Retail Pro in default on notes to Laurus, Valens; foreclosure possible

By Devika Patel

Knoxville, Tenn., June 25 - Retail Pro, Inc. received a notice of default from LV Administrative Services, Inc., the agent acting on behalf of Laurus Master Fund, Ltd. and Valens Offshore SPV II, Corp., indicating that the company is in default on certain securities it sold to the investors, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

The notice alleges default on the company's secured convertible term note, which was issued in July 12, 2004, and was amended on Oct. 29, 2004, on the company's secured convertible term note, which was issued on June 15, 2005, and on its secured term note, which was issued on Feb. 29.

The notice claims the company failed to make interest payments when they were due, and accelerates the obligations and liabilities due and owed under the notes, demanding a payment of $10,740,409.21 by June 26.

The payment purportedly includes the notes' outstanding principal, unpaid interest (at the default interest rate) and default fees through June 19.

The notes are secured by substantially all of the company and its subsidiaries' assets, and the company's subsidiaries have guaranteed the notes.

If the company fails to pay the default amount in full by 3 p.m. ET on the payment date, the investors may exercise their rights, which include foreclosure against all of the company's assets.

Retail Pro said in the filing it is trying to negotiate an amicable resolution with the investors.

It also said in the filing that, although it has not yet received a default notice from Midsummer Investment Ltd., a default under the Laurus and Valens notes triggers a default under the terms of the 9% secured convertible debentures issued to Midsummer on June 18.

Midsummer will have the right to accelerate the debentures and the company may be required to pay the notes' outstanding principal plus interest, liquidated damages and other amounts owed under those notes.

Based in Irvine, Calif., Retail Pro provides software solutions and services to the retail industry.

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