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): March 14, 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. OTHER EVENTS.
On March 14, 2004, Island Pacific, Inc. ("Island Pacific") and Retail
Technologies International, Inc. ("RTI") executed an Agreement of Merger and
Plan of Reorganization ("Merger Agreement") pursuant to which Island Pacific
will acquire RTI (the "Merger"), a leading provider of retail management store
solutions to small through mid-tier retailers via an international network of
resellers. Under the terms of the Merger Agreement, RTI will merge into IPI
Merger Sub, Inc., a wholly owned subsidiary of Island Pacific. Island Pacific
will pay the stockholders of RTI approximately $9,000,000 in consideration,
consisting of $4,500,000 in cash and the number of shares of Island Pacific
common stock determined by dividing $4,500,000 by the average closing price of
Island Pacific's common stock traded on the American Stock Exchange during the
ten (10) trading days immediately preceding the closing date of the Merger.
Island Pacific will assume all of RTI's currently outstanding options. Island
Pacific will also satisfy RTI's obligations under certain promissory notes for
approximately $2.1 million issued by RTI to its former shareholders by causing
the surviving corporation to repay the notes within thirty (30) days of the
closing of the Merger.
Consummation of the Merger is subject to Island Pacific securing
financing and satisfaction of customary closing conditions, including the
approval of RTI's shareholders. The Merger is expected to close in the first
quarter of Island Pacific's fiscal year ending March 31, 2005.
On March 15, 2004 (the "First Closing Date"), Island Pacific sold
Omicron Master Trust ("Omicron") and Midsummer Investments, Ltd. ("Midsummer"
and together with Omicron, the "Purchasers") 9% convertible debentures (the
"Debentures") for an aggregate price of approximately $3,500,000 pursuant to a
securities purchase agreement (the "Purchase Agreement"). The Debentures bear an
interest rate of 9% per annum, and provide for interest only payments on a
quarterly basis, payable, at Island Pacific's option, in cash or shares of
Island Pacific common stock. The Debentures mature on May 15, 2006. The
Debentures are convertible into shares of Island Pacific common stock at a
conversion price of $1.32 per share, subject to adjustment. If certain
conditions are met, Island Pacific has the option to redeem the debentures at
110% of their face value, plus accrued but unpaid interest. Island Pacific must
redeem the debentures at the initial monthly amount of $233,333 commencing on
February 1, 2005. If the daily volume weighed average price of Island Pacific
common stock on the American Stock Exchange exceeds the Closing Price by more
than 200% for 15 consecutive trading days, Island Pacific will have the option
to cause the Purchasers to convert the then outstanding principal amount of
Debentures into Island Pacific common stock at the conversion price then in
effect.
Island Pacific also issued each Purchaser two warrants as follows: (1)
a Series A Warrant to purchase up to a number of shares of Island Pacific common
stock equal to 40% of such Purchaser's subscription amount divided by $1.15 (the
"Closing Price"), these warrants are exercisable at anytime after September 16,
2004, have a 5 year term and have an exercise price per warrant share of $1.15,
subject to adjustment therein; and (2) a Series B Warrant to purchase up to a
number of shares of Island Pacific common stock equal to such Purchaser's
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pro-rata portion of 8,500,000 shares of Island Pacific common stock (calculated
based on such Purchaser's subscription amount), these warrants are immediately
exercisable, have an eighteen (18) month term and have an exercise price per
warrant share equal to $5, subject to adjustment therein. The Series A Warrant
issued to Omicron is exercisable for up to 608,696 shares of Island Pacific
common stock and the Series A Warrant issued to Midsummer is exercisable for up
to 437,783 shares of Island Pacific common stock. The Series B Warrant issued
Omicron is exercisable for up to 4,958,333 shares of Island Pacific common stock
and the Series B Warrant issued to Midsummer is exercisable for up to 3,541,667
shares of Island Pacific common stock.
For a period of one hundred eighty (180) days following the First
Closing Date, each Purchaser has the right, in its sole discretion, to elect to
purchase such Purchaser's pro rata portion of additional debentures and Series A
Warrants for an aggregate purchase price of up to $2,000,000 in a second closing
(the "Second Closing"). The terms of the Second Closing shall be identical to
the terms set forth in the Purchase Agreement and related documents, except
that, the conversion price for the additional debentures and the exercise price
for the additional warrants shall be equal to 115% of the average of the daily
volume weighted average price of Island Pacific's common stock on the American
Stock Exchange for the ten (10) days preceding the Second Closing ("Second
Closing Price"). The Series A Warrant coverage for the Second Closing shall be
40% of each Purchaser's subscription amount divided by the Second Closing Price.
For a period of one hundred eighty (180) days following the First
Closing Date, if the daily volume weighted average price of Island Pacific's
common stock for twenty (20) consecutive trading days exceeds $2.00, subject to
adjustment, Island Pacific may, on one occasion, in its sole determination,
require the Purchasers to purchase each such Purchaser's pro rata portion
additional debentures and Series A Warrants for an aggregate purchase price of
up to $2,000,000. Any such additional investment shall be under the terms set
forth in the Purchase Agreement and related documents, except that, the
conversion price for the additional debentures and the exercise price for the
additional warrants shall be equal to the then current conversion price and
warrant exercise price for the Debentures and warrants purchased on the First
Closing Date.
For a period of six (6) months following the First Closing Date, the
Purchasers have a right of first refusal to participate in certain future
financings by Island Pacific involving the sale of its common stock or
equivalent securities. The Purchasers were also granted registration rights
under a Registration Rights Agreement, which requires Island Pacific to file a
registration statement respecting the common stock issuable upon the conversion
of the debentures and exercise of the warrants within thirty (30) days after the
First Closing Date, and to use best efforts to have the registration statement
declared effective at the earliest date. If a registration statement is not
filed within thirty (30) days following the First Closing Date or declared
effective within ninety (90) days following the First Closing Date, or within
one hundred twenty (120) days in the event of a full review by the Securities
and Exchange Commission, Island Pacific will be obligated to pay liquidated
damages to the Purchasers equal to 2% of each such Purchasers' subscription
amount under the Purchase Agreement plus the value of any warrants issued
pursuant to the Purchase Agreement then held by a Purchaser.
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The foregoing descriptions of the Merger Agreement, Purchase Agreement
and any related agreements do not purport to be complete and are qualified in
their entirety by the terms and conditions of the Merger Agreement, Purchase
Agreement and related agreements attached hereto as exhibits and incorporated
herein by reference.
EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement of Merger and Plan or Reorganization by and among
Island Pacific, Inc., Retail Technologies International,
Inc., IPI Acquisition, Inc., Michael Tomczak and Jeffrey
Boone dated March 12, 2004.*
4.1 Securities Purchase Agreement by and among Island Pacific,
Inc., Omicron Master Trust and Midsummer Investments, Ltd.
dated March 15, 2004.*
4.2 Registration Rights Agreement by and among Island Pacific,
Inc., Omicron Master Trust and Midsummer Investments, Ltd.
dated March 15, 2004.
*Certain exhibits and schedules have been omitted pursuant to Item 601(b)(2) of
Regulation S-K, but a copy will be furnished to the Securities and Exchange
Commission upon request.
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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: March 17, 2004 By: /s/ Ran Furman
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Name: Ran Furman
Title: Chief Financial Officer
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