SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 1, 2004
Island Pacific, Inc.
(formerly known as SVI Solutions, Inc.)
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-23049 33-0896617
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(Commission File Number) (IRS Employer Identification No.)
19800 MacArthur Boulevard, Suite 1200, Irvine, California 92612
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(Address of Principal Executive Offices) (Zip Code)
(949) 476-2212
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(Registrant's telephone number, including area code)
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 5.
Pursuant to the Securities Purchase Agreement, attached as Exhibit 4.1
(the "Purchase Agreement"), dated July 12, 2004 between Island Pacific, Inc., a
Delaware corporation (the "Company") and Laurus Master Fund, Ltd., a Cayman
Islands company ("Laurus"), the Company sold and issued the Secured Convertible
Term Note, attached as Exhibit 4.2 (the "Note"), and the Common Stock Purchase
Warrant (the "Warrant"), attached as Exhibit 4.3 to Laurus for $7,000,000. The
Company's obligations under the Note are secured by all of the assets of the
Company. Page Digital Incorporated, IP Retail Technologies International, Inc.
(formerly known as IPI Merger Sub II, Inc.) and Sabica Ventures, Inc., all
wholly owned subsidiaries of the Company (collectively referred to herein as,
the "Subsidiaries") guarantied the Company's obligations under the Note. The
Company also pledged all of its interests in the outstanding stock of the
Subsidiaries as security for its obligations under the Note.
The Note matures on September 1, 2004; provided however, the maturity
of the Note will be automatically extended upon the stockholders approving an
amendment to the Company's Certificate of Incorporation ("Certificate")
increasing the authorized common stock to 250,000,000 shares and the Company
filing an amendment to its Certificate to effect the increase with the Secretary
of State of Delaware by August 31, 2004. The Note accrues interest at a rate per
annum (the "Interest Rate") equal to the "prime rate" published in The Wall
Street Journal from time to time, plus two percent (2.0%). Interest under the
Note will be payable monthly in arrears commencing on August 1, 2004. The
Interest Rate will be calculated on the last day of each month (the
"Determination Date") and be subject to adjustment as follows: (1) if the shares
issuable upon conversion of the Note or exercise of the Warrant have been
registered with the U.S. Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended (the "Securities Act") and the market price
of the Company's common stock for the five trading days immediately preceding
the Determination Date exceeds the then applicable conversion price for the Note
by at least 25%, then the Interest Rate for the succeeding calendar month shall
be reduced by 2% for each incremental 25% increase over the then applicable
conversion price or (2) if all of the conditions set forth in subparagraph (1)
have been satisfied, except that the shares issuable upon conversion of the Note
or exercise of Warrant have not been registered, then the Interest Rate for the
succeeding calendar month shall be reduced by 1% for each incremental 25%
increase over the then applicable conversion price. The initial conversion price
under the Note is $0.56, subject to adjustment upon the Company's issuance of
additional shares of common stock at a price that is less than the then current
fixed conversion price, a stock split or combination, declaration of a dividend
on the Company's common stock or reclassification of the Company's common stock.
The Company has the option to redeem the Note by paying Laurus 125% of the
principal amount due under the Note together with all accrued and unpaid
interest.
The Warrant grants Laurus the right to purchase up to 3,750,000 shares
of the Company's common stock at a price of $0.71 per share. The Warrant is
immediately exercisable and has a seven year term. The Company shall have the
right to require exercise of the Warrant in whole or in part if: (1) all of the
obligations of the Company under the Note shall have been irrevocably paid in
full, (2) the Common Stock underlying the Warrant has been registered on a
registration statement declared effective by the SEC, and such registration
statement remains effective, and (3) the average closing price of the Common
Stock for the ten (10) trading days immediately prior to the proposed date of
the mandatory exercise of the Warrant is greater than three hundred percent
(300%) of the then applicable exercise price.
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The Company is obligated to file a registration statement on Form S-3
(or if Form S-3 is not available another appropriate form) (the "Registration
Statement") registering the shares of Company common stock issuable upon
conversion of the Note or exercise of the Warrant (the "Underlying Shares")
pursuant to the Registration Rights Agreement between the Company and Laurus
dated July 12, 2004 (the "Registration Rights Agreement"). The Company is
required to file the Registration Statement within 60 days of July 12, 2004 (the
"Filing Date") and have the Registration Statement declared effective by the SEC
no later than 90 days after it is filed (the "Effectiveness Date"). If the
Registration Statement is not filed by the Filing Date, declared effective by
the Effectiveness Date, ceases to be effective for more than 30 days in any
calendar year or 10 consecutive calendar days or if the Company's common stock
is not listed or traded or is suspended from trading for three consecutive
trading days, the Company shall be required to pay Laurus liquidated damages
equal to 2% of original principal balance on the Note for each 30 day period
(with partial periods prorated) that such event continues. The Company is
obligated to keep the Registration Statement effective until the earlier of when
(1) all of the Underlying Shares have been sold or (2) such time as all of the
Underlying Shares can be sold without registration or volume restrictions under
Rule 144(k) of the Securities Act (the "Effectiveness Period"). If there is not
an effective Registration Statement covering the Underlying Shares at any time
during the Effectiveness Period and the Company proposes to file a registration
statement for its own account or the account of others, the Company will be
obligated to include the Underlying Shares on that registration statement.
Pursuant to the Company's preliminary proxy statement filed on Schedule
14A with the SEC on July 15, 2004, the Company has requested that its
stockholders approve the sale and issuance of the Note and the Warrant. Under
the American Stock Exchange rules stockholder approval is required for any
transaction that could result in the issuance a number of shares of common stock
that is greater than 20% of the Company's outstanding common stock at less than
the market price. The shares issuable upon conversion of the Note are priced at
$0.56 (105% of the closing price on July 9, 2004 of $0.53 the last trading
immediately preceding the closing of the transaction) and the shares issuable
upon exercise of the Warrant have an exercise price of $0.71 (115% of the 10-day
average closing price immediately preceding the transaction). However, the
conversion price under the Note is subject to adjustment if the Company issues
additional shares of common stock at price below the then applicable conversion
price under the Note, which could result in the issuance of more than 20% of the
outstanding shares of common stock of the Company at a price below market. The
Purchase Agreement provides that if conversion of the Note would result in the
issuance of more than 20% of the outstanding shares of the common stock of the
Company such that stockholder approval is required, the Company is required to
promptly call a stockholders meeting to approve such issuance. The Company has
determined it is in the best interests of the Company to have the Purchase
Agreement, Note, Warrant and related agreements approved at the annual meeting
scheduled for August 11, 2004, rather than be obligated to call a meeting at
some unspecified time in the future.
Neither Laurus nor any of its respective affiliates, maintains or has
maintained in the past, any affiliation with the Company or its officers,
directors or affiliates.
In addition, effective as of July 1, 2004, Robert P. Wilkie and Ivan M.
Epstein resigned from the Company's board of directors. Messrs. Wilke and
Epstein were both independent directors and the Company is currently looking for
two independent individuals to fill the vacancies resulting from their
resignations. Effective as of July 14, 2004, Steven Beck resigned from the
Company's board of directors and Donald Radcliffe, who previously served as a
director of the Company from May 1998 to October 2003, was appointed to replace
Mr. Beck.
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EXHIBIT INDEX
Exhibit No. Description
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4.1 Securities Purchase Agreement dated July 12, 2004 between
Island Pacific, Inc. and Laurus Master Fund, Ltd.
4.2 Secured Convertible Term Note issued by Island Pacific, Inc.
in favor of Laurus Master Fund. Ltd.
4.3 Common Stock Purchase Warrant dated July 12, 2004 issued by
Island Pacific, Inc.
4.4 Registration Rights Agreement dated July 12, 2004 between
Island Pacific, Inc. and Laurus Master Fund, Ltd.
10.1 Master Security Agreement between Island Pacific, Inc., Page
Digital Incorporated, IPI Merger Sub II, Inc., Sabica
Ventures, Inc. and Laurus Master Fund, Ltd. dated July 12,
2004
10.2 Subsidiary Guaranty executed by Page Digital Incorporated, IPI
Merger Sub II, Inc. and Sabica Ventures, Inc.
10.3 Stock Pledge Agreement dated July 12, 2004 between Island
Pacific, Inc. and Laurus Master Fund, Ltd.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Island Pacific, Inc.
Date: July 21, 2004 By: /s/ Ran Furman
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Name: Ran Furman
Title: Chief Financial Officer
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