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 28, 1997
PACKAGING PLUS SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Nevada 0-18094 11-2781803
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
formation)
20 South Terminal Drive, Plainview, New York 11803
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 349-1300
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(Former name or former address, if changed since last report)
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Item 9. SALE OF EQUITY SECURITIES PURSUANT TO REGULATION S.
On July 28, 1997 and July 29, 1997 (each a "Closing Date"),
the Registrant issued to two investors, specifically Mary Park
Properties and Bothwell International (individually, "Investor" and
collectively, "Investors"), pursuant to Regulation S ("Regulation
S") under the Securities Act of 1933, as amended (the "Act"),
convertible debentures (individually, "Debenture", collectively,
"Debentures") in the aggregate principal amount of $437,500. The
Debentures were purchased by the Investors at a discount equal to
20% of the principal amount of the Debentures, resulting in
aggregate gross proceeds of $350,000. In connection with the sale
of the Debentures, the Company paid commissions to the placement
agent equal to 12% of the gross proceeds, resulting in aggregate
commissions equal to $42,000. As a consequence, after deducting the
placement agent's commissions, the Company received net proceeds of
$308,000 from the sale of the Debentures.
The principal amount of each Debenture becomes due and payable
to the Investors on July 31, 1999. Interest on the principal amount
of each Debenture accrues at the rate of eighteen percent (18%) per
annum and is due and payable quarterly beginning on the applicable
Closing Date (each a "Closing Date") with respect to each sale,
although such interest may be paid monthly commencing on the
applicable Closing Date.
The holder of each Debenture is entitled, at its option, at
any time commencing 45 days after the Closing Date, to convert all
or any amount of the Debenture in increments of $10,000, together
with all accrued and unpaid interest, into shares of Common Stock,
at a conversion price (the "Conversion Price") per share of Common
Stock equal to the lower of (a) 80% of the closing bid price of the
Common Stock, as reported on the National Association of Securities
Dealers Bulletin Board (the "Bulletin Board") on the last business
day immediately preceding the date of receipt by the Registrant
from the holder of the Debenture of a notice of conversion, or (b)
80% of the closing bid price of the Common Stock, as reported on
the Bulletin Board, for the five (5) business days immediately
preceding the date of subscription by the Investor.
The Registrant shall have the option to redeem each Debenture
at a price equal to 120% of the full principal amount of each
Debenture then outstanding (the "Redemption Price") in the event
and to the extent
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that, after 90 days after the applicable Closing Date, the
Debenture has not been converted. In addition, the Registrant is
required to redeem each Debenture at the Redemption Price in the
event and to the extent that conversion of a Debenture would
require the Registrant to seek shareholder approval of the issuance
of the underlying Common Stock and such shareholder approval is not
obtained 30 days thereafter. In either case, the Registrant shall
give each Investor 5 days written notice of such redemption and
each Investor during such 5 day period shall have the option to (i)
accept the Redemption Price, or (ii) convert their respective
Debenture or any part thereof into shares of Common Stock at a
conversion price equal to 80% of the average closing bid price of
the Common Stock, as reported on the Bulletin Board, for the 5
consecutive trading days prior to the date of such conversion. Any
of such shares of Common Stock shall be issued pursuant to
Regulation S. Lastly, if at any time after 120 days after the
applicable Closing Date, the Investor shall have the option to
demand redemption to the extent conversion of the Debenture has not
occurred at a price equal to 120% of the unconverted principal
amount of the Debenture, plus interest thereon.
In the event that (i) the Registrant fails to issue unlegended
certificates for shares of Common Stock issuable upon conversion of
the Debenture or as payment as interest on the Debenture after the
applicable restrictive period for any reason other than the
Registrant's reasonable good faith belief that certain
representations and warranties made by the respective Investor in
connection with this transaction were untrue when made, or (ii) if
the restrictive period under Regulation S is extended, then the
Registrant is required, at the request of the respective Investor
and at the Registrant's expense, to effect the registration of such
shares of Common Stock under the Act and relevant Blue Sky laws as
promptly as is practicable. The Company shall file such
registration statement within thirty (30) days of the respective
Investor's demand therefor and shall use its best efforts to cause
such registration statement to become effective as soon as
practicable thereafter.
The Registrant agrees to pay liquidated damages to each
Investor for the late issuance of shares of Common Stock upon
conversion of the Debenture in accordance with the following
schedule (where "No. Business Days Late" is defined as the number
of business days beyond seven (7) business days from the date of
receipt by the Registrant of a Notice of Conversion from an
Investor:
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<TABLE>
<CAPTION>
Liquidated
No. of Damages
Business per $100,000
Days Late of Debenture
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<S> <C>
1 $ 500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
9 $4,500
10 $5,000
10 + $5,000 + $1,000 each
Business Day Late beyond
10 days
</TABLE>
In the event the Company defaults in converting any portion of
the Debentures into shares of Common Stock as a result of the
Company not having a sufficient number of authorized but unissued
shares available (a "Conversion Default"), the Company shall pay to
each of the Investors, as well as other investors ("Other
Investors") who purchased debentures ("Similar Debentures") similar
to the terms and conditions of the Debentures, liquidated damages
in the amount of (N/365) multiplied by (.24) multiplied by the
initial issuance price of the outstanding and/or tendered but not
converted Debentures and Similar Debentures, whereby "N" equals the
number of days between the Conversion Default date and the date the
Company authorized a sufficient number of shares of Common Stock to
effect the conversion of all of the remaining Debentures and
Similar Debentures. The liquidated damages shall be paid in cash or
shall be convertible into Common Stock at the Conversion Price, at
the Investor's option.
Each Debenture is secured by a subordinated lien against the
Registrant in favor of the respective Investor in an amount not
less than $9,000,000.
In making the sale of the Debentures, the Registrant relied on
the representations and warranties of each Investor that such
Investor is not a "U.S. person," as such term is defined under
Regulation S.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly authorized and caused the undersigned to sign this
Report on the Registrant's behalf.
PACKAGING PLUS SERVICES, INC.
By: /s/ Richard Altomare
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Richard Altomare, Chief
Executive Officer
Dated: August 11, 1997
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly authorized and caused the undersigned to sign this
Report on the Registrant's behalf.
PACKAGING PLUS SERVICES, INC.
By: /s/ Richard Altomare
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Richard Altomare, Chief
Executive Officer
Dated: August 11, 1997
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