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As filed with the Securities and Exchange Commission on October 13, 2000.
Registration No. 333-44686
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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PACIFIC AEROSPACE & ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
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WASHINGTON 91-1744587
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
430 Olds Station Road, Third Floor
Wenatchee, WA 98801
(509) 667-9600 (telephone)
(509) 667-9696 (facsimile)
(Address, including zip code, and telephone and facsimile numbers,
including area code, of registrant's principal executive offices)
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Donald A. Wright
430 Olds Station Road, Third Floor
Wenatchee, WA 98801
(509) 667-9600 (telephone)
(509) 667-9696 (facsimile)
(Name, address, including zip code, and
telephone and facsimile numbers, including area code, of agent for service)
Copy to:
L. John Stevenson, Jr.
Stoel Rives LLP
One Union Square, 36th Floor
600 University Street
Seattle, WA 98101-3197
(206) 624-0900 (telephone)
(206) 386-7500 (facsimile)
Approximate date of commencement of proposed sale to the public:
From time to time after the effectiveness of this registration statement.
If the only securities being registered on this Form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box.
[_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with a dividend or
interest reinvestment plan, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [_]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
________________________________________________________________________________
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until either (1) the registrant
files an amendment specifically stating that this registration statement shall
become effective under section 8(a) of the Securities Act of 1933, as amended;
or (2) until the date that the Securities and Exchange Commission declares this
registration statement to be effective.
________________________________________________________________________________
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The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities, and it is not soliciting an offer to buy these
securities, in any state where the offer or sale is not permitted.
Resale Prospectus
Subject to Completion, dated October 13, 2000
[LOGO OF PACIFIC AEROSPACE & ELECTRONICS, INC.]
4,422,010 Shares of Common Stock
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<S> <C>
Pacific Aerospace & Electronics, Inc. Pacific Aerospace is an international engineering and
430 Olds Station Road, third floor manufacturing company with operations in the United States and
Wenatchee, Washington 98801 the United Kingdom. We design, manufacture and sell components
(509) 667-9600 and subassemblies used in technically demanding environments.
Products that we produce primarily for the aerospace and
transportation industries include machined, cast, and formed
metal parts and subassemblies, using aluminum, titanium,
magnesium, and other metals. Products that we produce
primarily for the defense, electronics, telecommunications and
medical industries include components such as hermetically
sealed electrical connectors and instrument packages, and
ceramic capacitors, filters and feedthroughs. Our customers
include global leaders in all of these industries.
Selling Shareholders: These shares of common stock are being offered and sold from
See Page 19 for the Names of the Selling time to time by three of our current shareholders or warrant
Shareholders. holders. Two selling shareholders are offering a total of
1,142,860 shares of common stock that they purchased from us in
a private placement, and three selling shareholders are
offering up to 3,279,150 shares of common stock that they may
receive upon exercise of warrants that they hold. We will not
receive any of the proceeds from sale of these shares.
Closing Sale Price of Common Stock: The selling shareholders may offer the shares to the public for
$0.75 per Share on October 10, 2000 prices computed as follows:
. Fixed prices,
. Prevailing market prices,
Trading Market and Symbol: Nasdaq National . Formula prices relating to prevailing market prices, or
Market System -- PCTH. . Negotiated prices.
</TABLE>
Potential investors should consider the risk factors starting on page 3 before
purchasing the shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the shares, or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
_________ __, 2000
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TABLE OF CONTENTS
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Section Page
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Risk Factors.................................................... 3
Information Incorporated by Reference........................... 14
Available Information........................................... 15
Selling Shareholders............................................ 16
Plan of Distribution............................................ 20
Experts......................................................... 21
Legal Matters................................................... 21
</TABLE>
______________________
Prospective investors may rely only on information contained in this prospectus
or incorporated into it by reference. Neither Pacific Aerospace & Electronics,
Inc. nor the selling shareholders have authorized any person to provide
prospective investors with any information other than that contained in this
prospectus.
______________________
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RISK FACTORS
________________________________________________________________________________
An investment in shares of our common stock involves risks. You should
carefully consider all of the information set forth in this prospectus. In
particular, you should evaluate the following risk factors before making an
investment in the shares of our common stock. If any of the following
circumstances actually occur, our business, financial condition and results of
operations could be materially and adversely affected. If that occurs, the
trading price of our common stock could decline, and you could lose all or part
of your investment.
Some of these risk factors contain forward-looking statements. These forward-
looking statements are not guarantees of our future performance. They are
subject to risks and uncertainties related to business operations, some of which
are beyond our control. Any of these risks or uncertainties may cause actual
results or future circumstances to differ materially from the forward-looking
statements set forth in this section.
________________________________________________________________________________
We have reported net losses for recent periods, and we may continue to incur net
losses, which could jeopardize our operations and decrease our stock value.
We reported a net loss of $12,869,000 for our fiscal year ended May 31, 1999, a
net loss of $13,049,000 for our fiscal year ended May 31, 2000 and a net loss of
$2,252,000 for the quarter ended August 31, 2000. We can offer no assurance
that we will achieve profitable operations or that any profitable operations
will be sustained. Our ability to achieve a profitable level of operations in
the future will depend on many factors, including our ability to reduce the
level of our debt, to assimilate our recent and potential future acquisitions,
and to finance production. Future profitability will also depend on our ability
to develop new products, the degree of market acceptance of our existing and new
products, and the level of competition in the markets in which we operate. If
we continue to incur net losses, our cash flow position could be further
damaged, our operations could be jeopardized, and our stock price could
decrease.
Our inability to generate cash if and when needed could severely impact our
ability to continue as a going concern.
Our consolidated financial statements have been prepared assuming that we will
continue as a going concern. However, our independent auditors in their most
recent report stated that Pacific Aerospace has suffered recurring losses from
operations which raise substantial doubt about our ability to continue as a
going concern. Our consolidated financial statements do not include any
adjustments that might result from the outcome of that uncertainty. If we are
not sufficiently successful in generating cash from operating activities, we may
need to sell additional common stock or other securities, or we may need to sell
assets outside the ordinary course of business. If we need to dispose of assets
outside of the ordinary course of business to generate cash, we may not be able
to realize the carrying values of those assets upon liquidation. If we are
unable to generate the necessary cash, we could be unable to continue
operations.
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If we do not raise additional cash, we may not be able to fund our operations.
Our existing cash and credit facilities may not be sufficient to meet our
obligations as they become due during fiscal 2001. Consequently, we expect that
we will need to obtain additional cash during fiscal 2001. Our actual cash
needs will depend primarily on the amount of cash generated from or used by
operations. We cannot predict accurately the amount or timing of our future
cash needs. If we cannot obtain additional cash if and when needed, we may be
unable to fund our operations and pay all obligations as they become due or at
all.
If we are unable to renew our lines of credit or obtain new lines of credit, we
may be unable to fund our operations.
Our U.S. operating lines of credit expired on September 5, 2000, and have been
extended through November 5, 2000. Our senior lender in the U.S. is currently
evaluating whether and upon what terms it will renew our credit lines. Our line
of credit in the U.K. expires in November 2000. We expect to request renewal of
that line. We can offer no assurance that our existing credit facilities will
be renewed or that they will remain available on acceptable terms or at all. If
we are unable to renew our credit lines, we may not have enough cash to fund our
operations.
We have significant debt that adversely affects our financial condition.
At May 31, 2000, our total long-term debt was approximately $69.2 million, or
approximately 48% of our total assets. We have a 1.9 to 1 debt-to-equity ratio.
We incurred substantial debt and payment obligations to finance the acquisition
of Aeromet International PLC in 1998. This debt currently constitutes $63.7
million of our long-term debt and bears interest at 11.25% per year. Our debt
could make us unable to obtain additional financing in the future. It could
also divert a significant portion of our cash flow to principal and interest
payments and away from operations and necessary capital expenditures. Our debt
has significantly increased our interest expense and decreased our net income,
and we expect the interest expense to continue to decrease our net income for
the foreseeable future. Our debt also puts us at a competitive disadvantage in
relation to competitors with less debt and limits our flexibility to adjust to
downturns in our business or market conditions.
If we do not perform well in the future, we might not be able to pay our debt.
Our future financial and operating performance will determine our ability to pay
our debt. We might not have sufficient cash flow to make our debt payments when
scheduled, or at all. If we do not maintain sufficient cash flow to make our
debt payments, we could be forced to reduce or delay capital expenditures, which
could impede our growth. We might also have to dispose of material assets or
operations, potentially at a loss. If we were unable to pay our debt, we might
need to restructure or refinance our debt at potentially higher rates of
interest. Alternatively, we might need to seek additional equity capital, which
would dilute the value of the shares held by our existing shareholders. We may
not be able to do any of these things, or
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we may not be able to do them on satisfactory terms. If we failed to make our
debt payments, the lenders would be able to declare all amounts we owe to be
immediately due and payable. If this were to occur, we would likely not have
funds available to us to pay off the debt. In addition, if we could not repay
our secured debt, secured lenders could proceed against any collateral securing
that debt. The collateral for our secured debt consists of substantially all of
our assets, including receivables, inventories, real property, personal
property, and intangible assets.
We must comply with a number of significant debt covenants that limit our
flexibility.
The agreements that govern our debt, particularly the indenture that governs our
11 1/4% senior subordinated notes, restrict a number of our activities. Unless
we obtain consent from our lenders, we cannot dispose of or create liens on
assets or create additional indebtedness. We are not permitted to pay dividends
to shareholders or repurchase stock. Our debt covenants restrict our ability to
acquire new businesses or make investments or loans to others. We are also
subject to covenants that limit our ability to make capital expenditures, change
the business we conduct, or engage in transactions with related parties. In
addition, if there is a change of control of our company, we may be required to
repay our debt early. If we breach any of these covenants, the lenders may be
able to declare all amounts we owe to be immediately due and payable. If this
were to occur, we would likely not have funds available to us to pay off the
debt.
We may not be successful if we fail to manage our rapid growth.
We have experienced rapid growth from both operations and acquisitions. This
growth has placed and will continue to place significant demands on our
managerial, administrative, financial and operational resources. For example,
both our total number of employees and the number of our operating sites nearly
doubled as a result of acquiring our European Aerospace Group, which was formed
when we acquired Aeromet in July 1998. The size of our European Aerospace Group
has caused and will continue to cause it to have a significant impact on our
future financial results. As we grow and our business operations become more
complex, we will need to be increasingly diligent in our business decisions to
comply with regulatory and accounting requirements. To manage our growth
effectively, we must continue to improve our operational, accounting, financial
and other management processes and systems. Our U.S. operating divisions have
had different accounting systems, which we have integrated or are in the process
of integrating. We must also continue to attract and retain highly skilled
management and technical personnel. If we do not effectively manage these
aspects of our growth, we may not succeed.
Our past and possible future acquisition strategy could negatively impact our
performance.
We have historically pursued an aggressive acquisition strategy. Although we
are currently focusing substantially all of our attention on existing operations
and on internal growth, we expect that in the future we may evaluate and pursue
potential strategic acquisitions. We have
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incurred substantial losses as a result of some of our acquisitions and
investments, including approximately $4.6 million in fiscal 2000 and
approximately $12.7 million in fiscal 1999. We need to better manage our
acquisition strategy. This includes accurately assessing the value, strengths
and weaknesses of acquisition candidates, as well as successfully implementing
necessary changes at newly acquired subsidiaries. In the past, our aggressive
acquisition strategy has diverted management attention from our operations,
increased borrowings, disrupted product development cycles and diluted earnings
per share. If we do not successfully manage future acquisitions, if any, our
financial performance could continue to be negatively impacted by acquisitions.
We have experienced asset impairment and may experience additional asset
impairment in the future.
We review long-lived assets and identifiable intangibles for potential
impairment of value whenever events or changes in circumstances indicate that
the carrying amount of those assets may not be recoverable. During the fourth
quarter of fiscal 2000, due to continuing losses and continued weakness in our
business related to changes in the commercial aerospace and transportation
industries, our evaluation resulted in the realization of a $4.6 million
impairment of goodwill and a $600,000 property impairment related to our U.S.
Aerospace Group. We will continue to evaluate the Company's assets, especially
in our aerospace groups, on a quarterly basis until such time as our divisions
become consistently profitable. Our future evaluations could result in
additional impairment charges for goodwill and for property and equipment.
Our European Aerospace Group has had and will continue to have a significant
impact on our business.
The acquisition of our European Aerospace Group in 1998 doubled the size of our
company. Approximately 50% of our assets and approximately 50% of our revenues
are associated with our operations in the United Kingdom. It is more difficult
for us to manage a business in the United Kingdom than our other businesses,
which are located in Washington State. The reasons for the increased difficulty
include differences in time, distance, business practices and cultural
variations. Our ownership of a business in Europe also subjects us to
regulatory, tax, and trade restrictions that we did not previously face. If we
are unable to effectively manage our European Aerospace Group, we may not be
successful.
Changes in foreign currency exchange rates could negatively affect our financial
position.
Because of our European Aerospace Group, we may decide to engage in hedging
transactions to protect against losses caused by changes in the exchange rate
between the U.S. dollar and the British pound sterling. However, we have not
engaged in hedging transactions to date. Since approximately 50% of the Company
transactions are conducted in foreign currency, the exchange rate risk could be
material. Even if we were to engage in hedging transactions, they may not
completely offset any such losses. Our European Aerospace Group has a few
contracts that are in European currencies other than British pounds sterling, or
in U.S. dollars.
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We believe that the conversion of European currencies to the Euro will not have
a material adverse effect on the European Aerospace Group's business or
financial condition.
We depend on some significant customers, and our revenues will decline
significantly if we cannot keep or replace these customers.
Our top ten customers in terms of revenues during fiscal 2000 together accounted
for approximately 46% of our revenues for that year, and no other customer
accounted for more than 2% of our revenues. Only the top four customers
individually accounted for 5% or more of our revenues, with The Boeing Company
at approximately 10%, Rolls-Royce plc at approximately 7%, PACCAR, Inc. at
approximately 6%, and Aeronautical Macchi Manufacturing Corporation (Aermacchi)
at approximately 5%. We produce machined and cast metal aircraft components for
Boeing, Rolls-Royce and Aermacchi, and cast metal heavy trucking components for
PACCAR. Because of the relatively small number of customers for most of our
products, our largest customers can influence product pricing and other terms of
trade. If we were to lose any of our largest customers, or if they reduced or
canceled orders, our business and financial performance could be harmed.
We operate in industries that are subject to cyclical downturns that could
adversely affect our revenues.
We operate in historically cyclical industries. The aerospace, defense and
transportation industries are sensitive to general economic conditions, and past
recessions have adversely affected these industries. In past years, a number of
factors have adversely affected the aerospace industry, including increased fuel
and labor costs, and intense price competition. Recently, the commercial
aircraft industry experienced a downturn in the rate of its growth due to
changing economic conditions and as a result of the ongoing financial crisis in
Asia, which caused reductions in production rates for some commercial airline
programs. The major aircraft manufacturers responded, in part, by significantly
decreasing their inventory levels. Although very recently the aerospace
industry seems to have been experiencing better results, we have not yet
benefited from the improvements. Additional cancellations or delays in aircraft
orders from customers of Boeing or Airbus could reduce demand for our products
and could have a material adverse effect on our business and financial
performance. Cyclical factors and general economic conditions could lead to a
downturn in demand for our core products and decrease our revenues.
We may fail to retain our key management and technical personnel, which could
negatively affect our business.
We believe that our ability to successfully implement our business strategy and
to operate profitably depends significantly on the continued employment of our
senior management team, led by our president, Donald A. Wright, and our ability
to retain and hire engineers and technical personnel with experience in the
aerospace and electronics industries. We have key man life insurance policies
on the life of Mr. Wright totaling $8 million. We also have an employment
agreement with Mr. Wright and several other senior managers. However, our
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business and financial results could be materially adversely affected if Mr.
Wright, other members of the senior management team, or significant engineers or
technical personnel become unable or unwilling to continue in their present
employment. Our growth and future success will depend in large part on our
ability to retain and attract additional board members, senior managers and
highly skilled technical personnel with experience in the aerospace and
electronics industries. Competition for such individuals is intense, and we may
not be successful in attracting and retaining them, which could interfere with
our ability to manage our business profitably.
We may not be able to convert all of our backlog into revenue.
We sell the majority of our products through individual purchase orders. Many
of our customers would have the right to terminate orders by paying the cost of
work in process plus a related profit factor. Historically, we have not
experienced a large number of significant order cancellations. However, from
time to time, customers cancel orders as a result of a program being cancelled
or for other reasons. As of May 31, 2000, we had purchase orders and
contractual arrangements evidencing anticipated future deliveries, which we
treat as backlog, through fiscal year 2002 of approximately $80 million. We
expect to deliver approximately $70 million of this backlog in fiscal year 2001.
We may not be able to complete all of that backlog and book it as net sales, if
we experience cancellations of pending contracts or terminations or reductions
of contracts in progress.
If we do not adapt to technological change and develop new products, we could
lose customers and our revenues could decline.
The market for our products in both the aerospace and the electronics industries
is characterized by evolving technology and industry standards, changes in
customer needs, adaptation of products to customer needs, and new product
introductions. Other companies that manufacture components for the aerospace
and electronics industries from time to time may announce new products,
enhancements, or technologies that have the potential to replace or render our
existing products obsolete. Our success will depend on our ability to enhance
our current products and develop new products to meet changing customer needs,
and achieve market acceptance of those products. We view our proprietary
technology and our level of technological development as our primary strengths.
Because most of our research and development efforts are funded by customers, it
will be essential for us to continue to respond effectively to our customers'
needs. We will also need to anticipate or respond to evolving industry
standards and other technological changes on a timely and cost-effective basis.
If we do not adequately respond to these changes, we could lose customers and
our revenues could decline.
Our markets are highly competitive, and our competitors' strengths may prevent
us from executing our business strategy.
We have substantial competition in many of the markets that we serve. In the
electronics markets, our competitors include Amphenol Corporation, Hermetic Seal
Corporation, AVX
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Corporation, Spectrum Control, Inc., and Electronics Design and Communications
Instruments. In the hot forming market, our primary competitors include Die
Barnes Group Inc. and the Carsons division of GKN Westland (North America), the
second of which we understand will be closing. In the cold forming market, we
compete with companies such as AHF and Pendle. In the U.S. sand casting market,
we compete with a number of West Coast and Midwest foundries, including ConMetco
in Oregon and North Carolina, Production Pattern in California, Progress Foundry
in Minnesota, and Wellman Dynamics in Iowa. We also compete with off-shore
foundries, which tend to have lower costs. Our competitors in the European sand
casting market include SFU, Stones, Haleys, Hitchcock, and Teledyne. In the
investment casting market, our competitors include the Cercast Group, Tital and
Tritech. In the precision machining market, we compete with a number of regional
machine shops. Many of these competitors have greater financial resources,
broader experience, better name recognition and more substantial marketing
operations than we have, and they represent substantial long-term competition
for us.
Our competitors can make components and products similar to those we make using
a number of different manufacturing processes. We believe that our
manufacturing processes, proprietary technologies and experience provide
significant advantages to our customers. These advantages include high quality,
more complete solutions, competitive prices, and physical properties that meet
stringent demands. However, competitors can use alternative forms of
manufacturing to produce many of the components and products that we make.
These competing products could be of the same or better quality and price as
those we produce. We expect our competitors to continue making new
developments, and they could develop products that customers view as more
effective or more economical than our products. In addition, our competitors
may introduce automation processes and robotics systems that could lower their
costs of production substantially. If we are not able to compete successfully
against current and future competitors, and respond appropriately to changes in
industry standards, our business could be seriously harmed.
If we cannot obtain raw materials when needed and at a reasonable cost, we could
have difficulty producing cost-effective products and delivering them on time.
Our European Aerospace Group obtains approximately 70% of its titanium from one
supplier and is subject to a lead time of approximately 65 weeks in ordering and
obtaining titanium. While the European Aerospace Group generally has managed
the ordering process to obtain titanium when needed, a labor strike at the
supplier negatively affected the group's ability to obtain timely deliveries of
titanium during fiscal 1999 and into the 2000 fiscal year. Although the
shortage of titanium did not have a material adverse effect on our European
Aerospace Group's business or on our overall financial condition, we lost some
business due to customers' dual sourcing contracts, and some customer orders
that were expected to be delivered in fiscal 1999 were delayed into fiscal 2000
and 2001. The effect of the strike emphasizes the fact that a failure to obtain
titanium or other raw materials when we need them, or significant cost increases
imposed by suppliers of raw materials such as titanium or aluminum, could damage
our business and financial performance. We generally have readily available
sources of all raw materials and supplies we need to manufacture our products
and,
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where possible, we maintain alternate sources of supply. However, we do not have
fixed price contracts or arrangements for all of the raw materials and other
supplies we purchase. We have experienced in the past shortages of, or price
increases for, raw materials and supplies, and shortages or price increases may
occur again in the future. Future shortages or price fluctuations could have a
material adverse effect on our ability to manufacture and sell our products in a
timely and cost-effective manner.
We need to protect our intellectual property and proprietary rights, and
protection may be costly and not always available.
Significant aspects of our business depend on proprietary processes, know-how
and other technology that are not subject to patent protection. We rely on a
combination of trade secret, copyright and trademark laws, confidentiality
procedures, and other intellectual property protection to protect our
proprietary technology. However, our competitors may still develop or utilize
technology that is the same as or similar to our proprietary technology.
We have 33 U.S. patents, 8 U.S. patent applications pending (including 2 allowed
applications), 3 PCT International patent applications pending, 5 patent
applications pending in non-U.S. jurisdictions, and 1 European patent
enforceable in the U.K. We can provide no assurance that any of the patent
applications will result in issued patents, that existing patents or any future
patents will give us any competitive advantages for our products or technology,
or that, if challenged, these patents will be held valid and enforceable. Most
of our issued patents expire at various times over the next 15 years, with 16
patents expiring over the next four years. These 16 patents relate to products
manufactured by our U.S. Electronics Group and constituted approximately 0.9% of
our consolidated revenue in fiscal 2000. Although we believe that the
manufacturing processes of much of our patented technology are sufficiently
complex that competing products made with the same technology are unlikely, our
competitors may be able to design competing products using the same or similar
technology after these patents have expired.
Despite the precautions we have taken, unauthorized parties may attempt to copy
aspects of our products or obtain and use information that we regard as
proprietary. Existing intellectual property laws give only limited protection
with respect to such actions, and policing violations of these laws is
difficult. The laws of other countries in which our products are or may be
distributed do not protect products and intellectual property rights to the same
extent as do the laws of the United States. We could be required to enter into
costly litigation to enforce our intellectual property rights or to defend
infringement claims by others. Infringement claims could require us to license
the intellectual property rights of third parties, but licenses may not be
available on reasonable terms, or at all.
We could be subject to product liability claims and lawsuits for harm caused by
our products.
Many of our customers use our products for applications such as aircraft,
satellites, heavy trucks and other uses in which failure could have serious
consequences. We maintain product
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liability insurance with a maximum coverage of $2 million. However, this
insurance may not be sufficient to cover any claims that may arise. A successful
product liability claim in excess of our insurance coverage could have a
material adverse effect on our business and financial performance.
We must comply with environmental laws, and any failure to do so could subject
us to claims or regulatory action.
Our facilities are subject to regulations concerning solid waste disposal,
hazardous materials generation, storage, use and disposal, air emissions, waste
water discharge, employee health and other environmental matters. Proper waste
disposal and environmental regulation are major considerations for us because a
number of the metals, chemicals and other materials used in and resulting from
our manufacturing processes are classified as hazardous substances and hazardous
wastes. If we do not meet permitting and other requirements of applicable
environmental laws, we could be liable for damages and for the costs of remedial
actions. We could also be subject to fines or other penalties, including
revocation of permits needed to conduct our business. Any permit revocation
could require us to cease or limit production at one or more of our facilities,
which could damage our business and financial performance. We have an ongoing
program of monitoring and addressing environmental matters, and from time to
time in the ordinary course of business we are required to address minor issues
of noncompliance at our operating sites. From time to time, we identify
operations or processes that lack required permits or otherwise are not in full
compliance with applicable environmental laws. Although we believe these items
have not been material to date, we maintain an environmental compliance team,
and our policy is to take steps promptly to remedy any noncompliance. It is our
policy to obtain environmental assessment reports in connection with the
acquisition of properties at which historical operations could have caused
adverse environmental conditions. Except as follows, we obtained environmental
reports in connection with the acquisition of our United States and European
subsidiaries. We did not obtain an environmental report in connection with the
acquisition of Nova-Tech Engineering, Inc., which included the lease of an
office building. Except as follows, we are not aware of any contamination on
our properties or involving neighboring activities that would be material. We
currently lease property in Tacoma, Washington that is located within the
Commencement Bay/Nearshore Tideflats Superfund Site. The property owner and
certain historic operators at the property are potentially responsible parties
for this Superfund site. We have not been named as a liable party for
contamination associated with this Superfund site, and we have no reason to
believe that we will be so named.
Environmental laws could become more stringent over time, imposing greater
compliance costs and increasing risks and penalties associated with any
violations. As a generator of hazardous materials, we are subject to financial
exposure with regard to our properties even if we fully comply with these laws.
In addition, we utilize facilities that are located in industrial areas and have
lengthy operating histories. As a consequence, it is possible that historical
or neighboring activities have affected properties we currently own, and that,
as a result, additional environmental issues may arise in the future, the
precise nature of which we cannot now predict. Any present or future
noncompliance with environmental laws or future discovery of
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contamination could have a material adverse effect on our results of operations
or financial condition.
If we do not comply with federal laws and regulations, we could lose our
business from U.S. government contracts and incur penalties.
Certain of our products are manufactured and sold under United States government
contracts or subcontracts. As with all companies that provide products or
services to the United States government, we are directly and indirectly subject
to various federal rules, regulations and orders applicable to government
contractors. Some of these regulations relate specifically to the seller-
purchaser relationship with the government, such as the bidding and pricing
rules. Under regulations of this type, we must observe pricing restrictions,
produce and maintain detailed accounting data, and meet various other
requirements. We are also subject to many regulations affecting the conduct of
our business generally. For example, in the United States we must adhere to
federal acquisition requirements and standards established by the Occupational
Safety and Health Act relating to labor practices and occupational safety
standards. We are currently updating and implementing written policies and
training programs relating to employee health and safety matters at several of
our facilities. These actions are being taken to ensure ongoing compliance with
applicable laws, and not in response to any violations identified by regulatory
agencies. Violation of applicable government rules and regulations could result
in civil liability, in cancellation or suspension of existing contracts, or in
ineligibility for future contracts or subcontracts funded in whole or in part
with federal funds. In addition, some of our customers are in the defense
industry, and loss of governmental certification by these customers could cause
them to reduce or curtail their purchases from us, which could harm our
business.
We might have to issue a significant number of additional shares to the
investors in our Summer 2000 private placement, which would result in dilution
for our other shareholders.
Under the terms of the adjustable warrants and the vesting warrants issued in
our Summer 2000 private placement, we may be required to issue a significant
number of additional shares of common stock to the investors in that private
placement. Although the total number of shares of common stock issuable upon
exercise of the adjustable warrants and the vesting warrants cannot currently be
determined, we believe that applicable Nasdaq rules permit us to issue up to
6,621,712 shares of common stock as a result of the offering without shareholder
approval. If the number of shares issuable under the terms of the warrants
would exceed the number permitted by Nasdaq rules to be issued, we would have
the option to either seek shareholder approval to issue the excess shares or to
redeem the excess shares. The indenture governing our 11 1/4% senior
subordinated notes would not currently permit us to redeem the excess shares.
If we seek shareholder approval to issue additional shares but do not receive
the approval, we would have to redeem the shares if we are permitted to do so by
the indenture. We would not be subject to additional penalties if, after
unsuccessfully using our best efforts to obtain shareholder approval, the
indenture prevented us from redeeming additional shares.
12
<PAGE>
The dilution from the adjustable warrants and vesting warrants could decrease
the market price of our common stock.
To the extent that shares of common stock become exercisable under the
adjustable warrants and the vesting warrants, the market price of our common
stock could decrease because of additional shares being sold into the market. A
reduced price could allow the warrant holders to exercise the adjustable
warrants for additional shares of common stock on subsequent vesting dates, the
sale of which could further depress the market price of the common stock and
encourage short sales of our common stock. In addition, the possibility of
dilution and decreased market price could inhibit our opportunities to obtain
additional public or private financing when and if needed or on terms acceptable
to us.
Future issuances or resales of a significant number of shares of our common
stock could negatively affect the market price of our stock.
Sales of a significant number of shares of common stock in the public market or
the prospect of such sales could adversely affect the market price of our common
stock. This offering covers the resale by the selling shareholders of up to
4,422,010 shares of common stock. The actual number of shares issuable upon
exercise of the warrants described in this prospectus cannot be determined at
this time because the adjustment provisions of the adjustable warrants and
vesting events under the vesting warrants may permit the issuance of additional
shares. The actual number of shares issuable upon exercise of the warrants
described in this prospectus could be more or less than the 3,279,150 shares
being registered at this time. As of October 2, 2000, we have also reserved
2,295,000 common shares for issuance under our publicly traded warrants,
3,361,448 common shares for issuance under options outstanding under our two
stock incentive plans, 86,637 common shares for issuance under options
outstanding under our independent director stock plan, and 838,609 common shares
for issuance under other warrants. We also have an employee stock purchase plan
permitting employees to purchase shares of common stock using payroll
deductions. Shares issued upon exercise of our outstanding warrants or options
or pursuant to the employee stock purchase plan would be available for resale in
the public markets, subject in some cases to volume and other limitations. Any
future issuance of a significant number of common shares, or any future resales
by the holders of a significant number of common shares, or the prospect of such
issuances or resales, could negatively affect the market price of our common
stock.
If the minimum bid price for our common stock is less than $1.00 for 30
consecutive trading days, our common stock could be delisted from the Nasdaq
National Market System, and it could become more difficult to buy or sell our
common stock.
Our common stock is quoted on the Nasdaq National Market System. In order to
remain listed on this market, we must meet Nasdaq's listing maintenance
standards. The minimum bid price of our common stock has been lower than $1.00
on several occasions recently. If the minimum bid price of our common stock were
to remain below $1.00 for 30 consecutive trading days, or if we were unable to
continue to meet Nasdaq's standards for any other
13
<PAGE>
reason, our common stock could be delisted from the Nasdaq National Market
System. If the common stock were delisted, the liquidity for our common stock
would be adversely affected. In addition, delisting would trigger the vesting of
penalty shares under the vesting warrants held by the selling shareholders,
which would result in additional dilution.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference publicly-filed documents into this
prospectus, which means that information included in those documents is
considered part of this prospectus. Information that we file with the SEC after
the date of this prospectus will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until the selling shareholders have sold all the
shares.
The following documents filed with the SEC are incorporated by reference in
this prospectus:
1. Our annual report on Form 10-K for the year ended May 31, 2000, filed
on August 28, 2000, and our amended annual report on Form 10-K/A filed
on October 13, 2000;
2. Our amended current report on Form 8-K/A filed on July 13, 2000;
3. Our current report on Form 8-K filed on August 8, 2000;
4. Our definitive proxy statement filed on September 7, 2000;
5. Our quarterly report on Form 10-Q filed on October 12, 2000; and
6. The description of our common stock set forth in our registration
statement on Form 8-B as filed with the SEC on February 6, 1997.
You may request free copies of these filings by writing or telephoning us at the
following address: Pacific Aerospace & Electronics, Inc., 430 Olds Station Road,
Third Floor, Wenatchee, Washington 98801, Attention: Mr. Tom Barrows, Investor
Relations, (509) 667-9600.
The information relating to Pacific Aerospace contained in this prospectus is
not comprehensive, and you should read it together with the information
contained in the incorporated documents.
14
<PAGE>
AVAILABLE INFORMATION
This prospectus is part of a registration statement that we filed with the SEC.
Certain information in the registration statement has been omitted from this
prospectus in accordance with SEC rules.
We file annual, quarterly and special reports and other information with the
SEC. You may read and copy the registration statement and any other document
that we file at the SEC's public reference rooms located at Room 1024, Judiciary
Plaza, 450 Fifth Street N.W., Washington, D.C. 20549; 7 World Trade Center,
Suite 1300, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-
0330 for further information on the public reference rooms. Our SEC filings are
also available to you free of charge at the SEC's web site at
http://www.sec.gov.
Statements contained in this prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and in each instance
you should refer to the copy of the contract or other document filed as an
exhibit to the registration statement.
15
<PAGE>
SELLING SHAREHOLDERS
Shares Offered by Selling Shareholders. The selling shareholders are offering up
to 4,422,010 shares of common stock pursuant to this prospectus. These shares
are related to a private placement that closed on July 27, 2000 and are composed
of:
. 1,142,860 shares of common stock sold by Pacific Aerospace to Strong River
Investments, Inc. and to Bay Harbor Investments, Inc. on July 27, 2000;
. up to 385,000 shares of common stock issuable to Strong River and Bay Harbor
upon exercise of warrants issued to them on July 27, 2000;
. up to 2,815,000 shares of common stock issuable to Strong River and Bay
Harbor pursuant to additional warrants issued to them on July 27, 2000 if any
of the adjustment events described below occur; and
. up to 79,150 shares of common stock issuable upon exercise of warrants issued
on July 27, 2000 to the placement agent that acted on behalf of Pacific
Aerospace in the private placement.
The private placement was made pursuant to the exemption from registration
contained in Rule 506 of Regulation D under the Securities Act. In the private
placement, we agreed with the investors to file the registration statement of
which this prospectus is a part to register the shares for resale in the U.S.
We have filed this prospectus and the related registration statement with the
SEC to allow the selling shareholders to resell the shares to third parties
according to the plan of distribution described in this prospectus. See "Plan of
Distribution."
Description of Summer 2000 Private Placement. On July 27, 2000, we issued
1,142,860 shares of common stock and warrants to purchase additional shares to
two accredited investors, Strong River Investments, Inc. and Bay Harbor
Investments, Inc., for gross proceeds of $2.0 million. We paid a commission to
Rochon Capital Group, Ltd. comprised of $80,000 in cash and warrants to purchase
79,150 shares of common stock, at an exercise price of $1.7688 per share, for
representing Pacific Aerospace in this transaction. After taking into
consideration other expenses related to the transaction, we received net
proceeds at closing of $1,886,500, which we used to pay down our U.S. credit
line.
We also issued to the investors on July 27, 2000, warrants to purchase an
aggregate of 385,000 shares of common stock at an exercise price of $2.01 per
share (subject to certain adjustments), through July 27, 2003, and warrants to
purchase a currently indeterminate number of shares as described below. Each
investor received both adjustable warrants and vesting warrants.
16
<PAGE>
The purpose of the adjustable warrants is to provide a mechanism for resetting
the price of the shares of common stock purchased by the investors in the
transaction if the market price of our common stock does not achieve and
maintain a specific level. Adjustable warrants are exercisable by the investors
at an exercise price of $.001 per share for fifteen trading days following each
of three vesting dates. The vesting dates begin on the twentieth trading day
after the effectiveness of the registration statement and end on the sixtieth
trading day after the effectiveness of the registration statement. The
adjustable warrants expire fifteen trading days after the third vesting date.
On each vesting date, we will determine with the investors, based on a formula
contained in the adjustable warrants, whether the warrants have become
exercisable for any warrant shares. Under the formula, the number of shares
issuable would depend on the average closing price of our common stock for the
five trading days before each vesting date. Specifically, on each vesting date,
the investor will be entitled to the number of shares equal to: (i) one-third of
the shares purchased by the investor at closing, times (ii) the difference
between $1.902 and the average of the lowest five closing prices for our stock
during the 20 consecutive trading days preceding the vesting date, all divided
by such average. If the average closing price of our common stock is less than
$1.91 per share during the applicable period preceding a vesting date, the
formula will be applied to determine the number of shares that are issuable to
the investors upon exercise of the warrants as of that vesting date. If the
average closing price of our common stock is $1.91 or above during the
applicable period preceding a vesting date, no shares of common stock will be
issuable as of that vesting date. In addition, if the average closing price of
our common stock exceeds $2.19 per share for any 20 consecutive trading days, no
further vesting will occur and no more shares will become issuable.
The purpose of the vesting warrants is to provide for penalty shares to be
issued to the investors if any of several specified events occurs. The events
include, among other events, certain acquisitions, mergers or changes of control
involving Pacific Aerospace, our failure to deliver certificates to the holders
in a timely manner, our material breach under the transaction documents, the
delisting of our common stock for ten consecutive days, our failure to obtain an
effective registration statement within 180 days after the closing, or our
failure to maintain the registration statement effective for the required time
period. If any of these events occur, the investors will be entitled to receive
the number of shares equal to the product of 30% of $3,500,000 divided by the
closing price of our common stock on the trading day preceding the date of the
event.
The vesting warrants also provide for penalty shares under a different formula
if other events occur. These events include our failure to have the registration
statement effective within 60 days after the closing, other events relating to
our actions in obtaining and maintaining an effective registration statement,
and the delisting of our common stock for ten consecutive days. If any of these
events occur, the investors will be entitled to receive the number of shares
equal to the product of 3% of $3,500,000 divided by the closing price of our
common stock on the trading day preceding the date of the event. Because the
registration statement did not become effective within the 60 days after the
closing, a portion of the vesting warrants vested and became exercisable. As of
September 25, 2000, the investors became entitled to
17
<PAGE>
exercise the vesting warrants for up to 101,823 shares of common stock, for an
exercise price of $.001 per share. On each monthly anniversary of September 25,
2000, the vesting warrants will vest for additional shares, until the
registration statement becomes effective. If the registration statement is not
effective 180 days after closing, the penalty shares would accrue under the
formula in the preceding paragraph. The vesting warrants expire five business
days after the expiration of the adjustable warrants.
The vesting dates and expiration dates contained in the warrants and the numbers
of shares issuable upon exercise of the warrants are subject to anti-dilutive
adjustments under certain circumstances.
We cannot yet predict how many shares of common stock, if any, may become
issuable upon exercise of the adjustable warrants or the vesting warrants.
However, the adjustable warrants and the vesting warrants, by their terms,
cannot be exercised for a number of shares greater than the number we may issue
without shareholder approval under applicable Nasdaq rules. In the event that
the number of shares issuable would exceed the number of shares permitted to be
issued without shareholder approval under applicable Nasdaq rules, we would be
entitled either to redeem the excess shares (if and to the extent permitted by
our lenders) or to use our best efforts to obtain shareholder approval for the
issuance of the additional shares. The indenture governing our outstanding
11 1/4 % senior subordinated notes would not currently permit us to redeem
excess shares.
The transaction documents also provided that upon effectiveness of the
registration statement within sixty days after the first closing, a second
closing would occur, and the investors would pay an additional $1.5 million and
receive 857,140 additional shares of common stock. No additional warrants would
be issued at a second closing. The effectiveness of the registration statement
within 60 days after the first closing was the only condition to the second
closing. This condition was not satisfied, and the investors have decided not to
waive the condition. As a result, the second closing will not occur.
18
<PAGE>
Information Regarding the Selling Shareholders. No selling shareholder has held
any position or office or has had any other material relationship with Pacific
Aerospace or any of its affiliates within the past three years, except that
Rochon Capital Group, Ltd. has been engaged through November 16, 2000 to act as
placement agent on behalf of Pacific Aerospace.
The following table sets forth information as of October 10, 2000, to the best
of our knowledge, regarding the ownership of common stock by the selling
shareholders and as adjusted to give effect to the sale of the shares offered by
this prospectus.
<TABLE>
<CAPTION>
Ownership After Offering
Shares if All Shares Offered by
Beneficially this Prospectus are Sold
Owned Prior Shares Being ------------------------
Selling Shareholder to Offering/(1)/ Offered Shares Percent
------------------- ----------- ------- ------ -------
<S> <C> 0 --
Strong River Investments, Inc. 2,171,430/(2)/ 2,171,430/(2)/
0 --
Bay Harbor Investments, Inc. 2,171,430/(3)/ 2,171,430/(3)/
0 --
Rochon Capital Group, Ltd. 79,150/(4)/ 79,150/(4)/
</TABLE>
___________________
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock subject
to warrants that are currently exercisable or convertible or may be
exercised or converted within sixty days are deemed to be outstanding and
to be beneficially owned by the person holding the warrants for the purpose
of computing the number of shares beneficially owned.
(2) Includes: 571,430 shares of common stock issued to Strong River
Investments, Inc. on July 27, 2000; and up to 1,600,000 shares of common
stock issuable to Strong River Investments, Inc. upon exercise of warrants
issued on July 27, 2000.
(3) Includes: 571,430 shares of common stock issued to Bay Harbor Investments,
Inc. on July 27, 2000; and up to 1,600,000 shares of common stock issuable
to Bay Harbor Investments, Inc. upon exercise of warrants issued on July
27, 2000.
(4) Represents shares of common stock issuable upon exercise of warrants issued
to Rochon Capital Group, Ltd. on July 27, 2000.
19
<PAGE>
PLAN OF DISTRIBUTION
The selling shareholders and any of their future pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling shareholders may use any one or more of the
following methods when selling shares:
. ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
transactions in which the broker-dealer will attempt to sell 10,000 or more
shares as agent but may then purchase and resell a portion of the shares as
principal to facilitate the transaction;
. purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
. privately negotiated transactions;
. broker-dealers may agree with the selling shareholders to sell a specified
number of such shares at a stipulated price per share;
. a combination of any such methods of sale; and
. any other method permitted pursuant to applicable law.
The selling shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. Rule 144 would
be available to the selling shareholders after they have had a holding period of
one year for the securities.
Broker-dealers engaged by the selling shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling shareholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling shareholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
Pacific Aerospace is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
selling shareholders. Pacific Aerospace has agreed to indemnify the selling
shareholders against specified losses, claims, damages and liabilities,
including liabilities under the Securities Act.
20
<PAGE>
EXPERTS
The consolidated financial statements of Pacific Aerospace & Electronics, Inc.
as of May 31, 1999 and 2000 and for each of the fiscal years in the three-year
period ended May 31, 2000 have been incorporated by reference in this prospectus
and in the registration statement of which this prospectus is a part in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein and therein, and upon the authority of that
firm as experts in accounting and auditing. The report of KPMG LLP contained in
our annual report on Form 10-K/A for the year ended May 31, 2000, contains an
explanatory paragraph that states that Pacific Aerospace's recurring losses from
operations raise substantial doubt about our ability to continue as a going
concern. Our consolidated financial statements do not include any adjustments
that might result from the outcome of that uncertainty.
LEGAL MATTERS
The validity of the issuance of the shares offered by this prospectus has been
passed upon for Pacific Aerospace by Stoel Rives LLP of Seattle, Washington.
21
<PAGE>
This prospectus does not constitute an PACIFIC AEROSPACE &
offer to sell or a solicitation of an ELECTRONICS, INC.
offer to buy the shares:
. in any jurisdiction in which such
offer to sell or solicitation is 4,422,010 Shares
not unauthorized;
of
. in any jurisdiction in which the
person making such offer or Common Stock
solicitation is not qualified to do
so; or
. to any person to whom it is
unlawful to make such offer or
solicitation.
__________________
PROSPECTUS
__________________
______ __, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Distribution.
------------------------------
The following table sets forth the expenses incurred in connection with the sale
and distribution of the securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are estimated except the
SEC registration fee and the Nasdaq listing fee.
<TABLE>
<S> <C>
SEC registration fee....................................... $ 2,049
Nasdaq National Market listing fee......................... 17,500
Legal fees and expenses.................................... 25,000
Accounting fees and expenses............................... 15,000
Miscellaneous.............................................. 451
Total...................................................... $60,000
</TABLE>
Item 15. Indemnification of Officers and Directors.
-----------------------------------------
Article 8 of the Company's Articles of Incorporation authorizes the Company to
indemnify its directors to the fullest extent permitted by the Washington
Business Corporation Act through the adoption of bylaws, approval of agreements,
or by any other manner approved by the Board of Directors. Such indemnification
would be available except for acts or omissions as a director finally adjudged
to be intentional misconduct or a knowing violation of law, a vote or consent to
an illegal distribution, or any transaction from which the director personally
received a benefit in money, property or services to which the director was not
legally entitled.
In accordance with such authorization, Section 10 of the Company's Bylaws (the
"Bylaws") requires indemnification, to the fullest extent permitted by
applicable law, of any person who is or has served as a director or officer of
the Company, as well as any person who, while serving as a director or officer
of the Company, served at the request of the Company as a director, officer,
employee or agent of another entity, against expenses reasonably incurred
because such person was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether formal or
informal, civil, criminal, administrative or investigative.
Notwithstanding these indemnification obligations, Section 10 of the Bylaws
states that no indemnification will be provided (a) to the extent that such
indemnification would be prohibited by the Washington Business Corporation Act
or other applicable law as then in effect, or (b) except with respect to
proceedings seeking to enforce rights to indemnification, to any director or
officer seeking indemnification in connection with a proceeding initiated by
such person unless such proceeding was authorized by the Board of Directors.
II-1
<PAGE>
Section 10 of the Bylaws also provides that expenses incurred in defending any
proceeding in advance of its final disposition shall be advanced by the Company
to the director or officer upon receipt of an undertaking by or on behalf of
such person to repay such amount if it is ultimately determined that such person
is not entitled to be indemnified by the Company, except where the Board of
Directors adopts a resolution expressly disapproving such advancement. Section
10 of the Bylaws also authorizes the Board to indemnify and advance expenses to
employees and agents of the Company on the same terms and with the same scope
and effect as the provisions thereof with respect to the indemnification and
advancement of expenses to directors and officers.
Item 16. Exhibits.
--------
Exhibit
Number Description
2.1 Securities Purchase Agreement among Pacific Aerospace &
Electronics, Inc., Strong River Investments, Inc., and Bay Harbor
Investments, Inc., dated as of July 27, 2000./(2)/
4.1 Articles of Incorporation of Pacific Aerospace & Electronics,
Inc./(1)/
4.3 Bylaws of Pacific Aerospace & Electronics, Inc., as amended./(3)/
4.4 Form of specimen certificate for Common Stock./(1)/
4.5 Registration Rights Agreement between Pacific Aerospace &
Electronics, Inc., Strong River Investments, Inc., and Bay Harbor
Investments, Inc., dated as of July 27, 2000./(2)/
4.6 Warrant between Pacific Aerospace & Electronics, Inc. and Strong
River Investments, Inc., dated as of July 27, 2000./(2)/
4.7 Warrant between Pacific Aerospace & Electronics, Inc. and Bay
Harbor Investments, Inc., dated as of July 27, 2000./(2)/
4.8 Warrant between Pacific Aerospace & Electronics, Inc. and Strong
River Investments, Inc., dated as of July 27, 2000./(2)/
4.9 Warrant between Pacific Aerospace & Electronics, Inc. and Bay
Harbor Investments, Inc., dated as of July 27, 2000./(2)/
4.10 Vesting Warrant between Pacific Aerospace & Electronics, Inc. and
Strong River Investments, Inc., dated as of July 27, 2000./(2)/
4.11 Vesting Warrant between Pacific Aerospace & Electronics, Inc. and
Bay Harbor Investments, Inc., dated as of July 27, 2000./(2)/
4.12 Placement Agent Warrant between Pacific Aerospace & Electronics,
Inc. and Rochon Capital Group, Ltd., dated as of July 27,
2000./(4)/
5.1 Opinion of Stoel Rives LLP./(6)/
23.1 Consent of KPMG LLP./(6)/
23.2 Consent of Stoel Rives LLP (included in Exhibit 5.1).
24.1 Power of Attorney for officers and certain directors./(5)/
24.2 Power of Attorney for an additional director./(6)/
_______________________________________________________________________________
/(1)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on December 12, 1996.
II-2
<PAGE>
/(2)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on August 8, 2000.
/(3)/ Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ending August 31, 2000.
/(4)/ Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ending May 31, 2000.
/(5)/ Filed with the Registration Statement.
/(6)/ Filed with this Amendment.
Item 17. Undertakings.
------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration
statement (or the most recent post-effective amendment
thereof) that, individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof; and
II-3
<PAGE>
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under "Plan of Distribution" and Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, PACIFIC
AEROSPACE & ELECTRONICS, INC. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Amendment No. 1 to the Registration Statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in
Wenatchee, Washington, on October 13, 2000.
PACIFIC AEROSPACE & ELECTRONICS, INC.
By: /s/ Donald A. Wright
---------------------------------------
Donald A. Wright, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement on Form S-3 has been signed by the
following persons in the capacities indicated on October 13, 2000.
Signature Title
/s/ Donald A. Wright President, Chief Executive Officer
----------------------------------- and Director (Principal Executive
Donald A. Wright Officer)
/s/ Nick A. Gerde* Chief Financial Officer, Vice
----------------------------------- President Finance and Treasurer
Nick A. Gerde (Principal Financial and Accounting
Officer)
/s/ Werner Hafelfinger* Director
-----------------------------------
Werner Hafelfinger
/s/ Dale L. Rasmussen* Director
-----------------------------------
Dale L. Rasmussen
/s/ William A. Wheeler* Director
-----------------------------------
William A. Wheeler
/s/ Robert M. Stemmler * Director
-----------------------------------
Robert M. Stemmler
/s/ Gene C. Sharratt, Ph.D. * Director
-----------------------------------
Gene C. Sharratt, Ph.D.
*By /s/ Donald A. Wright
-----------------------------------
Donald A. Wright
(Attorney in Fact)
II-5
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
2.1 Securities Purchase Agreement among Pacific Aerospace & Electronics,
Inc., Strong River Investments, Inc., and Bay Harbor Investments,
Inc., dated as of July 27, 2000./(2)/
4.1 Articles of Incorporation of Pacific Aerospace & Electronics,
Inc./(1)/
4.3 Bylaws of Pacific Aerospace & Electronics, Inc., as amended./(3)/
4.4 Form of specimen certificate for Common Stock./(1)/
4.5 Registration Rights Agreement between Pacific Aerospace & Electronics,
Inc., Strong River Investments, Inc., and Bay Harbor Investments,
Inc., dated as of July 27, 2000./(2)/
4.6 Warrant between Pacific Aerospace & Electronics, Inc. and Strong River
Investments, Inc., dated as of July 27, 2000./(2)/
4.7 Warrant between Pacific Aerospace & Electronics, Inc. and Bay Harbor
Investments, Inc., dated as of July 27, 2000./(2)/
4.8 Warrant between Pacific Aerospace & Electronics, Inc. and Strong River
Investments, Inc., dated as of July 27, 2000./(2)/
4.9 Warrant between Pacific Aerospace & Electronics, Inc. and Bay Harbor
Investments, Inc., dated as of July 27, 2000./(2)/
4.10 Vesting Warrant between Pacific Aerospace & Electronics, Inc. and
Strong River Investments, Inc., dated as of July 27, 2000./(2)/
4.11 Vesting Warrant between Pacific Aerospace & Electronics, Inc. and Bay
Harbor Investments, Inc., dated as of July 27, 2000./(2)/
4.12 Placement Agent Warrant between Pacific Aerospace & Electronics, Inc.
and Rochon Capital Group, Ltd., dated as of July 27, 2000./(4)/
5.1 Opinion of Stoel Rives LLP./(6)/
23.1 Consent of KPMG LLP./(6)/
23.2 Consent of Stoel Rives LLP (included in Exhibit 5.1).
24.1 Power of Attorney for officers and certain directors./(5)/
24.2 Power of Attorney for an additional director./(6)/
______________________________________________________________________________
/(1)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on December 12, 1996.
/(2)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on August 8, 2000.
/(3)/ Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ending August 31, 2000.
/(4)/ Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ending May 31, 2000.
/(5)/ Filed with the Registration Statement.
/(6)/ Filed with this Amendment.
