Loan Amount: $937,500 Spokane, Washington
Interest Rate: 8% July 19, 2002

FOR VALUE RECEIVED, the undersigned, SVI SOLUTIONS, INC., a Delaware corporation ("Borrower"), hereby promises to pay to the order of KOYAH LEVERAGE PARTNERS, L.P., a Delaware limited partnership ("Lender"), at such places and times and under the terms and conditions set forth below, the amounts, including interest, set forth below.

1. Principal Amount. This Convertible Promissory Note (this "Note") evidences a loan made by Lender to Borrower in the principal amount of Nine Hundred Thirty-Seven Thousand Five Hundred Dollars ($937,500), which principal amount shall incur interest and otherwise be subject to the terms and conditions set forth herein.

2. Payments. The entire principal balance of this Note shall be due and payable on September 30, 2003 (the "Maturity Date"). The principal balance of this Note shall accrue interest at the rate of eight percent (8%) per annum. Accrued interest under this Note shall be due and payable quarterly on each March 31, June 30, September 30 and December 31, commencing on September 30, 2002 and continuing through and including the Maturity Date.

3. Prepayment. Borrower shall not have the right to prepay the principal balance of this Note or accrued interest thereon, in whole or in part, prior to the date when such principal or interest is due without the prior written consent of Lender.

4. Collection Costs Borne by Borrower. Borrower agrees to pay all costs and expenses, including without limitation reasonable attorneys' fees, incurred by Lender in enforcing the terms of this Note or in collecting this Note, including without limitation in any out-of-court workout, any court action, any appeal or any bankruptcy proceeding.

5. Late Charge. If any payment of principal or interest under this Note shall not be made within five (5) days after the due date, Borrower agrees to pay, in addition to the unpaid principal or interest, interest on such defaulted amount from the due date until the date of actual payment (after as well as before judgment) at a rate of five percent (5%) per annum above the rate of interest which would otherwise have been payable under this Note or the maximum rate of interest permitted to be charged by applicable law, whichever is less. In the case of any late charges owing as a result of the Company's failure to make any quarterly payment of interest within five (5) days after the due date, such late charges may be paid by Borrower, at its option, either (i) in cash or (ii) in shares of Common Stock, at an issuance price equal to the average of the closing price per share of the Common Stock on American Stock Exchange each day over the ten (10) consecutive trading day period ending three (3) trading days before the date of payment.

6. Governing Law. This Note shall be governed by and construed and interpreted in accordance with the law of the State of Washington, without regard to that state's conflict of laws principles. All disputes between the parties hereto, whether sounding in contract, tort, equity or otherwise, shall be resolved only by state and federal courts located in Spokane, Washington, and the courts to which an appeal therefrom may be taken. All parties hereto waive any objections to the location of the above referenced courts, including but not limited to any objection based on lack of jurisdiction, improper venue or forum non-convenes. Notwithstanding the foregoing, any party obtaining any order or judgment in any of the above referenced courts may bring an action in a court in another jurisdiction in order to enforce such order or judgment.
   
    

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