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PLCSF > SEC Filings for PLCSF > Form 8-K on 2-Jun-2014All Recent SEC Filings

Show all filings for PLC SYSTEMS INC

Form 8-K for PLC SYSTEMS INC


2-Jun-2014

Entry into a Material Definitive Agreement, Creation of a Direct Financial Obliga


Item 1.01. Entry into a Material Definitive Agreement.

On May 27, 2014, in connection with an additional Third Closing (as defined in the Purchase Agreement) under that certain Securities Purchase Agreement, dated as of February 22, 2011, by and between PLC Systems Inc., a Yukon Territory corporation (the "Company"), and certain accredited investors, as amended by each of those certain Amendments and Waivers dated July 2, 2012, January 16, 2013, September 18, 2013 and April 14, 2014 (as amended, the "Purchase Agreement"), the Company issued and sold to GCP IV LLC ("GCP"), and GCP purchased from the Company, (i) a 5% Senior Secured Convertible Debenture of the Company (the "Debenture") with a principal amount of $250,000 (the "Debenture Amount"), and (ii) a Common Stock Purchase Warrant to purchase up to 4,166,667 shares of the Company's common stock (the "Common Stock") at an initial exercise price of $0.09 per share (the "Warrant"), for a total purchase price of $250,000.

The Debenture bears interest at a rate of 5% per annum, payable quarterly, and matures on January 16, 2016. The Debenture is convertible, at GCP's option, at any time prior to repayment of the Debenture Amount into shares of Common Stock (the "Debenture Shares") at an initial conversion price of $0.06 per share (the "Conversion Price"). The Conversion Price is adjustable for certain dilutive issuances, including issuances of securities at an effective price per share lower than the Conversion Price, rights offerings, mergers or sales of assets and certain other customary anti-dilution provisions.

The Company's obligations under the Debenture and the Purchase Agreement are secured by all of the assets of the Company and its subsidiaries. The Debenture contains covenants restricting the Company and its subsidiaries from, among other things, incurring debt, granting liens, amending organizational documents, repurchasing or repaying other debt, paying cash dividends, and entering into transactions with affiliates. Following an event of default, the interest rate on the Debenture will increase to 16% per annum and, at the election of the holder, the Debenture Amount may be accelerated and payable at a price equal to the greater of (i) 130% of the principal amount outstanding and (ii) an amount equal to a price based on the trading price of the Common Stock multiplied by the number of Debenture Shares, plus, in each case, accrued interest.

The Debenture may be redeemed at the option of the Company only in connection with a change of control of the Company or other fundamental transaction and subject to the satisfaction of certain other conditions including that the shares issuable upon conversion of the Debenture are freely tradable and that there is no event of default. The redemption price is the greater of (i) 130% of the Debenture Amount, (ii) an amount equal to a price based on the trading price of the Common Stock multiplied by the number of Debenture Shares, and
(iii) the outstanding principal amount of the Debenture divided by the Conversion Price, multiplied by the per share value of the consideration payable in the transaction giving rise to the redemption, plus, in each case, accrued interest.

As noted above, in connection with an additional Third Closing, in addition to the issuance and sale of the Debenture, the Company also issued to GCP a five year Warrant to purchase 4,166,667 shares of Common Stock (the "Warrant Shares") at an exercise price of $0.09 per share (the "Exercise Price"). The Warrant may be exercised on a cashless basis if there is no effective registration statement registering the Warrant Shares. The Exercise Price is adjustable for certain dilutive issuances, including issuances of securities at an effective price per share lower than the Exercise Price, rights offerings, mergers or sales of assets and certain other customary anti-dilution provisions.

The Warrant provides that the Warrant may be purchased at the option of the Company only in connection with a change of control of the Company that is an all cash transaction. The purchase price upon such change of control will be 30% of the then effective Exercise Price multiplied by the number of Warrant Shares.


The issuance of the Debenture and the Warrant (the "Securities") were not registered under the Securities Act of 1933, as amended (the "Securities Act") and such issuance qualified for exemption under Section 4(2) of the Securities Act and Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. GCP was an accredited investor (as defined by Rule 501 under the Act) at the time of the transaction.

The foregoing description of the transactions contemplated by the Debenture and the Warrant is not complete and is qualified in its entirety by reference to the full text of the Debenture, a copy of which is filed with this Current Report as Exhibit 10.1, and the Warrant, a copy of which is filed with this Current Report as Exhibit 4.1, all of which are incorporated by reference herein.



Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information provided in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.



Item 3.02. Unregistered Sales of Equity Securities.

The information provided in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 3.02.



Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Number   Exhibit

  4.1    Common Stock Purchase Warrant, dated May 27, 2014, issued by the Company
         to GCP IV LLC.

  10.1   5% Senior Secured Convertible Debenture, dated May 27, 2014, issued by
         the Company to GCP IV LLC.


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