, if mailed, shall be deemed
properly and reasonably given if mailed at least ten (10) days before such
disposition, postage prepaid, addressed to any Assignor either at such
Assignor's address shown herein or at any address appearing on Multi-Channel's
records for such Assignor. Any proceeds of any disposition of any of the
Collateral shall be applied by Multi-Channel to the payment of all expenses in
connection with the sale of the Collateral, including reasonable attorneys' fees
and other legal expenses and disbursements and the reasonable expense of
retaking, holding, preparing for sale, selling, and the like, and any balance of
such proceeds may be applied by Multi-Channel toward the payment of the
Obligations in such order of application as Multi-Channel may elect, and each
Assignor shall be liable for any deficiency. For the avoidance of doubt,
following the occurrence and during the continuance of an Event of Default which
has not been cured, Multi-Channel shall have the immediate right to withdraw any
and all monies contained in the Restricted Account and apply same to the
repayment of the Obligations (in such order of application as Multi-Channel may
elect).
6. If any Assignor defaults in the performance or fulfillment of any of
the terms, conditions, promises, covenants, provisions or warranties on such
Assignor's part to be performed or fulfilled under or pursuant to this Master
Security Agreement, Multi-Channel may, at its option without waiving its right
to enforce this Master Security Agreement according to its terms, immediately or
at any time thereafter and without notice to any Assignor, perform or fulfill
the same or cause the performance or fulfillment of the same for each Assignor's
joint and several account and at each Assignor's joint and several cost and
expense, and the cost and expense thereof (including reasonable attorneys' fees)
shall be added to the Obligations and shall be payable on demand with interest
thereon at the highest rate permitted by law.
7. Each Assignor appoints Multi-Channel, any of Multi-Channel's
officers, employees or any other person or entity whom Multi-Channel may
designate as our attorney, with power to execute such documents in each of our
behalf and to supply any omitted information and correct patent errors in any
documents executed by any Assignor or on any Assignor's behalf; to file
financing statements against us covering the Collateral (and, in connection with
the filing of any such financing statements, describe the Collateral as "all
assets and all personal property, whether now owned and/or hereafter acquired"
(or any substantially similar variation thereof)); to sign our name on public
records; and to do all other things Multi-Channel reasonably deems necessary to
carry out this Master Security Agreement. This power being coupled with an
interest, is irrevocable so long as any Obligations remains unpaid.
8. No delay or failure on Multi-Channel's part in exercising any right,
privilege or option hereunder shall operate as a waiver of such or of any other
right, privilege, remedy or option, and no waiver whatever shall be valid unless
in writing, signed by Multi-Channel and then only to the extent therein set
forth, and no waiver by Multi-Channel of any default shall operate as a waiver
of any other default or of the same default on a future occasion.
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Multi-Channel's books and records containing entries with respect to the
Obligations shall be admissible in evidence in any action or proceeding, shall
be binding upon each Assignor for the purpose of establishing the items therein
set forth and shall constitute prima facie proof thereof. Multi-Channel shall
have the right to enforce any one or more of the remedies available to
Multi-Channel, successively, alternately or concurrently. Each Assignor agrees
to join with Multi-Channel in executing financing statements or other
instruments to the extent required by the Uniform Commercial Code in form
satisfactory to Multi-Channel and in executing such other documents or
instruments as may be required or deemed necessary by Multi-Channel for purposes
of affecting or continuing Multi-Channel's security interest in the Collateral.
9. This Master Security Agreement shall be governed by and construed in
accordance with the laws of the State of California and cannot be terminated
orally. All of the rights, remedies, options, privileges and elections given to
Multi-Channel hereunder shall inure to the benefit of Multi-Channel's successors
and assigns. The term "Multi-Channel" as herein used shall include
Multi-Channel, any parent of Multi-Channel's, any of Multi-Channel's
subsidiaries and any co-subsidiaries of Multi-Channel's parent, whether now
existing or hereafter created or acquired, and all of the terms, conditions,
promises, covenants, provisions and warranties of this Agreement shall inure to
the benefit of each of the foregoing, and shall bind the representatives,
successors and assigns of each Assignor. Multi-Channel and each Assignor hereby
(a) waive any and all right to trial by jury in litigation relating to this
Agreement and the transactions contemplated hereby and each Assignor agrees not
to assert any counterclaim in such litigation, (b) submit to the nonexclusive
jurisdiction of any court in the state of California and (c) waive any objection
Multi-Channel or each Assignor may have as to the bringing or maintaining of
such action with any such court.
10. In the event of any conflict between the terms of this Agreement
and the terms of the Stock Pledge Agreement dated as of the date hereof between
Multi-Channel and the Company (the "Stock Pledge Agreement"), the terms of the
Stock Pledge Agreement will govern as to all matters relating to the Pledged
Collateral (as such term is defined in the Stock Pledge Agreement).
11. All notices from Multi-Channel to any Assignor shall be
sufficiently given if mailed or delivered to such Assignor's address set forth
below.
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Very truly yours,
ISLAND PACIFIC, INC.
By: /s/ X. Xxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxx
Title: President
Address:
PAGE DIGITAL INCORPORATED
By: /s/ X. Xxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxx
Title: President
Address:
IP RETAIL TECHNOLOGIES
INTERNATIONAL, INC.
By: /s/ X. Xxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxx
Title: President
Address:
SABICA VENTURES, INC.
By: /s/ X. Xxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxx
Title: President
Address:
ACKNOWLEDGED:
MULTI-CHANNEL HOLDINGS, INC.
By: /s/ Xxxxxxxx Xxxx
-----------------------------------
Name: Xxxxxxxx Xxxx
Title: Managing Director
