Document:

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EXHIBIT 10.7

                              ISLAND PACIFIC, INC.
                            STOCK OPTION GRANT NOTICE

Island Pacific, Inc. (the "Company"), pursuant to the Employment Agreement dated
June 1, 2004 (the "Employment Agreement"), hereby grants to Optionholder an
option to purchase the number of shares of the Company's Common Stock set forth
below (the "Option"). The Option is subject to all of the terms and conditions
as set forth herein and in the Stock Option Agreement and the Notice of
Exercise, all of which are attached hereto and incorporated herein in their
entirety. Capitalized terms not defined herein shall have the same meaning as in
the Stock Option Agreement.

Optionholder:                                     Jeffrey Boone
Date of Grant:                                    June 1, 2004
Vesting Commencement Date:                        June 1, 2004
Number of Shares Subject to Option:               1,572,354
Exercise Price (Per Share):                       $0.76
Total Exercise Price:                             $1,194,989
Expiration Date:                                  June 1, 2014

TYPE OF GRANT:      [ ] Incentive Stock Option(1)  [X] Nonstatutory Stock Option
EXERCISE SCHEDULE:  [X] Same as Vesting Schedule   [ ] Early Exercise Permitted

VESTING SCHEDULE: This option (and any shares issued upon the early exercise of
this Option) shall vest in accordance with the following schedule:

[ ] ALTERNATIVE 1: (FOUR YEAR ANNUAL VESTING-STANDARD) This option shall vest
annually over four years at the rate of twenty-five (25%) percent per year
commencing on the Vesting Commencement Date.

[ ] ALTERNATIVE 2: (FIVE YEAR ANNUAL VESTING-MINIMUM) This option shall vest
annually over five years at the rate of twenty (20%) percent per year commencing
on the Vesting Commencement Date.

[X] ALTERNATIVE 3: (OTHER) So long as the Optionholder's Continuous Status (as
defined below) continues, this Option shall vest as follows: 786,179 shares
shall vest on the first anniversary of the date of the grant ("Grant Date"). The
remaining 786,177 shares shall vest in twelve (12) equal monthly installments of
65,514 commencing on the first anniversary of the Grant Date and terminating on
the second anniversary of the Grant Date. This Option shall cease vesting on the
termination of the Optionholder's Continuous Status.

PAYMENT:    By one or a combination of the following items (described in the
            Stock Option Agreement):

                      By cash or check
                      Pursuant to a Regulation T Program if the Shares are
                        publicly traded
                      By delivery of already-owned shares if the Shares are
                        publicly traded

ADDITIONAL TERMS/ACKNOWLEDGMENTS: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Grant Notice and the Stock
Option Agreement. Optionholder further acknowledges that as of the Grant Date,
this Grant Notice and the Stock Option Agreement set forth the entire
understanding between Optionholder and the Company regarding the acquisition of
stock in the Company and supersede all prior oral and written agreements on that
subject.

------------------
(1) If this is an incentive stock option, it (plus your other outstanding
incentive stock options) cannot be first EXERCISABLE for more than $100,000 in
any calendar year. Any excess over $100,000 is a nonstatutory stock option.

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ISLAND PACIFIC, INC.                            OPTIONHOLDER:

By: ___________________________________         ________________________________
                Signature                       Name:      Jeffrey Boone

Name:__________________________________         Date: __________________________

Title:_________________________________

Date:__________________________________

ATTACHMENTS:      Stock Option Agreement
                  Notice of Exercise

                                       2
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                                  ATTACHMENT I

                             STOCK OPTION AGREEMENT

         Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, Island Pacific, Inc. (the "Company") has granted you the
Option to purchase the number of shares of the Company's Common Stock indicated
in your Grant Notice at the exercise price indicated in your Grant Notice.
Capitalized terms used but not defined herein shall have the meaning set forth
on the Grant Notice.

         The details of your option are as follows:

         1. VESTING. Subject to the limitations contained herein, your Option
will vest as provided in your Grant Notice.

         2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of the
Company's Common Stock subject to your Option and your exercise price per share
referenced in your Grant Notice may be adjusted from time to time, as provided
in Section 8 below.

         3. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your Option. You may elect to make payment of the
exercise price in cash or by check or in any other manner PERMITTED BY YOUR
GRANT NOTICE, which may include one or more of the following:

                  (a) In the Company's sole discretion at the time your
Option is exercised and provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in THE WALL STREET JOURNAL,
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board that, prior to the issuance of the Company's Common Stock, results
in either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company from
the sales proceeds;

                  (b) Provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in THE WALL STREET JOURNAL,
by delivery of already-owned shares of the Company's Common Stock either that
you have held for the period required to avoid a charge to the Company's
reported earnings (generally six months) or any restrictions pursuant to Rule
144 of the Securities Act of 1933, as amended (the "Securities Act"), or that
you did not acquire, directly or indirectly from the Company, that are owned
free and clear of any liens, claims, encumbrances or security interests, and
that are valued at fair market value on the date of exercise. "Delivery" for
these purposes, in the sole discretion of the Company at the time you exercise
your Option, shall include delivery to the Company of your attestation of
ownership of such shares of the Company's Common Stock in a form approved by the
Company. Notwithstanding the foregoing, you may not exercise your Option by
tender to the Company of the Company's Common Stock to the extent such tender
would violate the provisions of any law, regulation or agreement restricting the
redemption of the Company's stock.

         4. WHOLE SHARES. You may exercise your Option only for whole shares of
the Company's Common Stock.

         5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your Option unless the shares of the
Company's Common Stock issuable upon such exercise are then registered under the
Securities Act or, if such shares of the Company's Common Stock are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act. The exercise of
your Option must also comply with other applicable laws and regulations
governing your Option, and you may not exercise your Option if the Company
determines that such exercise would not be in material compliance with such laws
and regulations.

         6. TERM. The term of your Option commences on the Date of Grant and
your Option shall be exercisable for vested shares until the EARLIEST of the
following:

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                  (a) twelve (12) months after the termination of your
Continuous Status (as defined below), if your Continuous Status is terminated
without Cause (as defined below).

                  (b) immediately, if your Continuous Status is terminated for
Cause.

                  (c) twelve (12) months after the termination of your
Continuous Status due to your total and permanent disability;

                  (d) twelve (12) months after your death if you die either
during your Continuous Status or within three (3) months after your Continuous
Status terminates; or

                  (e) the Expiration Date indicated in your Grant Notice;

         For purposes of this Agreement, "Cause" shall mean the existence or
occurrence of any of the following: (a) your conviction for or pleading of nolo
contendre to any felony involving the Company or moral turpitude; (b) your
misappropriation of Company assets; (c) your willful violation of a Company
policy or a directive of the Board previously delivered to you in writing; (d)
your breach of confidentiality, proprietary information or business opportunity
obligations set forth in Sections 11, 12, or 13 of your Employment Agreement
with the Company dated June 1. 2004 ("Employment Agreement"); or (e) your
willful neglect or material breach of any duty or obligation under this
Agreement or your Employment Agreement or your failure to perform under this
Agreement or your Employment Agreement.

         For purposes of this Agreement, "Continuous Status" shall mean your
service with the Company as a director, officer, consultant or an employee is
not interrupted or terminated. Your Continuous Service shall not be deemed to
have terminated merely because of a change in the capacity in which you render
service to the Company or an affiliate of the Company as an employee,
consultant, officer or Director or a change in the entity for which you render
such service, provided that there is no interruption or termination of your
Continuous Service. The Board in its sole discretion, may determine whether
Continuous Service shall be considered interrupted in the case of any leave of
absence approved by that party, including sick leave, military leave or any
other personal leave.

         7. EXERCISE.

                  (a) You may exercise the vested portion of your Option
during its term by delivering a Notice of Exercise (in a form designated by the
Company) together with the exercise price to the Secretary of the Company, or to
such other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

                  (b) By exercising your Option you agree that, as a
condition to any exercise of your Option, the Company may require you to enter
into an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your Option, (2) the lapse of any substantial risk of forfeiture to which the
shares of the Company's Common Stock are subject at the time of exercise, or (3)
the disposition of shares of the Company's Common Stock acquired upon such
exercise.

         8. ADJUSTMENTS UPON CHANGES IN STOCK.

                  (a) CAPITALIZATION ADJUSTMENTS. If any change is made in the
Company's Common Stock subject to your Option, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the number of shares issuable upon
exercise of your Option and the exercise price per share of the Company's Common
Stock subject to your Option will be proportionately adjusted. The Company's
Board shall make such adjustments, and its determination shall be final, binding
and conclusive. (The conversion of any convertible securities of the Company
shall not be treated as a transaction "without receipt of consideration" by the
Company.)

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                  (b) CHANGE IN CONTROL. In the event of a Change of Control (as
defined below), the vesting of your Option (and, if applicable, the time during
which such Option may be exercised) shall thereupon be accelerated in full and
shall terminate if not exercised (if applicable) prior to such event. For the
purposes of this Agreement a Change in Control shall mean: (i) any "person" (as
defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) or group of persons acting in concert shall become
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 50% or more of
the issued and outstanding voting securities; (ii) the consummation of any
consolidation or merger of either the Company through which the holders of the
Company's (as applicable) issued and outstanding voting shares immediately prior
to the merger have less than 50% of the issued and outstanding voting shares, on
a converted basis, of the surviving or continuing corporation after the merger;
or (iii) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of
the Company.

         9. TRANSFERABILITY. Your Option is not transferable without the prior
written consent of the Company, except by will or by the laws of descent and
distribution.

         10. AVAILABILITY OF SHARES. Commencing on the first anniversary of the
Grant Date of your Option and at all times thereafter, the Company shall keep
available at all times the number of shares of the Company's Common Stock
required to satisfy your Option.

         11. OPTION NOT A SERVICE CONTRACT. Your Option is not an employment or
service contract, and nothing in your Option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate of the Company, as defined under the Securities Act
("Affiliate"), or of the Company or an Affiliate to continue your employment. In
addition, nothing in your Option shall obligate the Company or an Affiliate,
their respective shareholders, boards of directors, officers or employees to
continue any relationship that you might have as a director or consultant for
the Company or an Affiliate.

         12. WITHHOLDING OBLIGATIONS.

                  (a) At the time you exercise your Option, in whole or in part,
or at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in connection
with your Option.

                  (b) Upon your request and subject to approval by the Company,
in its sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested shares of the
Company's Common Stock otherwise issuable to you upon the exercise of your
Option a number of whole shares of the Company's Common Stock having a fair
market value, determined by the Company as of the date of exercise, not in
excess of the minimum amount of tax required to be withheld by law.

                  (c) You may not exercise your Option unless the tax
withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your Option when desired even
though your Option is vested, and the Company shall have no obligation to issue
a certificate for such shares of the Company's Common Stock.

         13. NOTICES. Any notices provided for in your Option or the Plan shall
be in writing and shall be deemed given upon receipt or, in the case of notices
delivered by mail to you, five (5) days after deposit in the United States mail,
postage prepaid, addressed to you at the last address you provided to the
Company.

         14. AMENDMENT OF OPTIONS. The Board at any time, and from time to time,
may amend the terms of your Option; PROVIDED, HOWEVER, that the rights under
your Option shall not be impaired by any such amendment unless without your
prior written consent.

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         15. CHOICE OF LAW. The law of the State of California shall govern all
questions concerning the construction, validity and interpretation of your
Option and this Option Agreement, without regard to such state's conflict of
laws rules.

                                       6
<PAGE>

                                 ATTACHMENT III

                              ISLAND PACIFIC, INC.
                               NOTICE OF EXERCISE

This constitutes notice under my Option that I elect to purchase the number of
shares for the price set forth below.

         Type of option (check one)         Incentive ____    Non-statutory ____

                  Stock option dated:                        ___________________

                  Number of shares as
                  to which option is
                  exercised:                                 ___________________

                  Certificates to be
                  issued in name of:                         ___________________

                  Total exercise price                       $__________________

                  Cash payment delivered
                  herewith:                                  $__________________

         By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of my Option Agreement, and (ii) to
provide for the payment by me to you (in the manner designated by you) of your
withholding obligation, if any, relating to the exercise of this option.

         I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of my
Option as set forth above:

         I warrant and represent to the Company that I have no present intention
of distributing or selling the Shares, except as permitted under the Securities
Act of 1933, as amended, and any applicable state securities laws.

         I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the any other applicable securities laws.

                                             ___________________________________
                                                      (Name)
                                             ___________________________________
                                                      (Date)

                                       7exv10w1

 

FIRST AMENDMENT

TO THIRD AMENDED AND RESTATED

WAREHOUSING CREDIT AGREEMENT

          This FIRST AMENDMENT TO THIRD AMENDED AND RESTATED WAREHOUSING CREDIT
AGREEMENT (this “Amendment”), made and entered into as of February 27, 2004
(the “Effective Date”), by and among HOMEAMERICAN MORTGAGE CORPORATION, a
Colorado corporation (“Borrower”), the financial institutions which are
signatories hereto (each a “Bank” and collectively, the “Banks”), and U.S. BANK
NATIONAL ASSOCIATION, as agent for the Banks (in such capacity, together with
any successor agents appointed hereunder, the “Agent”).

RECITALS

          1. The Borrower, the Agent and the Banks entered into a Third Amended and
Restated Warehousing Credit Agreement dated as of October 23, 2003 (the “Credit
Agreement”); and

          2. The Borrower desires to amend certain provisions of the Credit
Agreement pursuant to the provisions of Section 8.05(a) and the Banks and the
Agent are willing to do so upon the terms and subject to the conditions of this
Amendment.

AGREEMENT

          NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby covenant
and agree to be bound as follows:

          Section 1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement, unless the context shall otherwise require.

          Section 2. Amendments to Credit Agreement.

     2.1 Definition. The definition of “Total Outstandings” in Section
1.01 of the Credit Agreement is amended in its entirety to read as
follows:

     “Total Outstandings”: As of the time of any determination thereof, the
sum of (a) Aggregate Outstandings at such time and (b) the aggregate principal
amount of Indebtedness of any Affiliate guaranteed by the Company and
outstanding at such time.

     2.2 Guarantees. Section 4.09 of the Credit Agreement is amended by
deleting therefrom the dollar amount “$10,000,000” and inserting in its
place the dollar amount “$20,000,000”.

 

 

     2.3 Borrowing Base/Compliance Certificate. Schedule 4.01(e) to the
Credit Agreement, the Borrowing Base/Compliance Certificate, is amended
in its entirety to read as per Schedule 4.01(e) attached hereto.

            Section 3.
Effectiveness of Amendments. The amendment contained in this
Amendment shall become effective upon delivery by the Borrower to the Agent of,
and compliance by the Borrower with, the following:

     3.1 This Amendment duly executed by the Borrower and the Banks.

     3.2 A certificate of the Secretary or Assistant Secretary of the
Borrower (1) certifying that there has been no amendment to the Articles
of Incorporation or Bylaws of the Borrower since true and accurate copies
of the same were last delivered to the Agent with certificates of the
Secretary of the Borrower, and (ii) confirming that a resolution of the
Board of Directors of the Borrower authorizes the execution, delivery and
performance of this Amendment and any other documents executed in
connection herewith (the “Amendment Documents”), and identifying the
officers of the Borrower authorized to sign the Amendment Documents.

     3.3 The Borrower shall have satisfied such other conditions as
specified by the Agent, including payment of all unpaid legal fees and
expenses incurred by the Agent through the date of this Amendment in
connection with the Credit Agreement and the Amendment Documents.

     Section 4. Representations, Warranties, Authority, No Adverse Claim.

     4.1 Reassertion of Representations and Warranties, No Default. The
Borrower represents that on and as of the date hereof and after giving
effect to this Amendment (a) all of the representations and warranties
contained in the Credit Agreement are true, correct and complete in all
respects as of the date hereof as though made on and as of such date,
except for changes permitted by the terms of the Credit Agreement, and
(b) there will exist no Unmatured Event of Default or Event of Default
under the Credit Agreement as amended by this Amendment on such date.

     4.2 Authority, No Conflict, No Consent Required. The Borrower
represents and warrants that it has the power and legal right and
authority to enter into the Amendment Documents and has duly authorized
as appropriate the execution and delivery of the Amendment Documents and
other agreements and documents executed and delivered by it in connection
herewith or therewith by proper corporate action, and none of the
Amendment Documents nor the agreements contained herein or therein
contravenes or constitutes a default under any agreement, instrument or
indenture to which the Borrower is a party or a signatory or a provision
of the Borrower’s Articles of Incorporation, Bylaws or any other
agreement or requirement of law, or result in the imposition of any Lien
on any property of the Borrower under any agreement binding on or
applicable to the Borrower or any of its property except, if any, in
favor of the Banks. The Borrower represents and warrants that no
consent, approval or authorization of or registration or declaration with
any Person, including but not limited to any governmental authority, is
required in connection with the execution and delivery by the Borrower of

- 2 -

 

the Amendment Documents or other agreements and documents executed
and delivered by the Borrower in connection therewith or the performance
of obligations of the Borrower therein described, except for those which
the Borrower has obtained or provided and as to which the Borrower has
delivered certified copies of documents evidencing each such action to
the Agent.

     4.3 No Adverse Claim. The Borrower warrants, acknowledges and
agrees that no events have taken place and no circumstances exist at the
date hereof that would give the Borrower a basis to assert a defense,
offset or counterclaim to any claim of the Banks with respect to the
Secured Obligations.

          Section 5. Affirmation of Credit Agreement, Further References,
Affirmation of Security Interest. The Agent, the Banks and the Borrower each
acknowledge and affirm that the Credit Agreement, as hereby amended, is hereby
ratified and confirmed in all respects and all terms, conditions and provisions
of the Credit Agreement, except as amended by this Amendment, shall remain
unmodified and in full force and effect. All references in any document or
instrument to the Credit Agreement are hereby amended and shall refer to the
Credit Agreement as amended by this Amendment. The Borrower confirms to the
Agent and the Banks that the Secured Obligations are and continue to be secured
by the security interest granted by the Borrower in favor of the Agent for the
benefit of the Banks under the Pledge and Security Agreement, and all of the
terms, conditions, provisions, agreements, requirements, promises, obligations,
duties, covenants and representations of the Borrower under such documents and
any and all other documents and agreements entered into with respect to the
obligations under the Credit Agreement are incorporated herein by reference and
are hereby ratified and affirmed in all respects by the Borrower.

          Section 6.
Successors. The Amendment Documents shall be binding upon the
Borrower, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Borrower, the Banks and the Agent and the
successors and assigns of the Banks and the Agent.

- 3 -

 

          Section 7.
Legal Expenses. As provided in Section 8.03 of the Credit
Agreement, the Borrower agrees to reimburse the Agent, upon execution of this
Amendment, for all reasonable out-of-pocket expenses (including attorney fees
and legal expenses of Dorsey & Whitney LLP, counsel for the Bank) incurred in
connection with the Credit Agreement, including in connection with the
negotiation, preparation and execution of the Amendment Documents and all other
documents negotiated, prepared and executed in connection with the Amendment
Documents, and in enforcing the obligations of the Borrower under the Amendment
Documents, and to pay and save the Banks harmless from all liability for, any
stamp or other taxes which may be payable with respect to the execution or
delivery of the Amendment Documents, which obligations of the Borrower shall
survive any termination of the Credit Agreement.

          Section 8. Counterparts. The Amendment Documents may be executed in
several counterparts as deemed necessary or convenient, each of which, when so
executed, shall be deemed an original, provided that all such counterparts
shall be regarded as one and the same document, and either party to the
Amendment Documents may execute any such agreement by executing a counterpart
of such agreement.

          Section 9. Governing Law. THE AMENDMENT DOCUMENTS SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT
OF LAW PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS, THEIR HOLDING COMPANIES AND THEIR AFFILIATES.

[Remainder of this page left blank intentionally]

 

 

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.

	 	 	 	 	 
	 	 	HOMEAMERICAN MORTGAGE CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/s/ John J. Heaney
	

	 	 	 	
 
	

	 	Title:
	 	 Senior Vice President and Treasurer

(Signature page-Borrower)

 

 

	 	 	 	 	 
	 	 	U.S. BANK NATIONAL ASSOCIATION, as
 Agent
and as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Edwin D. Jenkins
	

	 	 	 	
 
	

	 	Title:
	 	Senior Vice President

(Signature Page-U.S. Bank)

 

 

	 	 	 	 	 
	 	 	BANK ONE, N.A., (successor by merger to Bank

One, Texas, N.A.), as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ James P. Krcmarik III
	

	 	 	 	
 
	

	 	Title:
	 	 Associate Director

(Signature Page-Bank One)

 

 

	 	 	 	 	 
	 	 	COMERICA BANK, as a Bank
	 
	 	 	 	 
	

	 	By:
	 	/s/ Heather D. Hogle
	

	 	 	 	
 
	

	 	Title:
	 	Assistant Vice President

(Signature Page Comerica Bank)

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