-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M8ZorzXrXbYc0xE2SsYERajPnRJ3/dBVQKDRwNozwdwFw7jOH/5EcMxUwGaV/HE4 LFA+YqMdORMIQprlm7dA/g== 0000950172-03-003389.txt : 20031124 0000950172-03-003389.hdr.sgml : 20031124 20031124163956 ACCESSION NUMBER: 0000950172-03-003389 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20031124 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SAGE GROUP PLC CENTRAL INDEX KEY: 0001103281 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: SAGE HOUSE STREET 2: BENTON PARK ROAD CITY: NEWCASTLE UPON TIME STATE: L1 ZIP: 00000 BUSINESS PHONE: 441912553000 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ISLAND PACIFIC INC CENTRAL INDEX KEY: 0000866535 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 330896617 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-45978 FILM NUMBER: 031021075 BUSINESS ADDRESS: STREET 1: 3252 HOLIDAY COURT STREET 2: STE 208 CITY: LA JOLLA STATE: CA ZIP: 92037 BUSINESS PHONE: 8585503345 MAIL ADDRESS: STREET 1: 3252 HOLIDAY COURT STREET 2: STE 208 CITY: LA JOLLA STATE: CA ZIP: 92037 FORMER COMPANY: FORMER CONFORMED NAME: SVI SOLUTIONS INC DATE OF NAME CHANGE: 20010404 FORMER COMPANY: FORMER CONFORMED NAME: SVI HOLDINGS INC DATE OF NAME CHANGE: 19940207 FORMER COMPANY: FORMER CONFORMED NAME: WILSON CAPITAL INC DATE OF NAME CHANGE: 19930328 SC 13D 1 pal124805_10.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. _____)1 ISLAND PACIFIC, INC. (Name of Issuer) COMMON STOCK, $0.0001 PAR VALUE PER SHARE (Title of Class of Securities) 464478106 (CUSIP Number) Michael Robinson Corporate Secretary and Group Legal Director The Sage Group plc Sage House Benton Park Road Newcastle upon Tyne NE7 7LZ, England Telephone: +44 (191) 255 3000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copy to: Marc R. Packer, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 525 University Avenue, Suite 1100 Palo Alto, CA 94301 Telephone: (650) 470-4500 November 14, 2003 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. 1 The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ------------------------------------------------------------------------------- CUSIP NO. 464478106 13D Page 2 OF 9 Pages - ------------------------------------------------------------------------------- NAME OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) The Sage Group plc I.D. No. - ---------- --------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions) 2 (a) [ ] (b) [ ] - ---------- --------------------------------------------------------------------- SEC USE ONLY 3 - ---------- --------------------------------------------------------------------- SOURCE OF FUNDS (See Instructions) 4 WC - ---------- --------------------------------------------------------------------- CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT 5 TO ITEMS 2(d) or 2(e) - ---------- --------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 England - ---------- --------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER 27,406,607 (See Item 5) OF ------- --------------------------------------------- 8 SHARED VOTING POWER SHARES 0 BENEFICIALLY ------- --------------------------------------------- 9 SOLE DISPOSITIVE POWER OWNED BY 27,406,607 (See Item 5) EACH ------- --------------------------------------------- 10 SHARED DISPOSITIVE POWER REPORTING 0 PERSON ------- --------------------------------------------- WITH - ---------- --------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 27,406,607 (See Item 5) - ---------- --------------------------------------------------------------------- CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN 12 SHARES (See Instructions) - ---------- --------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 48.4% (See Item 5) - ---------- --------------------------------------------------------------------- TYPE OF REPORTING PERSON (See Instructions) 14 CO - ----------- -------------------------------------------------------------------- ITEM 1. SECURITY AND ISSUER. The class of equity securities to which this statement on Schedule 13D (this "Schedule 13D") relates is the common stock, $0.0001 par value per share (the "Common Stock"), of Island Pacific, Inc. (formerly, SVI Solutions, Inc.), a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 19800 MacArthur Boulevard, Suite 1200, Irvine, California 92612. ITEM 2. IDENTITY AND BACKGROUND. This Schedule 13D is being filed by The Sage Group plc, a company organized under the laws of England ("Sage"). The principal business of Sage is supplying business management software solutions and related products and services to the small- and medium-sized business community worldwide. The principal offices and principal business of Sage are located at Sage House, Benton Park Road, Newcastle upon Tyne NE7 7LZ, England. (a) - (c), (f) Certain information concerning the executive officers and directors of Sage is set forth in Schedule A hereto and is incorporated herein by reference. (d) - (e) During the past five years, neither Sage nor, to the best knowledge of Sage, any of the executive officers and directors of Sage, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The total amount of funds used by Sage in acquiring its interest in the Company was ZAR 174,889,027 (equivalent to $26,818,946 based on an exchange rate of 0.14854 on November 14, 2003, the date the securities were acquired). Sage obtained all of such funds from its working capital. ITEM 4. PURPOSE OF TRANSACTION. The securities of the Company to which this Schedule 13D relate were acquired by Sage in connection with the consummation of the transactions contemplated by the Sale of Business Agreement (the "Original Sale of Business Agreement"), dated August 26, 2003, between Softline Limited, a company registered in accordance with the laws of South Africa ("Softline"), and Sage Software (SA) (Proprietary) Limited (formerly, Flagman Investments (Proprietary) Limited), a company registered in accordance with the laws of South Africa and a wholly-owned subsidiary of Sage ("Sage South Africa"), the Addendum to Sale of Business Agreement, dated November 7, 2003 (the "Addendum") and the Second Addendum to Sale of Business Agreement, dated November 24, 2003 (the "Second Addendum" and together with the Original Sale of Business Agreement and the Addendum, the "Sale of Business Agreement"). Under the Sale of Business Agreement, Sage South Africa agreed to acquire substantially all of the assets and liabilities of Softline, including the equity holdings of Softline in its subsidiaries and certain other entities, including the Company. Pursuant to the Addendum, among other things, Sage South Africa assigned to Sage all of its rights and obligations under the Sale of Business Agreement with respect to the equity interests held by Softline in the Company. In connection with the consummation of the transactions contemplated by the Sale of Business Agreement, certain agreements relating to the securities of the Company were assigned to and assumed by Sage, including the Purchase and Exchange Agreement (the "Purchase Agreement"), dated January 1, 2002, by and between the Company and Softline; the Investor Rights Agreement (the "Investor Rights Agreement"), dated January 1, 2002, by and between the Company and Softline; and the Option Agreement (the "Beck Option Agreement"), dated April 25, 2003, by and between Softline, as grantor, and Steven Beck, as trustee of a certain management group of the Company. In addition, in order to induce certain third parties to consent to the transaction, Sage executed a letter, dated November 20, 2003 (the "Lock-Up Letter"), in favor of Midsummer Investment, Ltd. and Omicron Master Trust. Pursuant to the Purchase Agreement, the Company (a) issued and sold to Softline 53,000 shares of Series A Preferred Stock and (b) sold, assigned and transferred to Softline all of the Company's right, title and interest in and to a note and a pledge agreement, in exchange for a release by Softline in favor of the Company. The Company also issued 88,000 shares of Series A Preferred Stock to Softline in exchange for 10,700,000 shares of the Common Stock held by Softline. As assignee of Softline's rights and obligations under the Purchase Agreement, Sage is prohibited from offering or selling the Series A Preferred Stock in the United States or to a U.S. person unless such securities are registered under the Securities Act of 1933, as amended (the "Securities Act"), or an exemption from the registration requirements is available. Pursuant to the Investor Rights Agreement, as assignee of Softline's rights and obligations, Sage is entitled to certain rights with respect to the registration under the Securities Act of the shares of Common Stock issuable upon conversion of the Series A Preferred Stock. Under the terms of the Investor Rights Agreement, subject to certain limitations, if the Company proposes to register any shares of Common Stock, the Company shall, upon Sage's written request, register all or any portion of the Common Stock issuable upon conversion of the Series A Preferred Stock held by Sage. The Company shall not include Sage's securities in an offering involving an underwriting of shares, unless Sage accepts the terms of the underwriting and enters into an underwriting agreement. The Company shall include in the offering only that number of shares held by Sage that the underwriters determine in their sole discretion will not jeopardize the success of the offering. The Investor Rights Agreement further provides that, under certain conditions, Sage may require the Company to register on Form S-3 the resale of the Common Stock issuable upon conversion of the Series A Preferred Stock. In addition, pursuant to the terms of the Investor Rights Agreement, the Company has a right of first refusal to purchase all but not less than all of any securities Sage proposes to sell to a third party. Pursuant to the Beck Option Agreement, Softline granted to Steven Beck ("Beck") the option to purchase, subject to certain conditions, from Softline 8,000,000 shares of Common Stock held by Softline and such number of shares of Series A Preferred Stock that are convertible into 17,625,000 shares of Common Stock as of April 25, 2003 (the "Option Shares"). The price for each Option Share shall be $0.80 per share of Common Stock represented by such Option Share. The option expires on the earlier of March 24, 2003 and the date on which an optionee's full-time employment as an officer or director of the Company is terminated for any reason. The Beck Option Agreement is subject to any agreement to which Softline and/or the Company are bound, including the Investor Rights Agreement. On September 17, 2003, in accordance with the terms of the Beck Option Agreement, Beck exercised, in part, his option to purchase such number of shares of Series A Preferred Stock convertible into 500,000 shares of Common Stock, at an exercise price of $400,000. Pursuant to the Lock-Up Letter, during the option period of that certain option granted to Beck, Sage may not sell those shares of Common Stock or Series A Preferred Stock that are subject to the Beck Option Agreement, except to Beck pursuant to such Beck Option Agreement. In addition, provided that Midsummer Investments, Ltd. and Omicron Master Trust continue to hold unconverted debentures of the Company at the time the Beck option expires and Sage continues to hold the Option Shares after such period, then Sage may sell only that number of shares that Sage would be permitted to sell pursuant to Rule 144(e) under the Securities Act, notwithstanding that any shares may be registered for resale at such time. The foregoing descriptions of the Sale of Business Agreement, the Purchase Agreement, the Investor Rights Agreement, the Beck Option Agreement and the Lock-Up Letter are qualified in their entirety by reference to the full text of such agreements, which are incorporated herein by reference and copies of which are filed as Exhibits 1 through 7 to this Schedule 13D, respectively. Sage may from time to time, depending on certain conditions, sell all or part of the shares of the Company. Sage intends to review its investment in the Company from time to time, evaluating the Company's business, prospects, financial condition, the market price of the shares, general economic conditions, general stock market and other factors and future developments that Sage may deem relevant from time to time, and may decide at any time, based on the foregoing and other factors, to decrease the size of its investment in the Company. Any such disposition may be effected through open market or privately negotiated transactions, or otherwise. Except as set forth above, Sage does not have, and to the best knowledge of Sage, none of the individuals identified in Schedule A has, any plan or proposal which relates to or would result in the types of transactions set forth in subparagraphs (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) - (b) The number of shares of Common Stock that may be deemed to be beneficially owned by Sage is equal to 27,406,607 which consists of (i) 8,923,915 shares of Common Stock, (ii) 18,410,880 shares of Common Stock issuable upon conversion of 136,788 shares of Series A Preferred Stock, (iii) 61,812 shares of Common Stock issuable, at an exercise price of $2.00 per share, upon exercise of outstanding options exercisable within 60 days and (iv) 10,000 shares of Common Stock issuable, at an exercise price of $11.75 per share, upon exercise of outstanding options exercisable within 60 days, which in the aggregate constitute approximately 48.4% of the issued and outstanding shares of Common Stock (based on 38,195,279 shares of Common Stock of the Company outstanding as of August 20, 2003, as disclosed by the Company in its Registration Statement on Form S-1/A, filed on September 26, 2003, plus the shares of Common Stock referred to in clauses (ii) through (iv) above). With respect to all of the 27,406,607 shares of Common Stock that may be deemed to be beneficially owned by Sage, Sage has sole voting power and sole dispositive power. (c) In connection with the consummation of the transactions contemplated by the Sale of Business Agreement, Sage acquired all of the equity interests in the Company described in this Item 5 on November 14, 2003, for the aggregate price of ZAR 174,889,027 (equivalent to $26,818,946 based on an exchange rate of 0.14854 on November 14, 2003, the date the securities were acquired). Other than as set forth in this Item 5, there have been no transactions in the shares of Common Stock effected during the past 60 days by Sage, nor to the knowledge of Sage, as of the date hereof, by any person listed on Schedule A hereto. (d) - (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The responses to Items 4 and 5 of this Schedule 13D and the exhibits to this Schedule 13D are incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit No. Exhibit Name ----------- ------------ 1 Sale of Business Agreement, dated August 26, 2003, by and between Sage Software (SA) (Proprietary) Limited (formerly, Flagman Investments (Proprietary) Limited), and Softline Limited. 2 Addendum to Sale of Business Agreement, dated November 7, 2003, by and between Sage Software (SA) (Proprietary) Limited (formerly, Flagman Investments (Proprietary) Limited), and Softline Limited. 3 Second Addendum to Sale of Business Agreement, dated November 24, 2003, by and between Sage Software (SA) (Proprietary) Limited (formerly, Flagman Investments (Proprietary) Limited), and Softline Limited. 4 Purchase and Exchange Agreement, dated January 1, 2002, by and between Island Pacific, Inc. and Softline Limited. 5 Investor Rights Agreement, dated January 1, 2002, by and between Island Pacific, Inc. and Softline Limited. 6 Option Agreement, dated April 25, 2003, by and between Softline, as grantor, and Steven Beck, as trustee. 7 Lock-Up Letter, dated November 20, 2003, in favor of Midsummer Investment, Ltd. and Omicron Master Trust. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: November 24, 2003 The Sage Group plc By: /s/ Paul Walker ----------------------------- Name: Paul Walker Title: Chief Executive Officer Schedule A EXECUTIVE OFFICERS AND DIRECTORS OF THE SAGE GROUP PLC The following table sets forth the name, business address and present principal occupation or employment of each executive officer and director of The Sage Group plc. Unless otherwise indicated, each such person is a citizen of the United Kingdom, and the business address of each such person is c/o The Sage Group plc, Sage House, Benton Park Road, Newcastle upon Tyne NE7 7LZ, England. THE SAGE GROUP PLC
------------------------------------------------------------------------------------------------------------- | Name | Present Principal Occupation | |---------------------------------------|---------------------------------------------------------------------| | Michael Jackson | Chairman of The Sage Group plc. | |---------------------------------------|---------------------------------------------------------------------| | Paul Walker | Chief Executive Officer of The Sage Group plc. | |---------------------------------------|---------------------------------------------------------------------| | Paul Stobart | Managing Director, U.K. of The Sage Group plc. | |---------------------------------------|---------------------------------------------------------------------| | Paul Harrison | Group Finance Director of The Sage Group plc. | |---------------------------------------|---------------------------------------------------------------------| | Guy Berruyer (French citizenship) | Managing Director, Mainland Europe of The Sage Group plc. | |---------------------------------------|---------------------------------------------------------------------| | Ron Verni (U.S. citizenship)* | Managing Director, U.S. Operations of The Sage Group plc.; | | | President and Chief Executive Officer of Best Software of | | | California, Inc. | |---------------------------------------|---------------------------------------------------------------------| | Kevin Howe (U.S. citizenship) | Manager of Mercury Ventures. | |---------------------------------------|---------------------------------------------------------------------| | Lindsay Bury | Chairman of South Staffordshire Group plc and Henderson Electric | | | and General Investment Trust plc. | |---------------------------------------|---------------------------------------------------------------------| | John Constable | Trustee of the Pensions Trust; Chairman of the Harpur Trust. | |---------------------------------------|---------------------------------------------------------------------| | Tim Ingram | Chief Executive Officer of Caledonia Investments plc. | -------------------------------------------------------------------------------------------------------------
* The business address of such person is c/o Best Software, Inc., 56 Technology Drive, Irvine, California 92618. EXHIBIT INDEX Exhibit No. Exhibit Name ----------- ------------ 1 Sale of Business Agreement, dated August 26, 2003, by and between Sage Software (SA) (Proprietary) Limited (formerly, Flagman Investments (Proprietary) Limited), and Softline Limited. 2 Addendum to Sale of Business Agreement, dated November 7, 2003, by and between Sage Software (SA) (Proprietary) Limited (formerly, Flagman Investments (Proprietary) Limited), and Softline Limited. 3 Second Addendum to Sale of Business Agreement, dated November 24, 2003, by and between Sage Software (SA) (Proprietary) Limited (formerly, Flagman Investments (Proprietary) Limited), and Softline Limited. 4 Purchase and Exchange Agreement, dated January 1, 2002, by and between Island Pacific, Inc. and Softline Limited. 5 Investor Rights Agreement, dated January 1, 2002, by and between Island Pacific, Inc. and Softline Limited. 6 Option Agreement, dated April 25, 2003, by and between Softline, as grantor, and Steven Beck, as trustee. 7 Lock-Up Letter, dated November 20, 2003, in favor of Midsummer Investment, Ltd. and Omicron Master Trust. EX-99 3 pal128094.txt EXHIBIT 1: SALE OF BUSINESS AGREEMENT Exhibit 1 SALE OF BUSINESS AGREEMENT between: SOFTLINE LIMITED and FLAGMAN INVESTMENTS (PROPRIETARY) LIMITED (WHICH NAME IS TO BE CHANGED TO SAGE SOFTWARE (SA) (PROPRIETARY) LIMITED) BOWMAN GILFILLAN INC. 9th Floor, Twin Towers West Sandton City Sandton, 2146 Telephone: (011) 881-9800 Fax: (011) 883-4505
CONTENTS 1. INTERPRETATION...................................................................................4 2. SUSPENSIVE CONDITIONS...........................................................................10 3. SALE............................................................................................14 4. ASSUMPTION OF THE LIABILITIES...................................................................15 5. PURCHASE PRICE OF THE BUSINESS AND ALLOCATION OF THE PURCHASE PRICE.............................18 6. PAYMENT OF THE PURCHASE PRICE...................................................................19 7. DELIVERY........................................................................................20 8. OWNERSHIP, RISK AND BENEFIT.....................................................................26 9. ASSIGNMENT OF CONTINUING CONTRACTS..............................................................26 10. WARRANTIES AND UNDERTAKINGS..................................................................27 11. THE TRADE NAMES..............................................................................32 12. RECORDAL.....................................................................................33 13. RELEASE OF SURETYSHIPS AND GUARANTEES........................................................34 14. WARRANTIES BY THE PURCHASER..................................................................34 15. MORE FAVOURABLE OFFER........................................................................37 16. BREACH.......................................................................................38 17. ANNOUNCEMENTS AND CONFIDENTIALITY............................................................39 18. GENERAL PROVISIONS FOR INDEMNITIES...........................................................40 19. INSOLVENCY NOTICES...........................................................................44 20. DELEGATION OF OBLIGATIONS IN RESPECT OF UNCLAIMED DIVIDENDS..................................44 21. ARBITRATION..................................................................................45 22. GENERAL......................................................................................46 23. ADDRESSES FOR LEGAL PROCESS AND NOTICES......................................................49 24. EXERCISE OF THE STEVEN BECK OPTION...........................................................50 APPENDICES: 1. American Sale Shares (clause 1.1.3), American Subsidiaries (clause 1.1.4) and Direct American Subsidiaries (clause 1.1.15) 2. Australian Subsidiaries (clause 1.1.7) 3. Canadian Sale Shares (clause 1.1.10) and Direct Canadian Subsidiary (clause 1.1.16) 4. Continuing Contracts (clause 1.1.14) 5. Irish Sale Shares (clause 1.1.25), Irish Subsidiaries (clause 1.1.26) and Direct Irish Subsidiary (clause 1.1.17) 6. South African Sale Shares (clause 1.1.35), South African Subsidiaries (clause 1.1.36) and Direct South African Subsidiaries (clause 1.1.18) 7. Shareholder Loans (clause 1.1.20) 8. Integrity Software Sale Shares (clause 1.1.23) 9. Island Pacific Sale Shares (clause 1.1.28) 10. Management Accounts (clause 1.1.30) 11. Contracts requiring consent of third parties (clause 2.2.12) 12. Guarantee from The Sage Group plc (clause 2.2.13) 13. Form of Resolution in terms of section 228 of the Companies Act (clause 2.7) 14. Manner of distribution (clause 4.3) 15. Form of cession or assignment (clause 7) 16. Appointment of directors (clause 7) 17. Warranties in respect of the Business (clause 10.2) 18. Warranties in respect of the South African Subsidiaries, the Irish Subsidiaries, Lorge Consulting and Pastel Software (clause 10.3) 19. Warranties in respect of the Australian Subsidiaries (clause 10.4) 20. Warranties in respect of the American Subsidiaries (clause 10.5) 21. Warranties in respect of the Canadian Subsidiaries (clause 10.6) 22. Warranties in respect of Integrity Software and Island Pacific (clause 10.7) 23. Disclosure schedule (clause 10.12) 24. Transaction costs (clause 22.3.1) 25. Liquidator's costs (clause 22.3.2)
SALE OF BUSINESS AGREEMENT between: SOFTLINE LIMITED (a company registered in accordance with the laws of South Africa under Registration No. 1977/002304/06) ("the Seller") and FLAGMAN INVESTMENTS (PROPRIETARY) LIMITED (which name is to be changed to Sage Software (SA) (Proprietary) Limited, a company registered in accordance with the laws of South Africa under Registration No. 2003/015693/07) ("the Purchaser") WHEREAS: A. The Seller is listed on the JSE Securities Exchange South Africa and conducts the business of operating as an investment holding company and holds the Sale Shares and, indirectly, the shares in the subsidiary companies of the Direct American Subsidiaries, the Direct Irish Subsidiary and the Direct South African Subsidiaries. B. On 1 August 2003 The Sage Group plc, a company incorporated in England and Wales, the shares of which are listed on the London Stock Exchange, the holding company of the Purchaser, announced its intention to acquire the Business, including the Equity Interests, of the Seller in terms of section 228 of the Companies Act and the Seller wishes to sell the Business and the Equity Interests to the Purchaser, upon the terms and conditions set out in this Agreement. NOW THEREFORE THE PARTIES AGREE: 1. INTERPRETATION 1.1 Definitions In this Agreement and the preamble above, unless the context requires otherwise:
1.1.1 "2003 Accounting Policies" means the accounting policies, principles, practices and methods applied in the preparation of the Seller's audited draft annual financial statements as at and for its financial year ended 31 March 2003; 1.1.2 "this Agreement" means this sale of business agreement and all of its appendices; 1.1.3 "American Sale Shares" means the shares in the Direct American Subsidiaries held by the Seller, as listed in APPENDIX 1; 1.1.4 "American Subsidiaries" means the subsidiaries of the Seller incorporated in various states of the United States of America, as listed in APPENDIX 1; 1.1.5 "Assets" means all the assets of the Business which the Seller is selling to the Purchaser in terms of this Agreement, which are described more fully in clause 3 below and shall include the Equity Interests; 1.1.6 "Auditors" means Charles Orbach & Company; 1.1.7 "Australian Subsidiaries" means Pastel Software (Australia) Proprietary Limited, a company incorporated in Australia and all the subsidiaries (incorporated in Australia) of Softline Australia (Proprietary) Limited, a company registered in accordance with the laws of South Africa under registration number 2000/028147/07, a wholly owned subsidiary of the Seller, as listed in APPENDIX 2; 1.1.8 "Business" means the business of the Seller referred to in paragraph A of the preamble above, as at the Closing Date; 1.1.9 "Business Day" means any day other than a Saturday, Sunday or national statutory holiday in South Africa; 1.1.10 "Canadian Sale Shares" means the shares in the Direct Canadian Subsidiary held by the Seller, as listed in APPENDIX 3; 1.1.11 "Claim" means the claim against The Softline Trust for a loan made by the Seller to The Softline Trust for purposes of the Seller's share incentive scheme as at the Closing Date, which loan, as at 31 July 2003, was an amount of R20 374 623,00 (twenty million three hundred and seventy four thousand six hundred and twenty three Rand); 1.1.12 "Closing Date" means the first Business Day after the first trading Friday (being a Friday on which trading occurs on the JSE Securities Exchange South Africa), after the tenth day on which trading occurs on the JSE Securities Exchange South Africa following the Effective Date or such later date referred to in clause 4.7; 1.1.13 "Companies Act" means the South African Companies Act, 1973; 1.1.14 "Continuing Contracts" means the contracts listed in APPENDIX 4; 1.1.15 "Direct American Subsidiaries" means the subsidiaries, incorporated in various states of the United States of America, the shares in which are held directly by the Seller, as listed in APPENDIX 1; 1.1.16 "Direct Canadian Subsidiary" means the subsidiary, incorporated in Canada, the shares in which are held directly by the Seller, as set out in APPENDIX 3; 1.1.17 "Direct Irish Subsidiary" means the subsidiary, incorporated in the Republic of Ireland, the shares in which are held directly by the Seller, as set out in APPENDIX 5; 1.1.18 "Direct South African Subsidiaries" means the subsidiaries, incorporated in South Africa, the shares in which are held directly by the Seller, as listed in APPENDIX 6; 1.1.19 "Effective Date" means the date of fulfilment, or where applicable deemed fulfilment, of all the suspensive conditions set out in clause 2; 1.1.20 "Equity Interests" means the Sale Shares, and all shareholder loans made to the Subsidiaries by the Seller and any other companies owned or controlled by the Seller, all as at the Closing Date, and as set out in APPENDIX 7; 1.1.21 "GAAP" means Statements of Generally Accepted Accounting Practice in South Africa; 1.1.22 "Integrity Software" means Integrity Software Limited, a company incorporated under the laws of England and Wales; 1.1.23 "Integrity Software Sale Shares" means the shares in Integrity Software held by the Seller as listed in APPENDIX 8; 1.1.24 "Investor Rights Agreement" means the Investor Rights Agreement entered into between the Seller and Island Pacific dated 1 January 2002; 1.1.25 "Irish Sale Shares" means the shares in the Direct Irish Subsidiary held by the Seller as set out in APPENDIX 5; 1.1.26 "Irish Subsidiaries" means the subsidiaries of the Seller incorporated in the Republic of Ireland as listed in APPENDIX 5; 1.1.27 "Island Pacific" means Island Pacific, Inc., previously known as SVI Solutions Inc., a company incorporated under the laws of the State of Delaware, United States of America; 1.1.28 "Island Pacific Sale Shares" means the shares of common and preferred stock in Island Pacific held by the Seller as set out in APPENDIX 9; 1.1.29 "Liabilities" means the liabilities of the Seller as set out in clause 4.1 below; 1.1.30 "Management Accounts" means the unconsolidated unaudited management accounts prepared for: (i) the Business for the period from 1 April 2003 to 31 July 2003; (ii) for each of the Subsidiaries (except for the dormant companies listed in APPENDIX 17B) for the period from 1 April 2003 to 30 June 2003; and (iii) the Irish Subsidiaries for the twelve month period ending on 31 March 2003, attached to this Agreement as APPENDIX 10; 1.1.31 "Parties" means the parties to this Agreement, and "Party" means any one of them as the context may require; 1.1.32 "Sale Shares" means the American Sale Shares, the Canadian Sale Shares, the Irish Sale Shares, the Integrity Software Sale Shares, the Island Pacific Sale Shares and the South African Sale Shares; 1.1.33 "Signature Date" means the date on which this Agreement is signed by both the Parties, or if they do not sign it on the same date, the date of the last signature; 1.1.34 "South Africa" means the Republic of South Africa; 1.1.35 "South African Sale Shares" means the shares in the Direct South African Subsidiaries held by the Seller, as listed in APPENDIX 6; 1.1.36 "South African Subsidiaries" means the subsidiaries of the Seller incorporated in South Africa, as listed in APPENDIX 6; and 1.1.37 "Subsidiaries" means the American Subsidiaries, the Australian Subsidiaries, the Direct Canadian Subsidiary, the Irish Subsidiaries and the South African Subsidiaries.
1.2 General Interpretation For the purposes of this Agreement the following rules of construction shall apply, unless the context requires otherwise: 1.2.1 the singular shall include the plural and vice versa; 1.2.2 a reference to any one gender, whether masculine, feminine or neuter, includes the other two; 1.2.3 any reference to a person includes, without being limited to, any individual, body corporate, unincorporated association or other entity recognised under any law as having a separate legal existence or personality; 1.2.4 any word or expression defined in, and for the purposes of, this Agreement shall if expressed in the singular include the plural and vice versa, and a cognate word or expression shall have a corresponding meaning; 1.2.5 all accounting terms used in this Agreement shall be interpreted and all accounting classifications and determinations under it shall be made in accordance with GAAP; 1.2.6 references to a statutory provision include any subordinate legislation made from time to time under that provision and references to a statutory provision include that provision as from time to time modified or re-enacted as far as such modification or re-enactment applies, or is capable of applying, to this Agreement or any transaction entered into in accordance with this Agreement; 1.2.7 a "law" shall be construed as any law (including common law), statute, constitution, decree, judgment, treaty, regulation, directive, by-law, order or any other legislative measure or enactment of any government, local government, statutory or regulatory body or court and shall be deemed to include the rules and other requirements of any applicable stock exchange; 1.2.8 references in this Agreement to "clauses" and "Appendices" are to clauses of, and appendices to, this Agreement; and 1.2.9 any reference in this Agreement to this Agreement or any other agreement, document or instrument shall be construed as a reference to this Agreement or that other agreement, document or instrument as amended, varied, novated or substituted from time to time. 1.3 Headings and Sub-headings All the headings and sub-headings in this Agreement are for convenience only and are not to be taken into account for the purposes of interpreting it. 2. SUSPENSIVE CONDITIONS 2.1 The provisions of this clause 2 and clauses 1, 4.5, 4.6, 4.7, 4.8, 4.9, 10, 16, 17, 18.4, 18.5, 21, 22 and 23, shall take effect and become operative immediately upon the Signature Date. 2.2 Subject to clause 2.1 above, the whole of this Agreement shall be subject to the fulfilment, by 30 November 2003 (or, in the case of clause 2.2.13, within 14 (fourteen) days from the Signature Date) or by such later date as the Parties may agree upon in writing, of the following suspensive conditions that: 2.2.1 all unconditional approvals required in terms of the Competition Act, 1998, for the implementation of this Agreement are given or deemed to be given. If any approval is subject to any conditions, this suspensive condition will only be deemed to have been fulfilled if the Parties in their sole discretion agree in writing to such conditions; 2.2.2 to the extent required by the law of the country where any Subsidiary is incorporated, all and any approvals required from any anti-trust, competition or merger authorities outside of South Africa for the implementation of this Agreement are given or deemed to be given. If any approval is subject to any conditions, this suspensive condition will only be deemed to have been fulfilled if the Parties in their sole discretion agree in writing to such conditions; 2.2.3 all and any approvals for the implementation of this Agreement from the Exchange Control Department of the South African Reserve Bank are given. If any approval is subject to any conditions, this suspensive condition will only be deemed to have been fulfilled if the Purchaser in its sole discretion agrees in writing to such conditions; 2.2.4 to the extent required by the law of the country where any Subsidiary is incorporated, all and any other regulatory approvals for the implementation of this Agreement are given; 2.2.5 the shareholders of the Seller authorise and approve the sale of the Business and the Equity Interests in terms of this Agreement as required by section 228 of the Companies Act; 2.2.6 the acquisition of the Island Pacific Sale Shares be approved by the board of directors of Island Pacific for purposes of eliminating restrictions that would otherwise be applicable to the Purchaser under section 203 of the Delaware General Corporation Law; 2.2.7 either (i) an opinion of Island Pacific's counsel is delivered pursuant to section 2.2 of the Investor Rights Agreement or (ii) Island Pacific waives such requirement in writing; 2.2.8 Island Pacific waives its right of first refusal under the Investor Rights Agreement and consents, in writing, to the transfer and assignment to the Purchaser of all of the registration rights and other rights of the Seller under the Investor Rights Agreement; 2.2.9 Island Pacific does not redeem the Series A Preferred Stock held by the Seller, provided that this condition shall be deemed to have been fulfilled if the Seller delivers to the Purchaser a written statement by Island Pacific that it will not redeem the Series A Preferred Stock prior to the Closing Date; 2.2.10 Steven Beck consents in writing to the sale of the Island Pacific Sale Shares by the Seller to the Purchaser; 2.2.11 the written consent by Omicron Master Trust and Midsummer Investments Limited to the transfer of the Island Pacific Sale Shares to the Purchaser in order that such sale will not trigger any rights under any pre-emptive rights, anti-dilution rights, rights of first offer or refusal, options, put or call rights, encumbrances or liens with respect to the Island Pacific Sale Shares, lock-up provisions or default provisions; 2.2.12 the third parties to the Continuing Contracts and the contracts listed in APPENDIX 11 consent to the assignment of the rights and obligations under such contracts to the Purchaser. If any consent is subject to any conditions, this suspensive condition will only be deemed to have been fulfilled if the Purchaser, in its sole discretion, agree in writing to such conditions; 2.2.13 within 14 (fourteen) days from the Signature Date, the Purchaser delivers to the Seller a guarantee in the form attached as APPENDIX 12 from the Purchaser's holding company, The Sage Group plc, a company registered in accordance with the laws of England and Wales, for the due performance by the Purchaser of its obligations under this Agreement; and 2.2.14 the Seller obtains a certificate issued by the Minister of National Revenue under section 116 of the Income Tax Act (Canada) and delivers a certified copy of such certificate to the Purchaser. 2.3 The suspensive conditions in clauses 2.2.6, 2.2.7, 2.2.8, 2.2.9, 2.2.10, 2.2.11, 2.2.12 and 2.2.14, or any part of any of those suspensive conditions above are stipulated for the benefit of the Purchaser alone and may be waived, either in whole or in part, by the Purchaser at any time before 30 November 2003 or such later date as may be agreed upon in writing by the Parties, but only by written notice given to the Seller before the end of that period. If any one or more of those conditions is duly waived by the Purchaser, then the condition so waived shall be deemed to have been fulfilled. 2.4 If the suspensive conditions referred to in clause 2.2 above are not fulfilled or where applicable deemed to be fulfilled by 30 November 2003 (or, in the case of clause 2.2.13, within 14 (fourteen) days from the Signature Date) or such later date as may be agreed upon in writing by the Parties then the provisions of this Agreement that are suspended shall not take effect and those that have taken effect and become operative shall fall away, unless otherwise agreed in writing by the Parties. 2.5 If the suspensive conditions referred to in clause 2.2 above are fulfilled or where applicable deemed to be fulfilled, then all the provisions of this Agreement, which were suspended, in terms of clause 2.2 above shall also take effect and become operative, and the whole of this Agreement shall accordingly become unconditional. 2.6 Each Party shall sign all such documents and do everything else that may reasonably be required of it by the other Party to bring about the fulfilment of the suspensive conditions in clause 2.2 above, and they shall co-operate with each other in all respects to that end. 2.7 The Seller undertakes to the Purchaser that it shall submit this Agreement to its shareholders for approval in terms of section 228 of the Companies Act in the form of the resolution attached as APPENDIX 13, or such other form as the Parties may agree in writing, as soon as possible after the Signature Date and that it shall not agree to any amendments of the resolution without the prior written consent of the Purchaser. 3. SALE The Seller agrees to sell to the Purchaser and the Purchaser agrees to purchase from the Seller, upon and subject to the terms and conditions of this Agreement, the Business as a going concern, together with all of its assets of every kind, movable and immovable, corporeal and incorporeal and wherever situated and with all rights, including dividend rights, attached or accruing to them all as at the Closing Date and which shall include, without being limited to: 3.1 all information files, records, data, plans, contracts and recorded knowledge owned by the Seller for or in connection with the Business, including customer and supplier lists; 3.2 all the Seller's rights and obligations under the Continuing Contracts to be assigned to the Purchaser in terms of clause 9 below; 3.3 the Claim; and 3.4 all the Seller's rights and obligations in respect of the Equity Interests. 4. ASSUMPTION OF THE LIABILITIES 4.1 The Purchaser agrees to assume the following liabilities of the Seller with effect from the Closing Date and to discharge them as and when they fall due:- 4.1.1 All current liabilities of the Seller in respect of the Business, set out in the Management Accounts of the Business, totaling an amount of R105 605,00 (one hundred and five thousand six hundred and five Rand). 4.1.2 Provided that the distribution of the proceeds of the sale of the Business to shareholders of the Seller occurs within a period of 6 (six) months from the Closing Date and that the Purchaser fully complies with the provisions of clause 4.3 below: 4.1.2.1 any liability for Capital Gains Tax levied in terms of Schedule 8 of the Income Tax Act, 1962 ("the Income Tax Act") arising out of the transaction set out in the Agreement or the distribution of the proceeds of the sale of the Business to shareholders of the Seller; and 4.1.2.2 any liability for Secondary Tax on Companies levied in terms of section 64B of the Income Tax Act arising out of the transaction set out in this Agreement or the distribution of the proceeds of the sale of the Business to shareholders of the Seller, provided further that the Purchaser's liability in terms of clauses 4.1.2.1 and 4.1.2.2 shall be limited to the amounts of those taxes that would have been payable if the distribution of the proceeds of the sale of the Business to shareholders of the Seller occurred on the Closing Date or within 10 (ten) days after the Closing Date, and in accordance with clause 4.3 below. 4.1.3 The loan by Softline Holdings (Proprietary) Limited (a company incorporated in South Africa under registration number: 1996/000595/07) to the Seller in an amount of R227 891 115,00 (two hundred and twenty seven million eight hundred and ninety one thousand one hundred and fifteen Rand). 4.1.4 The loan by Datafaction Inc. (a company incorporated in the State of Delaware, United States of America) to the Seller in an amount of R12 353 924,00 (twelve million three hundred and fifty three thousand nine hundred and twenty four Rand). 4.1.5 The loan by Handisoft Software Proprietary Limited (a company incorporated in Western Australia) to the Seller in an amount of R115 154 327,00 (one hundred and fifty million one hundred and fifty four thousand three hundred and twenty seven Rand). 4.2 The Purchaser does not agree to assume or discharge and shall not be obliged to assume or discharge any liabilities of any kind of the Business, other than those which it agrees to assume or discharge in terms of this Agreement, and accordingly the Seller shall take no action which would have the effect of increasing the amount of the Liabilities as at the Closing Date, without the prior written consent of the Purchaser. 4.3 The Seller undertakes to the Purchaser to distribute the proceeds of the sale of the Business to its shareholders strictly in the manner set out in APPENDIX 14. 4.4 The Purchaser agrees to indemnify and hold the Seller harmless against all the Liabilities which the Purchaser is obliged to assume and discharge in terms of clause 4.1 above and against any demand, claim, action or other legal proceedings made or instituted against the Seller in respect of any of them, and against all costs incurred by the Seller or awarded against them in respect of any such demand, claim, action or other legal proceedings (but always excluding liabilities which the Seller is obliged to retain and discharge in terms of this Agreement). 4.5 The Seller agrees to indemnify the Purchaser against all costs incurred by the Purchaser or awarded against it in respect of any demands, claims, actions or other legal proceedings made or instituted against the Purchaser in respect of any of the liabilities which the Purchaser is not obliged to assume and discharge in terms of this Agreement. 4.6 Subject to clause 4.9, if the Seller becomes aware of any liability in respect of the Business after the Signature Date but before the Closing Date other than the Liabilities ("additional liability"), it shall be entitled but not obliged, to notify the Purchaser in writing of such additional liability and such written notice shall set out full details of the additional liability, the amount of such additional liability and the basis and source of such additional liability. The Purchaser shall have 7 (seven) days from the date of receipt of such written notice within which to notify the Seller in writing whether or not it will, unconditionally and irrevocably, assume such additional liability and discharge such additional liability as and when it falls due. If the Purchaser notifies the Seller in writing that it will not so assume the additional liability, the Seller shall be entitled but not obliged to terminate this Agreement on 3 (three) days' written notice to the Purchaser, and neither Party shall have a claim against the other Party arising out of such termination. 4.7 If the Closing Date falls within the 7 (seven) or 3 (three) day period, as the case may be, referred to in clause 4.6 above, the Closing Date shall be automatically postponed to the first Business Day after the last day of the 7 (seven) or 3 (three) day period, as the case may be. 4.8 If the Purchaser assumes the additional liability set out in the written notice delivered in terms of clause 4.6, such additional liability shall be included in the liabilities assumed by the Purchaser in terms of clause 4.1 above, and the purchase price referred to in clause 5.1 above shall be increased accordingly. 4.9 Notwithstanding anything to the contrary in this Agreement the Seller shall not be entitled to give the written notification referred to in clause 4.6 in respect of any liability which arises as a result of a breach by the Seller of the terms or conditions of this Agreement or a breach by the Seller of any Continuing Contract or a breach by the Seller or any Subsidiary of any material agreement with a third party. 5. PURCHASE PRICE OF THE BUSINESS AND ALLOCATION OF THE PURCHASE PRICE 5.1 The purchase price of the Business shall be an amount equal to the sum of the Liabilities and R784 830 000,00 (seven hundred and eighty four million eight hundred and thirty thousand Rand). 5.2 The Parties shall agree, on or before the Effective Date, on the allocation of the whole of the purchase price referred to in clause 5.1 among the Assets as follows: 5.2.1 the Claim and the shareholder loans set out in APPENDIX 7, at their book value as reflected in the respective Management Accounts; and 5.2.2 the American Subsidiaries, the Australian Subsidiaries, the Irish Subsidiaries, the South African Subsidiaries, the Direct Canadian Subsidiary, the Island Pacific Sale Shares and the Integrity Software Sale Shares, at the values agreed upon between the Parties or, failing agreement, determined in accordance with clause 5.3 below. 5.2.3 the amount of the purchase price allocated to the Direct Canadian Subsidiary in terms of clause 5.2.2 shall, for purposes of the application for a clearance certificate under section 116 of the Income Tax Act (Canada) to the Canada Customs and Revenue Agency be converted into Canadian Dollars at the rate of exchange quoted by The Standard Bank of South Africa Limited as the market selling rate of the Canadian Dollar against the Rand at or around 11:00am on the Closing Date, as certified by a duly authorized officer of The Standard Bank of South Africa Limited. 5.3 If the Parties fail to agree on the allocation of the purchase price as set out in clause 5.2.2 above the matter shall be referred, within 2 (two) Business Days from the Effective Date, to PricewaterhouseCoopers Inc. ("PWC") for determination at least 1 (one) Business Day before the Closing Date. PWC shall act as valuators and not as arbitrators and their decision shall, in the absence of manifest error, be final and binding on the Parties. 5.4 If any Value Added Tax ("VAT") is payable by the Seller for the sale of the Business or any of the Assets in terms of this Agreement under the Value Added Tax Act, 1991, the Purchaser shall be obliged to pay to the Seller the amount of the VAT so payable by the Seller against presentation to the Purchaser of a VAT invoice and the purchase price referred to in clause 5.1 above shall be increased accordingly. 6. PAYMENT OF THE PURCHASE PRICE 6.1 The purchase price of the Business shall be payable by the Purchaser to the Seller on the Closing Date as follows: 6.1.1 against compliance by the Seller with its obligations in terms of clause 7, the Purchaser shall assume, and discharge on due date, the Liabilities (being the liabilities referred to in clause 4.1 above); 6.1.2 R784 830 000,00 (seven hundred and eighty four million eight hundred and thirty thousand Rand) shall be payable in cash on the Closing Date against completion of all the matters referred to in clause 7. 6.2 The payment by the Purchaser of the purchase price in terms of this clause 6 shall be without any withholding, set-off or deduction. 7. DELIVERY 7.1 Delivery of the Business The Seller shall, on the Closing Date, deliver the Business together with the Assets to the Purchaser in accordance with the following provisions:- 7.1.1 The Seller shall take all such steps and do everything which may be required of it to put the Purchaser in actual possession of the Business. 7.1.2 The Seller hereby cedes to the Purchaser, with effect from the Closing Date, all its rights to the Claim. The Seller shall sign all such documents and do everything else which may reasonably be required by the Purchaser to record or otherwise give effect to the cession of those rights or any of them. 7.1.3 The Seller shall deliver to the Purchaser on the Closing Date all papers, drawings, electronic discs, software and other material embodying or containing or otherwise recording the assets referred to in clause 3.1. 7.2 Books and Records The Seller shall, on the Closing Date, place all the documents, books and records of each of the Subsidiaries, including without derogating from the generality thereof the share certificates in respect of the Subsidiaries, minute books, share registers, stock books, stock ledgers, corporate seals, certificates of incorporation, memoranda and articles of association, books of account, title deeds and the like, in the possession of the Seller, or, where such documents, books and records are not in the possession of the Seller, the Seller shall place them under the control of the Purchaser by delivering to the Purchaser on the Closing Date a certified copy of a written instruction to any third party under whose control such documents, books and records are to act on the instructions, and under the direction, of the Purchaser from the Closing Date. 7.3 Delivery in respect of the Direct South African Subsidiaries The Seller shall deliver to the Purchaser on the Closing Date the following documents in respect of the South African Sale Shares: 7.3.1 the share certificates for the South African Sale Shares, together with such duly executed deeds of cession in the form attached as APPENDIX 15 and share transfer forms for the transfer of the South African Sale Shares to the Purchaser or The Sage Group plc or such other entity or entities which is/are (a) subsidiary/ies of The Sage Group plc as the Purchaser may by written notice to the Seller designate at least 15 (fifteen) days before the Closing Date ("designated subsidiary"); 7.3.2 a written cession in the form attached as APPENDIX 15 of all the shareholder loans to each Direct South African Subsidiary which are included in the Equity Interests; 7.3.3 duly certified copies of resolutions of the directors of each Direct South African Subsidiary approving the following matters: 7.3.3.1 the transfer from the Seller of the South African Sale Shares in each of the Direct South African Subsidiaries to the Purchaser or the designated subsidiary and the cession by the Seller to the Purchaser or the designated subsidiary of each shareholder loan to each Direct South African Subsidiary; 7.3.3.2 the placing on each Direct South African Subsidiary's register of members of the name of the transferee of the shares for registration in accordance with the share transfer forms delivered in terms of clause 7.3.1 and authorising the issue of appropriate new share certificates to the Purchaser; and 7.3.3.3 the appointments of the persons as directors of the Direct South African Subsidiaries as set out in PART A of APPENDIX 16. 7.4 Delivery in respect of the Direct American Subsidiaries and Island Pacific The Seller shall deliver to the Purchaser on the Closing Date the following documents with respect to the Direct American Subsidiaries and Island Pacific: 7.4.1 the share certificates representing all of the American Sale Shares and Island Pacific Sale Shares, together with duly executed stock powers for the transfer to the Purchaser or the designated subsidiary. For the purposes of this clause 7.4 the designated subsidiary shall be a subsidiary of The Sage Group plc incorporated in the United States of America; 7.4.2 copies of the required opinions, statements, third party consents or waivers with respect to the Island Pacific Sale Shares as set forth in clauses 2.2.7, 2.2.8, 2.2.9, 2.2.10, 2.2.11 and 2.2.12 of this Agreement, on terms satisfactory in substance and form to the Purchaser; 7.4.3 certified copies of resolutions evidencing the required approval of the board of the directors of Island Pacific with respect to the acquisition of the Island Pacific Sale Shares by the Purchaser or the designated subsidiary as set forth in clause 2.2.6 of this Agreement, on terms satisfactory in substance and form to the Purchaser; 7.4.4 the appointments of the persons as directors of each Direct American Subsidiary as set out in PART B of APPENDIX 16; 7.4.5 all such other certificates, documents and instruments with respect to the American Subsidiaries and Island Pacific Sale Shares as the Purchaser shall reasonably request, in writing, at least 15 (fifteen) days before the Closing Date, in connection with the consummation of the transactions contemplated by this Agreement. 7.5 Delivery in respect of the Australian Subsidiaries The Seller shall deliver to the Purchaser on the Closing Date the following documents in respect of the Australian Subsidiaries: 7.5.1 duly completed bank authorities directed to the bankers of each Australian Subsidiary authorizing the operation of each of its bank accounts by nominees of the Purchaser and terminating the authority of each of the present signatories; 7.5.2 written resignations of the company secretaries of the Australian Subsidiaries, acknowledging that: 7.5.2.1 they have no claim for fees, entitlements, salary or compensation for loss of office or otherwise against any of the Australian Subsidiaries; and 7.5.2.2 there is no agreement, arrangement or understanding under which any of the Australian Subsidiaries has, or could have, any obligation to them; 7.5.3 duly certified copies of resolutions of the directors of each Australian Subsidiary approving the appointments of the persons as directors of the Australian Subsidiaries as set out in PART C of APPENDIX 16. 7.6 Delivery in respect of the Direct Canadian Subsidiary The Seller shall deliver to the Purchaser on the Closing Date the following documents in respect of the Canadian Sale Shares: 7.6.1 the share ledgers and minute books of the Direct Canadian Subsidiary; 7.6.2 a certificate of status and certified document list of the Direct Canadian Subsidiary from the Minister of Consumer and Business Services (Ontario), as well as of each jurisdiction in which the nature of its business or the ownership or leasing of its properties requires the Direct Canadian Subsidiary to be duly qualified or licensed, each dated within 3 (three) Business Days of the Closing Date; 7.6.3 share certificates evidencing all of the Canadian Sale Shares duly endorsed in blank or accompanied by stock transfer powers duly executed in blank, in proper form for transfer of the Canadian Sale Shares to the Purchaser or the designated subsidiary; 7.6.4 certified copies of resolutions of the board of directors of the Direct Canadian Subsidiary approving the transfer of the Canadian Sale Shares from the Seller to the Purchaser or the designated subsidiary; 7.6.5 all other documents reasonably required from the Seller to consummate the transactions contemplated herein, and as requested, in writing, by the Purchaser at least 15 (fifteen) days before the Closing Date. 7.7 Delivery in respect of Integrity Software The Seller shall deliver to the Purchaser on the Closing Date the following documents in respect of the Integrity Software Sale Shares: 7.7.1 transfers of the Integrity Software Sale Shares duly executed by the registered holders thereof in favour of the Purchaser or the designated subsidiary together with the relevant share certificates in the names of such registered holders or an indemnity in a form acceptable to the Purchaser; 7.7.2 duly certified copies of resolutions of the directors of Integrity Software approving the transfer from the Seller of the Integrity Software Sale Shares to the Purchaser or the designated subsidiary. 7.8 Delivery in respect of the Direct Irish Subsidiary The Seller shall deliver to the Purchaser on the Closing Date the following documents in respect of the Irish Sale Shares: 7.8.1 transfers of the Irish Sale Shares duly executed by the registered holders thereof in favour of the Purchaser or the designated subsidiary together with the relevant share certificates in the names of such registered holders or an indemnity in a form acceptable to the Purchaser; 7.8.2 a written assignment of the shareholders loan in the form attached as APPENDIX 15 to the Direct Irish Subsidiary which is included in the Equity Interests; and 7.8.3 duly certified copies of resolutions of the directors of the direct Irish Subsidiary approving the transfer from the Seller of the Irish Sale Shares to the Purchaser or the designated subsidiary and the assignment to the Purchaser or the designated subsidiary of the shareholders loan to the Direct Irish Subsidiary. 8. OWNERSHIP, RISK AND BENEFIT The ownership of, and the risk and benefit in, the Business and all the Assets shall pass to the Purchaser upon delivery of the Business to the Purchaser in accordance with the provisions of clause 7 above. 9. ASSIGNMENT OF CONTINUING CONTRACTS 9.1 On the Closing Date the Seller shall be obliged to assign to the Purchaser, with effect from the Closing Date, all the Seller's rights and all its obligations under every Continuing Contract and the Purchaser shall be obliged to accept the assignment of all those rights and obligations under each such Continuing Contract. 9.2 The Seller and the Purchaser shall be obliged to enter into all such agreements and sign all such documents and do all such things as may reasonably be required of it to give effect to the provisions of clause 9.1. 9.3 The Purchaser hereby indemnifies the Seller against any claim which may be made against the Seller and any liability which may be incurred by the Seller arising out of or attributable to the failure of the Purchaser to discharge its obligations under any Continuing Contract after the Closing Date, as set out in clause 9.1. 10. WARRANTIES AND UNDERTAKINGS 10.1 The Seller warrants and undertakes to the Purchaser, in respect of each of the Subsidiaries and the Seller, for the period between 31 March 2003 and the Closing Date, that, save as the Purchaser may otherwise consent in writing in advance:- 10.1.1 None of the Subsidiaries shall have varied the terms of employment of or remuneration payable to any of its key employees, directors or officers, and none of the Subsidiaries will agree to any compensation or other benefits payable on or in connection with the termination of or retirement from employment or office of any such person. 10.1.2 Neither the Seller nor any of the Subsidiaries shall incur or become committed to incur any capital expenditure, except in the ordinary and regular conduct of the Business or that Subsidiary's business. 10.1.3 Neither the Seller nor any of the Subsidiaries shall enter into any transaction except in the ordinary and regular conduct of the Business or that Subsidiary's business. 10.1.4 No resolutions shall be passed by the members or directors of any of the Subsidiaries or the Seller, other than such resolutions as are strictly necessary to give effect to this Agreement or that are passed in the ordinary and regular course of business. 10.1.5 No dividend shall be declared nor will any distribution out of profit, accumulated profit, reserves or capital of any of the Subsidiaries or the Seller be made. 10.1.6 The business of each of the Subsidiaries and the Business shall be conducted in the ordinary course and no material adverse change or deterioration will occur in the financial position, assets or liabilities of (or any of their constituent items) the Subsidiaries or the Seller. 10.1.7 There has not been and nor shall there be any material change in the assets or liabilities of (or any of their constituent items) or shareholders equity in any of the Subsidiaries or the Seller. 10.1.8 Neither the Seller nor any of the Subsidiaries has and shall not have sold or disposed of or entered into any agreement for the sale or disposal of any of its assets, except in the ordinary and regular conduct of the Business or of that Subsidiary's business. 10.1.9 Neither the Seller nor any of the Subsidiaries has and shall not have incurred any liabilities (including contingent liabilities, which shall, without derogating from the generality thereof, include contingent liabilities arising from or relating to any warranty or guarantee given to any third party in connection with the activities of the Subsidiaries and the Seller) or undertaken any commitments or sold or otherwise disposed of any of its assets, except in the ordinary and regular conduct of the Business or of that Subsidiary's business. 10.2 The Seller hereby gives to the Purchaser in connection with the sale of the Business all of the warranties set out in APPENDIX 17. 10.3 The Seller hereby gives to the Purchaser in connection with the sale of the South African Sale Shares, the South African Subsidiaries, the Irish Sale Shares and the Irish Subsidiaries all of the warranties set out in APPENDIX 18. 10.4 The Seller hereby gives to the Purchaser in connection with the Australian Subsidiaries all of the warranties set out in APPENDIX 19. 10.5 The Seller hereby gives to the Purchaser in connection with the sale of the American Sale Shares and the American Subsidiaries all of the warranties set out in APPENDIX 20. 10.6 The Seller hereby gives to the Purchaser in connection with the sale of the Canadian Sale Shares and the Direct Canadian Subsidiary all of the warranties set out in APPENDIX 21. 10.7 The Seller hereby gives to the Purchaser in connection with the sale of the Integrity Sale Shares and the Island Pacific Sale Shares all the warranties set out in APPENDIX 22. 10.8 Each warranty shall continue and remain in force notwithstanding the completion of the transactions provided for in this Agreement. 10.9 Notwithstanding anything to the contrary contained in this Agreement: 10.9.1 the Purchaser shall only be entitled to exercise its rights to terminate the Agreement in terms of clause 10.9.4 if the breach of the warranty is of such a nature that had the facts to which the breach of the warranty relate, been in existence and known prior to the Signature Date to the Purchaser, the Purchaser would not have entered into this Agreement or would have entered into the Agreement on materially different terms, whether such knowledge relates to the Seller, the Business and/or the Subsidiaries; 10.9.2 the Purchaser's only remedy in the event of a breach of a warranty shall be to terminate this Agreement in accordance with the provisions of this clause 10.9, and neither Party shall have a claim against the other Party arising out of such termination; 10.9.3 the Purchaser shall not be entitled to exercise any of its rights in respect of a breach of any of the warranties referred to in this clause 10 after the distribution to shareholders of the Seller of the full proceeds of the sale contemplated in this Agreement whether by way of liquidation dividend, dividend in anticipation of liquidation or any other form of distribution or payment; 10.9.4 the Purchaser shall as soon as practicable upon becoming aware of any breach of any of the warranties referred to in this clause 10 and after the Purchaser has had the reasonable opportunity to assess the impact of such breach on the Business or the Subsidiary, notify the Seller in writing of such breach and the Seller shall have 3 (three) days from the date of such written notice within which to remedy such breach and if the Seller fails to remedy such breach, the Purchaser shall be entitled to terminate this Agreement by giving written notice of such termination to the Seller within 7 (seven) days from the date of expiry of the 3 (three) days referred to in this clause 10.9.4; 10.9.5 the Seller shall not be entitled to distribute to the shareholders of the Seller any part of the proceeds of the sale contemplated in this Agreement whether by way of liquidation dividend, dividend in anticipation of liquidation or any other form of distribution or payment in the event that the Purchaser has notified the Seller, in terms of clause 10.9.4, of any breach of any of the warranties referred to in this clause 10, provided that the Seller shall be entitled so to distribute the proceeds of the sale contemplated in this Agreement if the 7 (seven) days from the date of expiry of the 3 (three) days referred to in clause 10.9.4 has expired and: 10.9.5.1 the Purchaser has not terminated the Agreement upon written notice to the Seller in terms of clause 10.9.4; and 10.9.5.2 no dispute exists between the Parties in respect of such breach or termination, subject to clause 4.3; 10.9.6 in order for the Purchaser to exercise its rights in terms of this clause 10, the Seller shall give the Purchaser access to the Business and the Subsidiaries (including, without being limited to, all documents, financial records and financial information) and shall cooperate with the Purchaser by providing to it full information on the breach of the warranty and the steps taken by the Seller to remedy the breach; and 10.9.7 the Purchaser shall send a written notice to the Seller at least 24 (twenty four) hours before the commencement of the general meeting of the shareholders of the Seller called to approve the sale of the business and the Equity Interests referred to in clause 2.2.5, stating whether or not it has become aware of any breach of any warranty, if so, the nature of such breach and whether or not it has had the reasonable opportunity to assess the materiality of such breach. If the Purchaser has had the reasonable opportunity to assess the materiality of such breach the notice shall state whether or not it wishes to exercise its rights in terms of clause 10.9.4 because of such breach. To the extent that the Purchaser notifies the Seller of its intention not to terminate this Agreement as a result of such breach only, the Purchaser shall be deemed to have waived its right to terminate the Agreement as a result of such breach. For the avoidance of doubt, it is agreed that the Purchaser shall be entitled to exercise its rights in terms of clause 10.9.4 at any time in respect of a breach of a warranty that the Purchaser becomes aware of after the written notice referred to in this clause 10.9.7. 10.10 Each warranty shall be a separate warranty and shall in no way be limited to or restricted by reference to or by inference from the terms of any other warranty, or by any words in this Agreement. 10.11 The Seller acknowledges that in entering into this Agreement the Purchaser is relying on those warranties and all of the other warranties given by the Seller in terms of this Agreement. 10.12 All the warranties referred to in this clause 10 are given subject to the disclosure schedule attached to this Agreement as APPENDIX 23. 10.13 A breach of a warranty given in terms of clauses 10.2 to 10.7 which occurs only as a result of a change in the laws or regulatory practice in the relevant country of incorporation of the Seller or any Subsidiary, shall not constitute a breach of a warranty for purposes of clause 10.9. 11. THE TRADE NAMES 11.1 After the Closing Date the Seller shall not be entitled to use any name included among the Assets (including without being limited to the name "Softline") or any words which are confusingly similar to any such trade name for any purpose whatever, whether as a trade mark, trade name or as part of a corporate name, and the Seller acknowledges that the right to the use of any such trade name will be vested exclusively in the Purchaser. 11.2 The Seller undertakes that with effect from the Closing Date it shall remove the word "Softline" or any other word which is confusingly similar to the word "Softline" from its corporate name and the Seller undertakes to the Purchaser that it shall submit to its shareholders for approval a special resolution for the change of the name of the Seller to any name which does not include any name referred to in clause 11.1 at the same general meeting of shareholders of the Seller referred to in clause 2.2.5. 12. RECORDAL 12.1 It is recorded that at 31 July 2003, 29 460 315 (twenty nine million four hundred and sixty thousand three hundred and fifteen) ordinary shares in the Seller held by the Trustees for the time being ("the Trustees") of The Softline Trust ("the Trust") have been allocated to and purchased by beneficiaries of the Trust ("the Beneficiaries") in accordance with the provisions of the Trust Deed between the Seller and the Trustees which governs the share incentive scheme ("the Scheme"), and, in order to ensure that the Beneficiaries in the Scheme are placed in a position which is no worse, or better, than other shareholders of the Seller as a consequence of the implementation of this Agreement, the board of directors of the Seller instructed the Trustees to deal with Beneficiaries in the following manner: 12.1.1 the delivery period of all shares purchased by Beneficiaries in terms of the Scheme, will be accelerated and be effective from the Closing Date; 12.1.2 with respect to each Beneficiary, for that amount constituting a positive difference between the amount of the distribution received and the purchase price of the shares purchased, the Beneficiary will become a creditor of the Trust in respect of the Scheme; 12.1.3 the Trustees will, on receipt of notification from a Beneficiary setting out the positive difference referred to in clause 12.1.2 above, immediately pay any such amount to the respective Beneficiaries. 12.2 The Seller shall procure that the Claim is repaid to the Purchaser on the date of distribution of all or any part of the proceeds of the sale contemplated in this Agreement whether by way of liquidation dividend, dividend in anticipation of liquidation or any other form of distribution or payment. 13. RELEASE OF SURETYSHIPS AND GUARANTEES The Purchaser shall procure the release of the Seller from the suretyship in favour of The Standard Bank of South Africa Limited dated 3 July 2003 and shall be obliged to furnish its own suretyship insofar as it may be necessary to procure any such release, but shall not be obliged to effect any payment, provide any further security, or agree to any variation of the terms of any obligations guaranteed in order to procure any such release. 14. WARRANTIES BY THE PURCHASER 14.1 The Purchaser warrants that: 14.1.1 it is incorporated as a private company with limited liability according to the laws of South Africa; 14.1.2 it has the power to enter into this Agreement and the execution by it of, and the performance by the Purchaser of its obligations under, this Agreement, does not breach the provisions of its articles of association; and 14.1.3 it is a subsidiary of The Sage Group plc, a company incorporated in England and Wales, an international investment holding company and which is listed on the London Stock Exchange. 14.2 The Purchaser represents and warrants that it is not a resident of the United States of America ("the USA") or an entity domiciled in the USA, and that it is not acquiring the Island Pacific Sale Shares for the account or benefit of, any of the following: 14.2.1 a natural person resident in the USA; 14.2.2 a partnership or corporation organized or incorporated under the laws of the USA; 14.2.3 an estate of which any executor or administrator is organized, incorporated, or (if an individual) resident in the USA; 14.2.4 a trust of which any trustee is organized, incorporated, or (if an individual) resident in the USA; 14.2.5 an agency or branch of a foreign entity located in the USA; 14.2.6 a non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a person or entity organized, incorporated, or (if an individual) resident in the USA; 14.2.7 a discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the USA; or 14.2.8 a partnership or corporation (a) organized or incorporated under the laws of any jurisdiction outside the USA; and (b) formed by a person or entity organized, incorporated, or (if an individual resident) in the USA principally for the purpose of investing in securities not registered under the USA Securities Act of 1933 ("the Securities Act"), unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts. 14.3 The Purchaser does not intend to resell the Pacific Island Sale Shares except in accordance with the provisions of Regulation S under the Securities Act, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration. The Purchaser does not intend to engage in hedging transactions with regard to such securities unless in compliance with the Securities Act. The Purchaser acknowledges that it has been informed by the Seller (it being understood that the Purchaser has not independently verified such information) that the Island Pacific Sale Shares have not been registered under the Securities Act in reliance on an exemption for offerings made outside the USA under the Securities Act. 14.4 The Purchaser represents and warrants to the Seller the following: 14.4.1 the Island Pacific Sale Shares will be acquired for investment purposes and not with a view to resale or distribution; 14.4.2 the Purchaser qualifies as an "Accredited Investor," as such term is defined in Rule 501(a) of Regulation D under the Securities Act; 14.4.3 the Purchaser has such knowledge and experience in financial, tax, and business matters in order to enable it to use the information made available to it to fully evaluate the risks associated with an investment in the Island Pacific Sale Shares, to evaluate the merits and risks of the Purchaser's prospective investment in the Island Pacific Sale Shares, to make an informed investment decision, and to protect its interests in connection with an investment in the Island Pacific Sale Shares; and 14.4.4 the Purchaser is a sophisticated investor and has access to information regarding an investment in the Island Pacific Sale Shares as would be available if the Island Pacific Sale Shares were registered in a registration statement. 14.5 The Purchaser understands that some of the Island Pacific Sale Shares have not been registered under the Securities Act in reliance upon an exemption from registration for non-public, offerings and certain related factors, and such Island Pacific Sale Shares may not be sold and must be held indefinitely unless subsequently registered under the Securities Act (and qualified under any applicable state securities laws) or Island Pacific receives the written opinion of counsel acceptable to Island Pacific that an exemption from registration (and qualification) is available. 14.6 It is recorded that the certificates representing the Island Pacific Sale Shares will contain the following legends:- 14.6.1 "The shares represented by this certificate have not been registered or qualified under the Securities Act of 1933 or the Securities or Blue Sky laws of California or any other state and may be offered and sold only if registered and qualified pursuant to the relevant provisions of federal and state securities or Blue Sky laws or if an exemption from such registration or qualification is applicable." 14.6.2 "Transfer of the shares represented by this certificate is prohibited except in accordance with the provisions of Regulation S under the Securities Act of 1933, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration. " 15. MORE FAVOURABLE OFFER It is recorded that the Seller shall be entitled, at any time before (and not on or after that date) the date of the meeting of shareholders of the Seller to authorise and approve this Agreement referred to in clause 2.2.5 above, to conclude an agreement with any third party for the sale of the Business which is on the whole more favourable than the terms of this Agreement, provided that such agreement shall be conditional upon this Agreement not being approved by shareholders of the Seller at the meeting referred to above. 16. BREACH 16.1 If the Purchaser commits a breach of its obligations under clause 6 and remains in default for 3 (three) days after receiving written notice from the Seller to remedy the default, the Seller's only remedies shall be to: 16.1.1 cancel this Agreement by giving written notice to that effect to the Purchaser, and neither Party shall have a claim against the other Party arising out of such termination; or 16.1.2 claim for specific performance and/or damages. 16.2 If the Seller commits a material breach of its obligations to deliver the Business, the Assets or any document in accordance with the provisions of clause 7 above and remains in default for 3 (three) days after receiving written notice to remedy the default the Purchaser's only remedies shall be to: 16.2.1 cancel this Agreement by giving written notice to that effect to the Seller, and neither Party shall have a claim against the other Party arising out of such termination; or 16.2.2 claim for specific performance and/or damages. 16.3 Subject to clause 16.1 and 16.2, should either Party ("the defaulting party") breach any of the other terms or conditions of this Agreement (except for the provisions of clauses 10 and 18), then the other Party ("the aggrieved party") shall not be entitled to cancel this Agreement, but the aggrieved party shall, in the event that the defaulting party remains in default for 14 (fourteen) days after receiving written notice to remedy the default from the aggrieved party, be entitled to exercise all other remedies available to it in law as a result of the breach and which are consistent with the contract remaining in force, including specific performance (so far as permissible) and damages. 17. ANNOUNCEMENTS AND CONFIDENTIALITY 17.1 Subject to clause 17.2, neither of the Parties shall make any public announcement or statement about this Agreement or its contents without first having obtained the other Party's prior written consent (which may not be unreasonably withheld) to the announcement or statement and to its contents. 17.2 The provisions of clause 17.1 shall not apply to any announcement or statement which a Party is obliged to make under any applicable law, or because of its shares or those of its holding company being listed on any recognised stock exchange, provided that the Party in question shall consult with the other Parties before making any announcement or statement contemplated in this clause 17. 17.3 Neither Party shall, without the prior written consent of the other Party disclose to any person the details of this Agreement, the details of the negotiations of this Agreement, as well as the details of all the transactions contemplated in this Agreement nor shall a Party directly or indirectly use or allow the use, to the detriment or prejudice of the other Party ("the aggrieved party"), or divulge or allow the divulgence to any person, of any trade secret or other confidential information concerning the business affairs of the aggrieved party, or any associated company of the aggrieved party, which may come to the knowledge of the Party during the negotiations leading to the conclusion of this Agreement and/ or during the subsistence of this Agreement, unless such information is required to be disclosed pursuant to clauses 17.2. The provisions of this clause 17.3 shall survive the termination or cancellation of this Agreement or if this Agreement does not take effect because all the suspensive conditions referred to in clause 2.2 are not fulfilled. 17.4 It is recorded that the Confidentiality Agreement entered into between The Sage Group plc, the Seller, Deutsche Bank AG London and Deutsche Securities SA (Proprietary) Limited on 5 July 2003 shall: 17.4.1 remain in force in accordance with its terms, notwithstanding the termination or cancellation of this Agreement or if this Agreement does not take effect because all the suspensive conditions referred to in clause 2.2 are not fulfilled. 17.4.2 be deemed to have been amended to the extent inconsistent with this Agreement and shall terminate automatically upon completion of the matters referred in clause 7 above on the Closing Date. 18. GENERAL PROVISIONS FOR INDEMNITIES 18.1 If the Seller becomes aware of any matter which may give rise to a claim by the Seller against the Purchaser in terms of any indemnity given under clause 4.4 of this Agreement, notice of the claim and full details of it shall be given by the Seller to the Purchaser as soon as reasonably possible after the Seller becomes aware of it and, if the claim in question arises out of or is connected with a claim by, or liability to, a third party, the claim shall not be compromised or settled without the consent of the Purchaser. 18.2 The Purchaser shall be entitled to avoid, dispute, resist, appeal, compromise or contest any claim by a third party in the name of the Seller and to control any proceedings arising out of the exercise of any of those rights by the Purchaser, provided that: 18.2.1 The Purchaser shall indemnify the Seller against all reasonable costs, charges, liabilities and expenses which may be incurred by the Seller for the purposes of or in connection with anything done by the Purchaser in its name in accordance with the provisions of this clause 18.2; and 18.2.2 The Purchaser shall keep the Seller informed of the way in which it exercises its rights under this clause 18.2 and shall at all times exercise those rights in such manner as the Seller may reasonably require to avoid or to minimise any damage to its relationship with any of its own suppliers or customers. 18.3 The Seller shall make available to the Purchaser all such information and assistance and sign all such documentation as may reasonably be required by the Purchaser for the purposes of avoiding, disputing, resisting, appealing, compromising or contesting any such claim or liability. 18.4 The Seller shall have all the same rights against the Purchaser as the Purchaser has against the Seller in terms of clauses 18.1, 18.2 and 18.3 and all the provisions of those clauses shall accordingly apply mutatis mutandis for the purposes of this clause 18.4, for any indemnities given by the Seller to the Purchaser under clauses 4.5 and 19.2. 18.5 Notwithstanding anything to the contrary contained in this Agreement: 18.5.1 the Purchaser shall only be entitled to exercise its rights to terminate the Agreement in terms of clause 18.5.4 if any claim in respect of an indemnity is of such a nature that had the facts to which the claim relates been in existence and known prior to the Signature Date to the Purchaser, the Purchaser would not have entered into this Agreement or would have entered into the Agreement on materially different terms, whether such knowledge relates to the Seller, the Business and/or the Subsidiaries; 18.5.2 the Purchaser's only remedy in the event of a failure by the Seller to remedy any claim in respect of any indemnity referred to in clause 18.4 shall be to terminate this Agreement in accordance with the provisions of this clause 18.5, and neither Party shall have a claim against the other Party arising out of such termination; 18.5.3 the Seller shall not be liable in respect of any of the indemnities referred to in clause 18.4 after the final distribution to shareholders of the Seller of the proceeds of the sale contemplated in this Agreement whether by way of liquidation dividend, dividend in anticipation of liquidation or any other form of distribution or payment; 18.5.4 the Purchaser shall as soon as practicable upon becoming aware of any claim in respect of any of the indemnities referred to in clause 18.4 and after the Purchaser has had the reasonable opportunity to assess the impact of such claim on the Business or the Subsidiary, notify the Seller of such claim and the Seller shall have 3 (three) days from the date of such notice within which to settle such claim and if the Seller fails to settle such claim, the Purchaser shall be entitled to terminate this Agreement by giving written notice of such termination to the Seller within 7 (seven) days from the date of expiry of the 3 (three) days referred to in this clause 18.5.4; 18.5.5 the Seller shall not distribute to the shareholders of the Seller any part of the proceeds of the sale contemplated in this Agreement whether by way of liquidation dividend, dividend in anticipation of liquidation or any other form of distribution or payment in the event that any claim has been made in respect of any of the indemnities referred to in clause 18.4, provided that the Seller shall be entitled so to distribute the proceeds of the sale contemplated in this Agreement if the 7 (seven) days from the date of expiry of the 3 (three) days referred to in clause 18.5.4 has expired and: 18.5.5.1 the Purchaser has not terminated the Agreement upon written notice to the Seller in terms of clause 18.5.4; and 18.5.5.2 no dispute exists between the Parties in respect of such claim or termination, subject to clause 4.3; 18.5.6 in order for the Purchaser to exercise its rights in terms of this clause 18, the Seller shall give the Purchaser access to the Business and the Subsidiaries (including, without being limited to, all documents, financial records and financial information) and shall cooperate with the Purchaser by providing full information on the claim received and the steps taken by the Seller to settle such claim; and 18.5.7 the Purchaser shall send a written notice to the Seller at least 24 (twenty four) hours before the commencement of the general meeting of the shareholders of the Seller called to approve the sale of the Business and the Equity Interests referred to in clause 2.2.5, stating whether or not it has become aware of any claim in respect of any of the indemnities referred to in clause 18.4, if so the nature of such claim and whether or not it has had the reasonable opportunity to assess the materiality of such claim. If the Purchaser has had the reasonable opportunity to assess the materiality of such claim the notice shall state whether or not it wishes to exercise its rights in terms of clause 18.5.4 because of the Seller's failure to settle such claim. To the extent that the Purchaser notifies the Seller of its intention not to terminate this Agreement as a result of such failure only, the Purchaser shall be deemed to have waived its right to terminate the Agreement as a result of such failure. For the avoidance of doubt, it is agreed that the Purchaser shall be entitled to exercise its rights in terms of clause 18.5.4 at any time in respect of a claim that the Purchaser becomes aware of after the written notice referred to in this clause 18.5.7. 19. INSOLVENCY NOTICES 19.1 The Parties agree to dispense with the publication of notices in respect of the sale of the Business as required in terms of section 34(1) of the Insolvency Act, 1936. 19.2 The Seller indemnifies the Purchaser against all losses, damages and costs which the Purchaser may suffer, sustain or incur in consequence of any action or other steps being taken by any of the creditors of the Seller against the Purchaser or against or in relation to the Business or any of the Assets as a result of the Seller being wound up or placed under judicial management, provided, however, that the Seller does not indemnify the Purchaser in respect of any actions being brought or other steps being taken against the Purchaser as a result of the Purchaser failing to discharge the Liabilities which it has undertaken to discharge in terms of this Agreement. 20. DELEGATION OF OBLIGATIONS IN RESPECT OF UNCLAIMED DIVIDENDS Subject to the passing by the shareholders of the Seller and the registration by the Registrar of Companies of a special resolution to amend article 118 of the articles of association of the Seller to provide for the delegation of the Seller's obligation to pay unclaimed dividends which have not been forfeited to the Seller and a resolution authorising such delegation, and with effect from the first Business Day following the expiry of a period of 5 (five) calendar months after the date of the distribution to the shareholders of the Seller of the proceeds of the sale contemplated in this Agreement whether by way of liquidation dividend, dividend in anticipation of liquidation or any other form of distribution or payment, or such earlier date, after such distribution, as the Seller may determine by written notice to the Purchaser ("the delegation date"): 20.1 the Seller shall delegate to the Purchaser, and the Purchaser shall accept such delegation, with effect from the delegation date, all the Seller's obligations to shareholders of the Seller to pay unclaimed dividends which have not been forfeited to the Seller; and 20.2 the Seller shall, with effect from the delegation date, pay to the Purchaser all cash in the Seller's unclaimed dividend account and the Seller shall within 14 (fourteen) days of the delegation date deliver a certificate signed by the Auditors certifying that the amount so paid was correct and was sufficient to discharge the Seller's obligation to pay unclaimed dividends which have not been forfeited to the Seller at the delegation date. 21. ARBITRATION 21.1 Any dispute between the Parties in regard to any matter arising out of this Agreement or its interpretation or their respective rights and obligations under this Agreement or its cancellation or any matter arising out of its cancellation, shall be submitted to and decided by arbitration in accordance with the rules of the Arbitration Foundation of Southern Africa, by an arbitrator agreed upon between the Parties or, failing agreement, appointed by that Foundation. 21.2 Unless otherwise agreed by the Parties in writing the arbitration shall be held in Johannesburg in the Gauteng Province. 21.3 The arbitrator shall be obliged to give the reasons for any decision made by him in the course of the arbitration. 21.4 Subject to the other provisions of this clause 20, each arbitration shall be held in accordance with the provisions of the Arbitration Act, 1965, as amended. 21.5 Nothing in this clause 20 shall preclude either Party from seeking any interim relief from any competent court having jurisdiction pending the institution of any arbitration proceedings in terms of this clause 20. 22. GENERAL 22.1 Severance If any provision of this Agreement, which is not material to its efficacy as a whole, is rendered void, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the Parties shall endeavour in good faith to agree an alternative provision to the void, illegal or unenforceable provision. 22.2 Survival of Rights, Duties and Obligations Termination of this Agreement for any cause shall not release a Party from any liability which at the time of termination has already accrued to such Party or which thereafter may accrue in respect of any act or omission prior to such termination. 22.3 Costs The Purchaser shall: 22.3.1 bear all costs in respect of the negotiation and preparation of this Agreement and the preparation and lodging of the application to the Competition Commission, established in terms of the Competition Act, 1998, ("the Competition Commission") in terms of clause 2.2.1, and all other transaction costs as set out in APPENDIX 24, subject to a maximum amount of R8 000 000,00 (eight million Rand) excluding value added tax; 22.3.2 if the special resolution for the voluntary winding up of the Sellers is passed and registered, pay the liquidator's costs as set out in APPENDIX 25, which costs shall not exceed R130 000,00 (one hundred and thirty thousand Rand) excluding value added tax; 22.3.3 pay all stamp duty and other taxes or duties payable on the transfer of the Sale Shares; and 22.3.4 shall pay the filing fee payable to the Competition Commission in respect of the sale of the Business. 22.4 Entire Agreement This Agreement contains the entire agreement between the Parties in respect of the sale and purchase of the Business and the Assets. 22.5 Non-variation Save as otherwise expressly provided no agreement to amend, add to or otherwise vary or waive any of the provisions of this Agreement or to cancel or terminate it shall be effective unless made in writing and duly signed by the Parties or on their behalf by their duly authorised agents. 22.6 Assignment 22.6.1 Save as otherwise expressly provided in this Agreement, neither of the Parties may assign this Agreement or any of its rights or obligations under it without the prior written consent of the other Party. 22.6.2 Notwithstanding anything to the contrary in this Agreement, the Purchaser shall be entitled to assign this Agreement or any of its rights or obligations under it to any company which is its holding company or a subsidiary of it, or of its holding company. For the avoidance of doubt the Purchaser shall be entitled to assign its rights and/or obligations in respect of the American Subsidiaries and the Island Pacific Sale Shares to a subsidiary of The Sage Group plc incorporates in the United States of America. 22.7 Further Assurance The Parties shall co-operate with one another and execute and deliver to the other Party such other instruments and documents and take such other actions as may be reasonably requested from time to time in order to carry out, evidence and confirm their rights and the intended purpose of this Agreement. 22.8 Counterparts This Agreement may be signed in any number of counterparts, all of which taken together shall constitute one and the same instrument. The Parties may enter into this Agreement by signing any such counterpart. 22.9 Successors Bound This Agreement shall be binding on and shall inure for the benefit of the successors and permitted assigns and personal representatives (as the case may be) of each of the Parties. 22.10 Good Faith The Parties undertake to each other to do all things reasonably within their power which are necessary or desirable to give effect to the spirit and intent of this Agreement. 22.11 Governing Law The validity of this Agreement, its interpretation, the respective rights and obligations of the Parties and all other matters arising in any way out of it or its expiration or earlier termination for any reason shall be determined in accordance with the laws of South Africa, without giving effect to the principles of conflict of laws. 23. ADDRESSES FOR LEGAL PROCESS AND NOTICES 23.1 The Parties choose for the purposes of this Agreement the following addresses and telefax numbers: 23.1.1 the Purchaser: c/o The Sage Group plc Benton Park Road Sage House Newcastle Upon Tyne NE7 7L2 Telefax No: +44 191 255 0306 For Attention: Mr Paul Walker 23.1.2 the Seller Softline Technology Park 151 Katherine Street Atholl Ext. 13 Sandton 2031 Telefax No: (011) 292 8201 For Attention: Mr Ivan Epstein 23.2 Any legal process to be served on the Parties may be served on it at the address specified for it in clause 23.1 and it chooses that address as its domicilium citandi et executandi for all purposes under this Agreement. 23.3 Any notice or other communication to be given to the Parties in terms of this Agreement shall be valid and effective only if it is given in writing, provided that any notice given by telefax shall be regarded for this purpose as having been given in writing. 23.4 A notice to a Party which is sent by registered post in a correctly addressed envelope to the address specified for it in clause 23.1 shall be deemed to have been received (unless the contrary is proved) within 14 (fourteen) days from the date it was posted, or which is delivered to the Party by hand at that address shall be deemed to have been received on the day of delivery, provided it was delivered to a responsible person during ordinary business hours. 23.5 Each notice by telefax to a Party at the telefax number specified for it in clause 23.1 shall be deemed to have been received (unless the contrary is proved) within 4 (four) hours of transmission if it is transmitted during normal business hours of the receiving Party or within 4 (four) hours of the beginning of the next Business Day after it is transmitted, if it is transmitted outside those business hours. 23.6 Notwithstanding anything to the contrary in this clause 23, a written notice or other communication actually received by a Party (and for which written receipt has been obtained) shall be adequate written notice or communication to it notwithstanding that the notice was not sent to or delivered at its chosen address. 23.7 A Party may by written notice to the other Party change its address for the purposes of clause 23.1 to any other address (other than a post office box number) provided that the change shall become effective on the 7th (seventh) day after the receipt of the notice. 24. EXERCISE OF THE STEVEN BECK OPTION In the event that Steven Beck exercises the option to acquire all or part of the shares held by the Seller in Island Pacific, the Seller undertakes to apply the proceeds it receives in respect of such sale to repay the loans referred to in clauses 4.1.3, 4.1.4 and 4.1.5, on or before the Closing Date and the amount of the Liabilities assumed by the Purchaser in terms of clauses 4.1.3, 4.1.4 and 4.1.5, as the case may be, shall be reduced by the same amount. SIGNED at Sandton on 26 AUGUST 2003. For: SOFTLINE LIMITED /s/ R. Wilkie ----------------------------- Signatory: R. Wilkie Capacity: C.F.O. Authority: Board Resolution SIGNED at Newcastle on 26 AUGUST 2003. For: FLAGMAN INVESTMENTS (PROPRIETARY) LIMITED /s/ Paul Walker ----------------------------- Signatory: Paul Walker Capacity: C.E.O. Authority: Board Resolution EX-99 4 pal128096.txt EXHIBIT 2 - ADDENDUM TO SALE OF BUSINESS AGMNT Exhibit 2 ADDENDUM TO SALE OF BUSINESS AGREEMENT between SOFTLINE LIMITED and SAGE SOFTWARE (SA) (PROPRIETARY) LIMITED BOWMAN GILFILLAN INC. 9th Floor, Twin Towers West Sandton City Sandton, 2146 Telephone: (011) 881-9800 Fax: (011) 883-4505
TABLE OF CONTENTS 1. INTERPRETATION................................................................................................5 2. FULFILMENT OF THE SUSPENSIVE CONDITIONS.......................................................................7 3. DESIGNATED SUBSIDIARIES AND ASSIGNMENT........................................................................8 4. AMENDMENTS TO CLAUSE 1 OF THE SALE OF BUSINESS AGREEMENT.....................................................10 5. AMENDMENTS TO CLAUSES 3, 6 AND 7 OF THE SALE OF BUSINESS AGREEMENT...........................................11 6. AMENDMENTS TO CLAUSE 1 OF, AND APPENDICES 2 AND 6 TO, THE SALE OF BUSINESS AGREEMENT.........................14 7. AMENDMENTS TO CLAUSE 4 OF THE SALE OF BUSINESS AGREEMENT.....................................................17 8. AMENDMENTS TO CLAUSE 5 OF THE SALE OF BUSINESS AGREEMENT.....................................................18 9. AMENDMENTS TO CLAUSE 7 OF THE SALE OF BUSINESS AGREEMENT.....................................................19 10. AMENDMENTS TO CLAUSE 8 OF THE SALE OF BUSINESS AGREEMENT.....................................................19 11. AMENDMENTS TO CLAUSE 10 AND APPENDIX 7 TO THE SALE OF BUSINESS AGREEMENT.....................................20 12. THE SAGE GROUP PLC GUARANTEE LETTER AGREEMENT................................................................21 13. ALLOCATION OF THE PURCHASE PRICE.............................................................................21 14. COUNTERPARTS.................................................................................................22 15. GENERAL......................................................................................................22 SCHEDULES A ASSIGNMENT AGREEMENTS B SHARE TRANSFER DOCUMENTS C INTELLECTUAL PROPERTY ASSIGNMENTD D FORM OF ASSIGNMENT E ALLOCATION OF THE PURCHASE PRICE
ADDENDUM TO SALE OF BUSINESS AGREEMENT between SOFTLINE LIMITED (Registration no. 1977/002304/06) ("the Seller") and SAGE SOFTWARE (SA) (PROPRIETARY) LIMITED (previously known as Flagman Investments (Proprietary) Limited) (Registration no. 2003/105693/07) ("the Purchaser") WHEREAS: A. The Seller and the Purchaser entered into a Sale of Business Agreement on 26 August 2003. B. The Parties wish to amend the Sale of Business Agreement to: (i) agree on the Closing Date of the Sale of Business Agreement and to regulate the closing of the transaction; (ii) agree on the assignment of certain rights and obligations under the Sale of Business Agreement from the Purchaser to The Sage Group plc and to various wholly owned subsidiaries of The Sage Group plc and the nomination by the Purchaser of certain designated subsidiaries as envisaged in clause 7 of the Sale of Business Agreement; (iii) agree on the sale of the Excluded American Sale Shares on the Business Day before the Closing Date and the sale of the Sale Shares (save for the Excluded American Sale Shares) on the Closing Date, but as one indivisible transaction; (iv) exclude Softline Australia from the sale contemplated in the Sale of Business Agreement by: a. excluding Softline Australia from the definitions of Direct South African Subsidiaries and South African Subsidiaries; and b. excluding the reference to the shares in Softline Australia from the definition of the South African Sale Shares, by amending Appendix 6 to the Sale of Business Agreement; (v) agree that the Parties shall procure the sale of the shares in the Australian Operating Subsidiaries from Softline Australia Holdings to Sage Software Australia and to regulate the distribution of the proceeds of such sale to the Seller; (vi) correct certain provisions of clause 4 of the Sale of Business Agreement relating to liabilities to be assumed by the Purchaser and to make provision for the assumption of certain liabilities by The Sage Group plc; (vii) delete the reference to the shareholder loan by the Seller to Softline Software from Appendix 7 to the Sale of Business Agreement and to replace it with a reference to the shareholder loan by the Seller to the Direct Canadian Subsidiary; (viii)agree on the allocation of the purchase price among the Assets as referred to in clause 5.2 of the Sale of Business Agreement; (ix) effect certain consequential and additional amendments to the Sale of Business Agreement. C. Accordingly, the Parties are entering into this Addendum to set out the amendments to the Sale of Business Agreement. NOW THEREFORE THE PARTIES AGREE: 1. INTERPRETATION In this Addendum and the preamble above, unless the context requires otherwise:
1.1 "this Addendum" means this addendum to the Sale of Business Agreement and all of the schedules to this Addendum, which form part of it; 1.2 "AccountMate Software Corporation" means AccountMate Software Corporation (which name has been changed to Softline AccountMate Corporation), EIN # 94-3382661, a company incorporated in the State of Delaware, United States of America, and a wholly owned subsidiary of the Seller; 1.3 "Australian Operating Subsidiaries" means: (i) Sybiz Software Proprietary Limited, registration number ACN # 007 969 913, a company incorporated in South Australia; (ii) Micropay Proprietary Limited, registration number ACN # 071 007 326, a company incorporated in New South Wales; (iii) Handisoft Software Proprietary Limited, registration number ACN # 089 780 218, a company incorporated in Western Australia; and (iv) Softline Australia Proprietary Limited, registration number ACN # 098 460 630, a company incorporated in Western Australia; 1.4 "Best Software Canada Limited" means Best Software Canada Limited, registration number 1273641, a company incorporated in Ontario, Canada, and a wholly owned subsidiary of The Sage Group plc; 1.5 "Best Software Inc." means Best Software Inc., , a company incorporated in the State of Virginia, United Sates of America, and a wholly owned subsidiary of The Sage Group plc; 1.6 "BusinessVision Technologies Inc." means BusinessVision Technologies Inc. (which name has been changed to Softline BusinessVision Inc.), EIN # 59-3261565, a company incorporated in the State of Florida, United States of America, and a wholly owned subsidiary of the Seller; 1.7 "Datafaction Inc." means Datafaction Inc., EIN # 95-4724135, a company incorporated in the State of Delaware, United States of America, and a wholly owned subsidiary of the Seller; 1.8 "Excluded American Sale Shares" means the shares held by the Seller in: (i) AccountMate Software Corporation; (ii) BusinessVision Technologies Inc.; and (iii) Datafaction Inc.; 1.9 "Excluded Direct American Subsidiaries" means: (i) AccountMate Software Corporation; (ii) BusinessVision Technologies Inc.; and (iii) Datafaction Inc.; 1.10 "Sage Software Australia" means Sage Software Australia Proprietary Limited, registration number ACN 106 729 015, a company incorporated in Australia, and a wholly owned subsidiary of The Sage Group plc; 1.11 "the Sale of Business Agreement" means the sale of business agreement entered into between the Seller and the Purchaser on 26 August 2003; 1.12 "Softline Australia" means Softline Australia (Proprietary) Limited, registration number 2000/028147/07, a company incorporated in the Republic of South Africa, and which holds the entire issued share capital in Softline Australia Holdings; 1.13 "Softline Australia Holdings" means Softline Australia Holdings Proprietary Limited, registration number ACN # 101 238 671, a company incorporated in South Australia, and which holds the entire issued share capital in each of the Australian Operating Subsidiaries; 1.14 "Softline Software" means Softline Software Limited, Irish company number 316561, a company incorporated in the Republic of Ireland; 1.15 "The Sage Group plc" means The Sage Group plc, registration number 2231246, a company incorporated in England and Wales, the holding company of the Purchaser; 1.16 "Tonwomp" means Tonwomp, registration number 325754, an unlimited company registered in the Republic of Ireland, and a wholly owned subsidiary of The Sage Group plc;
1.17 words and expressions defined in the Sale of Business Agreement shall have the same meaning in this Addendum as those ascribed to them in the Sale of Business Agreement. 2. FULFILMENT OF THE SUSPENSIVE CONDITIONS 2.1 It is recorded that: 2.1.1 the suspensive conditions in clauses 2.2.1, 2.2.2, 2.2.3, 2.2.4, 2.2.5, 2.2.6, 2.2.7, 2.2.8, 2.2.9, 2.2.10, 2.2.11 and 2.2.13 of the Sale of Business Agreement have been fulfilled; 2.1.2 the suspensive conditions in clause 2.2.12 (in regard to the contracts referred to in Appendix 4, paragraphs 1, 2, 4, 5, 7, 8, 9, 10, 11 and 12, and Appendix 11, paragraphs 1, 2, 3 and 4) of the Sale of Business Agreement have been fulfilled; 2.1.3 the Purchaser has waived, on written notice to the Seller, the suspensive condition in clause 2.2.14 of the Sale of Business Agreement. 2.2 The Purchaser hereby waives the fulfilment of the suspensive conditions in clause 2.2.12 (in regard to the contracts referred to in Appendix 4, paragraphs 3, and 6and Appendix 11, paragraphs 5 and 6) of the Sale of Business Agreement. 2.3 Accordingly, the Parties agree that all the suspensive conditions set out in clause 2 of the Sale of Business Agreement have been fulfilled, or are deemed to have been fulfilled, and the Effective Date of the Sale of Business Agreement shall be the date of signature of this Addendum by the last party signing this Addendum. 2.4 The Parties agree that the Closing Date shall be 14 November 2003. 3. DESIGNATED SUBSIDIARIES AND ASSIGNMENT 3.1 Clauses 7.3.1, 7.4.1, 7.6.3, 7.7.1 and 7.8.1 of the Sale of Business Agreement provide for the transfer of the relevant Sale Shares to the Purchaser, The Sage Group plc or such other entity or entities which is/are (a) subsidiary/ies of The Sage Group plc as the Purchaser may by written notice to the Seller designate at least 15 (fifteen) days before the Closing Date. The Parties hereby agree that, notwithstanding the fact that 15 (fifteen) days written notice before the Closing Date has not been given, the Purchaser hereby nominates the following designated subsidiaries to take transfer of the following Sale Shares: 3.1.1 The Sage Group plc as transferee in respect of the Island Pacific Sale Shares; 3.1.2 Best Software Inc. as transferee in respect of the shares held in Datafaction Inc.; 3.1.3 Best Software Inc. as transferee in respect of the shares held in AccountMate Software Corporation; 3.1.4 Best Software Inc. as transferee in respect of the shares held in BusinessVision Technologies Inc.; 3.1.5 Best Software Canada Limited, as transferee in respect of the Canadian Sale Shares; 3.1.6 The Sage Group plc as transferee in respect of the Integrity Software Sale Shares; and 3.1.7 Tonwomp as transferee in respect of the Irish Sale Shares. 3.2 The Parties agree that the necessary transfer documents required by clause 7 of the Sale of Business Agreement will be delivered in the name of each designated subsidiary referred to in 3.1. 3.3 Clause 22.6 of the Sale of Business Agreement provides that, notwithstanding anything to the contrary in the Sale of Business Agreement, the Purchaser shall be entitled to assign the agreement or any of its rights or obligations under the agreement to any company which is its holding company or a subsidiary of it or of its holding company. 3.4 The Parties agree to the assignment of the Purchaser's rights and obligations under the Sale of Business Agreement insofar as it relates to: 3.4.1 Island Pacific, to The Sage Group plc, in accordance with the assignment agreement attached to this Addendum as SCHEDULE A1; 3.4.2 Datafaction Inc., to Best Software Inc., in accordance with the assignment agreement attached to this Addendum as SCHEDULE A2; 3.4.3 AccountMate Software Corporation, to Best Software Inc., in accordance with the assignment agreement attached to this Addendum as SCHEDULE A3; 3.4.4 BusinessVision Technologies Inc., to Best Software Inc., in accordance with the assignment agreement attached to this Addendum as SCHEDULE A4; 3.4.5 the Direct Canadian Subsidiary, to Best Software Canada Limited, in accordance with the assignment agreement attached to this Addendum as SCHEDULE A5; and 3.4.6 Integrity Software, to The Sage Group plc, in accordance with the assignment agreement attached to this Addendum as SCHEDULE A6. 4. AMENDMENTS TO CLAUSE 1 OF THE SALE OF BUSINESS AGREEMENT Clause 1 of the Sale of Business Agreement be and is hereby amended as follows: 4.1 by inserting the following new clause 1.1.1A before the existing clause 1.1.1: "1.1.1A. "AccountMate Software means AccountMate Software Corporation" Corporation (which name has been changed to Softline AccountMate Corporation), EIN # 94-3382661, a company incorporated in the State of Delaware, United States of America, and a wholly owned subsidiary of the Seller;" 4.2 by inserting the following new clause 1.1.8A before the existing clause 1.1.8: "1.1.8A "BusinessVision means BusinessVision Technologies Inc. Technologies Inc." (which name has been changed to Softline BusinessVision Inc.), EIN # 59-3261565, a company incorporated in the State of Florida, United States of America, and a wholly owned subsidiary of the Seller;" 4.3 by inserting the following new clause 1.1.12A after the existing clause 1.1.12: "1.1.12A "First Closing Date" means one Business Day before the Closing Date;" 4.4 by deleting clause 1.1.12 in its entirety and replacing it with the following new clause 1.1.12: "1.1.12A "Closing Date" means 14 November 2003, or such other date as the Parties may agree in writing;" 4.5 by inserting the following new clause 1.1.14A before the existing clause 1.1.14: "1.1.14A. "Datafaction means Datafaction Inc., EIN # Inc." 95-4724135, a company incorporated in the State of Delaware, United States of America, and a wholly owned subsidiary of the Seller;" 4.6 by inserting the following new clause 1.1.20A after the existing clause 1.1.20: "1.1.20A "Excluded American means the shares held by the Seller in: Sale Shares" (a) AccountMate Software Corporation; (b) BusinessVision Technologies Inc.; and (c) Datafaction Inc.;" 4.7 by inserting the following new clause 1.1.20B before the existing clause 1.1.21: "1.1.20B "Excluded Direct means: American Subsidiaries" (a) AccountMate Software Corporation; (b) BusinessVision Technologies Inc.; and (c) Datafaction Inc.;" 4.8 by inserting the following new clause 1.1.33A after the existing clause 1.1.33: "1.1.33A "Softline Software" means Softline Software Limited, Irish company number 316561, a company incorporated in the Republic of Ireland;" 5. AMENDMENTS TO CLAUSES 3, 6 AND 7 OF THE SALE OF BUSINESS AGREEMENT 5.1 Clause 3 of the Sale of Business Agreement be and is hereby amended by inserting the words ", and in respect of the Excluded American Sale Shares, as at the First Closing Date, as one indivisible transaction," after the words "Closing Date" in the last line of the first paragraph of clause 3. 5.2 Clause 6 of the Sale of Business Agreement be and is hereby amended by deleting clause 6.1 in its entirety and replacing it with the following new clause 6.1: "6.1 The purchase price of the Business shall be discharged by the Purchaser to the Seller, as follows: 6.1.1 R37 721 315,00 (thirty seven million seven hundred and twenty one thousand and three hundred and fifteen Rand) shall be payable in cash on the First Closing Date against completion of all the matters referred to in clause 6A, in respect of the Excluded Direct American Subsidiaries; 6.1.2 on the Closing Date, against compliance by the Seller with its obligations in terms of clause 7, the Purchaser shall assume, and discharge on due date, the Liabilities (being the liabilities referred to in clause 4.1 above); and 6.1.3 R630 381 519,00 (six hundred and thirty million three hundred and eighty one thousand and five hundred and nineteen Rand) shall be payable in cash on the Closing Date against completion of all the matters referred to in clause 7. The Parties record that the amount of R630 381 519,00 (six hundred and thirty million three hundred and eighty one thousand and five hundred and nineteen Rand) includes the purchase price allocated to: 6.1.3.1 the Direct South African Subsidiaries, the Direct American Subsidiaries (save for the Excluded Direct American Subsidiaries) and the Claim in the amount of R238 172 634,00 (two hundred and thirty eight million one hundred and seventy two thousand and six hundred and thirty four Rand); 6.1.3.2 Island Pacific and Integrity Software in the amount of R163 966 695,00 (one hundred and sixty three million nine hundred and sixty six thousand and six hundred and ninety five Rand); 6.1.3.3 the Direct Canadian Subsidiary and the shareholder loan by the Seller to the Direct Canadian Subsidiary, set out in APPENDIX 7, in the amount of R37 721 354,00 (thirty seven million seven hundred and twenty one thousand and three hundred and fifty four Rand); 6.1.3.4 the Direct Irish Subsidiary in the amount of R190 520 836,00 (one hundred and ninety million five hundred and twenty thousand and eight hundred and thirty six Rand):" 5.3 The following new clause 6A be and is hereby inserted in the Sale of Business Agreement before the existing clause 7: "6A Delivery in respect of the Excluded Direct American Subsidiaries The Seller shall deliver to the Purchaser on the First Closing Date the following documents with respect to the Excluded Direct American Subsidiaries: 6A.1 the share certificates representing all of the Excluded American Sale Shares, together with duly executed stock powers for the transfer to the Purchaser or the designated subsidiary. For the purposes of this clause 6A.1 the designated subsidiary shall be Best Software Inc.; and 6A.2 the appointments of the persons as directors of each Excluded Direct American Subsidiary as set out in PART B of APPENDIX 16." 5.4 Clause 7.4 of the Sale of Business Agreement be and is hereby amended as follows: 5.4.1 by inserting the words "(save for the Excluded Direct American Subsidiaries)" after the words "Direct American Subsidiaries" in the heading of clause 7.4, the first clause after the heading of clause 7.4, and clause 7.4.4; and 5.4.2 by inserting the words "(save for the Excluded American Sale Shares)" after the words "American Sale Shares" in clause 7.4.1. 6. AMENDMENTS TO CLAUSE 1 OF, AND APPENDICES 2 AND 6 TO, THE SALE OF BUSINESS AGREEMENT 6.1 Clause 1.1.7 (the definition of "Australian Subsidiaries") of the Sale of Business Agreement be and is hereby amended by deleting the first row (in its entirety) of the table in Appendix 2, which reads as follows:
---------------------------- --------------- --------------------- --------------------------------- "SOFTLINE AUSTRALIA 04/07/2002 ACN # 101 238 671 Wholly-owned subsidiary of HOLDINGS PROPRIETARY Softline Australia LIMITED (Proprietary) Limited (Incorporated in South (Incorporated in South Africa)" Australia) ---------------------------- --------------- --------------------- ---------------------------------
6.2 Clause 1.1.18 (the definition of "Direct South African Subsidiary") of the Sale of Business Agreement be and is hereby amended by deleting the last row (in its entirety) of the table under the heading "Direct South African Subsidiaries" on page 4 of Appendix 6, which reads as follows:
------------------------------ ---------------- --------------------- ------------------------------ "SOFTLINE AUSTRALIA 07/11/2000 2000/028147/07 Wholly-owned subsidiary of (PROPRIETARY) LIMITED Softline Limited" (Incorporated in South Africa) ------------------------------ ---------------- --------------------- ------------------------------
6.3 Clause 1.1.35 (the definition of "South African Sale Shares") of the Sale of Business Agreement be and is hereby amended by deleting the second paragraph (in its entirety) under the heading "South African Sale Shares" on page 1 of Appendix 6, which reads as follows: "100 ordinary shares in Softline Australia (Proprietary) Limited, registration number 2000/028147/07 incorporated in South Africa, constituting the entire issued share capital of Softline Australia (Proprietary) Limited, are held by Softline Limited." 6.4 Clause 1.1.36 (the definition of "South African Subsidiaries") of the Sale of Business Agreement be and is hereby amended by deleting the first row (in its entirety) of the table on page 3, under the heading "South African Subsidiaries", which reads as follows:
--------------------------------- --------------- ------------------- ------------------------------ "SOFTLINE AUSTRALIA 07/11/2000 2000/028147/07 Wholly-owned subsidiary of (PROPRIETARY) LIMITED Softline Limited" (Incorporated in South Africa) --------------------------------- --------------- ------------------- ------------------------------
6.5 The purchase price set out in clause 5.1 of the Sale of Business Agreement be and is hereby reduced by the value allocated to the shares held in the Australian Operating Subsidiaries, being an amount of R43 740 072,00 (forty three million seven hundred and forty thousand and seventy two Rand), as set out in 8.1. 6.6 The Parties shall procure that Sage Software Australia and Softline Australia Holdings effect the transfer of the shares in the Australian Operating Subsidiaries from Softline Australia Holdings to Sage Software Australia by executing the documents in substantially the same form as attached to this Addendum as SCHEDULE B on the Closing Date, so that Sage Software Australia will acquire the shares in the Australian Operating Subsidiaries from Softline Australia Holdings as at the Closing Date. The Seller shall deliver to the Purchaser on the Closing Date the documents referred to in this 6.6. 6.7 The Sage Group plc shall procure that Sage Software Australia pays the purchase price of the shares held in the Australian Operating Subsidiaries, in the amount of R43 740 072,00 (forty three million seven hundred and forty thousand and seventy two Rand) to the nominee of Softline Australia Holdings, being the Seller, on the Closing Date. The payment to the nominee in terms of 6.7, shall discharge the obligation of Sage Software Australia to pay the purchase price of the shares held in the Australian Operating Subsidiaries. 6.8 The Seller shall procure that the proceeds of the sale of the shares in the Australian Operating Subsidiaries are distributed to Softline Australia as a dividend in anticipation of the winding up of Softline Australia Holdings and that Softline Australia distribute the amount so received to the Seller by repaying the shareholder loan by the Seller to Softline Australia and distributing the balance of the amount received to the Seller as a dividend in anticipation of the winding up of Softline Australia. 6.9 The Seller shall take all steps necessary for the liquidation of Softline Australia Holdings and Softline Australia, as directed by the Purchaser and/or The Sage Group plc and at the cost of the Purchaser and/or The Sage Group plc, within 6 (six) months from the date of the distributions referred to in 6.8 above. 6.10 The Purchaser and/or The Sage Group plc shall pay the liquidator's costs in respect of the liquidations of Softline Australia Holdings and Softline Australia. 6.11 The Sage Group plc shall procure that Sage Software Australia pays all taxes, costs and/or other charges which may become due and payable by Softline Australia Holdings or Softline Australia in respect of: 6.11.1 the transfer of the shares in the Australian Operating Subsidiaries from Softline Australia Holdings to Sage Software Australia; and 6.11.2 the distribution of the proceeds of the sale of the shares in the Australian Operating Subsidiaries to Softline Australia as a dividend in anticipation of the winding up of Softline Australia Holdings and by Softline Australia to the Seller by repaying the shareholder loan by the Seller to Softline Australia and the balance as a dividend in anticipation of the winding up of Softline Australia, as set out in 6.8. 6.12 The Seller shall procure, at the cost of the Purchaser and/or The Sage Group plc, that all intellectual property rights held by Softline Australia Holdings be assigned to Sage Software Australia with effect from the Closing Date, at a consideration of R5,00 (five Rand). The Seller shall do everything that may required of it by the Purchaser and/or Sage Software Australia, at the cost of the Purchaser and/or The Sage Group plc, to bring about the assignment of the intellectual property rights held by Softline Australia Holdings to Sage Software Australia and to record the change of ownership on the applicable intellectual property registers, including the trade marks register, in Australia and elsewhere, including by executing the assignment in substantially the same form as set out in SCHEDULE C. 7. AMENDMENTS TO CLAUSE 4 OF THE SALE OF BUSINESS AGREEMENT 7.1 Clause 4.1.1 of the Sale of Business Agreement be and is hereby amended by deleting "R105 605,00 (one hundred and five thousand six hundred and five Rand)" and replacing it with the following words "R105 705,00 (one hundred and five thousand seven hundred and five Rand)". 7.2 Clause 4.1.3 of the Sale of Business Agreement be and is hereby amended by deleting the whole of clause 4.1.3 of the Sale of Business Agreement and replacing it with the following new clause 4.1.3: "The loan by Softline Holdings (Proprietary) Limited (a company incorporated in South Africa under registration number 1996/000595/07) to the Seller as at the Closing Date, which as at the Signature Date was an amount of R227 891 115,00 (two hundred and twenty seven million eight hundred and ninety one thousand and one hundred and fifteen Rand)." 7.3 It is recorded that Steven Beck has exercised the option to acquire 500 000 of the shares held by the Seller in Island Pacific on 25 September 2003 for purchase price of R2 818 800,00 (two million eight hundred and eighteen thousand and eight hundred Rand). The Seller agrees, in accordance with clause 24 of the Sale of Business Agreement, that the amount of R2 818 800,00 (two million eight hundred and eighteen thousand and eight hundred Rand) be applied to reduce the loan set out in clause 4.1.3 of the Sale of Business Agreement, as amended by 7.1 above. Accordingly the Parties agree that the loan set out in clause 4.1.3 of the Sale of Business Agreement, as amended by 7.1 above, is reduced by the amount of R2 818 800,00 (two million eight hundred and eighteen thousand and eight hundred Rand) to an amount of R225 072 315,00 (two hundred and twenty five million seventy two thousand and three hundred fifteen Rand). 7.4 Clauses 4.1.4 and 4.1.5 of the Sale of Business Agreement be and are hereby deleted in their entirety. 7.5 The Sage Group plc agrees to assume the following liabilities of the Seller with effect from the First Closing Date, in the case of the liability set out in 7.5.1, and with effect from the Closing Date, in the case of the liability set out in 7.5.2, and to discharge them as and when they fall due: 7.5.1 The loan by Datafaction Inc. to the Seller as at the First Closing Date, which as at the Signature Date was an amount of R8 099 902,00 (eight million ninety nine thousand and nine hundred and two Rand). 7.5.2 The loan by Handisoft Software Proprietary Limited (a company incorporated in Western Australia) to the Seller in an amount of R8 657 417,00 (eight million six hundred and fifty seven thousand and four hundred and seventeen Rand). 7.6 The Parties agree that, save for the reference to "Liabilities" in clause 6 of the Sale of Business Agreement as amended by 5.2 above, any reference to "Liabilities" in the Sale of Business Agreement shall include the liabilities set out in 7.5.1 and 7.5.2 above. 7.7 The Parties further agree that: 7.7.1 on the First Closing Date, against compliance by the Seller with its obligations in terms of clause 6A of the Sale of Business Agreement, The Sage Group plc shall discharge the portion of the purchase price represented by the liability as set in 7.5.1 above by assuming, and discharging on the due date, such liability; and 7.7.2 on the Closing Date, against compliance by the Seller with its obligations in terms of clause 7 of the Sale of Business Agreement, The Sage Group plc shall discharge the portion of the purchase price represented by the liability as set in 7.5.2 above by assuming, and discharging on the due date, such liability. 8. AMENDMENTS TO CLAUSE 5 OF THE SALE OF BUSINESS AGREEMENT 8.1 To give effect to the amendments to the Sale of Business Agreement referred to in 6.5 above and 11.4 below, clause 5.1 of the Sale of Business Agreement be and is hereby amended by deleting the amount and words "R784 830 000,00 (seven hundred and eighty four million eight hundred and thirty thousand Rand)" in clause 5.1 of the Sale of Business Agreement and replacing them with the amount and words "R668 102 834,00 (six hundred and sixty eight million one hundred and two thousand and eight hundred and thirty four Rand)". 8.2 Clause 5.2.2 of the Sale of Business Agreement be and is hereby amended by deleting the words ", the Australian Subsidiaries" in the first line of clause 5.2.2. 9. AMENDMENTS TO CLAUSE 7 OF THE SALE OF BUSINESS AGREEMENT 9.1 Clause 7.2 of the Sale of Business Agreement be and is hereby amended by inserting the words ", and in respect of the Excluded American Subsidiaries on the First Closing Date," after the word "Closing Date" in the first line of clause 7.2. 9.2 Clause 7.5 of the Sale of Business Agreement be and is hereby amended by deleting clauses 7.5.1 and 7.5.2 in their entirety. 9.3 Clause 7.8 of the Sale of Business Agreement be and is hereby amended by deleting clause 7.8.2 in its entirety. 10. AMENDMENTS TO CLAUSE 8 OF THE SALE OF BUSINESS AGREEMENT Clause 8 of the Sale of Business Agreement be and is hereby deleted in its entirety and replaced by the following new clause 8: "8. OWNERSHIP, RISK AND BENEFIT 8.1 The ownership of, and the risk and benefit in, the Excluded American Sale Shares shall pass to the Purchaser upon compliance by the Purchaser with the provisions of clause 6A above. 8.2 The ownership of, and the risk and benefit in, the Business and all the Assets (save for the Excluded American Sale Shares) shall pass to the Purchaser upon delivery of the Business to the Purchaser in accordance with the provisions of clause 7 above." 11. AMENDMENTS TO CLAUSE 10 AND APPENDIX 7 TO THE SALE OF BUSINESS AGREEMENT 11.1 Appendix 7 to the Sale of Business Agreement (Shareholder Loan) be and is hereby amended by deleting the words "Shareholder loan by the Seller to Softline Software Limited (Ireland) in the amount of R148 364 000.00 (one hundred and forty eight million three hundred and sixty four thousand Rand)." and replacing it with the words "Shareholder loan by the Seller to the Direct Canadian Subsidiary in the amount of CAD3 999 900,00 (three million nine hundred and ninety nine thousand and nine hundred Canadian Dollars) on the Closing Date." 11.2 The Seller shall deliver to Best Software Canada Limited on the Closing Date a written assignment in the form attached as SCHEDULE D to this Addendum of the shareholder loan to the Direct Canadian Subsidiary which are included in the Equity Interests and referred to in 11.1 above and the Seller shall deliver on the Closing Date duly certified copies of a resolution of the directors of the Direct Canadian Subsidiary approving the above assignment. 11.3 The Parties hereby agree that the shareholder loan by the Seller to Softline Software in the amount of R72 987 094,00 (seventy two million nine hundred and eighty seven thousand and ninety four Rand) ("the Shareholder Loan") shall be repaid by Softline Software to the Seller on the Closing Date and The Sage Group plc shall procure that Softline Software repays the Shareholder Loan on the Closing Date against compliance by the Seller with its obligations in terms of clause 7 of the Sale of Business Agreement. 11.4 The purchase price set out in clause 5.1 of the Sale of Business Agreement be and is hereby reduced by the value allocated to the Shareholder Loan, being an amount of R72 987 094,00 (seventy two million nine hundred and eighty seven thousand and ninety four Rand), as set out in 8.1 above. 11.5 Clause 10 of the Sale of Business Agreement be and is hereby amended by inserting the following clause 10.1.10 after the existing clause 10.1.9: "10.1.10 The terms of the shareholder loan by the Seller to Softline Software in the amount of R72 987 094,00 (seventy two million nine hundred and eighty seven thousand and ninety four Rand) are as follows:" 10.1.10.1 The Seller advanced a loan to Softline Software in an amount of R72 987 094,00 (seventy two million nine hundred and eighty seven thousand and ninety four ) and this is the only amount owing by Softline Software to the Seller. 10.1.10.2 The loan referred to in clause 10.1.10.1 is repayable on demand and is currently due and payable. 10.1.10.3 The outstanding amount of the loan referred to in 10.1.10.1 does not bear interest." 12. THE SAGE GROUP PLC GUARANTEE LETTER AGREEMENT The Sage Group plc guarantee letter agreement concluded between the Parties on 8 September 2003 pursuant to clause 2.2.13 of the Sale of Business Agreement be and is hereby amended by: 12.1 inserting the words ", and/or any subsidiary of Sage," after the words "Sage SA", wherever they appear in The Sage Group plc guarantee letter agreement; and 12.2 inserting the words "as amended by the Addendum between the Parties dated 7 November 2003" after the words "26 August 2003" in the first paragraph of The Sage Group plc guarantee letter agreement. 13. ALLOCATION OF THE PURCHASE PRICE 13.1 The Parties wish to record that the purchase price of the Business is an amount equal to the sum of the Liabilities (as defined in the Sale of Business Agreement) and R668 102 834,00 (six hundred and sixty eight million one hundred and two thousand and eight hundred and thirty four Rand) which is made up as follows: 13.1.1 R37 721 315,00 (thirty seven million seven hundred and twenty one thousand and three hundred and fifteen Rand) in respect of the Excluded Direct American Subsidiaries which is payable as indicated in 5.2 above; 13.1.2 R630 381 519,00 (six hundred and thirty million three hundred and eighty one thousand and five hundred and nineteen Rand) in respect of the: 13.1.2.1 the Direct South African Subsidiaries, the Direct American Subsidiaries (save for the Excluded Direct American Subsidiaries) and the Claim; 13.1.2.2 Island Pacific and Integrity Software; 13.1.2.3 the Direct Canadian Subsidiary and the shareholder loan by the Seller to the Direct Canadian Subsidiary set out in APPENDIX 7 to the Sale of Business Agreement; 13.1.2.4 the Direct Irish Subsidiary, which is payable as indicated in 5.2 above. 13.2 Clause 5.2 of the Sale of Business Agreement provides that the Parties shall agree on the allocation of the whole of the purchase price on or before the Effective Date. 13.3 The Parties hereby agree on the allocation of the whole of the purchase price referred to in clause 5.1 of the Sale of Business Agreement as set out in 13.1 above and SCHEDULE E to this Addendum. 14. COUNTERPARTS This Addendum may be signed in any number of counterparts, all of which taken together shall constitute one and the same instrument. The Parties may enter into this Addendum by signing any such counterpart. 15. GENERAL 15.1 Save as provided for in this Addendum, the provisions of the Sale of Business Agreement shall remain unaltered and of full force and effect. 15.2 If there is any conflict between the provisions of the Sale of Business Agreement and this Addendum the provisions of this Addendum shall prevail. 15.3 If the Parties fulfil their obligations on the First Closing Date, as is required in terms of the Sale of Business Agreement and this Addendum, but either and/or both of the Parties fail to fulfil their obligations on the Closing Date, as is required in terms of the Sale of Business Agreement and this Addendum, the Parties agree that the Sale of Business Agreement and this Addendum shall not take effect and that the Parties shall be restored to their positions on the Business Day before the First Closing Date, unless the Parties agree otherwise in writing. SIGNED at Sandton on 7 November 2003. For : SOFTLINE LIMITED /s/ R. Wilkie ----------------------------------- Signatory : R. Wilkie Capacity : C.F.O. Authority : Board Resolution SIGNED at Newcastle on 7 November 2003. For : SAGE SOFTWARE (SA) (PROPRIETARY) LIMITED /s/ Paul Walker ----------------------------------- Signatory : Paul Walker Capacity : C.E.O. Authority : Board Resolution SIGNED at Newcastle on 7 November 2003. For : THE SAGE GROUP PLC /s/ Paul Walker ----------------------------------- Signatory : Paul Walker Capacity : C.E.O. Authority : Board Resolution EX-99 5 pal128688.txt EXHIBIT 3 - 2ND ADDEND. TO SALE OF BUS. AGMNT. Exhibit 3 SECOND ADDENDUM TO SALE OF BUSINESS AGREEMENT between SOFTLINE LIMITED and SAGE SOFTWARE (SA) (PROPRIETARY) LIMITED and THE SAGE GROUP PLC BOWMAN GILFILLAN INC. 9th Floor, Twin Towers West Sandton City Sandton, 2146 Telephone: (011) 881-9800 Fax: (011) 883-4505 TABLE OF CONTENTS 1. INTERPRETATION.............................................................4 2. AMENDMENTS TO CLAUSE 1 AND APPENDIX 9 OF THE SALE OF BUSINESS AGREEMENT....5 3. COUNTERPARTS...............................................................5 4. GENERAL....................................................................5 SECOND ADDENDUM TO SALE OF BUSINESS AGREEMENT between SOFTLINE LIMITED (Registration no. 1977/002304/06) ("the Seller") and SAGE SOFTWARE (SA) (PROPRIETARY) LIMITED (previously known as Flagman Investments (Proprietary) Limited) (Registration no. 2003/105693/07) ("the Purchaser") and THE SAGE GROUP PLC (Registration no. 2231246) ("The Sage Group plc") WHEREAS: A. The Seller and the Purchaser entered into a Sale of Business Agreement on 26 August 2003 and a First Addendum on 7 November 2003. B. The Parties wish to amend the Sale of Business Agreement to: (i) correct the number of shares of common and preferred stock in Island Pacific held by the Seller; (ii) include the options to purchase shares of common and preferred stock in Island Pacific held by the Seller; and (iii) include the dividends, which have been declared but have not been paid by Island Pacific to the Seller, in respect of the shares of common and preferred stock in Island Pacific held by the Seller. C. Accordingly, the Parties are entering into this Addendum to set out the amendments to the Sale of Business Agreement. NOW THEREFORE THE PARTIES AGREE: 1. INTERPRETATION In this Second Addendum and the preamble above, unless the context requires otherwise:
1.1 "this Second Addendum" means this second addendum to the Sale of Business Agreement; 1.2 "the First Addendum" means the first addendum to the Sale of Business Agreement concluded between the Parties on 7 November 2003; 1.3 "the Sale of Business Agreement" means the sale of business agreement entered into between the Seller and the Purchaser on 26 August 2003.
1.4 words and expressions defined in the Sale of Business Agreement and the First Addendum shall have the same meaning in this Second Addendum as those ascribed to them in the Sale of Business Agreement and the First Addendum. 2. AMENDMENTS TO CLAUSE 1 AND APPENDIX 9 OF THE SALE OF BUSINESS AGREEMENT Clause 1 of the Sale of Business Agreement be and is hereby amended as follows: 2.1 by deleting clause 1.1.28 in its entirety and replacing it with the following new clause 1.1.28:
"1.1.28 "Island Pacific Sale Shares" means: (a) the shares of common and preferred stock in Island Pacific; (b) all options to purchase shares of common and preferred stock in Island Pacific; and (c) all dividends, which have been declared but have not been paid by Island Pacific to the Seller, in respect of the shares of common and preferred stock in Island Pacific,
held by the Seller as set out in APPENDIX 9; 2.2 by substituting the existing APPENDIX 9 to the Sale of Business Agreement with the new APPENDIX 9 attached to this Second Addendum. 3. COUNTERPARTS This Second Addendum may be signed in any number of counterparts, all of which taken together shall constitute one and the same instrument. The Parties may enter into this Second Addendum by signing any such counterpart. 4. GENERAL 4.1 Save as provided for in this Second Addendum, the provisions of the Sale of Business Agreement and the First Addendum shall remain unaltered and of full force and effect. 4.2 If there is any conflict between the provisions of the Sale of Business Agreement, the First Addendum and this Second Addendum, the provisions of this Second Addendum shall prevail. SIGNED at Johannesburg on 24 November 2003. For : SOFTLINE LIMITED /s/ R. Wilkie ------------------------------ Signatory : R. Wilkie Capacity : CFO Authority : Board Resolution SIGNED at Newcastle on 24 November 2003. For : SAGE SOFTWARE(SA)(PROPRIETARY)LIMITED /s/ Paul Walker ------------------------------ Signatory : Paul Walker Capacity : CEO Authority : Board Resolution SIGNED at Newcastle on 24 November 2003. For : THE SAGE GROUP PLC /s/ Paul Walker ------------------------------ Signatory : Paul Walker Capacity : CEO Authority : Board Resolution EX-99 6 pal127934.txt EXHIBIT 4: PURCHASE AND EXCHANGE AGREEMENT EXHIBIT 4 PURCHASE AND EXCHANGE AGREEMENT SVI SOLUTIONS, INC. A DELAWARE CORPORATION AND SOFTLINE LIMITED A SOUTH AFRICAN CORPORATION Effective: January 1, 2002 PURCHASE AND EXCHANGE AGREEMENT THIS PURCHASE AND EXCHANGE AGREEMENT (this "Agreement") is entered into effective as of January 1, 2002, by and among SVI Solutions, Inc., a Delaware corporation ("SVI"), and Softline Limited, a South African corporation ("Softline"). Capitalized terms used herein shall have the same meanings ascribed to them in the body of this Agreement and in Section 11 below. WHEREAS, SVI is the holder of a promissory note dated December 31, 1998 issued by Kielduff Investments Limited, as amended, in the original amount of $18,108,000, with an outstanding balance due of Seven Million Dollars ($7,000,000) as of December 31, 2001 (the "Note"); WHEREAS, the Note is secured by 1,536,000 shares of common stock of Integrity Software, Inc., which are pledged pursuant to a Pledge Agreement between Kielduff and SVI dated December 31, 1998 (the "Pledge Agreement") to secure Kielduff's obligations under the Note; WHEREAS, SVI is indebted to Softline in the total amount of $12,257,359 as of December 31, 2001 including accrued and unpaid interest at fourteen percent (14%) per annum under that certain promissory note dated July 11, 2000, as amended (the "Softline Indebtedness"); WHEREAS, Softline is the owner of 19,028,715 shares of common stock of SVI (the "SVI Shares"), representing a majority of the issued and outstanding shares of the common stock of SVI; WHEREAS, SVI desires to satisfy in full the Softline Indebtedness in exchange for 53,000 shares of Series A Preferred Stock (as defined below) and the transfer of all of its right, title and interest in and to the Note and the Pledge Agreement, and Softline desires to exchange 10,700,000 SVI Shares for 88,000 shares of Series A Preferred Stock, all of which transactions shall concurrently close in accordance with this Agreement. AGREEMENT 1. Purchase, Sale and Exchange Transactions. ---------------------------------------- 1.1. AUTHORIZATION. SVI has authorized the issuance and sale pursuant to the terms and conditions of this Agreement of up to 141,000 shares of its Series A Convertible Preferred Stock (the "Series A Preferred Stock"), at a purchase price of $100.00 per share, with the rights, preferences and limitations set forth on a Certificate of Designation to be filed with the Delaware Secretary of State in the form of attached EXHIBIT A (the "Certificate of Designation"). The shares of Common Stock issuable upon the conversion of the Series A Preferred Stock are referred to herein as the "Conversion Shares". The Conversion Shares will be subject to the terms and conditions of an investor rights agreement between the parties in the form of attached Exhibit B (the "Investor Rights Agreement"). 1.2. ISSUANCE OF NEW SVI SECURITIES AND RELEASE. Subject to the terms and conditions of this Agreement, at the Closing, (a) SVI shall issue and sell to Softline, and Softline shall acquire from SVI, 53,000 shares of Series A Preferred Stock, and (b) SVI shall sell, assign and transfer to Softline, and Softline shall acquire from SVI, all of SVI's right, title and interest in and to the Note and the Pledge Agreement, in exchange for the Release (as defined in paragraph 1.4(c) below) executed by Softline in favor of SVI. A copy of the Note and the Pledge Agreements are attached as EXHIBITS C and D, respectively. 1.3. EXCHANGE OF SVI SHARES. SVI shall issue to Softline 88,000 shares of Series A Preferred Stock in exchange for 10,700,000 shares of SVI Shares. 1.4. CLOSING DELIVERIES. (a) CLOSING. Upon satisfaction of the conditions set forth in Sections 4 and 5, the closing of this Agreement (the "Closing) shall take place at the offices of Solomon Ward Seidenwurm & Smith, LLP, on or before March ___, 2002 (the "Closing Date"), at 10:00 a.m. (local time), or at such other time and place as the parties may agree in writing (the "Closing Date"). (b) DELIVERIES OF SVI AT THE CLOSING. At the Closing, SVI shall deliver to Softline 141,000 shares of Series A Preferred Stock, and an assignment of all its right, title and interest in and to the Note and the Pledge Agreement pursuant to an instrument of assignment substantially in the form of attached Exhibit E (the "Assignments"). (c) DELIVERIES BY SOFTLINE AT CLOSING. At the Closing, Softline shall deliver to SVI (i) a duly executed release, substantially in the form of attached EXHIBIT F (the "Release"); (ii) all documents evidencing the Softline Indebtedness, marked on the face thereof to indicate the Softline Indebtedness has been satisfied in full; and (iii) one or more stock certificates representing 10,700,000 of the SVI Shares, duly endorsed by Softline in favor of SVI. 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SVI. SVI hereby represents and warrants to Softline, as of the date of this Agreement and as of the Closing Date, that except as set forth on the SVI Schedule of Exceptions (which items and exceptions, if any, shall be deemed to be representations and warranties as if made in this Section): 2.1. ORGANIZATION; STANDING AND POWER. SVI (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, (b) has all requisite corporate power and authority to own and operate its Assets and Properties and to carry on the Business as presently conducted and as proposed hereafter to be conducted, and (c) is duly qualified and in good standing to do business as a foreign corporation in each and every jurisdiction where its Assets and Properties are located and wherever such qualification is necessary to carry out the Business except where the failure to so qualify or be in good standing would not have a Material Adverse Effect on the Business and Condition of SVI. SVI has all requisite corporate power and authority to execute, deliver and perform all of its obligations under this Agreement and the other Transaction Documents. SVI has prior to the execution of this Agreement and the other Transaction Documents made available to Softline true and complete copies of its (i) Certificate of Incorporation with all amendments thereto and (ii) by-laws, in each case as in effect on the date hereof (collectively, the "Charter"). 2.2. BINDING OBLIGATION. (a) Each of this Agreement and the other Transaction Documents to which SVI is a signatory has been duly executed and delivered by SVI and is the legally valid and binding obligation of SVI, enforceable against SVI in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. (b) The Series A Preferred Stock, when issued, sold, paid for, and delivered in accordance with the terms of this Agreement will be duly and validly issued, fully paid and non-assessable, and free and clear of any restrictions on transfer (other than any restrictions under the Securities Act of 1933, as amended (the "Securities Act") and state securities laws) and any Taxes, security interests, options, warrants, purchase rights, preemptive rights, Contracts, commitments, equities, claims or demands. Upon the conversion of the Series A Preferred Stock in accordance with the Certificate of Designation, the Conversion Shares will be duly and validly issued, fully paid and non-assessable, and free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and state securities laws) and any Taxes, security interests, options, warrants, purchase rights, preemptive rights, Contracts, commitments, equities, claims or demands. 2.3. GOVERNMENTAL AUTHORITY. Except as disclosed on the SVI Schedule of Exceptions, SVI is not required to obtain any approval, consent or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the execution, delivery or performance of this Agreement and the other Transaction Documents to which SVI is a signatory (including the issuance and delivery of the shares of Series A Preferred Stock and the Conversion Shares), other than a filing of Form 8-K with the U.S. Securities and Exchange Commission. 2.4. CAPITALIZATION. (a) The total number of authorized shares of capital stock of SVI immediately prior to the Closing consists of 100,000,000 common shares, $.0001 par value (the "Common Stock), and 5,000,000 preferred shares, $.0001 par value (the "Preferred Stock"). As of March 15, 2002, 39,093,609 shares of Common Stock are issued and outstanding and no shares of Preferred Stock are issued and outstanding. All shares of capital stock of SVI issued and outstanding on or prior to the Closing Date have been, and the Conversion Shares will at the time of issuance be, duly and validly issued, fully paid and nonassessable and issued in accordance with all applicable federal and state securities laws. Except for: (a) the capital stock of SVI authorized and issued pursuant to Section 1 of this Agreement, (b) 4,000,000 shares of Common Stock issuable upon exercise of options which are outstanding or reserved for issuance under SVI's 1998 Equity Incentive Plan as of March 15, 2002, (c) 629,235 of Common Stock issuable upon the exercise of options which are outstanding or reserved for issuance under SVI's 1989 Incentive Stock Option Plan as of March 15, 2002, (c) 3,966,639 shares of Common Stock issuable on the exercise of warrants outstanding as of March 15, 2002, (d) 1,046,812 shares of Common Stock issuable upon the exercise of non-statutory stock options granted to non-employees as of March 15, 2002, and (e) 73,529 shares of Common Stock issuable upon the exercise of additional warrants to be issued on or about March 21, 2002 under the Investors' Rights Agreement dated December 22, 2000 between SVI and Koyah Leverage Partners, L.P. and Koyah Partners, L.P. (the "2000 Investor Rights Agreement"), or as set forth in Section 2.4(a) of the SVI Schedule of Exceptions, no other shares have been reserved for issuance on the Closing Date and there are no outstanding options, warrants or other rights to subscribe for or purchase from SVI any shares of its capital stock or any securities convertible into or exchangeable for any shares of its capital stock. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of SVI are or will be as set forth in the Certificate of Designation and the Charter, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable against SVI under all applicable laws, rules and regulations. (b) Except for the rights of first refusal set forth in the 2000 Investors' Rights Agreement which are set forth in Section 2.4(b) of the SVI Schedule of Exceptions, there are no preemptive rights, rights of first refusal, options, warrants, conversion rights or similar rights which are binding on SVI permitting any person to subscribe for or purchase from SVI shares of its capital stock pursuant to any Law or Order, the Charter, by agreement or otherwise. None of the transactions contemplated by this Agreement (including issuance of the Series A Preferred Stock and the Conversion Shares) will cause any anti-dilution protection provisions given by SVI to any Person to become operative. 2.5. NO CONFLICTS. The execution and delivery by SVI of this Agreement and the other Transaction Documents to which SVI is a signatory and the performance by SVI of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby does not and will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the Charter; (b) conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to SVI or any of its Assets and Properties; or (c) result in or give to any Person any rights or create any additional or increased liability of SVI under or create or impose any Liens upon, SVI or any of its Assets and Properties under any Contract or Permit to which SVI is a party or by which its Assets and Properties are bound. 2.6. TRANSFER OF NOTE. SVI has the authority to transfer the Note and its security interest in the pledged shares (the "Security") without impairing the interests so transferred. The transfer of the Note and security interest in the pledged shares is made without any recourse against SVI as to payment, and SVI makes no representation or warranty whatsoever concerning the amount, if any, which may be actually realized by any subsequent holder of the Note and the Security. 2.7. BROKER'S FEES. No agent, broker, finder, investment banker, financial advisor or other similar Person will be entitled to any fee, commission or other compensation in connection with any of the transactions contemplated by this Agreement on the basis of any act or statement made or alleged to have been made by SVI or any of its Affiliates, or any investment banker, financial advisor, attorney, accountant or other Person retained by or acting for or on behalf of SVI or any of its Affiliates. 3. REPRESENTATIONS AND WARRANTIES OF SOFTLINE. Softline represents and warrants to SVI, as of the date of this Agreement and as of the Closing, that except as set forth on the Softline Schedule of Exceptions attached hereto (which items and exceptions, if any, shall be deemed to be representations and warranties as if made in this Section): 3.1. AUTHORIZATION. The execution and delivery by Softline of this Agreement and the other Transaction Documents to which Softline as signatory, the performance of Softline's obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and will not, either prior to or as a result of the consummation of the transactions contemplated by this Agreement: (i) violate any law or any governmental rule or regulation applicable to Softline, any provision of the certificate or articles of incorporation or bylaws of Softline, or any Contract, indenture, agreement or other instrument to which Softline is a party, or by which Softline or any of its assets or properties are bound, or (ii) be in conflict with, result in a breach of, or constitute (after the giving of notice or lapse of time or both) a default under, or result in the creation or imposition of any lien of any nature whatsoever upon any of the Assets and Properties of Softline pursuant to the provisions of any Contract, indenture, agreement or other instrument to which Softline is a party. Softline is not required to obtain any approval, consent or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the execution, delivery or performance of this Agreement or the other Transaction Documents to which Softline is a signatory, other than receiving the approvals of the South African Exchange Control and the Johannesburg Stock Exchange. 3.2. BINDING OBLIGATION. Each of the Agreement and the other Transaction Documents to which Softline is a signatory has been duly executed and delivered by Softline and is the legally valid and binding obligation of Softline, enforceable against Softline in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. 3.3. BROKER'S FEES. No agent, broker, finder, investment banker, financial advisor or other similar Person will be entitled to any fee, commission or other compensation in connection with any of the transactions contemplated by this Agreement on the basis of any act or statement made or alleged to have been made by Softline or any of its Affiliates, or any investment banker, financial advisor, attorney, accountant or other Person retained by or acting for or on behalf of Softline or any of its Affiliates. 3.4. REGULATION S. Softline has not offered to transfer the Series A Preferred Stock to any Person in the United States or to any U.S. Person or for the account or benefit of any U.S. Person (as defined in Rule 902(k) of Regulation S) and has not, nor has any Person acting on its behalf, made any directed selling efforts in the United States with respect to the Series A Preferred Stock. Softline is not a U.S. Person, as defined in Rule 902(k) of Regulation S promulgated under the Securities Act and is not acquiring the Series A Preferred Stock for the account or benefit of any U.S. Person. On the date of this Agreement Softline is, and at the Closing, Softline will be, domiciled outside of the United States. 3.5. SVI SHARES. Softline has good and marketable title to the SVI Shares, free and clear of liens, encumbrances and other restrictions. 4. SOFTLINE'S CONDITIONS TO CLOSING. Softline's obligation to proceed with Closing is subject to the fulfillment to Softline's satisfaction (or waiver thereof), at or prior to Closing, of the following conditions: 4.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties of SVI contained in Section 2 hereof shall be true and correct when made and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing Date. 4.2. PERFORMANCE. SVI shall have performed and complied with all agreements, obligations, and conditions contained in this Agreement that are required to be performed by them or with which they are required to have complied on or before Closing. 4.3. APPROVALS. Softline shall have received the consent of the South Africa Reserve Bank to the transactions contemplated in this Agreement, to the extent required by applicable Law; and (b) the Johannesburg Stock Exchange, to the extent required by the listing agreement between Softline and such exchange by the policies or regulations of the exchange. 4.4. CERTIFICATE OF DESIGNATION. SVI shall have filed the Certificate of Designation with the Delaware Secretary of State. 4.5. TRANSACTION DOCUMENTS. Each of the other Transaction Documents shall have been duly executed and delivered to SVI prior to or concurrently with the Closing. 5. SVI'S CONDITIONS TO CLOSING. SVI's obligation to proceed with Closing is subject to the fulfillment to SVI's satisfaction (or waiver thereof), prior to or at Closing, of the following conditions: 5.1. REPRESENTATIONS AND WARRANTIES. The representations and warranties of Softline contained in Section 3 hereof shall be true and correct when made and as of Closing with the same effect as though such representations and warranties had been made on and as of the Closing Date. 5.2. PERFORMANCE. Softline shall have performed and complied with all agreements, obligations, and conditions contained in the Agreement that are required to be performed by it or with which it is required to have complied on or before Closing. 5.3. APPROVALS. SVI shall have received the consent of the American Stock Exchange, Inc. to the transactions contemplated in this Agreement, to the extent required by the listing agreement between SVI and such exchange or by the policies or regulations of the exchange. 5.4. UNION BANK. To the extent required by its loan agreement with Union Bank of California ("Union Bank"), SVI shall have received the consent of Union Bank to the transactions contemplated by this Agreement and a release from Union Bank of its security interest in the Note and Pledge Agreement in a form satisfactory to SVI. 5.5. APPRAISAL. SVI shall have received an opinion from a recognized valuation expert selected by SVI that the transactions contemplated by this Agreement as a whole are fair to the shareholders (excluding Softline) of SVI. 5.6. BOARD AND SHAREHOLDER APPROVALS. SVI shall have received the approval of its Board of Directors and, to the extent required by law or any agreements or instruments, its shareholders, to the transactions contemplated in this Agreement. 5.7. TRANSACTION DOCUMENTS. Each of the other Transaction Documents shall have been duly executed and delivered to Escrow Holder prior to or concurrently with the Closing. 6. SECURITIES RESTRICTIONS/NO RECOURSE. Softline acknowledges and agrees to the following: 6.1. RESTRICTIONS ON TRANSFER. The Series A Preferred Stock and, when issued, the Conversion Shares will be, restricted securities as such term is defined in Rule 144 promulgated under the Securities Exchange Act of 1934 and are not transferable except in compliance with applicable federal and state securities laws. 6.2. RESTRICTIVE LEGENDS. The certificates representing the Series A Preferred Stock and the Conversion Shares shall be stamped or otherwise imprinted with legends in substantially the following form: "THE SECURITIES OF SVI SOLUTIONS, INC. (THE "ISSUER") REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO REGULATION S, PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND HAVE NOT BEEN REGISTERED UNDER THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED OR SOLD EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE SECURITIES ACT OF 1933, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION." 6.3. SECURITIES LAW COMPLIANCE. (a) Softline acknowledges and agrees that none of the Series A Preferred Stock or Conversion Shares have been registered under the Securities Act and may not be offered or sold in the United States or to U.S. Persons unless such securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available. (b) Softline agrees to make all offers and sales of the Series A Preferred Stock and Conversion Shares only in compliance with the provisions of Rule 903 or Rule 904 of Regulation S promulgated under the Securities Act (as applicable), under an effective registration statement under the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act 6.4. NO RECOURSE. The Note, Pledge Agreement and Security are sold and transferred to Softline without any recourse against SVI as to payment. SVI makes no representation or warranty as to the amount, if any, which may be actually realized by any subsequent holder of the Note and the Security. 7. COVENANTS OF SVI AND SOFTLINE. 7.1. COVENANTS AND AGREEMENTS OF SVI PRIOR TO CLOSING. During the period commencing on the date hereof and ending on the Closing Date, SVI shall perform the following covenants in this Section 7.1: (a) COOPERATION. SVI shall take all necessary or desirable steps and proceed diligently and in good faith and use its commercially reasonable best efforts to promptly obtain all consents, approvals or actions of, to make all filings with and to give all notices to, Governmental Authorities or any other Person required of SVI, or of Softline to consummate the transactions contemplated hereby and by the Transaction Documents, and SVI shall use its best efforts to promptly effect the transactions contemplated hereby and by the Transaction Documents. SVI shall use its best efforts to obtain the approval of its Board of Directors to the transactions contemplated by this Agreement on or before March 22, 2002. (b) INVESTIGATION BY SOFTLINE. Subject to the confidentiality provisions in Section 10.13 below, from the date hereof through the Closing Date, SVI shall: (i) provide Softline and its officers, employees, agents, counsel, accountants, financial advisors, consultants and other representatives (together "Representatives") with full access, upon reasonable prior notice and during normal business hours, to all officers, employees, agents and accountants of SVI and its subsidiaries and their Assets and Properties and Books and Records, and (ii) furnish Softline and such Representatives with all such information and data concerning the business and operations of SVI and its subsidiaries, as the case may be, as Softline or any of such other Representatives reasonably may request in connection with such investigation. Nothing contained in this Section 7 or any other investigation by or disclosure to Softline shall affect the survival of or modify, limit or create any exception to the representations, warranties, covenants, agreements and indemnities of SVI hereunder or the conditions to the obligations of Softline to close as set forth in Section 4 hereof.. (c) NOTICE AND CURE. SVI shall notify Softline promptly in writing of, and contemporaneously shall provide Softline with true and complete copies of any and all information or documents relating to, and shall use its best efforts to cure before the Closing Date, any event, transaction or circumstance occurring after the date of this Agreement that causes or shall cause any covenant or agreement of SVI under this Agreement to be breached or that renders or shall render untrue any representation or warranty of SVI contained in this Agreement. 7.2. COVENANTS OF SVI AFTER CLOSING. So long as the shares of Series A Preferred Stock remains outstanding and convertible, SVI shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than 100% of the aggregate number of shares of Common Stock needed to provide for the issuance of Conversion Shares. 7.3. COVENANTS AND AGREEMENTS OF SOFTLINE PRIOR TO CLOSING. During the period commencing on the date hereof and ending on the Closing Date, Softline shall perform the following covenants in this Section 7.3: (a) COOPERATION. Softline shall take all steps it determines are necessary or desirable and shall proceed diligently and in good faith and use its commercially reasonable best efforts to promptly obtain all consents, approvals or actions of, to make all filings with and to give all notices to, Governmental Authorities or any other Person required of Softline, or of SVI to consummate the transactions contemplated hereby and by the Transaction Documents, and Softline shall use its best efforts to promptly effect the transactions contemplated hereby and by the Transaction Documents. (b) NOTICE AND CURE. Softline shall notify SVI promptly in writing of, and contemporaneously shall provide SVI with true and complete copies of any and all information or documents relating to, and shall use its best efforts to cure before the Closing Date, any event, transaction or circumstance occurring after the date of this Agreement that causes or shall cause any covenant or agreement of Softline under this Agreement to be breached or that renders or shall render untrue any representation or warranty of Softline contained in this Agreement. 8. INDEMNIFICATION. 8.1. INDEMNIFICATION BY SVI. SVI shall defend, indemnify, and hold harmless Softline against all Softline Claims (as defined below) and all costs, expenses and attorney's fees reasonably incurred in the defense of any of such Softline Claims or any action or proceeding brought on any of such Softline Claims, to the extent not covered by any applicable insurance or to the extent of any liability in excess of the policy limits of such insurance. For purposes of this paragraph, "Softline Claims" means all liabilities, damages, losses, costs, expenses, reasonable attorney's fees and claims (except to the extent caused by Softline's negligent act, willful misconduct or breach under this Agreement) arising from (a) any breach or default in the performance of any obligation to be performed by SVI under this Agreement, and (b) any breach of any representation or warranty of SVI set forth in this Agreement. Nothing in this Paragraph creates any rights to which any insurance company may be subrogated and no person who is not a party to this Agreement may enforce, directly or indirectly, this subparagraph. 8.2. INDEMNIFICATION BY SOFTLINE. Softline shall defend, indemnify, and hold harmless SVI against all SVI Claims (as defined below) and all costs, expenses and attorney's fees reasonably incurred in the defense of any of such SVI Claims or any action or proceeding brought on any of such SVI Claims, to the extent not covered by any applicable insurance or to the extent of any liability in excess of the policy limits of such insurance. For purposes of this paragraph, "SVI Claims" means all liabilities, damages, losses, costs, expenses, reasonable attorney's fees and claims (except to the extent caused by SVI's negligent act, willful misconduct or breach under this Agreement) arising from (a) any breach or default in the performance of any obligation to be performed by Softline under this Agreement, and (b) any breach of any representation or warranty of Softline set forth in this Agreement. Nothing in this Paragraph creates any rights to which any insurance company may be subrogated and no person who is not a party to this Agreement may enforce, directly or indirectly, this subparagraph. 9. TERMINATION. 9.1. MECHANICS OF TERMINATION. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned at any time prior to the Closing: (a) by mutual written agreement of Softline, on the one hand, and SVI, on the other hand; or (b) by either party if the other party is in default under any material provision under this Agreement and the defaulting party fails to cure such default within five (5) business days following notification thereof by the terminating party. 9.2. EFFECT OF TERMINATION. If this Agreement is validly terminated pursuant to Section 9.1, this Agreement will forthwith become null and void, and there will be no liability or obligation on the part of either party, except that the provisions with respect to confidentiality in Section 10.13 will continue to apply following any such termination. 10. MISCELLANEOUS. 10.1. AMENDMENTS AND WAIVERS. This Agreement may be amended only with the written consent of each party. Any waiver of a default or provision under this Agreement must be in writing. No such waiver constitutes a waiver of any other default or provision concerning the same or any other provision of this Agreement. No delay or omission by a party in the exercise of any of its rights or remedies constitutes a waiver of (or otherwise impairs) such right or remedy. A consent to or approval of an act does not waive or render unnecessary the consent to or approval of any other or subsequent act. 10.2. NOTICES. Any notice, consent, authorization or other communication to be given hereunder shall be in writing and shall be deemed duly given and received when delivered personally or transmitted by facsimile transmission with receipt acknowledged by the addressee or the next business day after being deposited for next-day delivery with an internationally recognized overnight delivery service, charges and postage prepaid, properly addressed to the party to receive such notice at the address(es) specified on the signature page of this Agreement for each party (or at such other address as shall be specified by like notice). 10.3. ENTIRE AGREEMENT. This Agreement and the other Transaction Documents contain the entire agreement of the parties and supersede all prior negotiations, correspondence, term sheets, agreements and understandings, written and oral, between or among the parties regarding the subject matter hereof. 10.4. SUCCESSORS AND ASSIGNS. This Agreement and the other Transaction Documents shall inure to the benefit of and be binding upon the respective heirs, representatives, successors and permitted assigns of the parties. Nothing in this Agreement or the other Transaction Documents, express or implied, is intended to confer upon any party other than the parties hereto or their respective heirs, representatives, successors and permitted assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement or the other Transaction Documents, except as expressly provided in this Agreement or the other Transaction Documents. SVI expressly acknowledges and agrees that, subject only to limitations imposed by state and federal securities laws, Softline has the right to transfer or assign any of its rights under and in connection with this Agreement and the other Transaction Documents and any securities acquired pursuant to this Agreement and the other Transaction Agreements. 10.5. SEVERABILITY. If any provision of this Agreement or the other Transaction Documents, or the application of such provision to any person or circumstance, shall be held invalid or unenforceable, the remainder of this Agreement and the other Transaction Documents, or the application of such provision to persons or circumstances other than those to which it is held to be invalid or unenforceable, shall not be affected thereby. 10.6. GOVERNING LAW; ARBITRATION. This Agreement and the other Transaction Documents shall be governed by and construed and interpreted in accordance with the law of the State of Delaware, without regard to that state's conflict of laws principles. All disputes arising under this Agreement shall be resolved by arbitration pursuant to the commercial rules of the American Arbitration Association then in effect. All disputes shall be arbitrated in Wilmington, Delaware. The prevailing party in any such arbitration shall be entitled to recover its reasonable attorneys' fees and other costs incurred therein. Any award rendered shall be final and conclusive upon the parties and a judgment thereon may be entered in any federal or state court located in the city of Wilmington, Delaware. Notwithstanding the foregoing, any party obtaining any Order or judgment in any of the above referenced courts may bring an action in such court in Order to enforce such Order or judgment. Each party authorizes and accepts service of process sufficient for personal jurisdiction in any action against it as contemplated by this paragraph by registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of notices set forth in this Agreement. 10.7. ATTORNEYS' FEES. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement or the other Transaction Documents, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 10.8. INTERPRETATION. Each of this Agreement and the other Transaction Documents shall be construed according to its fair language. The rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or the other Transaction Documents. 10.9. FURTHER ASSURANCES. Each party to this Agreement shall execute such other and further certificates, instruments and other documents as may be reasonably necessary and proper to implement, complete and perfect the transactions contemplated by this Agreement. 10.10. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall constitute an original, and all of which together shall be considered one and the same agreement. 10.11. TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 10.12. COSTS. Each party shall bear its own costs and fees incurred in connection with the negotiations of the terms of this Agreement, drafting of applicable documents and Closing of the transactions contemplated herein. 10.13. CONFIDENTIALITY. Each party hereto will hold in confidence from any Person (other than any Affiliate), unless compelled to disclose by law or legal process, all documents and information concerning the other party or any of its Affiliates furnished to it by the other party in connection with this Agreement and the other Transaction Documents or the transactions contemplated hereby, including this Agreement or the Transaction Documents or their respective terms and conditions, except to the extent that such documents or information can be shown to have been (a) previously known to the party receiving such documents or information, (b) in the public domain (either prior to or after the furnishing of such documents or information hereunder) through no fault of such receiving party or (c) later acquired by the receiving party by another source if the receiving party is not aware that such source is under an obligation to another party hereto to keep such documents and information confidential. In the event the transactions contemplated hereby are not consummated, upon the request of the other party, each party will, and will cause their Affiliates and their respective representatives to, promptly to deliver or cause to be delivered all copies of documents and information furnished by the other party in connection with this Agreement or the transactions contemplated hereby and destroy or cause to be destroyed all notes, memorandum, summaries, analyses, compilations and other writings related thereto or based thereon prepared by the party furnished such documents and information or its representatives. 10.14. SURVIVAL OF WARRANTIES. The warranties, representations and covenants of each party contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing for a period of two years following the Closing. 10.15. LEGAL REPRESENTATION. Each of the parties to this Agreement acknowledges that, in connection with the negotiation and preparation of this Agreement, SVI was represented by the law firm of Solomon Ward Seidenwurm & Smith, LLP ("SWSS") and that SWSS represented only the interests of SVI. Each of the parties to this Agreement also acknowledges that SWSS has previously represented SVI and Softline. The parties to this Agreement agree that after execution of this Agreement, SVI may retain SWSS as its legal counsel notwithstanding SWSS's prior or concurrent representation of Sofltline. 11. GLOSSARY. For purposes of this Agreement, the following terms shall have the meanings set forth below, which shall be equally applicable to both the singular and plural forms of any of such terms: 2000 INVESTOR RIGHTS AGREEMENT has the meaning ascribed to it in Section 1.1. AFFILIATE means, as applied to any Person, (i) any officer, director, or former officer or director; (ii) any other Person directly or indirectly controlling, controlled by or under common control with, that Person, (iii) any other Person that owns or controls ten percent (10%) or more of any class of equity securities (including any equity securities issuable upon the exercise of any option) of that Person, or (iv) any member, director, partner, officer, agent, or employee of such Person. For the purposes of this definition, "control" (including with correlative meanings, the terms "controlling", "controlled by", and "under common control with") as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through ownership of voting securities or by Contract or otherwise. AGREEMENT has the meaning ascribed to it in the preamble. ASSETS AND PROPERTIES of any Person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible including the goodwill related thereto, operated, owned or leased by such Person). ASSIGNMENTS has the meaning ascribed to it in Section 1.4(b). BUSINESS means the business currently conducted by SVI or its subsidiaries. BUSINESS AND CONDITION OF SVI means the Business, condition (financial or otherwise), results of operations, Assets and Properties of SVI and its subsidiaries. CERTIFICATE OF DESIGNATION has the meaning ascribed to it in Section 1.1. CHARTER has the meaning ascribed to it in 2.1. CLOSING has the meaning ascribed to it in Section 1.4(a). CLOSING DATE has the meaning ascribed to it in Section 1.4(a). COMMON STOCK has the meaning ascribed to it in Section 2.4(a). CONTRACT means any agreement, lease, license, evidence of Indebtedness, mortgage, indenture, security agreement or other contract or other commitment (whether written or oral). GOVERNMENTAL AUTHORITY means any court, tribunal, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision, any arbitrator, tribunal or panel of arbitrators and shall include, without limitation, any stock exchange, quotation service and the National Association of Securities Dealers. INDEBTEDNESS means, as to any Person: (i) all obligations, whether or not contingent, of such Person for borrowed money (including, without limitation, reimbursement and all other obligations with respect to surety bonds, letters of credit and bankers' acceptances, whether or not matured), deferred purchase price of property or services, notes, bonds, debentures or similar instruments, all obligations of such Person representing the balance of, all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, obligations under conditional sale or other title retention agreement, obligations of such Person under leases which have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases, (vii) all indebtedness secured by any Lien on any Asset or Property owned or held by such Person regardless of whether the indebtedness secured thereby shall have been assumed by such Person or is non-recourse to the credit of such Person, and (ii) all indebtedness of any other Person referred to in clause (i) above, guaranteed, directly or indirectly, by such Person. LAWS means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or of any Governmental Authority. LIENS means any mortgage, pledge, assessment, security interest, lease, Lien, adverse claim, levy, charge or other encumbrance of any kind, or any conditional sale Contract, title retention Contract or Contract committing to grant any of the foregoing. MATERIAL ADVERSE EFFECT means a material adverse effect on the business, operations, properties, condition (financial or otherwise), results of operations, assets (taken as a whole), prospects or liabilities of SVI or the Business. ORDER means any writ, judgment, decree, injunction or similar order of any Governmental Authority (in each such case whether preliminary or final). PERMITS means all licenses, permits, certificates of authority, authorizations, approvals, registrations, franchises and similar consents granted or issued by any Governmental Authority. PERSON means any individual, corporation, joint stock corporation, limited liability company or partnership, general partnership, limited partnership, proprietorship, joint venture, other business organization, trust, union, association or Governmental Authority. RELEASE has the meaning ascribed to in Section 1.4(c). REPRESENTATIVES has the meaning ascribed to it in Section 7.1(b) SECURITIES ACT has the meaning ascribed to it in Section 2.2(b). SERIES A PREFERRED STOCK has the meaning ascribed to it in Section 1.1. SOFTLINE has the meaning ascribed to it in the preamble. SOFTLINE CLAIMS has the meaning ascribed to it in Section 8.1. SOFTLINE INDEBTEDNESS has the meaning ascribed to it in the recitals. SOFTLINE SCHEDULE OF EXCEPTIONS means the schedules delivered to SVI by or on behalf of Softline, containing all lists, descriptions, exceptions and other information and materials as are required to be included therein by Softline pursuant to Section 3 of this Agreement. SVI has the meaning ascribed to it in the preamble. SVI CLAIMS has the meaning ascribed to it in Section 8.2. SVI SCHEDULE OF EXCEPTIONS means the schedules delivered to Softline by or on behalf of SVI, containing all lists, descriptions, exceptions and other information and materials as are required to be included therein by SVI pursuant to Section 2 of this Agreement. TAXES means any taxes, assessments, duties, fees, levies, imposts, deductions, withholdings or other governmental charges of any nature whatsoever imposed by any Governmental Authority or taxing authority of any country or political subdivision of any country and any liabilities with respect thereto, including any penalties, additions to tax, fines or interest thereon. TRANSACTION DOCUMENTS means the Investor Rights Agreement, the Assignments and the Release. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date first set forth above. SVI SOLUTIONS, INC. By:/s/ Barry Schechter ------------------- Name: Barry Schechter Title: Chief Executive Officer 5607 Palmer Way Carlsbad, CA 92008 Tel: (760) 496-0805 Fax: (760) 496-0285 with a copy to: Solomon Ward Seidenwurm & Smith 401 B Street, Suite 1200 San Diego, CA 92101 Attn: Norman Smith, Esq. Tel: (619) 231-0303 Fax: (619) 231-4755 SOFTLINE LIMITED By: /s/ Rob Wilkie ------------- Name: Rob Wilkie Title: CFO 151 Katherine Street Atholl Ext 12 Sandton, 2031 Attention: Neil Dove Tel: (2711) 2928200 Fax: (2711) 2928201 EX-99 7 pal127932.txt EXHIBIT 5 : INVESTOR RIGHTS AGREEMENT EXHIBIT 5 INVESTOR RIGHTS AGREEMENT ------------------------- This Investor Rights Agreement is made as of January 1, 2002 (the "Effective Date") between SVI Solutions, Inc., a Delaware corporation (the "Company"), and Softline Limited, a South African company ("Holder"), with reference to the following facts: WHEREAS, The Company and Holder are parties to the Purchase and Exchange Agreement of even date hereof (the "Purchase Agreement") pursuant to which Holder is acquiring shares of convertible Series A Preferred Stock (as defined in the Purchase Agreement); and WHEREAS, the Purchase Agreement contemplates that this Agreement be executed to govern the rights of the parties with respect to the shares of Common Stock issuable upon the conversion of the Series A Preferred Stock. NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and for other consideration, the parties agree as follows: 1. REGISTRATION RIGHTS. The Company covenants and agrees as follows: 1.1. DEFINITIONS. For purposes of this Section 1: (a) "FORM S-3" means such form under the 1933 Act as in effect on the date hereof or any registration form under the 1933 Act subsequently adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC. (b) "HOLDER" means Softline Limited, a South African corporation. (c) "1933 ACT" means the Securities Act of 1933, as amended. (d) "1934 ACT" means the Securities Exchange Act of 1934, as amended. (e) "REGISTER", "REGISTERED", and "REGISTRATION" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the 1933 Act, and the declaration or ordering of effectiveness of such registration statement or document. (f) "REGISTRABLE SECURITIES" means the shares of the Company's Common Stock issued or issuable upon the conversion of the Series A Preferred Stock held by Holder. (g) The number of shares of "Registrable Securities" outstanding shall be determined by the number of shares of Common Stock outstanding which have been issued, and the number of shares of Common Stock issuable, upon the conversion of the Series A Preferred Stock, (h) "SEC" means the Securities and Exchange Commission. (i) Any other capitalized term not defined herein shall have the meaning set forth in the Purchase Agreement. 1.2. COMPANY REGISTRATION. (a) If (but without any obligation to do so) the Company proposes to register any of its stock (including a registration effected by the Company for stockholders other than Holder) or other securities under the 1933 Act in connection with the public offering of such securities solely for cash (other than a registration relating solely to the sale of securities to participants in a Company benefit plan, a registration relating solely to a Commission Rule 145 transaction, a registration on any form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities such as a Form S-4 registration, or a registration in which only Common Stock being registered is Common Stock issuable upon the conversion of debt securities which are also being registered), the Company shall, at such time, promptly give each Holder notice of such registration. On the request of Holder given within thirty (30) days after such notice by the Company, the Company shall, subject to the provisions of Section 1.2(c) below, cause to be registered under the 1933 Act all of the Registrable Securities that Holder has requested to be registered. (b) The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.2 prior to the effectiveness of such registration, whether or not Holder shall have elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 1.6 hereof. (c) In connection with any offering involving an underwriting of shares of the Company's capital stock, the Company shall not be required under this Section 1.2 to include Holder's securities in such underwriting, unless Holder accepts the terms of the underwriting as agreed between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters) and enters into an underwriting agreement in customary form with the underwriter or underwriters selected by the Company, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by Holder to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such Registrable Securities that the underwriters determine in their sole discretion will not jeopardize the success of the offering. 1.3. FORM S-3 REGISTRATION. If the Company receives from Holder a request that the Company effect a registration on Form S-3 and any related blue sky or similar qualification or compliance with respect to at least 25% (or a lesser percentage if the requirements of Section 1.3(b)(i) are met) of the Registrable Securities owned by Holder, the Company shall: (a) cause, as soon as practicable, such Registrable Securities to be registered for offering and sale on Form S-3 and cause such Registrable Securities to be qualified in such jurisdictions as Holder may reasonable request; provided that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 1.3: (i) if Holder proposes to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $5,000,000; (ii) if the Company has, within the twelve month period preceding the date of such request, already effected two registrations on Form S-3 for Holder pursuant to this Section 1.3; (iii) if the Company shall furnish to Holder a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than ninety (90) days after receipt of the request of Holder under this Section 1.3; provided that the Company shall not utilize this right more than once in any twelve month period; provided, further, that the Company shall not register shares for its own account during such ninety (90) day period, but such prohibition shall not apply to the registration of Company shares in connection with (x) a merger or (y) registration of shares relating to a stock option, stock purchase or similar plan; or (iv) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance. (b) Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request of Holder. 1.4. OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use best efforts to cause such registration statement to become effective, and keep such registration statement effective for a period of up to 120 days; provided that (i) such 120-day period shall be extended for a period of time equal to the period Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Company; and (ii) in the case of any registration of Registrable Securities on Form S-3 (or any other Form, to the extent permitted by law) that are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended, if necessary, to keep the Registration Statement effective until all such Registrable Securities are sold, provided that Rule 415, or any successor rule under the Act, permits an offering on a continued or delayed basis, and provided further that applicable rules under the Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (I) includes any prospectus required under Section 10(a)(3) of the Act or (II) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in the preceding sections (I) and (II) to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the registration statement; (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the 1933 Act with respect to the disposition of all securities covered by such registration statement during the period of time such registration statement remains effective; (c) furnish to Holder such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the 1933 Act, and such other documents as they may reasonably request to facilitate the disposition of Registrable Securities owned by it; (d) use best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by Holder; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; (e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering; (f) during the period of time such registration statement remains effective, notify Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the 1933 Act or the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (g) cause all such Registrable Securities registered hereunder to be listed on each securities exchange on which securities of the same class issued by the Company are then listed; (h) provide a transfer agent and registrar for all Registrable Securities registered hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration; and (i) furnish, at the request of Holder, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 1, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to Holder, and (ii) a "comfort" letter signed by the independent public accountants who have certified the Company's financial statements included in the registration statement, covering substantially the same matters with respect to the registration statement (and the prospectus included therein) and with respect to events subsequent to the date of the financial statements, as are customarily covered in accountants' letters delivered to the underwriters in underwritten public offerings of securities addressed to the underwriters, if any, and to Holder. 1.5. INFORMATION FROM HOLDER. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of Holder that Holder shall furnish to the Company such information regarding Holder, the Registrable Securities held by Holder, and the intended method of disposition of such securities as shall be required to effect the registration of such Registrable Securities. 1.6. EXPENSES OF REGISTRATION. All expenses (other than underwriting discounts and commissions attributable to the Registrable Securities) incurred in connection with registrations, filings or qualifications pursuant to this Section 1, including (without limitation) all registration, filing and qualification fees, printing fees and expenses, accounting fees and expenses, fees and disbursements of counsel for the Company, shall be borne by the Company. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 1.3 if the registration request is subsequently withdrawn at the request of Holder; provided that, if at the time of such withdrawal, Holder shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to Holder at the time of its request and shall have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change, then Holder shall not be required to pay any of such expenses and shall retain its rights pursuant to Section 1.3. 1.7. INDEMNIFICATION. If any Registrable Securities are included in a registration statement under this Section 1: (a) To the extent permitted by law, the Company will indemnify and hold harmless Holder, the partners or officers, directors and stockholders of Holder, legal counsel and accountants for Holder, any underwriter (as defined in the 1933 Act) for Holder and each person, if any, who controls Holder or underwriter within the meaning of the 1933 Act or the 1934 Act, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the 1933 Act, the 1934 Act or any other federal or state securities law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any state securities law; and the Company will reimburse Holder, underwriter or controlling person for any legal or other expenses incurred, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided that the indemnity agreement in this Section 1.7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based on a Violation that occurs in reliance on and in conformity with written information furnished expressly for use in connection with such registration by Holder, underwriter or controlling person. (b) To the extent permitted by law, Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who shall have signed the registration statement, each person, if any, who controls the Company within the meaning of the 1933 Act, legal counsel and accountants for the Company, any underwriter, any other person selling securities in such registration statement and any controlling person of any such underwriter or other seller, against any losses, claims, damages or liabilities to which any of the foregoing persons may become subject, under the 1933 Act, the 1934 Act or any other federal or state securities law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance on and in conformity with written information furnished by Holder expressly for use in connection with such registration; and Holder will reimburse any person intended to be indemnified pursuant to this Section 1.7(b), for any legal or other expenses reasonably incurred, as incurred, by such person in connection with investigating or defending any such loss, claim, damage, liability or action; provided that the indemnity agreement in this Section 1.7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of Holder (which consent shall not be unreasonably withheld or delayed). (c) Promptly after receipt by an indemnified party under this Section 1.7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.7, deliver to the indemnifying party notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent that the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to notify the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.7, but the omission so to notify the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.7. (d) If the indemnification provided in this Section 1.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that shall have resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. (f) The obligations of the Company and Holder under this Section 1.7 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise. 1.8. REPORTS UNDER 1934 ACT. With a view to making available to Holder the benefits of Rule 144 promulgated under the 1933 Act and any other rule or regulation of the SEC that may at any time permit Holder to sell securities of the Company to the public without registration or pursuant to a registration statement (including, without limitation, Form S-3), the Company agrees to: (a) make and keep public information available, as those terms are used in SEC Rule 144, at all times; (b) take such action as is necessary to enable Holder to utilize Form S-3 for the sale of its Registrable Securities; (c) file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act; and (d) furnish to Holder, so long as Holder owns any Registrable Securities, forthwith on request, (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the 1933 Act and the 1934 Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form. 1.9. NO ASSIGNMENT OF REGISTRATION RIGHTS. The rights of Holder to cause the Company to register Registrable Securities pursuant to this Section 1 may not be assigned to any person or entity. 1.10. TERMINATION OF REGISTRATION RIGHTS. Holder shall not be entitled to exercise any right provided in this Section 1 with respect to a Registrable Security (i) after the date on which that Registrable Security has been sold under a registration statement filed in accordance with this Agreement or (ii) if all Registrable Securities held by Holder (and any affiliate of Holder with whom Holder must aggregate its sales under Rule 144) can be sold in any three-month period without volume limitation and without registration in compliance with Rule 144 under the 1933 Act. 2. COVENANTS. 2.1. CONFIDENTIAL INFORMATION. Holder covenants with the Company that it confirms, acknowledges, and covenants that any information which is furnished to it by the Company: (a) with respect to the Company pursuant to this Agreement or with respect to the transactions described herein or in the Purchase Agreement and (b) the terms of this Agreement and the Purchase Agreement, is and shall be confidential and for Holder's use only, and Holder will not use such information in violation of the securities laws, or any other laws, or reproduce, disclose or disseminate such information to any other person (other than Holder's employees, directors or agents having a need to know the contents of such information and Holder's attorneys), except in connection with the exercise of rights under this Agreement, unless: (i) the Company has made such information available to the public generally, (ii) such information has otherwise been made generally or publicly available, except by Holder in breach of its confidentiality obligations to the Company, or (iii) Holder is required to disclose such information by a governmental body or pursuant to legal process, in which case Holder shall provide at least five (5) days' prior notice of such proposed disclosure or such lesser notice as Holder shall have received. 2.2. PRIVATE SALE OF SECURITIES. Subject to any transfer restrictions set forth in this Agreement, in the Purchase Agreement or under federal and state securities laws, Holder may sell or transfer any or all of its shares any Registrable Securities to any third party in a private sale if: (a) in the opinion of Company's counsel, such sale is exempt from registration or qualification under the federal and securities laws, or (b) the securities proposed to be sold are registered and/or qualified with the SEC and or under Blue Sky laws of the appropriate jurisdictions; provided, however, that in each instance a proposed sale shall be subject to a right of first refusal granted by Holder to the Company in accordance with Section 2.3 below. 2.3. RIGHT OF FIRST REFUSAL. Holder hereby grants to the Company the right of first refusal to purchase the Registrable Securities which Holder may, from time to time, propose to sell and issue, subject to the following provisions: (a) In the event Holder proposes to undertake a sale of Registrable Securities, it shall give the Company written notice of its intention, their price and the general terms upon which Holder proposes to issue the same. The Company shall have twenty (20) days after any such notice is effective to agree to purchase all of the Registrable Securities proposed to be sold for the price and upon the terms specified in the notice by giving written notice to Holder. (b) In the event the Company fail to exercise fully the right of first refusal within said twenty (20)-day period, Holder shall have thirty (30) days thereafter to sell or enter into an agreement (pursuant to which the sale of the Registrable Securities covered thereby shall be closed, if at all, within twenty (20) days from the date of said agreement) to sell the Registrable Securities respecting which the Company's right of first refusal option set forth in this Section 2.3 was not exercised, at a price and upon terms no more favorable to the purchaser(s) thereof than specified in Holder's notice to Company pursuant to Section 2.3(a). In the event the Holder has not sold within said 30-day period or entered into an agreement to sell the Registrable Securities within said 30-day period (or sold and issued Registrable Securities in accordance with the foregoing within twenty (20) days from the date of said agreement), Holder may not thereafter issue or sell any Registrable Securities, without first again offering such securities to the Company in the manner provided in Section 2.3(a) above. 2.4. RESERVE FOR CONVERSION SHARES. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock such number of shares of Common Stock as shall be sufficient to enable it to issue the shares of Common Stock issuable upon the conversion of the Series A Preferred Stock. 3. MISCELLANEOUS. 3.1. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, this Agreement shall inure to the benefit of and bind the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer on any party other than the parties hereto any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 3.2. GOVERNING LAW. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware, 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 Wilmington, Delaware. 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. Each party authorizes and accepts service of process sufficient for personal jurisdiction in any action against it as contemplated by this paragraph by registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of notices set forth in this Agreement. 3.3. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 3.4. HEADINGS. The headings of sections and subsections in this Agreement are used for convenience of reference only and are not to be considered in construing or interpreting this Agreement. 3.5. NOTICES. Any request, consent, notice or other communication required or permitted under this Agreement 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 applicable signature page hereof, or at such other address as such party may designate by ten days' advance notice to the other parties. 3.6. EXPENSES. If any action at law or in equity is necessary to enforce or interpret any of the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 3.7. ENTIRE AGREEMENT: AMENDMENTS AND WAIVERS. This Agreement constitutes the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the consent of the Company and Holder. 3.8. SEVERABILITY. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. [Signatures appear on the following page] IN WITNESS WHEREOF, this Investors' Rights Agreement has been duly executed by or on behalf of the parties hereto as of the date first above written. "COMPANY" SVI SOLUTIONS, INC. By:/s/ Barry Schechter ------------------------------------ Barry Schechter, President and Chief Executive Officer 5607 Palmer Way Carlsbad, CA 92008 Ph: (760) 496-0280 Fax: (760) 496-0281 with a copy to: Solomon Ward Seidenwurm & Smith 401 B Street, Suite 1200 San Diego, CA 92101 Attn: Norman Smith, Esq. Tel: (619) 231-0303 Fax: (619) 231-4755 "HOLDER" SOFTLINE LIMITED, a South African company By: /s/ Rob Wilkie -------------------- Name: Rob Wilkie Title: CFO EX-99 8 pal128097.txt EXHIBIT 6: OPTION AGREEMENT Exhibit 6 OPTION AGREEMENT This Option Agreement (the "Agreement") is effective April 25, 2003 (the "Grant Date") between Softline Ltd., a South African company (the "Grantor"), and Steven Beck ("Beck"), as trustee of a certain management group of Island Pacific, Inc., a Delaware corporation formerly known as SVI Solutions, Inc. ("IPI"), identified on the attached Exhibit A (the "Optionees"). Exhibit A may be amended from time to time by IPI to reflect changes in the management group. 1. Recitals 1.1 Grantor is the holder of shares of common stock ("Common Stock") of IPI and shares of Series A Preferred Stock of IPI (the "Preferred Stock"), which are convertible into shares of Common Stock in accordance with the Amended and Restated Certificate of Incorporation filed by IPI with the Delaware Secretary of State on July 11, 2003 (the "Certificate of Incorporation"); 1.2 Grantor and IPI desire to provide management incentives to the Optionees for the benefit of Grantor and IPI; and 1.3 As an inducement to the Optionees, Grantor shall authorize Beck to grant the Optionees from time to time the right to purchase a certain number of shares of the Common Stock and Preferred Stock held by Grantor (collectively, "Option Shares") on the terms and conditions set forth in this Agreement. 2. Option 2.1 Grant. The Grantor hereby grants to Beck, as trustee of the Optionees, and or to the Optionees, in such numbers as the Board of Directors of IPI may determine in writing from time to time, during the Term (as defined below) the option (this "Option") to purchase from the Grantor the following Option Shares: (a) 8,000,000 shares of Common Stock held by the Grantor; and (b) such number of shares of Preferred Stock that are convertible into 17,625,000 shares of Common Stock as of the Grant Date. This Option does not apply to other any capital stock or other securities of IPI beneficially owned by Grantor. Notwithstanding anything herein to the contrary, none of the Option Shares shall be shares that have been held for a period of less than 12 months by Softline, it being the intention of the parties that the shares that Softline continues to hold (assuming all Options exercised) are the initial shares issued to Softline more than 12 months prior to the Grant Date. 2.2 Option Price. The price (the "Option Price") for each Option Share shall be Eighty-Cents ($.80) per share of Common Stock represented by such Option Share. 2.3 Changes in Equity Structure; Recapitalization. If any change is made in the Option Shares such as through a merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or otherwise, this Option will be appropriately adjusted in the number of shares and price per Option Share. 2.4 No Stockholder Rights. No Optionee shall have rights as a stockholder with respect to any Option Shares he or she is entitled to purchase under this Option until the date of the issuance of a certificate for the Option Shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such certificate is issued, except as provided in this Agreement. This Option and all Option Shares acquired hereunder are subject to IPI's Certificate of Incorporation, as amended, IPI's Bylaws, and the Investor Rights Agreement dated January 1, 2002 between IPI and Softline (the "Investor Rights Agreement"), and any other agreement to which Softline and/or IPI are bound, copies of which Beck acknowledges having received and shall make available to the Optionees. 2.5 Joinder. Upon the grant or exercise of an Option to or by an Optionee, each Optionee shall execute such instruments reasonably satisfactory to Softline and Beck agreeing to be bound to the terms of this Agreement and confirming the accuracy of the representations and warranties made by Optionee herein. 3. Exercise 3.1 Option Term. During the term (the "Term") commencing on the Grant Date and ending on either March 24, 2004 or the date on which an Optionee's Continuous Status (as defined below) is terminated, whichever occurs earliest (the "Expiration Date"), Optionee shall be entitled to exercise all or any part of the Option granted to him or her at any time. For purposes of this paragraph, "Continuous Status" means the full-time employment of Optionee as an officer or director of IPI not interrupted or terminated for any reason whatsoever, whether voluntarily, by the Optionee or IPI, or involuntarily. 3.2 Expiration of Exercise Rights. In no event shall this Option be exercisable after the Expiration Date. 3.3 Exercise Procedure. The Option shall be exercised by the giving of written notice to the Grantor in the form attached as Exhibit B, specifying the number and type of Option Shares to be purchased, accompanied by the payment of the aggregate Option Price for the Option Shares being purchased, such payment to be made in any combination of: (a) United States cash currency; (b) a cashier's or certified check to the order of the Grantor; or (c) a personal check acceptable to the Grantor. 3.4 Legends. Certificates representing Option Shares acquired upon exercise of this Option may contain such legends and transfer restrictions as IPI and/or Softline may deem necessary or desirable to assure the satisfaction of any liability that either or both may or will have incurred for any withholding of federal, state or local income, employment or other taxes, to facilitate compliance by either or both with any federal or state laws or regulations, including, without limitation, legends restricting transfer of the Option Shares until there has been compliance with federal and state securities laws or such other restrictions as may be imposed on the Stock under the terms of this Agreement, IPI's Certificate of Incorporation, as amended, the Certificate of Incorporation, IPI's Bylaws, the Investor Rights Agreement, or any other agreement to which Softline and/or IPI are bound. 4. Representations and Warranties. Optionee represents and warrants to Grantor the following: (a) This Option and the Option Shares are/will be acquired for investment purposes and not with a view to resale or distribution; (b) Optionee qualifies as an "Accredited Investor," as such term is defined in Rule 501(a) of Regulation D under the Act; (c) Optionee has such knowledge and experience in financial, tax, and business matters in order to enable Optionee to use the information made available to Optionee to fully evaluate the risks associated with an investment in the Option Shares, to evaluate the merits and risks of Optionee's prospective investment in the Option Shares, to make an informed investment decision, and to protect Optionee's interests in connection with an investment in the Option Shares; (d) Optionee is a sophisticated investor and has access to information regarding an investment in the Option Shares as would be available if the Option Shares were registered in a registration statement; and (e) Optionee has consulted with a tax advisor with respect to the Option and/or Option Shares, including, without limitation, the applicability of Section 83 of the Internal Revenue Code and any appropriate filings and/or notices thereunder. Furthermore, Optionee understands some of the Option Shares have not been registered under the Securities Act of 1933 (the "Act") in reliance upon an exemption from registration for non-public, offerings and certain related factors, and such Option Shares may not be sold and must be held indefinitely unless subsequently registered under the Act (and qualified under any applicable state securities laws) or IPI receives the written opinion of counsel acceptable to IPI that an exemption from registration (and qualification) is available. 5. Notices. 5.1 In Writing. All notices, demands, requests, or other communications permitted or required under this Agreement or applicable law shall be in writing. 5.2 Delivery. All such communications may be served personally or may be sent by registered or certified mail, return receipt requested, postage prepaid and addressed to either Optionee or the Grantor at the addresses appearing beneath the respective party's signature to this Agreement, or at such other address as either party shall have communicated to the other pursuant to this Section. All such communications shall be deemed effectively delivered upon personal service or three (3) days after deposit in the United States Mail. 6. Miscellaneous. 6.1 Successors and Assigns. This Option may not be transferred by Optionee to any other person or entity and may be exercised only during Optionee's lifetime and only by Optionee; provided, however, that this Option may be transferred to a trust for the benefit of the Optionee or members of his immediate family. Subject to the foregoing limitations, this Agreement shall inure to the benefit of the Grantor and Optionee and their respective successors or assigns. 6.2 Severability. If any provision or provisions of this Agreement are adjudged to be for any reason unenforceable, illegal or void, the remainder of its provisions shall remain in full force and effect. 6.3 Integration. This Agreement constitutes the entire understanding of the parties concerning the Option granted hereby. Except as otherwise provided, any changes, modifications, or variations to this Agreement or the Option are invalid unless stated in writing and executed by the Grantor and Optionee. 6.4 Governing Law. This Agreement and the Option granted hereby shall be governed by the laws of the State of California. Any action to enforce or interpret this Agreement shall be brought in the federal or state courts situated in San Diego County, State of California, 6.5 Attorneys Fees. If either party brings an action or seeks to enforce or interpret any of the terms or provisions of this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and costs in addition to any other remedy it may be awarded. 6.6 Counterparts. This Agreement may be executed in counterparts which shall constitute the whole instrument. 6.7 Further Assurances. Each party to this Agreement shall execute and deliver all instruments and documents and take all actions as may be reasonably required or appropriate to carry out the purposes of this Agreement. 6.8 Legal Representation. Each of the parties to this Agreement acknowledges that in connection with the preparation of this Agreement Solomon Ward Seidenwurm & Smith, LLP: (a) represented IPI exclusively in this matter, and SWSS represented neither Softline nor Beck; (b) represents Softline in matters unrelated to IPI, but that Softline was represented in this matter by separate counsel and has waived any conflicts in connection herewith; (c) after execution of this Agreement, IPI may continue to retain SWSS as its legal counsel. 6.9 Indemnification. Beck shall indemnify Softline against all Claims (as defined below) and all costs, expenses and attorney's fees incurred in the defense of any of such Claims or any action or proceeding brought on any of such Claims, to the extent not covered by any applicable insurance or to the extent of any liability in excess of the policy limits of such insurance. For purposes of this Paragraph, "Claims" shall mean all liabilities, damages, losses, costs, expenses, attorney's fees and claims (except to the extent caused by the other party's negligent act, willful misconduct or breach under this Agreement) incurred by Softline arising under Section 16 of the Securities Act of 1934, as amended, and the rules and regulations promulgated thereunder. If any action or proceeding is brought against Softline by reason of any such Claims, Beck upon notice from Softline shall defend such action or proceeding at the Softline's sole cost by legal counsel reasonably satisfactory to Softline. Nothing in this Paragraph creates any rights to which any insurance company may be subrogated and no person who is not a party to this Agreement may enforce, directly or indirectly, this Paragraph. SOFTLINE LTD., a South African company /s/ R. Wilkie By:___________________________________ R. Wilkie Name:________________________________ C.F.O. Title:__________________________________ 151 Katherine Street Address:_______________________________ Sandton _______________________________ /s/ Steve Beck Steve Beck 60 Bertolet School Road Spring City, PA 19475 EX-99 9 pal128549.txt EXHIBIT 7: CONSENT Exhibit 7 SAGE The Sage Group plc Sage House Benton Park Road Newcastle upon Tyne NE7 7LZ Telephone 0191 255 3000 Facsimile 0191 255 0306 Web Site www.sage.com To: Omicron Master Trust Attention: Mr B. Bernstein 153 East 53rd Street 48th Floor New York, NY 10022 To: Midsummer Investments Limited Attention: Mr M. Amsalem 485 Madison Avenue 23rd Floor 51/52 New York, NY 10022 20 November 2003 Dear Sirs CONSENT BY OMICRON MASTER TRUST AND MIDSUMMER INVESTMENTS LIMITED TO THE TRANSFER OF SHARES HELD IN ISLAND PACIFIC, INC. 1. We refer to your letters dated 27 and 28 October 2003 and confirm the following: 1.1 You have consented to the transfer of all shares of common stock and series A preferred stock held by Softline Limited in Island Pacific, Inc. to Sage Software (SA) (Proprietary) Limited, The Sage Group plc or any of its subsidiaries ("Sage"). 1.2 The consent referred to in paragraph 1.1 above is subject to Sage agreeing to and assuming the restrictions and obligations set out in the letter dated 27 March 2003 from Softline Limited to you. 2. We hereby confirm that The Sage Group plc, agrees to and assumes the restrictions and obligations set out in the letter dated 27 March 2003 from Softline Limited to you, which is attached to this letter as Annexure "A". 3. Please acknowledge receipt of this letter and confirm whether the form and substance of this letter is acceptable. Yours faithfully /s/ Paul Walker PA Walker THE SAGE GROUP PLC Annexure A Softline 27 March 2003 Omicron Master Trust Midsummer Investments, Ltd. To Whom It May Concern: Softline Limited agrees, during the option period of that certain option to Steven Beck and Associates, that it will not sell those common shares or Series A Convertible Stock in terms of the option agreement held by it ("option shares"), except under the option agreement to Steven Beck and Associates. Provided that you still hold any unconverted debentures with SVI Solutions Inc. at the time of the expiration of the above-referenced option and Softline Limited still holds the option shares of common stock of SVI Solutions Inc. (or securities convertible into such shares) after such period, then Softline Limited agrees to sell only that number of shares it would otherwise be permitted to sell pursuant to Rule 144(e) under the Securities Act of 1933, as amended, notwithstanding that any shares may be registered for resale at such time. Softline Limited acknowledges and agrees that, as a current shareholder and stakeholder of SVI Solutions Inc., it will derive an indirect benefit from the transaction to be consummated between SVI Solutions Inc. and you and that you will rely on this agreement in making your investment decision. Sincerely /s/ R. Wilkie Rob Wilkie Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----