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) JUNE 8, 2007
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I/OMAGIC CORPORATION
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(Exact name of registrant as specified in its charter)
NEVADA 000-27267 33-0773180
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4 MARCONI, IRVINE, CALIFORNIA 92618
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (949) 707-4800
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT.
TERMINATION OF STRATEGIC ALLIANCE SHARE PURCHASE AGREEMENT WITH JIANGXI
GREATSOURCE DISPLAY TECH. CO. LTD.
On June 8, 2007, I/OMagic Corporation (the "Company") received a
termination notice, effective immediately, from Jiangxi Greatsource Display
Tech. Co. Ltd. ("Jiangxi") terminating the Strategic Alliance Share Purchase
Agreement described below.
STRATEGIC ALLIANCE SHARE PURCHASE AGREEMENT WITH JIANGXI GREATSOURCE DISPLAY
TECH. CO. LTD.
On May 9, 2007, the Company entered into a Strategic Alliance Share
Purchase Agreement (the "Purchase Agreement") with Jiangxi, that provided for
the purchase of 21,750,000 shares of the Company's common stock by Jiangxi for
an aggregate of $95,000,000.
Pursuant to the Purchase Agreement, the purchase of the shares of the
Company's common stock was to occur in three separate closings as follows: (1)
the first closing was to occur on September 30, 2007 and was to include the
issuance of 8,000,000 shares of the Company's common stock to Jiangxi for a
payment of $24,000,000; (2) the second closing was to occur between March 31,
2008 and May 31, 2008 and was to include the issuance of 10,000,000 shares of
the Company's common stock to Jiangxi for a payment of $41,000,0000; and (3) the
third closing was to occur on May 31, 2008 and was to include the issuance of
3,750,000 shares of the Company's common stock to Jiangxi for a payment of
$30,000,000.
The Company and Jiangxi were to negotiate, over the 30-days following
May 9, 2007, the terms and conditions of (1) a registration rights agreement to
register the shares of the Company's common stock that were to be purchased by
Jiangxi pursuant to the Purchase Agreement; (2) an employment agreement between
the Company and Tony Shahbaz, the Company's president and chief executive
officer; (3) a voting agreement between Jiangxi and the Company; and (4) such
other agreements as the parties deemed necessary. Pursuant to the Purchase
Agreement, on June 10, 2007, the Company was to appoint a nominee of Jiangxi to
the board of directors of the Company.
The employment agreement with Mr. Shahbaz was to provide for, among
other things, the opportunity for Mr. Shahbaz to receive a bonus in connection
with the successful negotiation of the Purchase Agreement, which bonus was to be
payable in the form of shares of the Company's common stock at each of the
closing dates as follows: (1) at the first closing, such number of shares when
combined with the number of shares owned by Mr. Shahbaz prior to such issuance
was to result in Mr. Shahbaz having a direct ownership interest in the Company
equal to 25.76% of the then outstanding shares calculated on a fully-diluted
basis; (2) at the second closing, such number of shares when combined with the
number of shares owned by Mr. Shahbaz prior to such issuance was to result in
Mr. Shahbaz having a direct ownership interest in the Company equal to 16.60% of
the then outstanding shares calculated on a fully-diluted basis; and (3) at the
third closing, such number of shares when combined with the number of shares
owned by Mr. Shahbaz prior to such issuance was to result in Mr. Shahbaz having
a direct ownership interest in the Company equal to 9.90% of the then
outstanding shares calculated on a fully-diluted basis. Such shares were to be
registered by the company on Form S-8. The employment agreement was subject to
approval by the Company's board of directors.
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In addition to customary closing conditions, the closings under the
Purchase Agreement were contingent upon (1) Jiangxi obtaining governmental
approvals in the People's Republic of China to secure the funds necessary to
purchase the shares contemplated by the Purchase Agreement; (2) expiration or
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended; (3) the Company's common stock being
designated for quotation or listed on the OTC Bulletin Board; (4) filing of all
reports that the Company is obligated to file under the Securities Exchange Act
of 1934, as amended; and (5) removal of the "E" modifier appended to the
Company's trading symbol. Also, either party was entitled to terminate the
Purchase Agreement on or before June 8, 2007 based on the results of such
party's due diligence.
Jiangxi was to provide the Company with a trade credit facility in an
aggregate amount not to exceed $15,000,0000. The credit facility was to
terminate on the date of the third closing. The credit facility would only have
been available for use in connection with purchases of products from suppliers
to the Company.
The Purchase Agreement also contained other customary representations,
warranties, covenants and closing conditions.
A copy of the Purchase Agreement is incorporated herein by reference as
exhibit 10.1. The foregoing description of the Purchase Agreement is qualified
in its entirety by reference to the full text of the agreement.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
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None.
(b) Pro Forma Financial Information.
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None.
(c) Exhibits.
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Number Description
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10.1 Strategic Alliance Share Purchase Agreement dated May
9, 2007 between I/OMagic Corporation and Jiangxi
Greatsource Display Tech. Co. Ltd. (*)
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(*) Filed as an exhibit to the Registrant's current
report on Form 8-K for May 9, 2007 filed with the
Securities and Exchange Commission on May 15, 2007.
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SIGNATURE
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 hereunto duly authorized.
Date: June 14, 2007 I/OMAGIC CORPORATION
By: /S/ THOMAS L. GRUBER
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Thomas L. Gruber, Chief Financial Officer
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