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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 27, 2000
PACIFIC AEROSPACE & ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Washington 0-26088 91-1744587
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization)
430 Olds Station Road, Third Floor, Wenatchee, WA 98801
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number,
including area code: (509) 667-9600
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Item 5. Other Events
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On July 27, 2000, the Company closed the first installment of a $3.5 million
private placement with two accredited investors. On that date, the Company
issued 1,142,860 shares of common stock and warrants to purchase additional
shares to the investors for $2.0 million. The Company expects to file a
registration statement on Form S-3 with the Securities and Exchange Commission
to register the resale of the shares of common stock issued or issuable as a
result of the transaction (the "Registration Statement"). Upon effectiveness of
the Registration Statement within sixty days after the first closing, a second
closing will occur, and the investors will pay an additional $1.5 million and
receive 857,140 additional shares of common stock. No additional warrants will
be issued at the second closing. The effectiveness of the Registration
Statement within 60 days after the first closing is the only condition to the
second closing.
At the first closing, the Company issued to the investors warrants to purchase
an aggregate of 385,000 shares of the Company's common stock at an exercise
price of $2.01 per share (subject to certain adjustments), through July 27, 2003
(the "Closing Warrants") and warrants to purchase a currently indeterminate
number of shares as described below (the "Adjustable Warrants" and the "Vesting
Warrants" and, together with the Closing Warrants, the "Warrants").
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 the Company's 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, the Company and the investors will determine, 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 the Company's common stock
for the five trading days before each vesting date. If the average closing
price of the Company's 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 the
Company's 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 the Company's 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.
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The purpose of the Vesting Warrants is to provide for the additional shares to
be issued to the investors if certain events occur. Under the Vesting Warrants,
penalty shares would become issuable upon occurrence of any of several specified
events. The events include, among other events, certain acquisitions or mergers
involving the Company, the Company's failure to deliver certificates to the
holders in a timely manner, a material breach by the Company under the
transaction documents, the delisting of the Company's common stock for ten
consecutive days, or the failure of the Company to obtain an effective
Registration Statement in a timely manner and maintain the Registration
Statement effective for the required time period. 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 adjustment under
certain circumstances.
The Company 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 the
Company 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, the Company would be entitled either to redeem the excess shares
(if and to the extent permitted by the Company's lenders) or to obtain
shareholder approval for the issuance of the additional shares.
Item 7. Financial Statements and Exhibits
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(a) Financial Statements. Not applicable.
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(b) Pro Forma Financial Information. Not applicable.
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(c) Exhibits
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The following are filed as exhibits to this current report:
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.
4.1 Registration Rights Agreement between Pacific Aerospace & Electronics,
Inc., Strong River Investments, Inc., and Bay Harbor Investments, Inc.,
dated as of July 27, 2000.
4.2 Warrant between Pacific Aerospace & Electronics, Inc. and Strong River
Investments, Inc., dated as of July 27, 2000.
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4.3 Warrant between Pacific Aerospace & Electronics, Inc. and Bay Harbor
Investments, Inc., dated as of July 27, 2000.
4.4 Warrant between Pacific Aerospace & Electronics, Inc. and Strong River
Investments, Inc., dated as of July 27, 2000.
4.5 Warrant between Pacific Aerospace & Electronics, Inc. and Bay Harbor
Investments, Inc., dated as of July 27, 2000.
4.6 Vesting Warrant between Pacific Aerospace & Electronics, Inc. and Strong
River Investments, Inc., dated as of July 27, 2000.
4.7 Vesting Warrant between Pacific Aerospace & Electronics, Inc. and Bay
Harbor Investments, Inc., dated as of July 27, 2000.
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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 hereunto duly authorized.
PACIFIC AEROSPACE & ELECTRONICS, INC.
By: /s/ Donald A. Wright
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Donald A. Wright, Chief Executive Officer & President
Dated: August 8, 2000
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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.
4.1 Registration Rights Agreement between Pacific Aerospace & Electronics,
Inc., Strong River Investments, Inc., and Bay Harbor Investments, Inc.,
dated as of July 27, 2000.
4.2 Warrant between Pacific Aerospace & Electronics, Inc. and Strong River
Investments, Inc., dated as of July 27, 2000.
4.3 Warrant between Pacific Aerospace & Electronics, Inc. and Bay Harbor
Investments, Inc., dated as of July 27, 2000.
4.4 Warrant between Pacific Aerospace & Electronics, Inc. and Strong River
Investments, Inc., dated as of July 27, 2000.
4.5 Warrant between Pacific Aerospace & Electronics, Inc. and Bay Harbor
Investments, Inc., dated as of July 27, 2000.
4.6 Vesting Warrant between Pacific Aerospace & Electronics, Inc. and Strong
River Investments, Inc., dated as of July 27, 2000.
4.7 Vesting Warrant between Pacific Aerospace & Electronics, Inc. and Bay
Harbor Investments, Inc., dated as of July 27, 2000.
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