================================================================================
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 11, 1997
PACKAGING PLUS SERVICES, INC.
----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 0-18094 11-2781803
- --------------------------------------------------------------------------------
(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.)
FORMATION)
20 SOUTH TERMINAL DRIVE, PLAINVIEW, NEW YORK 11803
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (516) 349-1300
--------------
- --------------------------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
================================================================================
<PAGE>
Item 9. SALE OF EQUITY SECURITIES PURSUANT TO REGULATION S.
On various dates during the period commencing July 11,
1997 and ending on July 25, 1997 (each a "Closing Date"), the
Registrant issued to those investors listed on Schedule A
hereto (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 $2,881,250. 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
$2,305,000. In connection with the sale of the Debentures, the
Company paid (i) commissions to the placement agent equal to
12% of the gross proceeds, resulting in aggregate commissions
equal to $276,600, and (ii) a fee to the Company's investment
advisers in the aggregate amount of $500,000. As a
consequence, after deducting the placement agent's commissions
and the investment adviser's fee, the Company received net
proceeds of $1,528,400 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
1
<PAGE>
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 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
2
<PAGE>
Registrant of a Notice of Conversion from an Investor:
LIQUIDATED
NO. OF DAMAGES
BUSINESS PER $100,000
DAYS LATE OF DEBENTURE
--------- ------------
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
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.
3
<PAGE>
SIGNATURES
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: August 12, 1997
4
<PAGE>
SCHEDULE A
----------
LIST OF INVESTORS
Mercaz Revaj
Arcadia Mutual Fund
Bank August Roth AG
DeAffiliatie BV
Austost Anstalt Schaan
UFH Endowment Ltd.
Paril Holding
Prime Capital Management Group Ltd.
Guarantee & Finance
FT Trading
Mordecha Rand
Naffali Spitzer
Minna Ledereich
