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 3, 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.
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On June 3, 1997 and June 4, 1997 (each a "Closing
Date"), the Registrant issued to each of Austost Anstalt
Schaan and UFH Endowment, Ltd., respectively (individually,
"Investor" and collectively, "Investors"), pursuant to
Regulation S ("Regulation S") under the Securities Act of
1933, as amended (the "Act"), a convertible debenture
(individually, "Debenture", collectively, "Debentures") in the
principal amount of $156,250. Each Debenture was purchased by
the respective Investor for $125,000, which represented a
discount equal to 20% of the principal amount of the
Debenture. In addition, upon the closing of the sale of each
of these Debentures, the Company incurred fees to the
placement agent in the form of (i) a $15,000 cash payment per
Debenture (an aggregate of $30,000), and (ii) the issuance of
common stock purchase warrants to purchase at any time and
from time to time commencing June 1, 1997 and ending on March
31, 2002, an aggregate of 20,261 of shares of the Registrant's
common stock, $.005 par value per share (the "Common Stock"),
at an exercise price of $1.46 per share of Common Stock. As a
consequence, after deducting the placement agent's fees, the
Company received net proceeds of $220,000 from the sale of the
Debentures.
The $156,250 principal amount of each Debenture
becomes due and payable to the respective Investor on June 30,
1998. Interest on the principal amount of each Debenture
accrues at the rate of twelve percent (12%) per annum and is
due and payable quarterly beginning the applicable Closing
Date, although such interest may be paid in advance, monthly,
commencing on the applicable Closing Date. Notwithstanding the
foregoing, on the applicable Closing Date, the Registrant was
required to prepay in shares of Common Stock, the first three
months of interest by issuing to each Investor shares of
Common Stock in an amount equal to (x) the total monthly
interest accrued and due for the initial three month period
(the "Period") commencing on the applicable Closing Date,
divided by (y) 80% of the Market Price, where such term is
defined as the average closing bid price of the Common Stock,
as reported by the National Association of Securities Dealers
Electronic Bulletin Board (the "Bulletin Board"), for the last
5 consecutive trading days prior to the applicable Closing
Date. Any dividend payments in the form of Common Stock are
required to be issued pursuant to Regulation S. After the
Period, the Registrant shall pay interest in cash or Common
Stock (based on the above formula), at the Registrant's
option.
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The holder of each Debenture is entitled, at its
option, at any time commencing 45 days after the applicable
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, which are to be issued
pursuant to Regulation S, at a conversion price per share of
Common Stock equal to the lower of (a) 80% of the average
closing bid price of the Common Stock, as reported by the
Bulletin Board, for the day immediately preceding the date of
receipt by the Registrant from the Investor of a notice of
conversion, or (b) 80% of the closing bid price of the Common
Stock, as reported by the Bulletin Board, for the five (5)
days immediately preceding the date of subscription by the
Holder.
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 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 days 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 by 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.
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
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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):
<TABLE>
<S> <C>
Liquidated
No. of Damages
Business per $100,000
Days Late of Debenture
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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>
Each Debenture is secured by a lien against the
Registrant in favor of the respective Investor in an amount
not less than $1,000,000.
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
Richard Altomare, Chief
Executive Officer
Dated: June 18, 1997
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