Exhibit 10.31
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, DISTRIBUTED,
ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT AND APPLICABLE STATE
SECURITIES LAWS COVERING ANY SUCH TRANSACTION, (B) THE BORROWER RECEIVES AN
OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THE NOTE (CONCURRED IN BY LEGAL
COUNSEL FOR THE BORROWER) STATING THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION, OR (C) THE BORROWER OTHERWISE SATISFIES ITSELF THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION.
CONVERTIBLE PROMISSORY NOTE
Loan Amount: $100,000 Spokane, Washington
Interest Rate: 12% May 31, 2001
FOR VALUE RECEIVED, the undersigned, SVI Solutions, Inc., a
Delaware corporation ("Borrower"), hereby promises to pay to the order of Koyah
Community Partners, L.P. ("Lender"), at such places and times and under the
terms and conditions set forth below, the amounts, including interest, set forth
below.
1. PRINCIPAL AMOUNT. Borrower hereby borrows from Lender and Lender
hereby loans to Borrower the principal amount of One Hundred Thousand Dollars
($100,000), which principal amount shall incur interest and otherwise be subject
to the terms and conditions set forth herein.
2. PAYMENTS. The entire principal balance of this Promissory Note (this
"Note"), together with all accrued but unpaid interest thereon, shall be due and
payable on August 30, 2001 (the "Maturity Date"). The principal balance of this
Note shall accrue interest at the rate of twelve percent (12%) per annum.
3. PREPAYMENT. Borrower shall have the right to prepay the principal
balance of this Note, in part or in full, together with all accrued but unpaid
interest thereon, upon ten (10) days prior written notice to Xxxxxx.
4. COLLECTION COSTS BORNE BY BORROWER. Xxxxxxxx agrees to pay all costs
and expenses, including without limitation reasonable attorneys' fees, incurred
by Xxxxxx in enforcing the terms of this Note in collecting this Note, including
without limitation in any out-of-court workout, any court action, any appeal or
any bankruptcy proceeding.
5. LATE CHARGE. If any payment of principal or interest under this Note
shall not be made within five (5) days after the due date, Xxxxxxxx agrees to
pay, in addition to the unpaid principal or interest, interest on such defaulted
amount from the due date, up to the date of actual payment (after as well as
before judgment) at a rate of five percent (5%) per annum above the rate which
would have been payable under this Note or the maximum rate of interest
permitted to be charged by applicable law, whichever is less.
6. GOVERNING LAW. This Note shall be governed by and construed and
interpreted in accordance with the law of the State of Washington, without
regard to that state's conflict of laws principles. All disputes between the
parties hereto, whether sounding in contract, tort, equity or otherwise, shall
be resolved only by state and federal courts located in Spokane, Washington, and
the courts to which an appeal therefrom may be taken. All parties hereto waive
any objections to the location of the above referenced courts, including but not
limited to any objection based on lack of jurisdiction, improper venue or forum
non-conveniens. Notwithstanding the foregoing, any party obtaining any order or
judgment in any of the above referenced courts may bring an action in a court in
another jurisdiction in order to enforce such order or judgment.
7. SUCCESSORS. This Note shall be binding upon Xxxxxxxx and the
permitted successors and assigns of Xxxxxxxx. Nothing in this Note, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Note, except as expressly provided in
this Note.
8. SEVERABILITY. If any part of this Note is determined to be illegal
or unenforceable, all other parts shall remain in full force and effect.
9. CONVERSION OF NOTE. At the option of Lender, the outstanding
principal balance of this Note and all accrued but unpaid interest thereon, at
any time prior to payment thereof, may be converted, in whole or in part, into
duly authorized, fully paid and non-assessable shares of common stock, par value
$.0001 per share, of the Company ("Common Stock") at a conversion price of $1.35
per share (subject to appropriate adjustment in the event of any stock splits,
stock dividends or similar events). Lender may exercise such conversion right by
providing written notice to Xxxxxxxx. Such conversion shall be effective
immediately upon giving such notice and as of such date Borrower shall be
treated for all purposes as the holder of the shares issuable upon conversion.
As soon as practicable after such conversion, Borrower, at its expense, shall
cause to be issued in the name of and delivered to Lender a certificate or
certificates for the number of shares to which Lender shall be entitled upon
such conversion. No fractional shares shall be issued upon such conversion. If
upon such conversion a fractional share results, the number of shares to be
issued upon conversion shall be rounded to the next highest whole number.
10. REPRESENTATIONS OF LENDER. By acceptance of this Note, Lender
represents to Borrower that Lender is an "accredited investor" as such term is
defined in Regulation D promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), and that this Note and any securities issuable upon any
conversion thereof are being acquired for Xxxxxx's own account and for the
purpose of investment and not with a view to, or for sale in connection with,
the distribution of the same, nor with any present intention of distributing or
selling the same.
11. NO SHAREHOLDER RIGHTS. This Note shall not entitle Lender to any
voting rights or any other rights as a shareholder of Borrower until any
conversion of this Note.
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12. WARRANT. As additional consideration for making the loans evidenced
by this Note, Borrower shall issue to Lender a Warrant, in the form attached
hereto as Exhibit A (the "Warrant"), to purchase two hundred fifty (250) shares
of Common Stock for each one thousand dollars ($1,000) of original principal
amount of this Note.
13. REGISTRATION RIGHTS. As further additional consideration for making
the loan(s) evidenced by this Note, Borrower hereby agrees that any shares of
Common Stock issued upon any conversion of this Note or upon any exercise of the
Warrant shall be entitled to the same registration rights contained in the
Investor's Rights Agreement dated as of December 22, 2000 among Borrower and the
Investors party thereto (the "Investor's Rights Agreement") and for all purposes
shall be considered Registrable Securities (as defined in the Investor's Rights
Agreement), except that the provisions of Section 1.3 of the Investor's Rights
13.Agreement shall not apply to such shares.
14. CONDITIONS TO LOAN. As conditions to making the loan(s) to Borrower
evidenced by this Note, (i) on the date hereof, Borrower shall obtain and
deliver to Lender a subordination letter (the "Subordination Letter"), in form
and substance acceptable to Lender in Lender's sole discretion, of Softline
Limited, a South African corporation ("Softline"), to subordinate any and all
debt owed to Softline by Borrower to the debt evidenced by this Note, (ii) on
the date hereof, Xxxxxxxx shall execute and deliver to Lender the 14. Warrant
and (iii) within ten (10) business days after the date hereof, Borrower shall
obtain and deliver to Lender a Subordination Agreement (the "Subordination
Agreement"), in form and substance acceptable to Lender in its sole discretion,
of Softline to more fully memorialize the full subordination of such debt owed
to Softline by Borrower to the debt evidenced by this Note (it being understood
that Xxxxxx already has provided Borrower the form of Subordination Agreement
acceptable to Lender). Borrower hereby agrees to satisfy such conditions and
that failure to satisfy any such conditions on or before the date specified
above shall constitute a Default (as defined below) under this Note.
15. AGREED TERMS FOR SOFTLINE/SSII TRANSACTION. Borrower has had
discussions with Softline and Schmulik Xxxxx International Investments Limited
("SSII") regarding a possible transaction involving (i) conversion of the debt
owed to Softline by Borrower into shares of Common Stock and (ii) transfer by
Softline to SSII of the shares of Common Stock resulting from such conversion
and/or the shares of Common Stock already held by Softline. Xxxxxxxx has
informed Xxxxxx that Xxxxxxxx is willing to engage in any such debt-equity
conversion only on certain terms and Borrower desires to make certain agreements
with Lender regarding the terms of such debt-equity conversion. Borrower hereby
agrees not to engage in any such debt-equity conversion or similar transaction
unless (x) SSII enters into an agreement with Borrower (for the benefit of
Lender as well) containing (a) a "standstill" provision restricting SSII or any
of its affiliates from acquiring any additional shares of Common Stock or other
stock of Borrower for a period of twelve (12) months after such transfer from
Softline and (b) a method of disposition provision restricting SSII or any of
its affiliates from selling or otherwise disposing of any shares of Common Stock
or other stock of Borrower held by them for a period of twelve (12) months after
such transfer (and Borrower shall also use its best efforts to obtain SSII's
agreement to a period of eighteen (18) months or longer) except on the American
Stock Exchange or such other exchange as the Common Stock or other stock may
then be listed, (y) such debt -equity conversion occurs at a conversion or
similar transaction price of not less than $1.00 per share of Common Stock and
(2) the shares acquired by SSII will be "restricted securities" under Rule 144
under the Securities Act.
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16. DEFAULTS. Each of the following shall constitute a default under
this Note (a "Default"):
(a) Failure by Borrower to make any payment due under this
Note or under any other agreement with Lender, Koyah Leverage Partners, L.P. or
Koyah Partners, L.P. (collectively, the "Affiliated Lenders") within five (5)
days of its due date; failure by Borrower to satisfy the conditions set forth in
Section 14 on or before the date specified therein; or failure by Borrower to
comply with the provisions of any other covenant, obligation or term of this
Note or any other agreement with the Affiliated Lenders which shall unremedied
for five (5) days after written notice from the Affiliated Lenders;
(b) Failure by Borrower to pay when due any other indebtedness
or obligations in excess of two hundred thousand dollars ($200,000) which shall
continue after the applicable grace period, if any, specified in the agreement
relating to such indebtedness or obligation; failure by Borrower to comply with
the provisions of any other covenant, obligation or term of any agreement
relating to such indebtedness or obligation which shall continue after the
applicable grace period, if any, specified in such agreement if the effect of
such failure is to accelerate, or permit the acceleration of, the due date of
such indebtedness or obligation; or any such indebtedness or obligation shall be
declared to be due and payable, or required to be prepaid, prior to the stated
maturity date thereof;
(c) Borrower makes an assignment for the benefit of creditors,
files a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions
to any court for a receiver or trustee for Borrower or any substantial part of
its property, commences any proceeding relating to the arrangement,
readjustment, reorganization or liquidation under any bankruptcy or similar
laws; there is commenced against Borrower any such proceedings which remain
undismissed for a period of thirty (30) days; or Borrower by any act indicates
its consent or acquiesence in any such proceeding or the appointment of any such
trustee or receiver;
(d) Occurrence of any extraordinary situation which gives
Lender reasonable grounds to believe that Borrower will or may not be able to
perform its obligations under this Note or any other agreement with the
Affiliated Lenders; or
(e) The provisions of any covenant, agreement or term of the
Subordination Letter or Subordination Agreement shall for any reason be
invalidated or otherwise cease to be in full force and effect; the debt
evidenced by this Note shall for any reason not have the seniority and priority
contemplated by the provisions of the Subordination Letter or Subordination
Agreement; Softline or Borrower shall fail to comply with the provisions of any
covenant, obligation or term of the Subordination Letter or Subordination
Agreement; or Softline shall revoke or repudiate or attempt to contest any of
its obligations under the Subordination Letter or Subordination Agreement.
17. ACCELERATION; NO EXCLUSIVE REMEDY. Upon written notice from Xxxxxx
of a Default, Xxxxxx may declare, by written notice to Xxxxxxxx, that all
principal and accrued interest hereunder shall be immediately due and payable to
Xxxxxx. Notwithstanding anything to the contrary herein, Xxxxxx shall be
entitled to any and all remedies available to it in the event of a Default
hereunder and Xxxxxx's pursuance of any particular remedy shall not preclude
Xxxxxx from seeking any other remedies available to it at law or in equity.
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18. NOTICES. Any notice under this Note shall be given in writing and
shall be addressed to the party to be notified at the address indicated below,
or at such other address as such party may designate by written notice to the
other party.
"Borrower"
SVI Solutions, Inc.
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxxx X'Xxxxx
"Lender"
Koyah Community Partners, L.P.
c/o ICM Asset Management, Inc.
000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxxxx Xxx
19. COSTS AND EXPENSES. Borrower shall pay the costs and expenses of
legal counsel to the Affiliated Lenders (i) in connection with this Note, the
Subordination Letter, the Subordination Agreement and the Warrant and the
transactions contemplated hereby and thereby and (ii) in connection with the
registration on Form S-3 contemplated by the Investor's Rights Agreement and
Lender may withhold such costs and expenses or estimates thereof out of the
proceeds of the loan to be disbursed to Borrower evidenced by this Note.
20. MISCELLANEOUS.
(a) No delay or omission on the part of Lender in exercising
any right under this Note shall operate as a waiver of such right or of any
other right under this Note.
(b) Borrower hereby waives presentation for payment, demand,
notice of demand and of dishonor and non-payment of this Note, protest and
notice of protest, diligence in collecting, and the bringing of suit against any
other party. The pleading of any statute of limitations as a defense to any
demand against the Borrower, any endorsers, guarantors and sureties of this Note
is expressly waived by each and all of such parties to the extent permitted by
law. Time is of the essence under this Note.
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(c) Any payment hereunder shall first be applied to any
collections costs, then against accrued and unpaid interest hereunder and then
against the outstanding principal balance of this Note.
(d) This Note, together with the Subordination Letter, the
Subordination Agreement and the Warrant, constitutes the entire agreement of the
parties with respect to the subject matter hereof and thereof and supersedes all
prior discussions, negotiations, understandings or agreements of the parties
with respect to such subject matter.
(e) All payments under this Note shall be made without
set-off, deduction or counterclaim.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in
its corporate name by its duly authorized officer and dated the day and year
first above written.
SVI SOLUTIONS, INC.
By:______________________
Its:______________________
6
EXHIBIT A
TO
CONVERTIBLE PROMISSORY NOTE
FORM OF WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT TO PURCHASE COMMON STOCK
OF
SVI SOLUTIONS, INC.
June 14, 2001
No. W-__
This certifies that ____________________ (the "Holder") is entitled,
subject to the terms and conditions of this Warrant, to purchase from SVI
Solutions, Inc., a Delaware corporation (the "Company"), all or any part of an
aggregate of _________ shares of the Company's authorized and unissued Common
Stock, par value $.0001 (the "Warrant Stock"), at the Warrant Price (as defined
herein), upon surrender of this Warrant at the principal offices of the Company,
together with a duly executed subscription form in the form attached hereto as
Exhibit 1 and simultaneous payment of the Warrant Price for each share of
Warrant Stock so purchased in lawful money of the United States, unless
exercised in accordance with the provisions of Section 2.5 of this Warrant. The
Holder may exercise the Warrant at any time after the date of this Warrant and
prior to the third (3rd) anniversary of the date hereof (the "Expiration Date").
This Warrant is issued pursuant to that certain Convertible Promissory
Note dated as of June 14, 2001 (the "Promissory Note"), executed by the Company
in favor of the Holder.
1. DEFINITIONS. The following definitions shall apply for purposes of
this Warrant:
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1.1 "Acquisition" means any consolidation, merger or
reorganization of the Company with or into any other corporation or other entity
or person, or any other corporate reorganization, in which the stockholders of
the Company immediately prior to such consolidation, merger or reorganization,
own less than fifty percent of the Company's voting power immediately after such
consolidation, merger or reorganization, or any transaction or series of related
transactions to which the Company is a party in which in excess of fifty percent
of the Company's voting power is transferred, excluding any consolidation,
merger or reorganization effected exclusively to change the domicile of the
Company.
1.2 "Asset Transfer" means a sale, lease or other disposition
of all or substantially all of the assets of the Company.
1.3 "Company" means the "Company" as defined above and
includes any corporation or other entity that succeeds to or assumes the
obligations of the Company under this Warrant.
1.4 "Fair Market Value" of a share of Warrant Stock means (i)
if the Common Stock is traded on a securities exchange, the average of the
closing price each day over the thirty consecutive day period ending three days
before the day the Fair Market Value of the securities is being determined, (ii)
if the Common Stock is actively traded over-the counter, the average of the
closing bid and asked prices quoted on the NASDAQ system (or similar system)
each day over the thirty consecutive day period ending three days before the day
the Fair Market Value of the securities is being determined, or (iii) if at any
time the Common Stock is not listed on any securities exchange or quoted in the
NASDAQ System or the over-the-counter market, then the Fair Market Value
determined by the Company's Board of Directors in good faith.
1.5 "Holder" means the "Holder" as defined above and includes
any transferee who shall at the time be the registered holder of this Warrant.
1.6 "Warrant" means this Warrant and any warrant(s) delivered
in substitution or exchange therefor, as provided herein.
1.7 "Warrant Price" means $1.50 per share of Warrant Stock.
The Warrant Price is subject to adjustment as provided herein.
1.8 "Warrant Stock" means the Common Stock of the Company. The
number and character of shares of Warrant Stock are subject to adjustment as
provided herein and the term "Warrant Stock" shall include stock and other
securities and property at any time receivable or issuable upon exercise of this
Warrant in accordance with its terms.
2. EXERCISE.
2.1 METHOD OF EXERCISE. Subject to the terms and conditions of
this Warrant, the Holder may exercise the purchase rights represented by this
Warrant in whole or in part, at any time or from time to time, on or after the
date hereof and before the Expiration Date, by surrendering this Warrant at the
principal offices of the Company, with the subscription form attached hereto
duly executed by the Holder, and payment of an amount equal to the product
obtained by multiplying (i) the number of shares of Warrant Stock so purchased
by (ii) the Warrant Price, as specified in Section 2.2 below.
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2.2 FORM OF PAYMENT. Except as provided in Section 2.5,
payment may be made by (i) a check payable to the Company's order, (ii) wire
transfer of funds to the Company, (iii) cancellation of indebtedness of the
Company to the Holder, or (iv) any combination of the foregoing.
2.3 PARTIAL EXERCISE. Upon a partial exercise of this Warrant,
this Warrant shall be surrendered by the Holder and replaced with a new Warrant
or Warrants of like tenor for the balance of the shares of Warrant Stock
purchasable under the Warrant surrendered upon such purchase. The Warrant or
Warrants will be delivered to the Holder thereof within a reasonable time.
2.4 NO FRACTIONAL SHARES. No fractional shares may be issued
upon any exercise of this Warrant, and any fractions shall be rounded down to
the nearest whole number of shares. If upon any exercise of this Warrant a
fraction of a share results, the Company will pay an amount equal to the such
fraction multiplied by the Fair Market Value of a share of Warrant Stock.
2.5 NET EXERCISE ELECTION. The Holder may elect to convert all
or a portion of this Warrant, without the payment by the Holder of any
additional consideration, by the surrender of this Warrant or such portion to
the Company, with the net exercise election selected in the subscription form
attached hereto duly executed by the Holder, into up to the number of shares of
Warrant Stock that is obtained under the following formula:
X = Y (A-B)
-------
A
where X = the number of shares of Warrant Stock to be issued to the
Holder pursuant to this Section 2.5.
Y = the number of shares of Warrant Stock purchasable under
this Warrant, or if only a portion of the Warrant is being
exercised, the number of shares of Warrant Stock represented
by the portion of the Warrant being exercised.
A = the Fair Market Value of one share of Warrant Stock as at
the time the net exercise election is made pursuant to this
Section 2.5.
B = the Warrant Price.
3. ISSUANCE OF STOCK. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
shares of Warrant Stock issuable upon such exercise shall be treated for all
purposes as the holder of record of such shares as of the close of business on
such date. As soon as practicable, but in any event no later than three days
9
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
whole shares of Warrant Stock issuable upon such exercise. The Company covenants
and agrees that all shares of Warrant Stock that are issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any stockholder, free of all taxes, liens and charges with respect to the
issue thereof and free and clear of any restrictions on transfer (other than
under the Act and state securities laws).
4. ADJUSTMENT PROVISIONS. The number and character of shares of Warrant
Stock issuable upon exercise of this Warrant (or any shares of stock or other
securities or property at the time receivable or issuable upon exercise of this
Warrant) and the Warrant Price for the Common Stock are subject to adjustment
upon the occurrence of the following events between the date this Warrant is
issued and the date it is exercised:
4.1 ADJUSTMENT FOR STOCK SPLITS, STOCK DIVIDENDS,
RECAPITALIZATIONS, ETC. The Warrant Price of this Warrant and the number of
shares of Warrant Stock issuable upon exercise of this Warrant (or any shares of
stock or other securities at the time issuable upon exercise of this Warrant)
shall each be appropriately and proportionally adjusted to reflect any stock
dividend, stock split, reverse stock split, combination of shares,
reclassification, recapitalization or other similar event affecting the number
of outstanding shares of Warrant Stock (or such other stock or securities).
4.2 ADJUSTMENT FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In case
the Company shall make or issue, or shall fix a record date for the
determination of eligible holders entitled to receive, a dividend or other
distribution payable with respect to the Warrant Stock that is payable in (a)
securities of the Company (other than issuances with respect to which adjustment
is made under Section 4.1), or (b) assets (other than cash dividends paid or
payable solely out of retained earnings), then, and in each such case, the
Holder, upon exercise of this Warrant at any time after the consummation,
effective date or record date of such event, shall receive, in addition to the
shares of Warrant Stock issuable upon such exercise prior to such date, the
securities or such other assets of the Company to which the Holder would have
been entitled upon such date if the Holder had exercised this Warrant
immediately prior thereto (all subject to further adjustment as provided in this
Warrant).
4.3 ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER. In
case of any reorganization of the Company (or of any other corporation or
entity, the stock or other securities of which are at the time receivable on the
exercise of this Warrant), after the date of this Warrant, or in case, after
such date, the Company (or any such corporation or entity) shall consolidate
with or merge into another corporation or entity or convey all or substantially
all of its assets to another corporation or entity, then, and in each such case,
the Holder, upon the exercise of this Warrant (as provided in Section 2), at any
time after the consummation of such reorganization, consolidation, merger or
conveyance, shall be entitled to receive, in lieu of the stock or other
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securities and property receivable upon the exercise of this Warrant prior to
such consummation, the stock or other securities or property to which the Holder
would have been entitled upon the consummation of such reorganization,
consolidation, merger or conveyance if the Holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in this
Warrant, and the successor or purchasing corporation or entity in such
reorganization, consolidation, merger or conveyance (if other than the Company)
shall duly execute and deliver to the Holder a supplement hereto acknowledging
such corporation's or entity's obligations under this Warrant; and in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of this Warrant after
the consummation of such reorganization, consolidation, merger or conveyance.
4.4 NOTICE OF CERTAIN EVENTS AND ADJUSTMENTS. The Company
shall give thirty days prior written notice of the record date fixed for any
Acquisition, Asset Transfer or event referred to in Section 4.2 or 4.3. The
Company shall promptly give written notice of each adjustment or readjustment of
the Warrant Price or the number of shares of Warrant Stock or other securities
issuable upon exercise of this Warrant. The notice shall describe the adjustment
or readjustment and show in reasonable detail the facts on which the adjustment
or readjustment is based.
4.5 NO CHANGE NECESSARY. The form of this Warrant need not be
changed because of any adjustment in the Warrant Price or in the number of
shares of Warrant Stock issuable upon its exercise.
5. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. This Warrant does not by
itself entitle the Holder to any voting rights or other rights as a stockholder
of the Company. In the absence of affirmative action by the Holder to purchase
Warrant Stock by exercise of this Warrant, no provisions of this Warrant, and no
enumeration herein of the rights or privileges of the Holder, shall cause the
Holder to be a stockholder of the Company for any purpose.
6. ATTORNEYS' FEES. In the event any party is required to engage the
services of any attorneys for the purpose of enforcing this Warrant, or any
provision thereof, the prevailing party shall be entitled to recover its
reasonable expenses and costs in enforcing this Warrant, including attorneys'
fees.
7. TRANSFER. This Warrant may be transferred or assigned by the Holder
hereof in whole or in part, if, on the Company's reasonable request, the Holder
provides an opinion of counsel reasonably satisfactory to the Company that such
transfer does not require registration under the Act and the applicable state
securities law, except that this Warrant may be transferred by a Holder which is
a partnership or limited liability company to a partner, former partner, member,
former member or other affiliate of such partnership or limited liability
company, as the case may be, if (a) the transferee agrees in writing to be
subject to the terms of this Warrant; and (b) the Holder delivers notice of such
transfer to the Company. The rights and obligations of the Company and the
Holder under this Warrant shall be binding upon and benefit their respective
permitted successors, assigns, heirs, administrators and transferees.
8. LOSS OR MUTILATION. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership and the loss, theft, destruction
or mutilation of this Warrant, and of indemnity reasonably satisfactory to it,
and (in the case of mutilation) upon surrender and cancellation of this Warrant,
the Company will execute and deliver in lieu thereof a new Warrant of like
tenor.
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9. RESERVATION OF WARRANT STOCK. If at any time the number of
authorized but unissued shares of the Warrant Stock shall not be sufficient to
effect the exercise of this Warrant, the Company will take all such corporate
action as may be necessary to increase its authorized but unissued shares of
Warrant Stock to such number of shares of Warrant Stock as shall be sufficient
for such purpose.
10. GOVERNING LAW. This Warrant shall be governed by and construed and
interpreted in accordance with the laws of the State of Washington, without
giving effect to its conflicts of law principles. All disputes between the
parties hereto, whether sounding in contract, tort, equity or otherwise, shall
be resolved only by state and federal courts located in Spokane, Washington, and
the courts to which an appeal therefrom may be taken. All parties hereto waive
any objections to the location of the above referenced courts, including but not
limited to any objection based on lack of jurisdiction, improper venue or forum
non conveniens.
11. HEADINGS. The headings and captions used in this Warrant are used
for convenience only and are not to be considered in construing or interpreting
this Warrant. All references in this Warrant to sections and exhibits shall,
unless otherwise provided, refer to sections hereof and exhibits attached
hereto, all of which exhibits are incorporated herein by this reference.
12. NOTICES. Any request, consent, notice or other communication
required or permitted under this Warrant shall be in writing and shall be deemed
duly given and received when delivered personally or transmitted by facsimile,
one business day after being deposited for next-day delivery with a nationally
recognized overnight delivery service, or three days after being deposited as
first class mail with the United States Postal Service, all charges or postage
prepaid, and properly addressed to the party to receive the same at the address
indicated for such party on the signature pages of the Purchase Agreement. Any
party may, at any time, by providing ten days' advance notice to the other party
hereto, designate any other address in substitution of the address established
pursuant to the foregoing.
13. AMENDMENT; WAIVER. Any term of this Warrant may be amended, and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Holder.
14. SEVERABILITY. If one or more provisions of this Warrant are held to
be unenforceable under applicable law, such provision(s) shall be excluded from
this Warrant and the balance of the Warrant shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
15. TERMS BINDING. By acceptance of this Warrant, the Holder accepts
and agrees to be bound by all the terms and conditions of this Warrant.
16. VALID ISSUANCE; TAXES. All shares of Warrant Stock issued upon the
exercise of this Warrant shall be validly issued, fully paid and non-assessable,
and the Company shall pay all taxes and other governmental charges that may be
imposed in respect of the issue or delivery thereof. The Company shall not be
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required to pay any tax or other charge imposed in connection with any transfer
involved in the issuance of any certificate for shares of Warrant Stock in any
name other than that of the Holder of this Warrant.
17. REGISTRATION RIGHTS. All shares of Warrant Stock issuable upon
exercise of this Warrant shall be deemed to be "Registrable Securities" or such
other definition of securities entitled to registration rights pursuant to the
Investors' Rights Agreement dated as of December 22, 2000, by and among the
Company, the Holder and certain other Investors, and are entitled, subject to
the terms and conditions of that agreement, to all registration rights granted
to holders of Registrable Securities thereunder.
18. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or bylaws, or through reorganization,
consolidation, merger, dissolution, issue or sale of securities, sale of assets
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against impairment. Without limiting the generality of
the foregoing, the Company (a) will not increase the par value of any shares of
stock issuable upon the exercise of this Warrant above the amount payable
therefor upon such exercise, and (b) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Warrant Stock upon exercise of this
Warrant.
[Signature appears on the following page.]
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IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
date and year set forth below.
Dated: June 14, 2001 SVI Solutions, Inc.
By:
----------------------
Name:
----------------------
Title:
----------------------
[SIGNATURE PAGE TO WARRANT]
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EXHIBIT 1
---------
FORM OF SUBSCRIPTION
--------------------
(To be signed only upon exercise of Warrant)
To: SVI Solutions Inc.
(1) Check the box that applies and the provide the necessary
information:
|_| CASH PAYMENT ELECTION. The undersigned Holder hereby elects to
purchase _____________ shares of Common Stock of SVI Solutions, Inc. (the
"Warrant Stock"), pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price for such shares in full.
|_| NET EXERCISE ELECTION. The undersigned Holder elects to convert the
Warrant into shares of Warrant Stock by net exercise election pursuant to
Section 2.6 of the Warrant. This conversion is exercised with respect to
__________ shares of Common Stock of SVI Solutions, Inc. (the "Warrant Stock")
covered by the Warrant.
(2) In exercising the Warrant, the undersigned Holder hereby makes the
representations and warranties set forth on Appendix A hereto as of the date
hereof.
(3) Please issue a certificate or certificates representing such shares
of Warrant Stock in the name or names specified below:
___________________________________ ____________________________________
(Name) (Name)
___________________________________ ____________________________________
(Address) (Address)
___________________________________ ____________________________________
(City, State, Zip Code) (City, State, Zip Code)
___________________________________ ____________________________________
(Federal Tax Identification Number) (Federal Tax Identification Number)
___________________________________ ____________________________________
(Date) (Signature of Holder)
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Appendix A
INVESTMENT REPRESENTATION
The undersigned, _____________________ (the "Holder"), intends to acquire shares
of Common Stock (the "Common Stock") of SVI Solutions, Inc. (the "Company") from
the Company pursuant to the exercise or conversion of a Warrant to purchase
Common Stock held by the Holder. The Common Stock will be issued to the Holder
in a transaction not involving a public offering and pursuant to an exemption
from registration under the Securities Act of 1933, as amended (the "Securities
Act"), and applicable state securities laws. In connection with such purchase
and in order to comply with the exemptions from registration relied upon by the
Company, the Holder represents, warrants and agrees as follows:
(a) The Holder is acquiring the Common Stock for its own account, to hold for
investment, and the Holder shall not make any sale, transfer or other
disposition of the Common Stock in violation of the Securities Act or the
General Rules and Regulations promulgated thereunder by the Securities and
Exchange Commission or in violation of any applicable state securities law.
(b) The Holder has been advised that the Common Stock has not been registered
under the Securities Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on the Holder's representations set forth
herein.
(c) The Holder has been informed that under the Securities Act, the Common Stock
must be held indefinitely unless it is subsequently registered under the
Securities Act or unless an exemption from such registration (such as Rule 144)
is available with respect to any proposed transfer or disposition by the Holder
of the Common Stock. The Holder further agrees that the Company may refuse to
permit the Holder to sell, transfer or dispose of the Common Stock (except as
permitted under Rule 144) unless there is in effect a registration statement
under the Securities Act and any applicable state securities laws covering such
transfer, or unless the Holder furnishes an opinion of counsel reasonably
satisfactory to counsel for the Company to the effect that such registration-is
not required.
The Holder also understands and agrees that there will be placed on the
certificate(s) for the Common Stock or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws. These shares have been
acquired for investment purposes and may not be sold or otherwise
transferred in the absence of an effective registration statement for
these shares under the Securities Act and applicable state securities
laws or an opinion of counsel satisfactory to the Company that
registration is not required and that an applicable exemption is
available."
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