NOTE PURCHASE AGREEMENT

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EXHIBIT 4.2

NOTE PURCHASE AGREEMENT

THIS NOTE PURCHASE AGREEMENT (this "Agreement") is made and entered into as of

April 18, 2005, among (i) ISLAND PACIFIC, INC., a Delaware corporation (the

"Company"), (ii) each of the subsidiaries of the Company listed on the signature

page hereto (together with the Company, each a "Note Party" and collectively,

the "Note Parties") and (iii) Multi-Channel Holdings, Inc., a Delaware

corporation (the "Purchaser").

RECITALS

WHEREAS, the Company has authorized the sale to the Purchaser of a

Secured Term Note in the aggregate principal amount of Two Million Dollars

($2,000,000) (the "Note");

WHEREAS, Purchaser desires to purchase the Note on the terms and

conditions set forth herein; and

WHEREAS, the Company desires to issue and sell the Note to Purchaser on

the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual

promises, representations, warranties and covenants hereinafter set forth and

for other good and valuable consideration, the receipt and sufficiency of which

are hereby acknowledged, the parties hereto agree as follows:

1. AGREEMENT TO SELL AND PURCHASE. Pursuant to the terms and conditions

set forth in this Agreement, on the Closing Date (as defined in Section

3), the Company agrees to sell to the Purchaser, and the Purchaser

hereby agrees to purchase from the Company, a Note in the aggregate

principal amount of $2,000,000. A form of the Note is annexed hereto as

Exhibit A. The Note will mature on the Maturity Date (as defined in the

Note).

2. FEES AND EXPENSES. On the Closing Date, the Company shall reimburse the

Purchaser for its reasonable expenses not to exceed $100,000 (including

legal fees and expenses) incurred in connection with the preparation

and negotiation of this Agreement and the Related Agreements (as

hereinafter defined), and expenses incurred in connection with the

Purchaser's due diligence review of the Company and its Subsidiaries

(as defined in Section 4(b)) and all related matters.

3. CLOSING, DELIVERY AND PAYMENT.

(a) CLOSING. Subject to the terms and conditions herein, the

closing of the transactions contemplated hereby (the

"Closing"), shall take place on the date hereof, at such time

or place as the Company and Purchaser may mutually agree (such

date is hereinafter referred to as the "Closing Date").

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(b) DELIVERY. At the Closing on the Closing Date, the Company will

deliver to the Purchaser, among other things, a Note in the

form attached as Exhibit A representing the aggregate

principal amount of $2,000,000.

4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as otherwise

specifically identified on the disclosure schedule delivered by the

Company to Purchase pursuant to this Section 4 (the "Disclosure

Schedule"), the Company (and, where specifically provided or

referenced, each of the Note Parties) represents and warrants to the

Purchaser as set forth below in this Section 4. Any disclosure or

exception set forth on the Disclosure Schedule shall be deemed to apply

to any representation and warranty to which it is applicable regardless

of whether or not it is disclosed or cross referenced with respect to a

particular representation or warranty:

(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the

Note Parties 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. Each of the Note Parties has the

corporate power and authority to own and operate its

properties and assets, to execute and deliver (i) this

Agreement, (ii) the Note to be issued in connection with this

Agreement, (iii) the Master Security Agreement dated as of the

date hereof between the Company, certain Subsidiaries of the

Company and the Purchaser (as amended, modified or

supplemented from time to time, the "Master Security

Agreement"), (iv) the Subsidiary Guaranty dated as of the date

hereof made by certain Subsidiaries of the Company (as

amended, modified or supplemented from time to time, the

"Subsidiary Guaranty"), (v) the Stock Pledge Agreement dated

as of the date hereof among the Company, and the Purchaser

(the "Stock Pledge Agreement") and (vi) all other agreements

related to this Agreement and the Note and referred to herein

(the preceding clauses (ii) through (vi), collectively, the

"Related Agreements"), to issue and sell the Note and to carry

out the provisions of this Agreement and the Related

Agreements and to carry on its business as presently

conducted. Each of the Note Parties is duly qualified and is

authorized to do business and is in good standing as a foreign

corporation, partnership or limited liability company, as the

case may be, in all jurisdictions in which the nature of its

activities and of its properties (both owned and leased) makes

such qualification necessary, except for those jurisdictions

in which failure to do so has not, or could not reasonably be

expected to have, individually or in the aggregate, a material

adverse effect on the business, assets, liabilities, condition

(financial or otherwise), properties, operations or prospects

of the Company and its Subsidiaries, taken individually and as

a whole (a "Material Adverse Effect").

(b) SUBSIDIARIES. Each direct and indirect Subsidiary of the

Company, the direct owner of such Subsidiary and its

percentage ownership thereof, is set forth on Schedule 4(b).

For the purpose of this Agreement, a "Subsidiary" of any

person or entity means (i) a corporation or other entity whose

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shares of stock or other ownership interests having ordinary

voting power (other than stock or other ownership interests

having such power only by reason of the happening of a

contingency) to elect a majority of the directors of such

corporation, or other persons or entities performing similar

functions for such person or entity, are owned, directly or

indirectly, by such person or entity or (ii) a corporation or

other entity in which such person or entity owns, directly or

indirectly, more than 50% of the equity interests at such

time.

(c) CAPITALIZATION; VOTING RIGHTS.

(i) The authorized capital stock of the Company, as of

the date hereof consists of 250,000,000 shares of

common stock par value $0.0001 of which 64,437,833

are issued and outstanding and 5,000,000 shares of

preferred stock par value $0.0001, of which 141,000

are designated as Series A Preferred Stock, all of

which are issued and outstanding and 2,517,233 shares

are designated as Series B Preferred Stock, none of

which are issued and outstanding. The authorized

capital stock of each Subsidiary of the Company is

set forth on Schedule 4(c).

(ii) Except as disclosed on Schedule 4(c), other than: (A)

the shares reserved for issuance under the Company's

stock option plans; and (B) shares which may be

granted pursuant to that certain Securities Purchase

Agreement dated as of July 12, 2004 between the

Company and Laurus Master Fund, Ltd. ("Laurus"), a

Cayman Islands company (as amended, modified or

supplemented, the "Laurus Agreement") and the

"Related Agreements" (as such term is defined in the

Laurus Agreement, and as such Related Agreements are

amended modified or supplemented, the "Laurus Related

Agreements"), there are no outstanding options,

warrants, rights (including conversion or preemptive

rights and rights of first refusal), proxy or

stockholder agreements, or arrangements or agreements

of any kind for the purchase or acquisition from the

Company of any of its securities.

(iii) All issued and outstanding shares of the Company's

Common Stock: (A) have been duly authorized and

validly issued and are fully paid and nonassessable;

and (B) were issued by the Company in compliance with

all applicable state and federal laws concerning the

issuance of securities.

(iv) The rights, preferences, privileges and restrictions

of the shares of the Common Stock are as stated in

the Company's Certificate of Incorporation (the

"Charter") and pursuant to applicable law.

(d) AUTHORIZATION; BINDING OBLIGATIONS. All corporate, partnership

or limited liability company, as the case may be, action on

the part of the Company and each of its Subsidiaries

(including the respective officers and directors) necessary

for the authorization of this Agreement, the Note and the

Related Agreements, the performance of all obligations of the

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Company and its Subsidiaries hereunder and under the other

Related Agreements at the Closing and, the authorization,

sale, issuance and delivery of the Note has been taken or will

be taken prior to the Closing. This Agreement, the Note and

the Related Agreements, when executed and delivered and to the

extent it is a party thereto, will be valid and binding

obligations of each of the Company and each of its

Subsidiaries, enforceable against each such Person in

accordance with their terms, except:

(i) as limited by applicable bankruptcy, insolvency,

reorganization, moratorium or other laws of general

application affecting enforcement of creditors'

rights; and

(ii) general principles of equity that restrict the

availability of equitable or legal remedies.

(e) LIABILITIES. Neither the Company nor any of its Subsidiaries

has any material contingent liabilities, except current

liabilities incurred in the ordinary course of business and

liabilities disclosed in any of the Company's filings under

the Securities Exchange Act of 1934 (such filings, the

"Exchange Act Filings").

(f) AGREEMENTS; ACTION. Except as set forth on Schedule 4(f) or as

disclosed in any Exchange Act Filings:

(i) there are no agreements, understandings, instruments,

contracts, proposed transactions, judgments, orders,

writs or decrees to which the Company or any of its

Subsidiaries is a party or by which it is bound which

may involve: (A) obligations (contingent or

otherwise) of, or payments to, the Company in excess

of $50,000 (other than obligations of, or payments

to, the Company arising from purchase or sale

agreements entered into in the ordinary course of

business); or (B) the transfer or license of any

patent, copyright, trade secret or other proprietary

right to or from the Company (other than licenses

arising from the purchase of "off the shelf" or other

standard products); or (C) provisions restricting the

development, manufacture or distribution of the

Company's products or services; or (D)

indemnification by the Company with respect to

infringements of proprietary rights.

(ii) Since December 31, 2004, neither the Company nor any

of its Subsidiaries has: (A) declared or paid any

dividends, or authorized or made any distribution

upon or with respect to any class or series of its

capital stock; (B) incurred any indebtedness for

money borrowed or any other liabilities (other than

ordinary course obligations) individually in excess

of $50,000 or, in the case of indebtedness and/or

liabilities individually less than $50,000, in excess

of $100,000 in the aggregate; (C) made any loans or

advances to any Person not in excess, individually or

in the aggregate, of $100,000, other than ordinary

course advances for travel expenses; or (D) sold,

exchanged or otherwise disposed of any of its assets

or rights, other than the sale of its inventory in

the ordinary course of business.

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(iii) For the purposes of subsections (i) and (ii) above,

all indebtedness, liabilities, agreements,

understandings, instruments, contracts and proposed

transactions involving the same person or entity

(including persons or entities the Company has reason

to believe are affiliated therewith) shall be

aggregated for the purpose of meeting the individual

minimum dollar amounts of such subsections.

(g) OBLIGATIONS TO RELATED PARTIES. Except as set forth on

Schedule 4(g), there are no obligations of the Company or any

of its Subsidiaries to officers, directors, stockholders or

employees of the Company or any of its Subsidiaries other

than:

(i) for payment of salary for services rendered and for

bonus payments;

(ii) reimbursement for reasonable expenses incurred on

behalf of the Company and its Subsidiaries;

(iii) for other standard employee benefits made generally

available to all employees (including stock option

agreements outstanding under any stock option plan

approved by the Board of Directors of the Company);

and

(iv) obligations listed in the Company's financial

statements or disclosed in any of its Exchange Act

Filings.

Except as described above or set forth on Schedule 4(g), none of the officers,

directors or, to the best of the Company's knowledge, key employees or

stockholders of the Company or any members of their immediate families, are

indebted to the Company, individually or in the aggregate, in excess of $50,000

or have any direct or indirect ownership interest in any firm or corporation

with which the Company is affiliated or with which the Company has a business

relationship, or any firm or corporation which competes with the Company, other

than passive investments in publicly traded companies (representing less than

one percent (1%) of such company) which may compete with the Company. Except as

described above, no officer, director or stockholder, or any member of their

immediate families, is, directly or indirectly, interested in any material

contract with the Company and no agreements, understandings or proposed

transactions are contemplated between the Company and any such person. Except as

set forth on Schedule 4(g), the Company is not a guarantor or indemnitor of any

indebtedness of any other person, firm or corporation.

(h) CHANGES. Since December 31, 2004, except as disclosed in any

Exchange Act Filing, Schedule 4(h) or any other Schedule to

this Agreement or to any of the Related Agreements, there has

not been:

(i) any change in the business, assets, liabilities,

condition (financial or otherwise), properties,

operations or prospects of the Company or any of its

Subsidiaries, which individually or in the aggregate

has had, or could reasonably be expected to have,

individually or in the aggregate, a Material Adverse

Effect;

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(ii) any resignation or termination of any officer, key

employee or group of employees of the Company or any

of its Subsidiaries;

(iii) any material change, except in the ordinary course of

business, in the contingent obligations of the

Company or any of its Subsidiaries by way of

guaranty, endorsement, indemnity, warranty or

otherwise;

(iv) any damage, destruction or loss, whether or not

covered by insurance, has had, or could reasonably be

expected to have, individually or in the aggregate, a

Material Adverse Effect;

(v) any waiver by the Company or any of its Subsidiaries

of a valuable right or of a material debt owed to it;

(vi) any direct or indirect loans made by the Company or

any of its Subsidiaries to any stockholder, employee,

officer or director of the Company or any of its

Subsidiaries, other than advances made in the

ordinary course of business;

(vii) any material change in any compensation arrangement

or agreement with any employee, officer, director or

stockholder of the Company or any of its

Subsidiaries;

(viii) any declaration or payment of any dividend or other

distribution of the assets of the Company or any of

its Subsidiaries;

(ix) any labor organization activity related to the

Company or any of its Subsidiaries;

(x) any debt, obligation or liability incurred, assumed

or guaranteed by the Company or any of its

Subsidiaries, except those for immaterial amounts and

for current liabilities incurred in the ordinary

course of business;

(xi) any sale, assignment or transfer of any patents,

trademarks, copyrights, trade secrets or other

intangible assets owned by the Company or any of its

Subsidiaries;

(xii) any change in any material agreement to which the

Company or any of its Subsidiaries is a party or by

which either the Company or any of its Subsidiaries

is bound which either individually or in the

aggregate has had, or could reasonably be expected to

have, individually or in the aggregate, a Material

Adverse Effect;

(xiii) any other event or condition of any character that,

either individually or in the aggregate, has had, or

could reasonably be expected to have, individually or

in the aggregate, a Material Adverse Effect; or

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(xiv) any arrangement or commitment by the Company or any

of its Subsidiaries to do any of the acts described

in subsection (a) through (m) above.

(i) TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except as set

forth on Schedule 4(i), each of the Company and each of its

Subsidiaries has good and marketable title to its properties

and assets, and good title to its leasehold estates, in each

case subject to no mortgage, pledge, lien, lease, encumbrance

or charge, other than:

(i) those liens arising in connection with the

Obligations (as such term is defined in the Note);

(ii) those liens under the Laurus Indebtedness (as such

term is defined below)

(iii) those resulting from taxes which have not yet become

delinquent;

(iv) minor liens and encumbrances which do not materially

detract from the value of the property subject

thereto or materially impair the operations of the

Company or any of its Subsidiaries; and

(v) those that have otherwise arisen in the ordinary

course of business.

All facilities, machinery, equipment, fixtures, vehicles and other properties

owned, leased or used by the Company and its Subsidiaries are in good operating

condition and repair and are reasonably fit and usable for the purposes for

which they are being used. Except as set forth on Schedule 4(i), the Company and

its Subsidiaries are in compliance with all material terms of each lease to

which it is a party or is otherwise bound except where such failure to be in

compliance, either individually or in the aggregate has had, or could reasonably

be expected to have, individually or in the aggregate, a Material Adverse

Effect.

(j) INTELLECTUAL PROPERTY.

(i) Each of the Company and each of its Subsidiaries owns

or possesses sufficient legal rights to all patents,

trademarks, service marks, trade names, copyrights,

trade secrets, licenses, information and other

proprietary rights and processes necessary for its

business as now conducted and to the Company's

knowledge, as presently proposed to be conducted (the

"Intellectual Property"), without any known

infringement of the rights of others. There are no

outstanding options, licenses or agreements of any

kind relating to the foregoing proprietary rights,

nor is the Company or any of its Subsidiaries bound

by or a party to any options, licenses or agreements

of any kind with respect to the patents, trademarks,

service marks, trade names, copyrights, trade

secrets, licenses, information and other proprietary

rights and processes of any other person or entity

other than such licenses or agreements arising from

the purchase of "off the shelf" or standard products.

Set forth on Schedule 4(j) is a list of all

Intellectual Property owned by the Note Parties,

indicating, which, if any, is registered.

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(ii) Neither the Company nor any of its Subsidiaries has

received any communications alleging that the Company

or any of its Subsidiaries has violated any of the

patents, trademarks, service marks, trade names,

copyrights or trade secrets or other proprietary

rights of any other person or entity, nor is the

Company or any of its Subsidiaries aware of any basis

therefor.

(iii) The Company does not believe it is or will be

necessary to utilize any inventions, trade secrets or

proprietary information of any of its employees made

prior to their employment by the Company or any of

its Subsidiaries, except for inventions, trade

secrets or proprietary information that have been

rightfully assigned to the Company or any of its

Subsidiaries.

(k) COMPLIANCE WITH OTHER INSTRUMENTS. Neither the Company nor any

of its Subsidiaries is in violation or default of (i) any

material term of its Charter or Bylaws, or (ii) of any

provision of any indebtedness, mortgage, indenture, contract,

agreement or instrument to which it is party or by which it is

bound or of any judgment, decree, order or writ, which

violation or default, in the case of this clause (ii), has

had, or could reasonably be expected to have, either

individually or in the aggregate, a Material Adverse Effect.

The execution, delivery and performance of and compliance with

this Agreement and the Related Agreements to which it is a

party, and the issuance and sale of the Note by the Company

pursuant hereto, will not, with or without the passage of time

or giving of notice, result in any such material violation, or

be in conflict with or constitute a default under any such

term or provision, or result in the creation of any mortgage,

pledge, lien, encumbrance or charge upon any of the properties

or assets of the Company or any of its Subsidiaries or the

suspension, revocation, impairment, forfeiture or nonrenewal

of any permit, license, authorization or approval applicable

to the Company, its business or operations or any of its

assets or properties.

(l) LITIGATION. Except as set forth on Schedule 4(l) hereto, there

is no action, suit, proceeding or investigation pending or, to

the Company's knowledge, currently threatened against the

Company or any of its Subsidiaries that prevents the Company

or any of its Subsidiaries from entering into this Agreement

or the other Related Agreements, or from consummating the

transactions contemplated hereby or thereby, or which has had,

or could reasonably be expected to have, either individually

or in the aggregate, a Material Adverse Effect or any change

in the current equity ownership of the Company or any of its

Subsidiaries, nor is the Company aware that there is any basis

to assert any of the foregoing. Neither the Company nor any of

its Subsidiaries is a party or subject to the provisions of

any order, writ, injunction, judgment or decree of any court

or government agency or instrumentality. There is no action,

suit, proceeding or investigation by the Company or any of its

Subsidiaries currently pending or which the Company or any of

its Subsidiaries intends to initiate.

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(m) TAX RETURNS AND PAYMENTS. Each of the Company and each of its

Subsidiaries has timely filed all tax returns (federal, state

and local) required to be filed by it. All taxes shown to be

due and payable on such returns, any assessments imposed, and

all other taxes due and payable by the Company or any of its

Subsidiaries on or before the Closing, have been paid or will

be paid prior to the time they become delinquent. Except as

set forth on Schedule 4(m), neither the Company nor any of its

Subsidiaries has been advised:

(i) that any of its returns, federal, state or other,

have been or are being audited as of the date hereof;

or

(ii) of any deficiency in assessment or proposed judgment

to its federal, state or other taxes.

The Company has no knowledge of any liability of any tax to be imposed upon its

properties or assets as of the date of this Agreement that is not adequately

provided for.

(n) EMPLOYEES. Except as set forth on Schedule 4(n), neither the

Company nor any of its Subsidiaries has any collective

bargaining agreements with any of its employees. There is no

labor union organizing activity pending or, to the Company's

knowledge, threatened with respect to the Company or any of

its Subsidiaries. Except as disclosed in the Exchange Act

Filings or on Schedule 4(n), neither the Company nor any of

its Subsidiaries is a party to or bound by any currently

effective employment contract, deferred compensation

arrangement, bonus plan, incentive plan, profit sharing plan,

retirement agreement or other employee compensation plan or

agreement. To the Company's knowledge, no employee of the

Company or any of its Subsidiaries, nor any consultant with

whom the Company or any of its Subsidiaries has contracted, is

in violation of any term of any employment contract,

proprietary information agreement or any other agreement

relating to the right of any such individual to be employed

by, or to contract with, the Company or any of its

Subsidiaries because of the nature of the business to be

conducted by the Company or any of its Subsidiaries; and to

the Company's knowledge the continued employment by the

Company or any of its Subsidiaries of its present employees,

and the performance of the Company's and its Subsidiaries'

contracts with its independent contractors, will not result in

any such violation. Neither the Company nor any of its

Subsidiaries is aware that any of its employees is obligated

under any contract (including licenses, covenants or

commitments of any nature) or other agreement, or subject to

any judgment, decree or order of any court or administrative

agency, that would interfere with their duties to the Company

or any of its Subsidiaries. Neither the Company nor any of its

Subsidiaries has received any notice alleging that any such

violation has occurred. Except for employees who have a

current effective employment agreement with the Company or any

of its Subsidiaries, no employee of the Company or any of its

Subsidiaries has been granted the right to continued

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employment by the Company or any of its Subsidiaries or to any

material compensation following termination of employment with

the Company or any of its Subsidiaries. Except as set forth on

Schedule 4(n), the Company is not aware that any officer, key

employee or group of employees intends to terminate his, her

or their employment with the Company or any of its

Subsidiaries, nor does the Company or any of its Subsidiaries

have a present intention to terminate the employment of any

officer, key employee or group of employees.

(o) COMPLIANCE WITH LAWS; PERMITS. Neither the Company nor any of

its Subsidiaries is in violation of any applicable statute,

rule, regulation, order or restriction of any domestic or

foreign government or any instrumentality or agency thereof in

respect of the conduct of its business or the ownership of its

properties which has had, or could reasonably be expected to

have, either individually or in the aggregate, a Material

Adverse Effect. No governmental orders, permissions, consents,

approvals or authorizations are required to be obtained and no

registrations or declarations are required to be filed in

connection with the execution and delivery of this Agreement

or any other Related Agreement and the issuance of any of the

Securities, except such as has been duly and validly obtained

or filed, or with respect to any filings that must be made

after the Closing, as will be filed in a timely manner. Each

of the Company and its Subsidiaries has all material

franchises, permits, licenses and any similar authority

necessary for the conduct of its business as now being

conducted by it, the lack of which could, either individually

or in the aggregate, reasonably be expected to have a Material

Adverse Effect.

(p) ENVIRONMENTAL AND SAFETY LAWS. Neither the Company nor any of

its Subsidiaries is in violation of any applicable statute,

law or regulation relating to the environment or occupational

health and safety, and to its knowledge, no material

expenditures are or will be required in order to comply with

any such existing statute, law or regulation except for such

violations that individually, or in the aggregate, have had,

or could reasonably be expected to have, individually or in

the aggregate, a Material Adverse Effect. Except as set forth

on Schedule 4(p), no Hazardous Materials (as defined below)

are used or have been used, stored, or disposed of by the

Company or any of its Subsidiaries or, to the Company's

knowledge, by any other person or entity on any property

owned, leased or used by the Company or any of its

Subsidiaries. For the purposes of the preceding sentence,

"Hazardous Materials" shall mean:

(i) materials which are listed or otherwise defined as

"hazardous" or "toxic" under any applicable local,

state, federal and/or foreign laws and regulations

that govern the existence and/or remedy of

contamination on property, the protection of the

environment from contamination, the control of

hazardous wastes, or other activities involving

hazardous substances, including building materials;

or

(ii) any petroleum products or nuclear materials.

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(q) SOLVENCY. On the Closing Date, after giving effect to the

transactions contemplated hereby, each of the Company and each

of its Subsidiaries is, and the Note Parties on a consolidated

basis are, Solvent. For purposes of this Agreement,

"Solvent" means, with respect to any Person (as such term is

defined below) on a particular date, that on such Person's

total assets exceed their total liabilities. For purposes of

this Agreement, "Person" means an individual, corporation,

limited liability company, partnership, association,

joint-stock company, trust, unincorporated organization, joint

venture or other enterprise or entity or governmental

authority.

(r) INSURANCE. Each