SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended November 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ___________________
Commission file number 1-4415
PARK ELECTROCHEMICAL CORP.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 11-1734643
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Dakota Drive, Lake Success, N.Y. 11042
- ------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 354-4100
Not Applicable
-----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 11,384,798 as of January 9,
1998.
<PAGE> 2
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Number
------
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
November 30, 1997 (Unaudited) and
March 2, 1997 ...................................... 4
Consolidated Statements of Earnings
13 weeks and 39 weeks ended November 30, 1997 and
December 1, 1996 (Unaudited)........................ 5
Condensed Consolidated Statements of Cash Flows
39 weeks ended November 30, 1997 and
December 1, 1996 (Unaudited)........................ 6
Notes to Condensed Consolidated Financial
Statements (Unaudited) ............................. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ......................................... 9
Factors That May Affect Future Results........................ 12
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings ................................... 13
Item 6. Exhibits and Reports on Form 8-K .................... 13
SIGNATURES ..................................................... 14
EXHIBIT INDEX.................................................... 15
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<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The Company's Financial Statements begin on the next page.
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<PAGE> 4
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
November 30, March 2,
1997 1997
----------- --------
<S> <C> <C>
ASSETS (Unaudited) *
Current assets:
Cash and cash equivalents $ 27,203 $ 42,321
Marketable securities 125,035 102,232
Accounts receivable, net 53,242 50,314
Inventories (Note 2) 30,432 20,458
Prepaid expenses and other current assets 8,291 5,089
-------- --------
Total current assets 244,203 220,414
Property, plant and equipment, net 100,470 83,391
Other assets 3,920 4,057
-------- --------
$348,593 $307,862
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 41,640 $ 32,892
Accrued liabilities 19,752 18,565
Income taxes payable 5,679 3,953
-------- --------
Total current liabilities 67,071 55,410
Long-term debt 100,000 100,000
Deferred income taxes 8,421 7,963
Deferred pension & other liabilities 12,256 1,134
Stockholders' equity:
Common stock 1,358 1,358
Other stockholders' equity 159,487 141,997
-------- --------
Total stockholders' equity 160,845 143,355
-------- --------
$348,593 $307,862
======== ========
<FN>
*The balance sheet at March 2, 1997 has been derived from the audited
financial statements at that date.
</TABLE>
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<PAGE> 5
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited--in thousands, except per share data)
<CAPTION>
13 Weeks Ended 39 Weeks Ended
------------------------ ------------------------
November 30, December 1, November 30, December 1,
1997 1996 1997 1996
--------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Net sales $97,625 $88,972 $272,344 $246,352
Cost of sales 77,774 73,587 219,512 204,281
-------- -------- --------- ---------
Gross profit 19,851 15,385 52,832 42,071
Selling, general and
administrative expenses 10,115 8,810 28,106 24,986
-------- -------- --------- ---------
Profit from operations 9,736 6,575 24,726 17,085
-------- -------- --------- ---------
Other income (expense):
Interest and other
income, net 2,086 1,846 6,250 5,374
Interest expense (1,374) (1,337) (4,084) (4,062)
-------- -------- --------- ---------
Total other income 712 509 2,166 1,312
-------- -------- --------- ---------
Earnings before income taxes 10,448 7,084 26,892 18,397
Income tax provision 3,452 2,196 8,879 5,703
-------- -------- --------- ---------
Net earnings $ 6,996 $ 4,888 $18,013 $ 12,694
======== ======== ========= =========
Earnings per share (Note 3):
Primary $ .60 $ .43 $ 1.56 $ 1.09
Fully diluted $ .57 $ .42 $ 1.49 $ 1.09
Weighted average number of
common and common equivalent
shares outstanding:
Primary 11,585 11,444 11,530 11,617
Fully diluted 13,955 13,835 13,900 11,617
Dividends per share $ .08 $ .08 $ .24 $ .24
</TABLE>
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<PAGE> 6
<TABLE>
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited--in thousands)
<CAPTION>
39 Weeks Ended
-------------------------
November 30, December 1,
1997 1996
---------- ------------
<S> <C> <C>
Net cash provided by operating activities $26,200 $22,530
-------- --------
Cash flows from investing activities:
Purchases of property, plant and
equipment, net (10,958) (13,826)
Purchases of marketable securities (98,446) (82,708)
Proceeds from sales of marketable
securities 75,651 69,319
Acquisition of business, net of cash acquired (5,178) -
-------- --------
Net cash used in investing activities (38,931) (27,215)
-------- --------
Cash flows from financing activities:
Dividends paid (2,708) (2,746)
Proceeds from exercise of stock options 297 229
Purchase of treasury stock - (6,293)
Other - 1
-------- --------
Net cash used in financing activities (2,411) (8,809)
-------- --------
Decrease in cash and cash equivalents
before effect of exchange rate changes (15,142) (13,494)
Effect of exchange rate changes on cash
and cash equivalents 24 155
-------- --------
Decrease in cash and cash equivalents (15,118) (13,339)
Cash and cash equivalents, beginning of period 42,321 75,970
-------- --------
Cash and cash equivalents, end of period $27,203 $62,631
======== ========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 5,500 $ 2,781
Income taxes $ 6,747 $ 5,238
Non-cash investing activities:
Stock issued in connection with acquisition $ 2,074 $ -
</TABLE>
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<PAGE> 7
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of November 30, 1997, the
consolidated statements of earnings for the 13 weeks and 39 weeks ended
November 30, 1997 and December 1, 1996, and the condensed consolidated
statements of cash flows for the 39 week periods then ended have been
prepared by the Company, without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position at Novemer 30, 1997, and the
results of operations and cash flows for all periods presented, have been
made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year
ended March 2, 1997.
<TABLE>
2. INVENTORIES
Inventories consist of the following:
<CAPTION> (In thousands)
November 30, March 2,
1997 1997
---------- ----------
<S> <C> <C>
Raw materials $12,315 $ 8,459
Work-in-process 6,474 4,037
Finished goods 10,770 7,173
Manufacturing supplies 873 789
------- -------
$30,432 $20,458
======= =======
</TABLE>
3. EARNINGS PER SHARE
Primary earnings per share are computed based on the weighted average
number of common and common equivalent shares outstanding during the
period. Fully diluted earnings per share reflect additional shares
assumed to be outstanding based upon (i) the assumed exercise of stock
options at the period-end market price of the Company's common stock if
such price is higher than the average market price during the period, and
(ii) the assumed conversion of the Company's 5.5% Convertible Subordinated
Notes due 2006 (the "Notes"), if the effect would be dilutive. For the
39 weeks ended December 1, 1996, the effect of the assumed conversion of
the Notes was antidilutive and, accordingly, the amount reported for fully
diluted earnings per share was equal to the amount reported for primary
earnings per share.
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<PAGE> 8
4. ACQUISITION
On October 29, 1997, the Company acquired 80% of the capital stock of
Dielektra GmbH ("Dielektra") for $8.8 million in cash and 77,000
shares of Park common stock. The Company has an option to purchase,
and the 20% owner has an option to sell, the remaining portion of
Dielektra's capital stock in five years for an additional 103,000
shares of Park common stock. Dielektra, located in Cologne, Germany,
is a manufacturer of advanced electronic materials used to produce
sophisticated multilayer printed circuit boards. Dielektra's advanced
circuit materials product line includes continuously produced
multilayer laminates and very high layer count semi-finished
multilayer circuit board panels. The acquisition of Dielektra is
being accounted for as a purchase, and the Company is in the process
of finalizing the fair value of the assets and liabilities acquired.
Pro forma operating results are not presented because Dielektra's
impact on the Company's consolidated operating results is not
significant.
-8-
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Park is a leading global designer and producer of advanced
electronic materials used to fabricate complex multilayer printed circuit
boards, semiconductor packages and other electronic interconnect systems.
In October 1997, the Company acquired Dielektra GmbH, a manufacturer of
advanced electronic materials, including continuously produced copper-clad
laminates and mass-laminated multilayer panels, located in Cologne, Germany.
The Company's customers for its advanced printed circuit materials include
leading independent circuit board fabricators and large electronic equipment
manufacturers in the computer, telecommunications, transportation, aerospace
and instrumentation industries.
The Company's electronic materials operations accounted for 87%
or more of net sales worldwide in each of the last two fiscal years and in
the three-month and nine-month periods ended December 1, 1996 and November
30, 1997. The Company's foreign electronic materials operations accounted
for approximately 29% of net sales worldwide in the 1996 and 1997 fiscal
years and approximately 32% in each of the three-month periods and
approximately 30% in each of the nine-month periods ended December 1, 1996
and November 30, 1997. The Company's electronic materials operations
accounted for approximately 96% and 89% of operating profit in the 1996 and
1997 fiscal years, respectively, approximately 93% of operating profit in
the three-month and nine-month periods ended December 1, 1996, and
approximately 90% of operating profit in the three-month and nine-month
periods ended November 30, 1997.
Park is also engaged in the engineered materials and plumbing
hardware businesses, which consist of the Company's specialty adhesive tape
and film business, its advanced composite materials business and its
plumbing hardware business, all of which operate as independent business
units. This segment accounted for approximately 13% of the Company's total
net sales worldwide in each of the last two fiscal years, approximately 12%
in the three-month and nine-month periods ended December 1, 1996 and
approximately 11% of total net sales worldwide in the three-month and nine-
month periods ended November 30, 1997. Furthermore, this segment accounted
for approximately 4% and 11% of operating profit in the 1996 and 1997 fiscal
years, respectively, approximately 7% of operating profit in the three-month
and nine-month periods ended December 1, 1996, and approximately 10% of
operating profit in the three-month and nine-month periods ended November
30, 1997.
Three and Nine Months Ended November 30, 1997 Compared with Three and Nine
Months Ended December 1, 1996:
The Company's electronic materials business was principally
responsible for the improvement in the Company's results of operations for
the three-month and nine-month periods ended November 30, 1997. The North
American and Asian markets, and to a lesser extent the European market, for
sophisticated printed circuit materials were strong during the 1998 fiscal
year first and third quarters, and the Company's electronic materials
operations located in these regions performed well as a result.
During the first and third quarters, the Company's electronic
materials business experienced improved efficiencies resulting from the
operation of its facilities at levels close to their designed manufacturing
capacity, which favorably impacted the Company's margins in the three-month
and nine-month periods ended November 30, 1997 over last fiscal year's
comparable periods.
Operating results of the Company's engineered materials and
plumbing hardware business improved substantially during the three-month and
nine-month periods ended November 30, 1997.
-9-
<PAGE> 10
Results of Operations
Sales for the three-month and nine-month periods ended November
30, 1997 increased 10% to $97.6 million and 11% to $272.3 million,
respectively, from $89.0 million and $246.4 million for last fiscal year's
comparable periods. Sales of the electronic materials business for the
three-month and nine-month periods ended November 30, 1997 were $87.5
million and $241.6 million, respectively, or approximately 89% of total
sales worldwide, compared with $78.2 million and $214.8 million,
respectively, or 88% of total sales worldwide for last fiscal year's
comparable periods. The increases in sales of electronic materials were
principally the result of higher volumes of electronic materials shipped, an
increase in sales of higher technology products and the inclusion of
Dielektra in the Company's sales. Sales of the engineered materials and
plumbing hardware segment for the three-month and nine-month periods ended
November 30, 1997 were $10.1 million and $30.7 million, respectively,
compared with slightly higher amounts for last fiscal year's comparable
periods. Increased sales in the specialty adhesive tape and film business
and in the advanced composite materials business resulting from higher
volumes were offset by lower sales in the plumbing hardware business.
The Company's foreign electronic materials operations accounted
for $31.7 million and $80.3 million, respectively, of sales, or 32% and 30%
of the Company's total sales worldwide, during the three-month and nine-
month periods ended November 30, 1997 compared with $28.1 million and $73.6
million, respectively, of sales, or 32% and 30% of total sales worldwide,
during last fiscal year's comparable periods. Sales by the Company's
foreign electronic materials operations during the 1998 fiscal year first
three quarters increased 9% from the 1997 fiscal year comparable period
principally due to the inclusion of Dielektra in the Company's sales and an
increase in sales by the Company's Asian operations. The Company expanded
the manufacturing capacity of its facility in Singapore during the latter
part of the 1997 fiscal year and is engaged in further expansions of the
Singapore manufacturing facility during the Company's 1998 fiscal year.
The gross margins for the Company's worldwide operations were
20.3% and 19.4%, respectively, during the three-month and nine-month periods
ended November 30, 1997 compared with 17.3% and 17.1%, respectively, for
last fiscal year's comparable periods. The improvement in the gross margin
in the 1998 fiscal year was attributable to efficiencies resulting from
operating the Company's facilities at levels close to their designed
capacity during the first and third quarters and the continuing growth in
sales of higher technology, higher margin products.
Selling, general and administrative expenses, measured as a
percentage of sales, were 10.3% during the three-month and nine-month
periods ended November 30, 1997 compared with 9.9% and 10.2%, respectively,
during last fiscal year's comparable periods.
For the reasons set forth above, profit from operations for the
three-month period ended November 30, 1997 increased 48% to $9.7 million
from $6.6 million for last fiscal year's comparable period, and profit from
operations for the nine-month period ended November 30, 1997 increased 45%
to $24.7 million from $17.1 million for last fiscal year's comparable
period.
Interest and other income, principally investment income,
increased 13% to $2.1 million and 16% to $6.3 million, respectively, for the
three-month and nine-month periods ended November 30, 1997 from $1.8 million
and $5.4 million, respectively, for last fiscal year's comparable periods.
The increases in investment income were attributable to increases in cash
available for investment and an increase in prevailing interest rates. The
Company's investments were primarily short-term taxable instruments and
government securities. Interest expense for the three-month and nine-month
periods ended November 30, 1997 was $1.4 million and $4.1 million,
respectively, compared with approximately the same amounts during last
fiscal year's comparable periods. At the end of the 1996 fiscal year, the
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<PAGE> 11
Company issued $100 million principal amount of 5.5% Convertible
Subordinated Notes due 2006 (the "Notes"); as a result, all of such Notes
were outstanding during the quarter ended November 30, 1997 and the last
fiscal year, which resulted in the associated interest expense and
contributed to the cash available for investment.
The Company's effective income tax rate for the three-month and
nine-month periods ended November 30, 1997 was 33.0% compared with 31.0% for
last fiscal year's comparable periods. This increase in the effective tax
rate was primarily the result of less favorable foreign tax rate
differentials.
Net earnings for the three-month and nine-month periods ended
November 30, 1997 increased 43% to $7.0 million and 42% to $18.0 million,
respectively, from $4.9 million and $12.7 million, respectively, for last
fiscal year's comparable periods. Primary and fully diluted earnings per
share increased to $0.60 and $0.57, respectively, for the three-month period
ended November 30, 1997 from $0.43 and $0.42, respectively, for last fiscal
year's comparable period, and primary and fully diluted earnings per share
increased to $1.56 and $1.49, respectively, for the nine-month period ended
November 30, 1997 from $1.09 for last fiscal year's comparable period.
These increases in net earnings and earnings per share were attributable to
the Company's improved operating results and other income.
Liquidity and Capital Resources:
At November 30, 1997, the Company's cash and temporary
investments were $152.2 million compared with $144.6 million at March 2,
1997, the end of the Company's 1997 fiscal year. The increase in the
Company's cash and investment position at November 30, 1997 was attributable
to cash provided from operating activities in excess of investments in
property, plant and equipment and in Dielektra, as discussed below. The
Company's working capital was $177.1 million at November 30, 1997 compared
with $165.0 million at March 2, 1997. The increase at November 30, 1997
compared with March 2, 1997 was due principally to the increases in cash and
temporary investments, inventories and other current assets, partially due
to the acquisition of Dielektra, offset in part by higher payables. The
Company's current ratio (the ratio of current assets to current liabilities)
was 3.6 to 1 at November 30, 1997 compared with 4.0 to 1 at March 2, 1997.
During the nine-months ended November 30, 1997, cash provided by
net earnings before depreciation and amortization of $27.3 million was
reduced by a net increase in working capital items, resulting in $26.2
million of cash provided from operating activities, and the Company expended
$16.2 million for the purchase of property, plant and equipment and for its
net cash investment in Dielektra. Expenditures for property, plant and
equipment were $18.7 million and $24.5 million in the 1997 and 1996 fiscal
years, respectively. The Company is planning further expansions of its
electronic materials operations, particularly in the United States and Asia.
At November 30, 1997, the Company's only long-term debt was the
Notes. The Company believes its financial resources will be sufficient, for
the foreseeable future, to provide for continued investment in property,
plant and equipment and for general corporate purposes. Such resources
would also be available for appropriate acquisitions and other expansions of
the Company's business.
In the nine month periods ended November 30, 1997 and
December 1, 1996, the Company charged less than $0.2 million against pretax
income for environmental remedial response and voluntary cleanup costs
(including legal fees). While annual expenditures have generally been
constant from year to year, and may increase over time, the Company expects
it will be able to fund such expenditures from cash flow from operations.
The timing of expenditures depends on a number of factors, including
regulatory approval of cleanup projects, remedial techniques to be utilized
and agreements with other parties. At November 30, 1997 and March 2, 1997,
the recorded liability in accrued liabilities for environmental matters was
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<PAGE> 12
$1.2 million. Management does not expect that environmental matters will
have a material adverse effect on the liquidity, capital resources, business
or consolidated financial position of the Company.
Factors That May Affect Future Results.
Certain portions of this Report which do not relate to
historical financial information may be deemed to constitute forward-looking
statements that are subject to various factors which could cause actual
results to differ materially from the Company's expectations or from results
which might be projected, forecast, estimated or budgeted by the Company in
forward-looking statements. Such factors include, but are not limited to,
general conditions in the electronics industry, the Company's competitive
position, the status of the Company's relationships with its customers,
economic conditions in international markets, and the various factors set
forth under the caption "Factors That May Affect Future Results" after Item
7 of the Company's Annual Report on Form 10-K for the fiscal year ended
March 2, 1997.
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<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
(a) There are no material pending legal proceedings to which the
Company is a party or to which any of its properties is subject.
(b) No material pending legal proceeding was terminated during the
fiscal quarter ended November 30, 1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number
10.01 Sale and Purchase Agreement dated 29 October 1997 between
Dieter G. Weiss, Lothar Hubert Reinartz, Nelco
International Corporation and Park Electrochemical Corp.
relating to the sale and purchase of shares of capital in
Dielektra GmbH.
11.01 Computation of fully diluted earnings per share
27.01 Financial data schedule
(b) No reports on Form 8-K have been filed during the fiscal quarter
ended November 30, 1997.
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<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Park Electrochemical Corp.
---------------------------
(Registrant)
Date: January 13, 1998 /s/Brian E. Shore
---------------- ---------------------------
Brian E. Shore
President and
Chief Executive Officer
Date: January 13, 1998 /s/Alan M. Aronovitz
---------------- ---------------------------
Alan M. Aronovitz
Senior Vice President and
Principal Financial Officer
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<PAGE> 15
EXHIBIT INDEX
Exhibit No. Name Page
10.01 Sale and Purchase Agreement dated 29 October
1997 between Dieter G. Weiss, Lothar Hubert
Reinartz, Nelco International Corporation and
Park Electrochemical Corp. relating to the sale
and purchase of shares of capital in Dielektra
GmbH.......................................... 16
11.01 Computation of fully diluted
earnings per share........................... 40
27.01 Financial data schedule (filed
only by electronic transmission
with EDGAR filing with the
Securities and Exchange Commission).......... -
-15-
EXHIBIT 10.01
Deed Roll No. 1032/1997
R e c o r d e d
in Dusseldorf on this 29th day of October 1997
Before me, the undersigned notary
Dr. Burkhard Punder
with place of office in Dusseldorf
in the district of the Oberlandesgericht Dusseldorf
appeared today:
1. Dr. Christian Decher, attorney at law, born 11th February 1958,
hereinafter not acting on his own, but on the basis of a written
power of attorney of today which was presented in the original and
of which the notary took a certified copy and appended it hereto as
Annex A for and on behalf of Mr. Dieter G. Weiss, Diplom-Ingenieur,
Im Winkel 38, 53639 Konigswinter, born on 20th March 1955,
(hereinafter referred to as the "Seller 1"), identified by his
German passport.
2. Mr. Lothar Hubert Reinartz, Kaufmann, Dischkaul 5, 51143 Koln, born
on 20th April 1943, (hereinafter referred to as the "Seller 2"),
identified by his German passport.
The persons listed under 1 and 2 are hereinafter also collectively
referred to as the
"Sellers".
3. Mrs. Petra Kranz, attorney at law, born 1st June 1966, not acting
for herself but:
a) on the basis of a written power of attorney which was
presented in the original and of which the notary took a
certified copy and appended it hereto as Annex B for and on
behalf of Nelco International Corporation, 2401 E. Katella
Avenue, Anaheim, California, U.S.A., (hereinafter the "Buyer")
and
b) on the basis of a written power of attorney which was
presented in the original and of which the notary took a
certified copy and appended it hereto as Annex C for and on
behalf of Park Electrochemical Corp., 5 Dakota Drive, Lake
Success, New York 11042, U.S.A., (hereinafter "Park"),
The notary and all persons appearing are in command of the English
language.
The persons appearing requested the recording of the following
SALE AND PURCHASE AGREEMENT
Table of Contents
Preamble
Article 1 Definitions
Article 2 Description of the Objects to be Acquired
Article 3 Sale and Transfer
Article 4 Post-Closing Activities
Article 5 Purchase Price
Article 6 Escrow Account
Article 7 Warranties and Representations
Article 8 Legal Consequences
Article 9 Limitation of Claims
Article 10 Put and Call Options
Article 11 Confidentiality
Article 12 Non Competition
Article 13 Applicable Law, Jurisdiction
Article 14 Cost and Taxes
Article 15 Notices
Article 16 Miscellaneous
Article 1
Definitions
"Agreement" shall mean this present Sale and Purchase Agreement
"Call Option" shall have the meaning as set forth in Article 1 0. 1
"Company" shall mean Dielektra Gesellschaft mit beschrankter Haftung as
more closely identified in Article 2.1, for purposes of Article 7 the term
"Company" shall include any and all subsidiaries of Dielektra GmbH.
"Confidential Information " shall have the meaning as set forth in Article
11.
"Consolidated Financial Statements" shall mean the consolidated balance
sheet as well as the consolidated profit and loss statement of the Company
and all of its subsidiaries.
"Employees" shall have the meaning as set forth in Article 7.10.1.
"Escrow Account" shall have the meaning as set forth in Article 6.1.
"Escrow Amount" shall have the meaning as set forth in Article 6.1.
"Financial Statements" shall have the meaning as set forth in Article
7.4.1.
"Leased Property" shall have the meaning as set forth in Article 7.5.7.
"Material Contracts" shall have the meaning as set forth in Article
7.11.1.
"Park Shares" shall have the meaning as set forth in Article 5.1.
"Personal Property" shall have the meaning as set forth in Article 7.6.1.
"Put Option" shall have the meaning as set forth in Article 10.2.
"Real Property" shall have the meaning as set forth in Article 7.5.1.
"Shares" shall mean any and all shares the Sellers hold in the Company.
"Taxes" shall mean all "Abgaben", "Steuern", Steuerabzugsbetrage", "Zolle"
and all types of contributions to mandatory insurance schemes.
Article 2
Description of the Objects to be Acquired
2.1 The Sellers are all shareholders of Dielektra GmbH, registered in
the Commercial Register of the Lower Court of Cologne under the
registration number HR B 7188. The entire share capital of
Dielektra GmbH amounts to DM 20,320,000 and is allocated to the
Shares as follows:
Shares owned
by the Seller 1: one share in the nominal amount of DM 5,080,000
one share in the nominal amount of DM 1,016,000
one share in the nominal amount of DM 2,540,000
one share in the nominal amount of DM 2,540,000
one share in the nominal amount of DM 2,540,000
one share in the nominal amount of DM 2,540,000
Shares owned DM16,256,000
by the Seller 2: one share in the nominal amount of DM 4,064,000
All shares are fully paid in.
2.2 By virtue of a shareholders' resolution the Seller 1 and the Seller
2 hereby resolve to consolidate the shares owned by the Seller I as
follows:
The Seller 1: one share in the nominal amount of DM 16,256,000.
2.3 For the purpose of selling a portion of the share owned by the
Seller 1 this single share is hereby split as follows-
the share in the nominal amount of DM 16,256,000 into
one share in the nominal amount of DM 12,192,000 and
one share in the nominal amount of DM 4.064,000.
Article 3
Sale and Transfer
3.1 The Seller 1 hereby sells and transfers to the Buyer, who accepts
such sale and transfer, the following share in the Company including
any rights to profits for the fiscal year 1997 and any previous
fiscal years if such profits have not yet been distributed:
one share in Dielektra GmbH in the nominal amount of DM 12,192,000.
3.2 The Seller 2 hereby sells and transfers to the Buyer, who accepts
such sale and transfer, the following share including any rights to
profits for the fiscal year 1997 and any previous fiscal years if
such profits have not yet been distributed:
one share in Dielektra GmbH in the nominal amount of DM 4,064,000.
3.3 The effectiveness of the transfer of the shares pursuant to Article
3.1 and 3.2 above shall be subject to full payment of the purchase
price in accordance with Article 5 of this Agreement.
3.4 The proof of full payment of the purchase price may be furnished by
the Sellers by means of an irrevocable confirmation of payment or by
the Buyer by means of a confirmation given by the bank instructed to
transfer the purchase price stating that the transfer order has been
duly performed by the bank and, with regard to the Seller 1, by
furnishing a respective share certificate proving the issuance of
the Park Shares in favor of the Seller 1 pursuant to Article 5.1.
The Parties will provide the enacting notary public with the
respective proof. The enacting notary public is instructed to
attach the confirmation of payment to this notarial deed. Sec. 270
(1) of the German Civil Code (BGB) remains unaffected.
3.5. The Seller I shall be entitled to sell and transfer its remaining
share in the nominal value of DM 4,064,000 only with the prior
written approval of the Buyer for a period of five years and three
months commencing on the date hereof. The Buyer shall be obligated
to give such approval in case of a transfer of the share or parts
thereof to the wife and/or children of Seller 1, provided, however,
the wife and the children of the Seller 1 will assume simultaneously
all rights and obligations of the Seller 1 vis-a-vis the Buyer
arising in connection with the Put and Call Options as provided for
under Article 10 of this Agreement.
Article 4
Post-Closing Activities
4.1 Immediately upon signing of this Agreement, the Seller I and the
Buyer will enter into a service agreement substantially in the form
as it appears in Exhibit A.
4.2 Immediately upon signing of this Agreement the Buyer and Seller 1
will amend the Articles of Association of the Company to comply with
the form attached hereto as Exhibit B.
4.3 The Buyer and Park will appoint Seller 1 as ,managing director"or
its equivalent of the Buyer's European Operations.
Article 5
Purchase Price
5.1 The consideration for the share sold by the Seller 1 shall amount to
a cash payment of DM 10,850,000 (in words: Deutsche Mark ten million
eight hundred and fifty thousand) as provided for under clause (a)
below and the issuance of 77,000 shares of common stock par value
$10 per share of Park (the "Park Shares").
(a) On the date hereof the Buyer shall instruct its bank to make
the cash payment for the shares sold by the Seller I minus the
relevant Escrow Amount provided for in Article 6 below by wire
transfer to the following account of the Seller 1:
Bank: Deutsche Bank, Bonn, Kaiserplatz 5-9, 53113
Bonn, Germany
Bank code: 380 700 59
Account No.: 048 0004
(b) The Seller 1 agrees not to sell, transfer, pledge, encumber or
dispose otherwise of the Park Shares received pursuant to this
Article 5 for a period of three years commencing on the date
of receipt of such shares.
(c) The Seller 1 is acquiring the Park Shares pursuant to this
Article 5 and Article 10 solely for his own account for
investment and not with a view to, or for sale in connection
with, any distribution or other disposition thereof.
The Seller 1 acknowledges receipt of advice from the Buyer
that (i) the Park Shares have not been registered under the
Securities Act of 1933 (the "Securities Act"), (ii) the Park
Shares must be held indefinitely and the Seller 1 must
continue to bear the economic risk of the investment in the
Park Shares, unless such Park Shares are subsequently regis-
tered under the Securities Act, or an exemption from such
registration is available, (iii) if the exemption afforded by
Rule 144 of the Securities Act is not available, sale of the
Park Shares without registration will require the availability
of an exemption under the Securities Act, (iv) an appropriate
restrictive legend shall be placed on the certificates) rep-
resenting the Park Shares and (v) a notation shall be made in
the appropriate records of Park indicating that the Park
Shares are subject to restrictions on transfer and,
appropriate stop-transfer restrictions will be issued to the
transfer agent with respect to the Park Shares. In addition,
the Seller I has been given access to and the opportunity to
examine all documents and ask questions of, and receive
answers from Park and its representatives concerning the
business, assets, liabilities, results of operations and
financial condition of Park and the terms and conditions of
the transaction.
Either (i) the Seller I is an "accredited investor" as such
term is defined in Rule 501 (a) promulgated under the
Securities Act or (ii) (a) the Seller's I financial situation
is such that the Seller 1 can afford to bear the economic risk
of holding the Park Shares for an indefinite period of time,
(b) the Seller 1 can afford to suffer complete loss of his
investment in the Park Shares, and (c) the Seller's 1
knowledge and experience in financial and business matters are
such that the Seller 1 is capable of evaluating the merits and
risks of the Seller's 1 investment in the Park Shares.
5.2 The consideration for the share sold by the Seller 2 shall amount to
a cash payment of DM 4,360,000 (in words: Deutsche Mark four million
three hundred and sixty thousand five hundred). On the date hereof
the Buyer shall instruct its bank to make the cash payment for the
shares sold by the Seller 2 by wire transfer to the following
account of Seller 2:
Bank: Stadtsparkasse Koln, Hahnenstrabe 57, 50667 Koln,
Germany
Bank code: 370 501 98
Account No.: 100 456 3795
Article 6
Escrow Account
6.1 A portion of the Purchase Price for the Seller 1 of DM 1,700,000 (in
words: Deutsche Mark one million and seven hundred thousand) shall
serve as collateral for any claims relating to breaches for
representations and warranties as set forth in Article 7 hereof
which the Buyer is entitled to receive in accordance with Article 8
hereof (the "Escrow Amount") and shall be paid by the Buyer into a
joint account established at the Stadtsparkasse Koln ("Escrow
Account") in accordance with the terms of the Escrow Agreement
attached hereto as Schedule 6.1.
6.2 One year after the date hereof the Escrow Amount shall be released
in accordance with the following provisions and in the form set out
in the Escrow Agreement attached hereto as Schedule 6.1:
6.2.1 To the extent that within one year after the date hereof the Buyer
has asserted claims against the Seller 1 in accordance with Article
8 hereof which have either been accepted by the Seller 1 or have
been settled between the Seller 1 and the Buyer or have been
unappealably resolved by Arbitration award, the Seller 1 shall
immediately release such amount of money from the Escrow Account as
asserted by the Buyer or settled between the Seller 1 and the Buyer
or set out in the Arbitration award, if any.
6.2.2 To the extent that within one year after the date hereof the Buyer
has asserted claims against the Seller 1 in accordance with Article
8 hereof which have prior to the expiration of one year after the
date hereof not been accepted by the Seller 1 and the Buyer or no
finally been resolved by Arbitration award, such amount of money as
asserted by the Buyer shall remain in the Escrow Account until the
respective claims have finally been settled. Immediately after
final settlement the Seller 1 shall release such amount of money
from the Escrow Account as asserted by the Buyer or settled between
the Seller 1 and the Buyer or set out in the Arbitration award, if
any.
6.2.3 Subject to Articles 6.2.1.and 6.2.2 above, the Buyer shall upon
expiration of one year after the date hereof or after final
settlement in favor of the Seller 1 be obligated to release the
Escrow Amount then remaining on the Escrow Account, if any.
6.3 The bank shall make any payments to either the Buyer or the Seller
1 only upon joint order of the Buyer and the Seller 1 in the form
set out in Schedule 6.1 or upon presentation of an unappealable
Arbitration award awarding one of the Seller 1 or the Buyer certain
amount of money. The interest shall follow the principal.
Article 7
Representations and Warranties
7.1 The Seller 1 represents and warrants as of today the completeness
and correctness of all facts and circumstances mentioned or
described in Article 7.2 through 7.19.4 below relating to the
Company or its business. In as far as these warranties do not
constitute "zugesicherte Eigenschaften", the Seller 1 undertakes an
independent guarantee for the correctness and completeness of those
facts and circumstances.
7.2 The Company
7.2.1 The Company has been duly incorporated and is validly existing under
the jurisdiction of its respective place of incorporation and its
statutory seat.
7.2.2 There has been no proposal made or resolution adopted by the
shareholders for the dissolution and liquidation of the Company or
a merger of the Company with any other company, except the
resolution to dissolve Dielektra (HK) Ltd. and no liabilities exist
with respect to Dielektra (HK) Ltd. except for the costs of the
liquidation of Dielektra (HK) Ltd.
7.2.3 No application is pending to declare the Company bankrupt and no
application for composition proceedings is pending.
7.2.4 The Articles of Association and comparable documents of the Company
read in conformity with the copies thereof attached as Schedule
7.2.4 and no shareholders' resolution exists relating to the change
thereof.
7.2.5 The extract from the Commercial Register, attached as Schedule 7.2.5
is correct and complete. All shareholders' resolutions or other
circumstances capable of being registered are reflected in those
extracts.
7.2.6 The Company is not bound by "Unternehmensvertrage" within the
meaning of Section 291 et. seq. German Stock Corporation Act.
7.2.7 The Company does not and has not held shares or other interests in
other companies or similar entities except as disclosed in Schedule
7.2.7. The percentages of shareholdings shown in Schedule 7.2.7 are
correct.
7.2.8 Grundstucksgesellschaft Dielektra GbR has been dissolved with no
remaining liabilities and all the assets and interests of Dielektra
GbR were transferred to and are now held by the Company.
7.3 Shares
7.3.1 The factual information contained in Article 2 is complete and
correct.
7.3.2 The Shares and the shares in all subsidiaries are free and clear of
any rights of pledge, charges, liens, attachments, usufructs or any
other encumbrances thereof, including, but not limited to, option
rights and rights of first refusal, in favor of any third party.
The Seller 1 can dispose of the Shares without the co-operation,
consent or approval of any third party or any governmental authority
or court. No restrictions on the transfer of the Shares other than
those set forth in the Articles of Association of the Company are in
effect.
7.3.3 Since January 1, 1997 no (interim) dividends have been declared on
the Share .s except as disclosed in Schedule 7.3.3 nor have any
rights to a future dividend or other rights with respect to the
Company's profits been committed, transferred or pledged to third
parties.
7.3.4 Neither the Sellers nor their spouses nor any members of their
families nor any company controlled by them has any interest, direct
or indirect, in, nor any relationship with, any trade or business
which competes or is likely to compete with the Company's business
or which is a customer or supplier of the Company's business.
7.4 Financial Information
7.4.1 The 1996 audited annual reports of Dielektra GmbH and Dielektra U.K.
(Ltd.) with respect to the financial statements and financial
information as of, and for the years ended, December 31, 1995 and
December 31, 1996 (including the apportionment of Dielektra GmbH's
equity for tax purposes = "Gliederung des verwendbaren
Eigenkapitals") prepared by Quabeck & Partner, Bonn dated March 12,
1997 and The James Rosie Partnership, Galashiels, Scotland,dated
March 24, 1997 respectively, (hereinafter collectively referred to
as "Financial Statements") all of which have previously been
furnished to the Buyer:
a) have been prepared in accordance with all applicable laws and
accounting principals generally accepted in Germany with
respect to the preparation of annual accounts ("GAAP") and
applied on a consistent basis during the preceding two
business years;
b) present, in as far as the profit and loss accounts with the
notes are concerned, correctly, clearly and consistently the
results of the Company in the respective year.
7.4.2 The 1996 audited annual reports of Dielektra GmbH and Dielektra U.K.
(Ltd.) referred to in Art. 7.4.1 hereof have been furnished with an
unrestricted auditor's certificate by the Company's respective
auditor.
7.4.3 All accounts, books, ledgers, financial and other records of the
Company (including financial information and data stored
electronically)
(a) are in the possession of the Company;
(b) have been properly and accurately maintained;
(c) contain materially true, complete and accurate records of all
matters required to be entered in them by the law; and
(d) have been held for the period required by law.
7.4.4 On the relevant balance sheet dates in the Financial Statements, the
Company had no liability or commitments, contingent or otherwise,
matured or unmatured, not included or provided for in the Financial
Statements. There was no need to provide for additional provisions
or increase existing provisions.
7.4.5 The Company will have no liabilities other than those fully
reflected in the Financial Statements.
7.4.6 The Company has adequate working capital to fund its business in its
current state for at least one year after the date hereof.
7.4.7 Since December 31, 1996 and except as disclosed in Schedule 7.4.7:
(a) The Company's business has been conducted in the ordinary
course and there have been no changes in the condition,
financial or otherwise, of the Company, which have had a
material adverse effect on the net worth of the Company or in
general its business, results of operation or financial
condition;
(b) The Company has not entered into any transaction or incurred
any liability or obligation which individually or in the
aggregate was material to its business other than transactions
concluded and/or liabilities or obligations incurred in the
ordinary course of business of the Company, in particular no
direct or indirect payments have been made to the Sellers, or
entities in which the Sellers own any interest;
(c) There has not been any damage, destruction, or other casualty
loss (whether or not covered by insurance), which has had a
material adverse effect on the business or assets of the
Company or which would reasonably be expected to have material
adverse effect on the Company;
(d) There have not been any incurrence, assumption or guarantee by
the Company of any indebtedness for borrowed money other than
in the ordinary course of business and in amounts and on terms
consistent with past practices;
(e) There has not been an increase or material reduction of
inventory other than in the ordinary course of the Company's
business;
(f) None of the inventory items reflected in the Financial
Statements has been realized for an amount less than that
reflected in those Financial Statements with the exception of
sales of slow moving and obsolete items in stock.
(g) The Company has not offered price reductions or discounts or
allowances on sales of inventory items or sold inventory items
at less than cost with the exception of sales of slow moving
and obsolete items in stock;
(h) There have not been any (i) grant of any severance or
termination payment to any managing director or other employee
of the Company, (ii) increase in benefits payable under the
severance or termination policy of the Company or any
employment agreement or (iii) increase in compensation,
bonus or other benefits payable to the managing directors or
other employees of the Company, other than in the ordinary
course of business during the past three years.
7.4.8 Schedule 7.4.8 lists completely all banking or financing
relationships of the Company and all bank loans and other loans
taken out by the Company together with their respective main terms
and conditions.
7.4.9 The Company has no indebtedness to related companies and individuals
other than as disclosed in Schedule 7.4.9.
7.4.10 None of the loan facilities granted to the Company is dependent on
the guarantee or support or indemnity of, or any security provided
by, a third party other than the Company.
7.4.11 The Company has not factored or encumbered its receivables.
7.5 Real Property
7.5.1 The real property including, but not limited to, all buildings and
structures thereon, listed in Schedule 7.5.1 (collectively: the
"Real Property") comprises all real property owned by the Company.
7.5.2 The excerpts from the Land Register (including cadastral maps) as
they appear in Schedule 7.5.2 correctly and completely reflect the
factual and legal situation concerning all the Real Property to
which the Company holds title.
7.5.3 The Company has not entered into any legal transaction or granted
any rights which could lead to a change of the situation referred to
in the preceding subsection. Such changes will not occur as the
result of legal actions initiated by third parties.
7.5.4 The Real Property is not subject to any foreclosure measures
("Zwangsvollstreckungsmabnahmen").
7.5.5 Except as disclosed in Schedule 7.5.5 no governmental subsidy has
been requested or granted with respect to any of the Real Property
which would or does impose conditions which must still be fulfilled
in connection with the use of the property.
7.5.6 Schedule 7.5.6 sets forth all Real Property that has been leased
(Miete, Pacht) by the Company as landlord on the terms and
conditions stated in such Schedule. None of the Real Property is
subject to any other lease agreement and no purchase options, rights
of first refusal (except statutory rights) or other preferential
purchase rights.
7.5.7 Schedule 7.5.7 sets forth all real property that has been leased by
the Company as tenant (the "Leased Property") on the terms and
conditions stated in such Schedule. The Leased Property is fully
suitable for the purpose for which it is leased. There are no other
lease agreements where the Company is tenant.
7.5.8 All obligations of the Company towards the lessors and lessees
arising from the lease agreements referred to in the two preceding
subsections have been complied with. There are no disputes
regarding those agreements pending or threatened.
7.5.9 Neither public law nor rights of third parties prohibit or restrict
the present use of the Real Property. No construction on or use of
the Real Property has taken place without the necessary licenses or
permits.
7.5.10 The Leased Property (including buildings) is in accordance with all
terms of the relevant lease agreements.
7.5.11 Except as disclosed in Schedule 7.5.11, the Real Property and the
Leased Property do not contain any asbestos or other material which
is damaging to health.
7.5.12 Except as disclosed in Schedule 7.5.11, the Real Property, its
surroundings and its groundwater are not polluted or contaminated in
a way which would require remedial action and the Company is not
subject to any fines or penalties resulting from its failure to
comply with any law or regulation. The same applies for formerly
owned Real Property and formerly used Leased Property at the time of
sale or return of possession.
7.5.13 There are no disputes with any person or party with respect to
boundary walls and fences or with respect to any easement or right
over or means of access to the Real Property.
7.5.14 The Real Property enjoys the main services of water, drainage,
electricity and gas.
7.5.15 The Real Property and the Leased Property is not located in an area
or subject to circumstances particularly susceptible to flooding.
7.6 Other Property and Inventory
7.6.1 The Company has good and marketable title to all personal property
including the machinery at the factories and other premises of the
Company (the "Personal Property"), the main items of which are
listed in the Financial Statements.
7.6.2 None of the Company's sales agents/distributors holds any inventory
owned by the Company and the Company does not store inventory
outside Germany except in the U.K. and with AT & S GmbH, Austria.
7.6.3 Except for customary retention of title the Personal Property is not
subject to any attachments or charged with any pledges, liens,
encumbrances or charges.
7.7 Legality and Business Operation
7.7.1 The conduct of the operations and the business of the Company does
not violate any provisions of any applicable laws, orders,
regulations or requirements, including but not limited to any laws,
orders, regulations or requirements of any EU institution or any
federal, state or municipal administrative body or entity having
competence in relation thereto. With the exception of facts
disclosed in Schedule 7.7.1 this applies, in particular but not
limited to any environmental laws and regulations.
7.7.2 The Company complies with all EU and/or national and/or state and/or
municipal laws, provisions, regulations and orders in respect of
employment and employment practices and particularly in respect of
work place protection, hygiene and safety protection.
7.7.3 Except as disclosed in Schedule 7.51 1 there are no past or present
events which may materially interfere with the conduct of the
business of the Company or prevent its continued compliance with any
of the said laws, provisions, regulations and orders, or which may
give rise to any liability, or otherwise form the basis of any
claim, proceeding or investigation, based on or related to the use,
storage or disposal or the release into the environment, of any
pollutant, hazardous material or other substance or material with
respect to the Company or its business.
7.7.4 The Company has at its disposal all EU and/or national and/or state
and/or municipal licenses and permits as are necessary for carrying
out and continuing its operations and business at the place and in
the manner and capacity as presently conducted, as well as in
accordance with its designed capacity.
These licenses and permits are in full force and are not subject to
conditions other than the conditions contained in these licenses
themselves and do not require any further expenditure by the Company
for the term of the license.
The said permits and licenses have neither been suspended, revoked
nor restricted, nor is a suspension, revocation or restriction
impending or reasonably anticipated.
The operations and the business of the Company are carried out in a
manner which is consistent with the said licenses and permits.
7.7.5 There have been no serious industrial injuries suffered which may
lead to a claim against the Company which is not fully covered by
insurance. Since 1994 there have been no employment-related illness
suffered by any employee at any time that may lead to a claim
against the Company.
7.7.6 The products produced and distributed and the services supplied by
the Company are in compliance with all applicable EU, federal, state
or other laws and regulations as well as with all applicable
industrial standards, like ISO, DIN and the like.
7.8 Insurance
7.8.1 The Company has purchased and maintained in full force and effect
the insurance policies listed in Schedule 7.8.1.
7.8.2 All due premiums on the mentioned policies have been paid and all
obligations under these policies have been fulfilled by the Company
unless disclosed in Schedule 7.8.2.
7.8.3 The above-mentioned policies contain accurate descriptions of the
insured properties and persons and offer the Company full cover
against all risks normally insured against by the Company or persons
carrying on a similar business and in particular adequately insure
the assets of the Company.
7.8.4 Each of the above-mentioned policies will remain in effect for at
least three months after the date hereof.
7.8.5 No notifications have been received with regard to the non-renewal
of any policy.
7.8.6 There are no circumstances caused by the Company which may nullify
any policy or which my cause premiums or deductibles to be
increased.
7.9 Intellectual and Industrial Property
7.9.1 The Company is the sole and exclusive owner/holder of the
copyrights, licenses, patents, trade and service marks, model and
design rights described and listed by registration number in
Schedule 7.9.1(a). All such rights which have previously been held
by Seller 1 have been validly transferred to the Company. None of
the aforementioned licenses, patents, marks, model and design rights
or copyrights is encumbered or is subject to an agreement for its
encumbrance by any right in favor of a third party, including usage
rights, licenses, pledges or usufructs, except for the statutory
rights of inventors to royalties on patents and except as listed on
Schedule 7.9.1 (a). The Company does not own or use any copyrights,
licenses, patents, trade and service marks, models and design rights
other than those listed in Schedule 7.9.1.(a). Schedule 7.9.1(b)
lists all licenses for industrial property rights which the Company
uses or holds under license agreements.
7.9.2 The Company has taken all measures necessary to preserve and
maintain the aforementioned licenses, patents, marks, model and
design rights and copyrights and has, to the extent reasonable,
registered them in the name of the Company. Except for German
Patent Number 90/06101 all charges have been paid and none of such
registrations has lapsed. None such patents, marks, model and
design rights or copyrights is registered in a name other than the
name of the Company.
7.9.3 The Company has not undertaken any obligation with respect to its
know-how, trade secrets, confidential information or lists of
customers or suppliers and has not communicated any of the foregoing
or permitted any of the foregoing to be communicated to third
parties.
7.9.4 The Company is fully authorized to carry on its business under the
names listed in Schedule 7.9.4.
7.9.5 The licenses, patents, marks, model and design rights and copyrights
held by the Company are sufficient for the carrying on of its
business in its present form. The carrying on of the Company's
business does not infringe upon intellectual and industrial rights
of any third party and the Company is not liable for the payment of
any royalty or compensation in any form in connection with
intellectual and industrial property rights of any third party
except as provided in Schedule 7.9.5.
7.9.6 The Company has not (otherwise than in the ordinary and normal
course of business) disclosed or permitted to be disclosed or
undertaken or arranged to disclose to any person other than the
Buyer any of its know-how, trade secrets, confidential information,
price lists or lists of customers or suppliers.
7.10 Employees and Pensions
7.10.1 The Company has no employees other than those listed in Schedule
7.10.1 hereto which list includes all part-time employees and also
the managing directors (collectively: the "Employees"), their date
of birth, date of entry into service, current salary and benefits
and their position. Apart from the Employees no person can claim to
have a (full-time or part-time) employment agreement with the
Company.
7.10.2 Schedule 7.10.2 lists the collective labor agreement(s) applicable
to the Employees and all other existing agreements concluded with
trade unions or the work councils.
7.10.3 The contracts of the Employees which are not covered by collective
labour agreements are disclosed in Schedule 7.10.3.
7.10.4 The Company has no obligation, whether legally or established by
custom, to pay or grant to any of its current or former Employees
any salary, fringe benefit or premium save as reflected in the
Financial Statements or in Schedule 7.10.4.
7.10.5 All pension liabilities for which reserves are allowed in accordance
with German tax principles are correctly reflected in the Financial
Statements.
7.10.6 The Company has no obligations arising from the termination or
cancellation of any of its employment agreements, except as provided
in Schedule 7.10.6.
7.10.7 There is no profit sharing, saving, (early) retirement, stock option
or stock purchase plan in effect with or in respect for Employees
and/or others.
7.10.8 Since December 31, 1996, save to the extent disclosed in Schedule
7.10.8, or contained in the Financial Statements:
(a) no liability has been incurred by the Company for breach of
any employment agreement for redundancy payments, protective
awards or for compensation for wrongful dismissal or unfair
dismissal or for failure to comply with any order for the
reinstatement or re-engagement of any employee or for any
other liability accruing from the termination or variation of
any contract of employment or for services;
(b) no gratuitous payment has been made or promised by the Company
in connection with the actual or proposed termination or
suspension of employment or variation of any contract of
employment of any present or former director or employee;
(c) no liability has been incurred for accident or injury to
employees.
7.10.9 Unless disclosed in, Schedule 7.10.9 there are no schemes in
operation by, or in relation to, the Company under which any
Employee is entitled to a commission or remuneration of any other
sort calculated by reference to the whole or part of the turnover,
profits or sales of the Company. The Company does not intend to
introduce such schemes. The Company has no written tables plans,
directives or guidelines and any and all past bonus payments to
employees have been discretionary .
7.11 Material Contracts
7.11.1 Except for the contracts and commitments disclosed in Schedule
7.11.1.(collectively: the "Material Contracts"), the Company is not
a party to or in anyway bound by:
(a) any lease or hire-purchase agreement for a period of more than
six months:
(b) any contract for the purchase of goods or services for a
period of more than six months and/or exceeding an amount
equivalent to DM 100,000;
(c) any sales or similar agreement providing for the sale by the
Company of goods for a period of more than six months and/or
exceeding an amount equivalent to DM 100,000;
(d) any partnership, joint venture or other similar contract,
arrangement or agreement;
(e) any loan agreement or other banking and overdraft facility;
(f) any agency or distributorship agreement;
(g) any contract or other document that limits the freedom of the
Company to compete in any line of business or with any person
or in any area after the date hereof;
(h) any contract or commitment concerning the business of the
Company as a whole;
(i) any power of attorney granted to third parties:
(j) any guarantee, suretyship or indemnity in favor of third
parties or any agreement to provide security in favor of third
parties;
(k) any mortgage, pledge or other security interest (including an
assignment of claims) except as stated in the Financial
Statements;
(l) any agreement outside the ordinary course of business and/or
not at arm's length.
(m) any capital commitment or series of related capital
commitments exceeding a value of DM 100,000.
7.11.2 Neither the Company nor any other party to the Material Contracts
are in breach of any provision of, or in default under, the terms of
any Material Contract, where such breach or default would reasonably
be expected to have a materially adverse effect on the business of
the Company.
7.11.3 To the knowledge of the Seller 1 the Company is not a party to any
contract which shall or is likely to be terminated or changed by
another party, nor is there any reason to believe that any customer
or supplier of the Company will terminate or limit its business with
the Company as a result of the conclusion of this Agreement and
related agreements.
7.11.4 To the knowledge of the Seller 1 there is no reason to believe that
any key employee, as set out in Schedule 7.11.4, of the Company will
terminate his employment as a result of the conclusion of this
Agreement and related agreements.
7.11.5 The conclusion of this Agreement and related agreements does, not
conflict with or result in the termination of or accelerate the
performance required by or under any contract to which the Company
is a party, nor will it constitute a default thereunder. There is
no contract to which the Company is party which depends on the
continuation of the connection (whether as an officer of the Company
or otherwise) of any person with the Company.
7.11.6 Except as in the ordinary course of business, the Company has not
given or made any guarantee, warranty or representation in respect
of articles or trading stock sold or contracted to be sold by it
save for any warranty or guarantee implied by law or made or given
in accordance with the Company's normal terms of trading and (save
as aforesaid) has not accepted any liability or obligation to
service, maintain, repair, take back or otherwise do or not do
anything in respect of any articles or stock.
7.11.7 Except as disclosed in Schedule 7.11.7 there are no sales agent,
distributor, manufacturer's representative, consignment or similar
agreements, The agency agreements with Eltech S.A, France, ISOLA
S.p.A., Italy and B-F International Inc., Korea have been
terminated.
7.12 Violations and Litigation
7.12.1 Except as disclosed in Schedule 7,12.5, the Company has not violated
any laws of Germany, or the laws of any other country, which
violation could lead to a judicial decision, arbitration award or
any other judgment or ruling by any judicial or arbitration court or
governmental or regulatory authority or body which could materially
affect the financial or commercial position of the Company.
7.12.2 No conflicts have arisen in the past five years between the Company
and its employees except on an individual basis, and to the
knowledge of the Seller I there are no existing circumstances which
could lead to such a collective labor dispute.
7.12.3 The Company is not a party to any agreement or arrangement which
contravenes the Act against Restraints on Competition ("Gesetz gegen
Wettbewerbsbeschrankungen") or comparable provisions in other
countries or which is or should have been registered under the
aforementioned Act or was or should have been notified to the
European Commission under Article 85 of the EU Treaty.
7.12.4 The Company has received no notice, summons or official request of
any kind from the European Commission or from the authorities in
Germany or in any other country, competent in anti-trust or
competition matters, with respect to any aspect of the Companies'
activities.
7.12.5 Unless disclosed in Schedule 7.12.5 the Company is not engaged in
criminal, civil (including proceedings before labor courts),
administrative, arbitration or any other type of legal proceedings
against or affecting the Company, nor are there any such proceedings
or any investigations threatened against the Company.
7.13 Taxes
7.13.1 The Company has properly filed all declarations and documents in
connection with Taxes due on or before the date hereof in accordance
with all tax laws and tax regulations and paid all Taxes, including
any interest and penalties, on the due date and to the extent that
Taxes payable are not yet due such Taxes have been provided for in
the Financial Statements or in the books and records of the Company.
The Company has kept proper and complete records in relation to all
matters relating to Taxes.
7.13.2 There has not occurred in the past and until the day hereof any
hidden dividend distribution.
7.13.3 The corporation tax loss carried forward of the Company as of
December 31, 1996 amounts to DM 105,336,323 and has not changed by
more than 8% thereof since then.
7.13.4 The trade tax loss carried forward of the Company as of December 31,
1996 amounts to DM 93,744,056 and has not changed by more than 8%
thereof since then.
7.13.5 The Company has previously received waivers of debt from former
shareholders and affiliated companies in the years 1992 through
1994. The amount of the debt waived in the years 1992 through 1994
does not exceed DM 53, 638,394.
7.14 Conduct of business
7.14.1 The tangible and intangible assets as well as all rights and know-
how held by the Company are sufficient for the Company to continue
its business as it was conducted heretofore.
7.14.2 The Company does not have any of its records, systems, or data
recorded or operated or otherwise wholly or partly dependent on, or
held by, any means (including any electronic, mechanical or
photographic process whether computerized or not) which (including
all means of access to it and from it) are not under the exclusive
ownership and direct control of the Company, except for the
calculation of the monthly wages and salaries which is done at
Company Ratiodata, as well as the bookkeeping for the fixed assets
for which the Company's software is being converted at Company
Wilken in present.
7.14.3 Unless disclosed in.Schedule 7.14.3 during the 12 months ended on
the date of this Agreement there has been no substantial change in
the basis or terms on which any person is prepared to do business
with the Company (apart from normal price changes), and no
substantial customer or supplier of the Company has ceased or
substantially reduced its business with the Company, and no
indication has been received by the Company or the Sellers that
there will or may be any such change, cessation or reduction.
7.15 Arrangements with the Sellers
Except as listed in Schedule 7.15 the Company is not a party to any
agreement or arrangement with any of the Sellers or any person or
entity related to the Sellers.
7.16 Product Liability
Except as disclosed in Schedule 7.16 no claims for defective
products or product liability have been filed or notified against
the Company. To the knowledge of the Seller 1 no such claims will
be brought forward. To the knowledge of the Seller 1 there are no
serial defects.
7.17 Grants and subsidies
7.17.1 As a result of the conclusion of this Agreement no grants, subsidies
or similar benefits from any governmental, state, municipality, or
EU authority will become repayable, in whole or in part.
7.17.2 Full particulars of all grants, allowances, subsidies, applied for
or paid or made to the Company during the last three years by, and
of all outstanding claims by the Company for, any grant or allowance
from, any supranational, national or local authority or government
agency are set out in Schedule 7.17.2 and the Company has not done
or failed to do any act or thing which could result, nor will the
sale of the Shares result in all or any part of such grant or
allowance becoming repayable or forfeited or in a claim not being
granted.
7.18 Miscellaneous
7.18.1 The Company will not be subject to any claims brought by a third
party in connection with any assets formerly owned or used by the
Company.
7.18.2 To the knowledge of the Seller 1 all written information which has
been given by the Sellers or their respective professional advisers
to the Buyer or to directors, employees and professional advisers of
the Buyer in the course of the negotiations leading to this
Agreement is true, complete and accurate in all respects and is not
misleading because of any omission or ambiguity or for any other
reason provided that this Article 7.18.2 does not apply to the
representations and warranties given elsewhere in this Article 7 or
to the information contained in the Schedules.
7.18.3 To the knowledge of the Seller 1 there are no material facts or
circumstances, in relation to the assets, business or financial
condition of the Company, which have not been fully and fairly
disclosed in writing to the Buyer and which, if disclosed, might
reasonably have been expected to affect the decision of the Buyer to
enter into this Agreement.
7.18.4 True and complete copies of all documents listed in the Schedules to
this agreement have been furnished to Buyer or Buyer's counsel.
7.18.5 The Seller 1 does not dispose of his entire assets or substantially
all parts thereof by entering into or by performing his obligations
under this Agreement. The spouse of the Seller 1 has approved the
conclusion of this Agreement in a declaration attached hereto as
Exhibit C.
7.19 The Seller 2 represents and warrants as of today the completeness
and correctness of all facts and circumstances mentioned or
described in Article 7.3 and 7.15 above as far as he or his Shares
are concerned. The spouse of the Seller 2 has approved the
conclusion of this Agreement in a declaration attached hereto as
Exhibit D. Seller 2 confirms that he and the Company entered into a
severance agreement mutually terminating Seller 2's employment
agreement with the Company as of October 31, 1999 with no remaining
liability of the Company (except pension) after such date.
Article 8
Legal Consequences
8.1 If one or more of the representations and warranties of the Sellers
should turn out to be incomplete or incorrect, the Buyer has a claim
for damages for nonperformance ("Schadensersatz wegen
Nichterfullung").
8.2 The Buyer may alternatively demand that the Sellers pay an amount to
the Company, its successor, or the Buyer which is necessary to
procure a situation which conforms to the representation and
warranties given under this Agreement.
8.3 The Seller 1 shall not be liable for claims totaling less than DM
500,000 in aggregate. If the claims by the Buyer exceed DM 500,000
in aggregate, the Seller 1 shall be liable only for the amount
exceeding DM 500,000. In any case, the total liability of the
Seller 1 shall be limited to a maximum amount of DM 1,700,000. The
limitation of liability to a maximum amount of DM 1,700,000 shall
not apply in case of a breach of the representations and warranties
contained in Articles 7.2, 7.3, 7.5.1 through 7.5.4, 7.11.1 (e) and
7.15.
8.4 The legal principles expressed in sections 460 and 464 of the German
Civil Code do not apply as far as gross negligence ("grobe
Fahrlassigkeit") is concerned; however, the Buyer shall not be
entitled to file a claim based upon any inaccuracy or
misrepresentation of which the Buyer had actual knowledge as of the
day hereof. Any facts or circumstances being disclosed in any of
the schedules to this agreement shall be deemed to be a disclosure
and to therefore constitute actual knowledge of the Buyer.
Furthermore, the Buyer has conducted a legal due diligence and a
financial due diligence relating to the Company. The Sellers have
supported the due diligence by disclosing to the Buyer and its
representatives the documents listed in Schedule 8.4. All facts
contained in such documents are deemed to constitute actual knowl-
edge of the Buyer.
8.5 The Seller 1 shall be given the right and opportunity to defend, at
his own risk, discretion and expense, any action brought against the
Company and/or the Buyer and/or any company related to the Buyer or
any successor to the Company, the Buyer or such related company
which might result in any liability of the Seller 1 towards the
Buyer and/or the Company and/or any company related to the Buyer or
any successor to the Company, the Buyer or such related company in
connection with this Agreement, including the transactions
contemplated hereunder, provided, however that the Buyer and/or the
Company and/or any company related to the Buyer or any successor to
the Company, the Buyer or such related company may participate in
the defense of such action with counsel of its choice at its own
expense. To the extent that the Seller 1 elects not to defend such
action and the Buyer and/or the Company and/or any company related
to the Buyer or any successor to the Company elects to defend such
action the Buyer and/or the Company or such related company or any
successor to the Company will act reasonably and in accordance with
its good faith business judgment. The Sellers and the Buyer agree
to cooperate fully with each other in connection with the defense of
any such actions as mentioned above.
8.6 To the extent legally permissible, any further claims and remedies
for breach of warranties or similar complaints by the Buyer,
irrespective of nature, amount or legal basis, other than expressly
considered hereto for, are expressly waived and excluded, in
particular, without limitation, additional claims for damages under
pre-contractual fault ("culpa in contrahendo"), tort and/or the
right to reduce the purchase price and/or to rescind this Agreement
or to withdraw from this Agreement.
Article 9
Limitation of Claims
9.1 All claims of the Buyer against the Seller 1 under this Agreement
shall be limited in time one year after the date hereof except in
cases in which this Agreement provides for a longer period of
limitation.
9.2 Claims of the Buyer against the Seller 1 in connection with Taxes
and/or interest and penalties on Taxes including claims for
indemnification shall be limited in time six months after the Taxes
have been paid and any decision of the tax authorities regarding
such Taxes and/or interest and penalties on Taxes has become
unappealable, at the latest, six months after the claim by the
respective tax authority has become time-barred
9.3 Claims of the Buyer against the Seller 1 in connection with
environmental matters shall become limited in time five years after
the date hereof.
9.4 Claims of the Buyer resulting out of or in connection with Article
7.3.1 through 7.3.3 (second part) and 7.5.1 through 7.5.3 shall
become limited in time after 30 years after the date hereof.
9.5 The Financial Statements of the Company provide for reserves
relating to, and in the amount of, the expected occurrence of the
events or facts as described in Schedule 9.5. Warranty claims with
respect to the events and facts mentioned in Schedule 9.5 can only
be put forward by the Buyer to the extent that the reserves provided
for such facts should turn out to be insufficient.
9.6 Warranty claims are reduced by the amount by which until the
financial statements of the company as per February 28, 1998, are
drawn up the reason for a reserve turns out to be obsolete. To the
extent that additional Taxes assessed against the Company with
respect to time periods up to the date hereof in turn result in
subsequent reductions of taxes of the Company in time periods after
the date hereof, any such subsequent reduction of Taxes shall be
calculated at the net present value at the time of the arisal of the
additional Taxes using a discount rate of 6% and shall be offset
from the respective payment obligations of the Seller 1.
Article 10
Put and Call Options
10.1 The Seller 1 hereby offers to sell and transfer its remaining share
in the Company in the nominal amount of DM 4,064,000 (in words:
Deutsche Mark four million and sixty-four thousand) to the Buyer or
any other person identified by the Buyer ("Call Option"). The
consideration for the offered shares shall be settled by way of the
issuance 103,000 of Park Shares.
The offer shall be valid
i) for a period of three months commencing five years after the
date hereof.
ii) for a period of three months commencing on the day on which
the managing directors employment agreement (Exhibit A)
between the Company and the Seller 1 should end, not, however,
prior to November 1, 2002.
The Call Option must be exercised by the Buyer in writing within the
three-month period. The day of receipt of the written notice
relating to the exercise of the Call Option shall be decisive. The
Call Option has priority over the right of first refusal granted in
Section 2 of the Articles of Association.
10.02 The Buyer hereby offers to accept the sale and transfer of the
remaining share of the Seller 1 in the Company in the nominal amount
of DM 4,064,000 (in words: Deutsche Mark four million and sixty-four
thousand) to the Buyer or any other person identified by the Buyer
("Put Option"). The consideration shall be settled by way of
issuance of the same number of Park Shares as provided under Article
10.1 above.
The offer shall be valid for a period of three months commencing
five years after the date hereof. The Put Option must be exercised
in writing by the Seller 1 within the three-month period. The day
of receipt of the written notice relating to the exercise of the Put
Option shall be decisive.
10.3 The Seller 1 undertakes not to sell, transfer, pledge, encumber or
otherwise dispose of the Park Shares for a period of three years
commencing from the date of receipt of such shares. The restriction
will lapse as soon as Seller 1 should cease to be managing director
of the Company.
10.4 In the event that the Seller 1 sells and transfers all or a portion
of his shares in the Company to his wife and/or children, as
provided for under Article 3.5, the Seller 1 shall transfer all
rights and obligations arising from or in connection with the Put
and Call Options to his wife and children.
10.5 In the event that the Buyer sells and transfers its share in the
Company to any third party(ies), and if Seller I requests that his
share in the Company also be sold to such third party, the Buyer's
sale shall not be effective unless such third party also acquires
the shares of Seller 1 at the same (pro rata) price. Upon request
of the Buyer, the Seller 1 is obliged to sell and transfer his
shares to the third party(ies) at the same (pro rata) price.
Article 11
Confidentiality
The Parties shall not knowingly use, disclose, furnish or make available to
any person whatsoever any confidential or proprietary information that is
related to or is necessary for or used in connection with the business of
the Company (the "Confidential Information"), including without limitation
the business and marketing plans, costs of manufacturing, formulas,
customer lists and financial data relating to the business of the Company;
provided, however, that the Parties may use or disclose Confidential
Information (i) to the extent such Confidential Information is required to
be used in connection with the preparation of and/or disclosed in any, tax
return, related report or other filing that such party may be required to
do with any governmental authority, (ii) to the extent such Confidential
Information is required to be disclosed by a nonappealable order of a court
of competent jurisdiction, or (iii) to the extend such Confidential
Information is or becomes generally known to the public other than by
reason of the disclosure of Confidential Information by a party .
Furthermore, the Parties shall not disclose, furnish or make available to
any person whatsoever any information relating to the negotiations and the
existence of this Sale and Purchase Agreement except as required by law
and/or in a press release agreed to by the Seller 1 and the Buyer.
Notwithstanding the foregoing, after the date hereof the Buyer is entitled
to disclose whatever it deems to be reasonable with respect to the business
of the Company excluding the terms of this Agreement except as required by
law and/or in a press release agreed to by Seller 1 and the Buyer. In
addition, the Seller 1 and the Buyer shall agree on any press release
issued by either of them describing the transaction contemplated herein.
Article 12
Non-Competition
12.1 The Sellers ensure for a period of five years after the date hereof
that they shall not enter, either directly or indirectly into
competition with, or take up any position of employment with a
company which is partially or wholly engaged in business competitive
to that of the Company or the Buyer or any subsidiary of the Buyer
or of Park nor shall the Sellers participate in such company,
business or business activity or engage in activities for any such
business or business activity, also not in his own name or by
lending his name. Participation in other companies of the
competitive business up to 5 %, made for investment purposes only,
are permitted. In case the Call Option or the Put Option contained
in Article 10 should be exercised Seller's 1 obligation not to
compete shall extend for additional five years starting with the
receipt of the written notice that the option has been exercised.
12.2 The Sellers will not use the corporate name Dielektra or any other
corporate name containing a reference to the word "Dielektra" in a
competitive business or for any other purpose.
12.3 With respect to each breach of this non-competition obligation
according to article 12.1 and 12.2, the Sellers shall pay to the
Buyer a contractual penalty in the amount of DM 50,000. The Buyer
expressly reserves the right to claim further damages exceeding the
amount of the contractual penalty. If breach continues after
notice, an additional penalty in the amount mentioned above shall
become due at the beginning of each month. The Buyer reserves the
right of performance of a non-competition obligation in addition to
the contractual penalty and/or damages.
Article 13
Applicable Law, Jurisdiction
13.1 This Agreement, as well as any rights, obligations and transactions
thereunder, shall be construed in accordance with, and governed by,
the laws of the Federal Republic of Germany.
13.2 For all disputes arising out of this Agreement, including any
dispute regarding the validity of this Agreement, the Sellers and
the Buyer hereto submit to arbitration in accordance with the
arbitration agreement concluded separately and attached hereto as
Exhibit E.
Article 14
Costs
Each party shall bear its own costs and expenses in connection with the
preparation, execution and implementation of this Agreement, including any
and all professional fees of their legal, tax and financial advisors. Any
transfer taxes and costs in connection with the execution of this Agreement
and the transactions contemplated hereunder shall be borne by the Buyer.
Article 15
Notices
All notices and other material communication required or permitted under
this Agreement shall be in writing or by telefax to the addresses listed
below or such other addresses as any Party may designate from time to time:
(a) if to the Buyer to: General Counsel
Park Electrochemical Corporation
5 Dakota Drive
Lake Success, New York 11042, U.S.A.
(b) if to any of the Sellers to: Dieter Weiss
Im Winkel 3853639
Konigswinter
or such other addresses as any such party may designate from time to time.
Article 16
Miscellaneous
16.1 Changes to and amendments of this Agreement require written form,
unless stricter form is required. This also applies to the change
of this provision.
16.2 This Agreement contains all arrangements between the Parties in the
subject matter.
16.3 In the event any provision hereof is or becomes for any reason
wholly or partially invalid the remainder of this Agreement shall
not be affected. In such an event such provision shall be
considered to be agreed upon which the Parties to this Agreement
would have chosen, had they known about the invalidity of such
provision in order to reach the economic aim of the provision to the
furthest extent possible. This applies accordingly to unforeseen
contractual deficiencies.
16.4 The Parties are aware that the sale and transfer of the shares in
the Company pursuant to Article 3.1 and 3.2 hereof requires
notification to the Federal Cartel Office ("Bundeskartellamt")
according to Section 23 of the Act against Restraints of Competition
("Gesetz gegen Wettbewerbsbeschrankungen"/"GWB") without undue
delay. The Parties mutually agree to cooperate in such notification
procedure.
The persons appearing are aware of the contents of the notarial deed dated
29th October 1997 (Deed Rolls-No. 1030/97) which has been presented to the
persons appearing in original and in which the notarial assistant Mrs.
Ulrike Kry fixed the wording of all Schedules mentioned in the present
notarial deed.
The persons appearing declared:
We hereby approve of all declarations made by Mrs. Kry on our behalf in the
aforementioned notarial deed, releasing her from the restrictions pursuant
to section 181 German Civil Code "BGB").
All persons appearing waived the requirement that the aforementioned deed
be read anew in accordance with section 13a Notarization Act
("Beurkundungsgesetz") after having been advised by the enacting notary
public.
This notarial deed was read out to the persons who appeared in the presence
of the Notary Public, was approved by them and was signed by them and the
Notary Public in their own hands as follows:
<TABLE>
EXHIBIT NO. 11.01
PARK ELECTROCHEMICAL CORP.
AND SUBSIDIARIES
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
(Unaudited--in thousands, except per share data)
<CAPTION>
13 Weeks Ended 39 Weeks Ended
------------------------ -----------------------
November 30, December 1, November 30, December 1,
1997 1996 1997 1996
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
ADJUSTMENT OF NET EARNINGS:
Net earnings $ 6,996 $ 4,888 $18,013 $12,694
Adjustments resulting from
assumed conversion of 5.5%
Convertible Subordinated
Notes ("Notes"):
Reduction of interest expense
and amortization of deferred
debt financing costs 1,386 1,337 4,072 4,062
Related tax effect on above (485) (468) (1,425) (1,422)
-------- -------- -------- --------
Net earnings, as adjusted $ 7,897 $ 5,757 $20,660 $15,334
======== ======== ======== ========
ADJUSTMENT OF WEIGHTED AVERAGE
NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING:
Weighted average number of common
and common equivalent shares
outstanding 11,585 11,444 11,530 11,617
Add weighted average shares
assumed to be issued upon:
Conversion of Notes 2,370 2,370 2,370 2,370
Exercise of stock options at
period-end market price if
higher than average market
price for period - 21 - -
-------- -------- -------- --------
Weighted average number of common
and common equivalent shares
outstanding, as adjusted 13,955 13,835 13,900 13,987
======== ======== ======== ========
Fully diluted earnings per share--
as computed $ .57 $ .42 $ 1.49 $ 1.10*
======== ======== ======== ========
Fully diluted earnings per share--
as reported $ .57 $ .42 $ 1.49 $ 1.09
======== ======== ======== ========
*The results of the above computation for the 39 weeks ended December 1, 1996 is
antidilutive; accordingly, the reported fully diluted earnings per share is equal to
the reported primary earnings per share of $1.09 per share.
</TABLE>
-40-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF PARK ELECTROCHEMICAL CORP. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-01-1998
<PERIOD-END> NOV-30-1997
<CASH> 27,203
<SECURITIES> 125,035
<RECEIVABLES> 53,242
<ALLOWANCES> 0
<INVENTORY> 30,432
<CURRENT-ASSETS> 244,203
<PP&E> 191,581
<DEPRECIATION> 91,111
<TOTAL-ASSETS> 348,593
<CURRENT-LIABILITIES> 67,071
<BONDS> 100,000
0
0
<COMMON> 1,358
<OTHER-SE> 159,487
<TOTAL-LIABILITY-AND-EQUITY> 348,593
<SALES> 272,344
<TOTAL-REVENUES> 278,594
<CGS> 219,512
<TOTAL-COSTS> 247,618
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,084
<INCOME-PRETAX> 26,892
<INCOME-TAX> 8,879
<INCOME-CONTINUING> 18,013
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,013
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.49
</TABLE>
