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EXHIBIT 10.3
AMENDMENT AND WAIVER
This AMENDMENT AND WAIVER (this "AMENDMENT"), dated as of November
16,
2005, is entered into by and between ISLAND
PACIFIC, INC., a Delaware
corporation (the "COMPANY"), and MIDSUMMER
INVESTMENT, LTD., a Bermuda company
("MIDSUMMER"), for the purpose of amending
and waiving certain terms of (i) the
9% Convertible Debenture, dated as of March
15, 2004 (as amended, modified
and/or supplemented from time to time, the
"MARCH 2004 Debenture") issued by the
Company to Midsummer, (ii) the Securities
Purchase Agreement, dated as of March
15, 2004 (as amended, modified or
supplemented from time to time, the "March
2004 Purchase Agreement") by and between
the Company and Midsummer, (iii) the
Registration Rights Agreement by and
between the Company and Midsummer dated
March 15, 2004 (as amended, modified or
supplemented from time to time, the
"MARCH 2004 REG. RIGHTS AGREEMENT"), (iv)
the Secured Convertible Term Note,
dated as of June 15, 2005 (as amended,
modified and/or supplemented from time to
time, the "JUNE 2005 TERM NOTE" and
together with the March 2004 Debenture, the
"NOTES" and each, a "Note") issued by the
Company to Midsummer, (v) the
Securities Purchase Agreement, dated as of
June 15, 2005 (as amended, modified
or supplemented from time to time, the
"JUNE 2005 PURCHASE AGREEMENT" and
together with the March 2004 Purchase
Agreement, the "PURCHASE AGREEMENTS" and
each, a "PURCHASE AGREEMENT") by and
between the Company and Midsummer and (vi)
the Registration Rights Agreement by and
between the Company and Midsummer dated
June 15, 2005 (as amended, modified and/or
supplemented from time to time, the
"JUNE 2005 REG. RIGHTS AGREEMENT" and
together with the March 2004 Reg. Rights
Agreement, the "REG. RIGHTS AGREEMENTS" and
each, a "REG. RIGHTS AGREEMENT").
Capitalized terms used herein without
definition shall have the meanings
ascribed to such terms in the applicable
Note, Purchase Agreement or Reg. Rights
Agreement.
WHEREAS, the Company and Midsummer have agreed to make certain
changes
to the Notes, Purchase Agreements and Reg.
Rights Agreements as set forth
herein.
NOW, THEREFORE, in consideration of the above, and for other good
and
valuable consideration, the receipt and
sufficiency of which is hereby
acknowledged, the parties hereto agree as
follows:
1. Midsummer and the Company hereby agree that the Company shall
not
be required to pay the principal portion of
any Monthly Redemption Amount (as
defined in the March 2004 Debenture) due on
the first business day of November
2005, December 2005, January 2006 and
February 2006 on such dates (collectively,
the "MARCH 2004 POSTPONED PRINCIPAL");
PROVIDED THAT, the March 2004 Postponed
Principal shall each be paid in full on the
Maturity Date (as defined in the
March 2004 Debenture), together with all
other amounts due and payable on such
date under the March 2004 Purchase
Agreement and the Related Agreements referred
to in the March 2004 Purchase
Agreement.
2. Midsummer and the Company hereby agree that the Company shall
not be
required to pay the principal portion of
any Monthly Amount (as defined in the
June 2005 Term Note) due on the first
business day of November 2005, December
2005, January 2006 and February 2006 on
such dates (collectively, the "JUNE 2005
POSTPONED PRINCIPAL"); PROVIDED THAT, the
June 2005 Postponed Principal shall
each be paid in full on the Maturity Date
(as defined in the June 2005 Term
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Note), together with all other amounts due
and payable on such date under the
June 2005 Purchase Agreement and the
Related Agreements referred to in the June
2005 Purchase Agreement.
3. The last sentence of Section 10.4 set forth in the June 2005
Purchase Agreement is hereby deleted in its
entirety and, in each case, the
following new sentence is hereby inserted
in lieu thereof:
"Except upon the occurrence of an Event of Default (as defined
in the Note) and the continuance thereof, Purchaser may not assign
its
rights hereunder to a competitor of the Company."
4. Section 4.8 of March 2004 Purchase Agreement and Section 6.4 of
the
June 2005 Purchase Agreement are hereby
deleted in their entirety and, the
following a new Section 4.8 and Section
6.4, respectively, are hereby inserted
in lieu thereof:
"Once the Company's revenue recognition investigation is
complete and the Company has filed its Form 10-K for the year
ended
March 31, 2005 and the Forms 10-Q for quarters ended June 30, 2005
and
September 30, 2005 (the "Late Reports"), which Late Reports shall
be
filed by January 23, 2005, and after the filing of the Late
Reports,
the Company shall timely file with the SEC all reports required to
be
filed pursuant to the Exchange Act and refrain from terminating
its
status as an issuer required by the Exchange Act to file
reports
thereunder even if the Exchange Act or the rules or regulations
thereunder would
permit such termination. Promptly after (i) the filing
thereof, copies of the Company's most recent registration
statements
and annual, quarterly, current or other regular reports which
the
Company files with the Securities and Exchange Commission (the
"SEC"),
and (ii) the issuance thereof, copies of such financial
statements,
reports and proxy statements as the Company shall send to its
stockholders."
5. Midsummer understands that the Company has an affirmative
obligation
to make prompt public disclosure of
material agreements and material amendments
to such agreements. The Company hereby
covenants to report the terms and
provisions of this Amendment on a current
report on Form 8-K within four (4)
business days of the date hereof.
6. The first sentence of Section 4.5(c) of the March 2004
Purchase
Agreement shall be amended to state:
By February 1, 2006, the Company shall secure the listing of
the shares of Common Stock equal to the Required Minimum on
the NASD OTC Bulletin Board upon which shares of Common Stock
are listed and shall maintain such listing so long as any
other shares of Common Stock shall be so listed.
7. The first sentence of Section 6.2 of the Purchase Agreements
shall
be amended to state:
By February 1, 2006, the Company shall secure the listing of
the shares of Common Stock issuable upon conversion of the
Note, upon the exercise of the Warrant and upon exercise of
the Option on the NASD OTC Bulletin Board (the "Principal
Market") upon which shares of Common Stock are listed and
shall maintain such listing so long as any other shares of
Common Stock shall be so listed.
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8. Midsummer consents to the Company issuing a Secured Term Note
and
Option to Laurus Master Fund, Ltd.
("Laurus") on or around the date hereof on
terms no more favorable to Laurus than the
terms of the Note and the Option are
to Midsummer.
9. Midsummer waives any and all rights to an adjustment of the
conversion price under the March 2004
Debenture, the warrant to purchase 434,783
shares of common stock issued to Midsummer
on March 15, 2004, the warrant to
purchase 138,158 shares of common stoc
