PROSPECTUS
977,135 Shares
PSC
Common Shares
This Prospectus has been prepared in conjunction with the distribution of
up to 977,135 Common Shares, $.01 par value (the "Shares"), of PSC Inc. (the
"Company" or "PSC"), proposed to be sold from time to time by the Selling
Shareholder named herein. See "Selling Shareholder." The Company will not
receive any of the proceeds from the sale of the Shares by the Selling
Shareholder. The costs and expenses of registering the Shares covered by this
Prospectus will be paid by the Company.
The Company's Common Shares are quoted on the Nasdaq National Market under
the symbol PSCX. On October 24, 1996 the last reported sale price for the Common
Shares was $8.3125 per share.
The Shares offered hereby involve a high degree of risk. See "Risk Factors."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Subject to the provisions contained in certain agreements, the
distribution of the Shares by the Selling Shareholder may be effected from time
to time in one or more transactions (which may involve block transactions) in
the over-the-counter market, on the Nasdaq National Market (or any exchange on
which the Common Shares may then be listed), in negotiated transactions or
otherwise. Sales will be effected at such prices and for such consideration as
may be obtainable from time to time. Commission expenses and brokerage fees, if
any, will be paid by the Selling Shareholder. See "Selling Shareholder" and
"Plan of Distribution."
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No person is authorized to give any information or to make any
representation, other than those contained in or incorporated by reference in
this Prospectus, and any information or representations not contained in or
incorporated by reference in this Prospectus must not be relied upon as having
been authorized by the Company or the Selling Shareholder. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any
securities other than the registered securities to which it relates. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy such securities under any circumstances where such offer or solicitation is
unlawful. Neither the delivery of this Prospectus nor any sales made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to its date.
October 25, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D. C. 20549, and at the Commission's
following Regional Offices: Suite 1400, Northwest Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661; and 13th Floor, Seven World Trade
Center, New York, New York 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The Commission also
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants (including the Company) that file
electronically with the Commission. The address of the Commission's Web site is
http://www.sec.gov. In addition, the Company's Common Shares are listed on the
Nasdaq National Market, and the aforementioned materials may also be inspected
at the offices of the Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.
C. 20006.
Additional information regarding the Company and the shares offered hereby
is contained in the Registration Statement on Form S-3 and the exhibits thereto
filed with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). For further information pertaining to the Company and the
Shares, reference is made to the Registration Statement and the exhibits
thereto, which may be inspected without charge at, and copies thereof may be
obtained at prescribed rates from, the office of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, the Company' Quarterly Reports on Form 10-Q for the quarters
ended March 31, and June 30, 1996, the Company's Current Report on Form 8-K
dated May 22, 1996, the Company's Current Report on Form 8-K dated July 25,
1996, Form 8-K/A relating thereto dated September 23, 1996, and amendment No. 1
to Form 8-K/A dated September 26, 1996, the Company's Proxy Statement dated
March 25, 1996 and the description of the Company's Common Shares contained in
the Company's Registration Statement on Form 8-A filed by the Company with the
Commission on August 31, 1981 are hereby incorporated by reference in this
Prospectus, except as superseded or modified herein. All documents filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this Prospectus and prior to the termination of
the offering of the Shares offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in any document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
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superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed documents which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as modified or superseded, to constitute a part of this Prospectus. The Company
will provide without charge to each person, including any beneficial owner, to
whom this Prospectus is delivered, upon written or oral request of such person,
a copy of any and all of the documents that have been or may be incorporated by
reference herein (other than exhibits to such documents which are not
specifically incorporated by reference into such documents). Such requests
should be directed to William J. Woodard, Vice President, Finance and Treasurer,
at the Company's principal executive offices at 675 Basket Road, Webster, NY
14580 (telephone (716) 265-1600).
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THE COMPANY
PSC Inc. ("PSC" or the "Company") designs, manufactures and markets a
comprehensive line of handheld, countertop, in-counter and fixed position laser
based bar code scanners, scan engines and verifiers and automated carton
dimensioning systems and retail automation systems for the worldwide automatic
identification and data collection ("Auto ID") market. By identifying,
collecting, processing and transmitting data, the Company's scanning products
serve as the "front end" of terminals or host computers used by industry,
business and government to manage and control production, warehousing,
distribution, sales and service. Headquartered in Rochester, New York, the
Company has manufacturing facilities in Rochester, Eugene, Oregon, Orlando,
Florida and Paris, France. The Company has sales and service offices throughout
North America, Europe, Asia and Australia.
Recent Development. On July 12, 1996, PSC and certain of its subsidiaries
acquired from Spectra-Physics, Inc. ("SPI") and certain of its affiliated
entities all of the outstanding stock of Spectra-Physics Scanning Systems, Inc.
("Scanning"), 72% of the outstanding stock of TxCom S.A. ("TxCom"), and certain
other assets, which collectively comprised the Data Capture Group ("Spectra Data
Capture Group") of Spectra-Physics AB, a multinational corporation based in
Sweden. Scanning, which is headquartered in Eugene, Oregon, is a leading
provider of countertop and in-counter bar code scanners used primarily in retail
checkout applications. In 1995, the Spectra Data Capture Group had net sales of
$101,627,000. By integrating Scanning's lines with its existing lines of
scanners, the Company believes it now offers one of the broadest product lines
in the industry. In addition, the Company believes that the acquisition of
Scanning will provide the opportunity for its hand held laser scanners to be
sold through Scanning's retail and international distribution structure.
The acquisition price of $138,997,000 was paid by $123,997,000 in cash,
$10,000,000 in PSC Common Shares (977,135 shares) and $5,000,000 by a
Subordinated Installment Promissory Note. The cash portion was funded by a
combination of the Company's existing cash and Senior Debt ($92.5 million) and
Subordinated Debt ($30 million). In connection with the Subordinated Debt
warrants ("Warrants") evidencing rights to purchase an aggregate of 975,000
Common Shares of the Company were issued and sold to the purchasers of the
Subordinated Debt. Said Warrants have an exercise price of $9.48 per share and
may be exercised between July 12, 1997 and July 12, 2006. Holders of the
Warrants have certain rights relating to registration and to the repurchase by
the Company of the Warrants and the shares issued upon the exercise of the
Warrants under certain circumstances.
The acquisition will be accounted for as a purchase. The Company allocated
$60 million of the purchase price to acquired in-process research and
development. In accordance with Generally Accepted Accounting Principles, this
amount was written-off, resulting in a one-time charge to the Company's earnings
in the third quarter.
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On September 9, 1996, the name of Scanning was changed to PSC Scanning,
Inc.
PSC was incorporated in the State of New York in 1969. The Company's
headquarters are located at 675 Basket Road, Webster, New York, and its
telephone number is (716) 265-1600.
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RISK FACTORS
In addition to the other information in this Prospectus, the following
risk factors should be considered carefully in evaluating the Company and its
business before purchasing the Shares offered hereby.
Substantial Leverage. The Company incurred substantial indebtedness in
connection with the acquisition of the Spectra Data Capture Group: (i) $92.5
million in Senior Debt, (ii) $30 million in Subordinated Debt and (iii) $5
million in a Subordinated Installment Promissory Note. See "The Company - Recent
Development." After giving pro forma effect to the Spectra Data Capture Group
acquisition, at June 30, 1996, the Company's long-term indebtedness would have
been $122.8 million and the Company would have had a shareholders' equity of
$22.7 million. The degree to which the Company is leveraged could have important
consequences to the holders of the Shares, including the following: (i) the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or general corporate purposes may be
impaired; (ii) a substantial portion of the Company's cash flow from operations
must be dedicated to the payment of interest on the indebtedness, thereby
reducing the funds available to the Company for other purposes; (iii) the
agreements governing the Company's long-term indebtedness contain certain
restrictive financial and operating covenants; (iv) certain indebtedness under
the Senior Debt will be at variable rates of interest, which would cause the
Company to be vulnerable to increases in interest rates; (v) all of the
indebtedness outstanding under the Senior Debt is secured by substantially all
the assets of the Company;' (vi) the Company is substantially more leveraged
than certain of its competitors, which might place the Company at a competitive
disadvantage; (vii) the Company may be hindered in its ability to adjust rapidly
to changing market conditions; and (viii) the Company's substantial degree of
leverage could make it more vulnerable in the event of a downturn in general
economic conditions or its business.
Debt Service. As a result of the indebtedness incurred in connection with
the acquisition of the Spectra Data Capture Group, a substantial portion of the
Company's cash flow will be devoted to debt service. The ability of the Company
to continue making payments of principal and interest will be largely dependent
upon its future performance. Many factors, some of which will be beyond the
Company's control, such as prevailing economic conditions, will affect its
performance. There can be no assurance that the Company will be able to generate
sufficient cash flow to cover required interest and principal payments. If the
Company is unable to meet interest and principal payments in the future, it may,
depending upon the circumstances which then exist, seek additional equity or
debt financing, attempt to refinance its existing indebtedness or sell all or
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part of its business or assets to raise funds to repay its indebtedness. There
can be no assurance that sufficient equity or debt financing will be available,
or, if available, that it will be on terms acceptable to the Company, that the
Company will be able to refinance its existing indebtedness or that sufficient
funds could be raised through asset sales. In addition, the ability of the
Company to raise funds by selling assets is restricted by the Senior Debt.
Technological Change. The market for the Company's products is
characterized by rapidly changing technology, evolving industry standards and
changing customer needs. The Company's future success will depend on its ability
to enhance its current products, to develop new products on a timely and
cost-effective basis and to respond to changing customer needs and technological
developments. Certain of the Company's competitors spend larger amounts on
research and development efforts than the Company. Any failure by the Company to
anticipate or respond adequately to changes in technology and customer
preferences, or any significant delay in product development or introduction,
could have a material adverse effect on the Company's financial condition and
results of operations. There can be no assurance that the Company will be
successful in developing new products or enhancing its existing products on a
timely or cost-effective basis, or that such new products or product
enhancements will achieve market acceptance.
Management of Growth. The Company is experiencing a period of rapid growth
that could place a significant strain on its resources. A component of the
Company's business strategy is to complement internal growth with strategic
acquisitions. There can be no assurance that the Company will be able to operate
acquired businesses profitably or otherwise implement its growth strategy
successfully. The Company's ability to manage its growth and integrate any
newly-acquired entities will require it to continue to improve its operations
and its financial and management information systems, and to motivate and
effectively manage its employees. If the Company's management is unable to
manage such growth effectively, the quality of the Company's products, its
ability to identify, hire and retain key personnel and its results of operations
could be materially adversely affected.
Spectra Data Capture Group Acquisition. The successful integration of the
Spectra Data Capture Group is important to the Company's future financial
performance. The anticipated benefits of this acquisition may not be achieved
unless the Spectra Data Capture Group is successfully integrated with the
Company's existing operations, which will require substantial attention from the
Company's management. If the Company's management is unable to manage this
integration effectively, the Company's business and results of operations could
be materially adversely affected. See "The Company - Recent Development."
Dependence on Sales by Third Parties; Significant Customers. The Company's
net sales are dependent upon the ability of its original equipment manufacturer
("OEM"), value added reseller ("VAR"), distributor and systems integrator
customers to develop and sell products that incorporate the Company's scanning
products. Factors, including economic conditions, patent positions, inventory
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positions, the ability to sell the Company's products to end users, regulatory
requirements and other marketing restrictions, that adversely affect the
operations of the Company's OEM, VAR, distributor and systems integrator
customers can have a substantial impact upon the Company's financial results. No
assurances can be given that the Company's OEM, VAR, distributor and systems
integrator customers will not experience financial or other difficulties that
could adversely affect their operations and, in turn, the results of operations
of the Company. During 1995, 1994 and 1993, Telxon Corporation ("Telxon")
accounted for 17%, 22% and 16%, respectively, of PSC's net sales. In 1994, net
sales to Intermec, a division of Western Atlas, accounted for 10% of net sales.
In 1995, 1994 and 1993, approximately 14%, 12% and 24%, respectively, of the
Spectra Data Capture Group's net sales were derived from sales to IBM. A
significant decline in the Company's sales to Telxon or IBM could have a
material adverse effect on the business, financial condition and results of
operations of the Company.
Intellectual Property; Pending Litigation. The Company's success is
dependent in part on its ability to obtain patent protection for its products,
maintain trade secret protection and operate without infringing the proprietary
rights of others. The Company currently owns over 100 U.S. patents having
expirations from the year 2002 to the year 2013 and also has certain foreign
patents. The Company has filed, and intends to file, applications for additional
patents covering its products. There can be no assurance that any of these
patent applications will be granted, or that the Company will develop additional
products that are patentable and do not infringe upon the patents of others, or
that the patents issued to or licensed by the Company will provide the Company
with a competitive advantage or adequate protection for its products. In
addition, there can be no assurance that the Company's competitors will not
develop technology or know-how, or obtain patents, that could limit the
Company's ability to compete in the future or that patents issued to or licensed
by the Company will not be challenged, invalidated or circumvented by others.
The Auto ID industry is characterized by substantial litigation regarding
patent and other intellectual property rights. The Company aggressively defends
its patents and other proprietary rights, and is currently a plaintiff in two
lawsuits alleging patent infringements on the part of others, and these
proceedings involve counterclaims against the Company. The Company has also
commenced an action against Symbol Technologies, Inc. ("Symbol") for violation
of the antitrust laws and unfair trade practices and for declaration of
noninfringement and/or invalidity of certain of Symbol's patents. In that
action, Symbol has counterclaimed alleging patent infringement and alleging
breaches of certain Symbol-PSC License Agreements. PSC has informed Symbol that
subsequent to the Spectra Data Capture Group acquisition it has been operating
under certain Symbol-Scanning licenses rather than under the Symbol-PSC
licenses. PSC's licensing rights are before the courts. Although the Company
maintains that Symbol's patents are invalid, that the Company has not infringed
the patents, or both, and that the Symbol-Scanning License Agreements rather
than the Symbol-PSC License. Agreements are controlling, there can be no
assurance that the actions will be decided or settled in the Company's favor.
There can be no assurance that others will not assert claims against the Company
that result in litigation. Any such litigation could result in significant
expense, adversely impact the Company's marketing, give rise to certain
indemnity rights on the part of customers, and divert the Company's attention
from other matters. If any of the Company's products were found to infringe a
third-party patent, the third party could be entitled to injunctive relief,
which would prevent the Company from selling any such infringing products. In
addition, the Company could be required to pay monetary damages. Although the
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Company could seek a license to sell products determined to infringe a
third-party patent, there can be no assurance that a license would be available
on terms acceptable to the Company. The Company could also attempt to redesign
any infringing products so as to avoid infringement, although any effort to do
so could be expensive and time-consuming, and there can be no assurance the
effect would be successful.
Competition. The Auto ID industry is highly competitive with rapid
technological change and intellectual property developments representing key
competitive factors. The Company also competes on the basis of innovative
design, high qualify manufacturing, technical expertise in scanning, level of
sales and support services, price and overall product functionality and fitness
for use. Failure to keep pace with product and technological advances could
negatively affect the Company's competitive position and prospects for growth.
Several of the Company's competitors have substantially greater financial and
other resources than the Company. In addition, other larger corporations could
enter the Auto ID industry. No assurance can be given that the Company will be
able to compete successfully against current and future competitors or that the
competitive factors faced by the Company will not adversely affect its business,
financial condition or results of operations.
Dependence on Key Vendors. The Company's ability to produce and ship its
products on schedule is highly dependent on timely receipt of an adequate supply
of components and materials from its key vendors. The Company currently relies
on single suppliers, some of whom manufacture at a number of locations, for some
of the key components of its products. The Company could incur set-up costs and
delays in manufacturing should it become necessary to replace key vendors due to
work stoppages, shipping delays, financial difficulties or other factors and,
under certain circumstances, these costs and delays could have a material
adverse effect on the Company's results of operations.
Product Transitions. The introduction of new and enhanced products
requires the Company to manage the transition from older products in order to
minimize disruption in customer ordering patterns, avoid excess levels of older
material inventories and ensure that adequate supplies of new product can be
delivered to meet customer demand. There can be no assurance that the Company
will successfully manage the transition to selling new products. The failure to
do so could have a material adverse effect on the Company's business and results
of operations.
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Fluctuations in Operating Results. Historically, the Company has
experienced variability in its quarterly results. Large orders can cause
favorable or unfavorable variations in quarterly comparisons. In addition, the
Company's results may vary significantly from quarter to quarter depending on
other factors such as the timing of orders and shipments, the level of
development, sales and marketing expense incurred in anticipation of future
revenues and the timing of new product and applications announcements and
releases by the Company and its competitors. Many of these factors are beyond
the Company's control. The Company believes that quarterly period-to-period
comparisons of its financial results are not necessarily meaningful and should
not be relied upon as an indication of future performance. The Company believes
that, in general, retailers are reluctant to install point-of-sale scanners
during their peak fourth quarter selling period. This may have a negative effect
on fourth quarter sales.
Risks Associated with International Operations. PSC's sales to
international customers increased from $6.8 million or 18% of total net sales in
1993 to $19.3 million or 22% of net sales in 1995 and the Spectra Data Capture
Group's sales to international customers averaged approximately 53% of sales for
the last three years. The Company intends to continue to expand its operations
outside of the United States and to enter additional international markets and
expects that international sales will represent a substantial portion of its
revenues. This will require significant management attention and financial
resources and will result in a significant portion of the Company's net sales
being subject to the risks associated with international sales. Such risks
include changes in regulatory requirements, compliance costs associated with
quality control standards, special standards requirements, exposure to currency
fluctuations, exchange rates, tariffs and other barriers, reduced protection for
intellectual property rights in some countries, difficulties in staffing and
managing international subsidiary operations, potentially adverse tax
consequences, country-specific product requirements and political uncertainties.
There can be no assurance that these factors will not have an adverse impact on
the Company's ability to increase or maintain its international sales or on the
Company's results of operations.
Dependence on Key Personnel. The Company's future success depends in large
part on the continued service of L. Michael Hone, Chairman of the Board and
Chief Executive Officer, as well as on its other key technical and management
personnel. Mr. Hone's current employment agreement expires on December 31, 1999.
The Company is also dependent on its ability to continue to attract additional
qualified employees, particularly design, process and test engineers involved in
the manufacture of existing products and the development of new products and
processes. The competition for such skilled personnel is intense and the loss of
key employees could have a material adverse effect on the Company's results of
operations.
Volatility of Stock Price. The Company's Common Shares have experienced
substantial price volatility and such volatility may occur in the future,
particularly as a result of quarter-to-quarter variations in the actual or
anticipated financial results of the Company, its competitors and other
companies in the Auto ID industry. In addition, the stock market has experienced
significant price and volume fluctuations that have affected the market price of
many technology companies and have often been unrelated to the operating
performance of these companies. Broad market fluctuations, as well as general
economic and political conditions, may adversely affect the market price of the
Common Shares.
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Nasdaq National Market Listing. PSC's Common Shares are currently quoted
on the Nasdaq National Market. To maintain the listing of its Common Shares on
the Nasdaq National Market, the Company must have, among other things, net
tangible assets (total assets minus liabilities and good will) of at least
$1,000,000. After giving pro forma effect to the Spectra Data Capture Group
acquisition, at June 30, 1996, the Company would have had a negative net
tangible asset figure of approximately ($49,855,000), primarily due to the
goodwill associated with the acquisition. The failure of the Company to meet
this maintenance criterion may result in the delisting of the Company's Common
Shares from the Nasdaq National Market. The Company, meeting all of the other
criteria for listing on the Nasdaq National Market, intends to seek a waiver of
this requirement. However, there can be no assurance that such a waiver will be
granted. If the Company's Common Shares are delisted from the Nasdaq National
Market, the Company intends to make an application for quotation on the Nasdaq
Small-Cap Market System. The Company believes that it meets all the criteria for
listing on the Nasdaq Small-Cap Market System.
Government Regulation. Certain products of the Company must comply with
regulations promulgated by the United States Food and Drug Administration's
Center for Devices and Radiological Health (CDRH), the Federal Communications
Commission (FCC), as well as the Canadian Standard Association, the European
Community Standards (CE) and TUV Rheinland (Europe), which are corresponding
agencies for certain foreign countries. The Company's operations are also
subject to certain federal, state and local requirements relating to
environmental, waste management, health and safety regulations. The Company
believes that its business is currently operated in compliance with applicable
government, environmental, waste management, health and safety regulations.
There can be no assurance that future regulations will not require the Company
to modify its products to meet revised energy output or other requirements.
Failure to comply with current or future regulations could have a material
adverse effect on the Company's results of operations.
Anti-Takeover Effects of Certain Charter and Bylaw Provisions. The
Company's Certificate of Incorporation (the "Certificate") and Bylaws (the
"Bylaws") contain certain provisions relating to corporate governance, to the
rights of shareholders, and to the possible issuance of Preferred Shares. These
provisions may be deemed to have a potential "anti-takeover" effect in that such
provisions may delay, defer or prevent a change in control of the Company and
may delay or make more difficult a merger, tender offer or proxy contest
involving the Company. The Certificate provides for the Board of Directors to be
divided into three classes of directors serving staggered three-year terms. As a
result, approximately one-third of the Board of Directors will be elected each
year. In addition, the Certificate provides that shareholders may remove a
director only for cause and only by the vote of the holders of two-thirds of the
Common Shares of the Company. This provision, when coupled with the provision of
the Certificate authorizing only the Board of Directors to fill vacant
directorships, will preclude shareholders from removing incumbent directors
without cause and simultaneously gaining control of the Board of Directors by
filling the vacancies created by such removal with their own nominees, and will
make more difficult, and therefore may discourage, a proxy contest to change
control of the Company. The Certificate also provides that special meetings of
shareholders of the Company may be called only by the Board of Directors. These
provisions of the Certificate may be changed only by the affirmative vote of the
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holders of two-thirds of the Common Shares of the Company entitled to vote on
such matters at a meeting duly called for such purpose. The Bylaws provide that
shareholders seeking to bring business before an annual meeting of shareholders
or to nominate candidates for election as directors at an annual or special
meeting of shareholders, must provide prior written notice thereof, as set forth
in the Bylaws. The Certificate provides that the Company's Preferred Shares may
be issued in the future without further shareholder approval and upon such terms
and conditions, and having such rights, privileges and preferences, as the Board
of Directors may determine.
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USE OF PROCEEDS
All proceeds from the sale of the Shares to be sold pursuant to this
Prospectus will be for the account of the Selling Shareholder. As a consequence,
the Company will not receive any proceeds from the sale of the Shares offered by
the Selling Shareholder.
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SELLING SHAREHOLDER
Pursuant to an Asset and Stock Purchase Agreement dated May 20, 1996 and
amended July 12, 1996, by and among PSC, SPI, and Spectra-Physics Holding, S. A.
("SPHSA") (the "Purchase Agreement"), SPI received 977,135 Common Shares (the
"Shares") of PSC as part of the consideration for the sale to PSC and certain of
its subsidiaries of certain stock and assets owned by SPI and certain of its
affiliated entitles. See "The Company - Recent Development."
As described more fully below, the Shares are subject to the provisions of
an Escrow Agreement (as hereinafter defined) and a Registration Agreement (as
hereinafter defined).
In accordance with the Purchase Agreement and pursuant to an Escrow
Agreement dated as of July 12, 1996, by and among PSC, SPI and The Chase
Manhattan Bank, N.A., as escrow agent (the "Escrow Agreement"), SPI has
delivered to an escrow agent 315,789 Shares acquired by SPI pursuant to the
Purchase Agreement (together with any securities into which such shares may be
converted by virtue of any merger or other reorganization during the term of the
escrow, the "Escrowed Shares"), together with stock powers for such Escrowed
Shares duly executed in blank.
In accordance with the Escrow Agreement, the Escrowed Shares may be used
to satisfy certain indemnification obligations of SPI and SPHSA under Article
VIII of the Purchase Agreement (an "Indemnification Claim"). Pursuant to the
Escrow Agreement and as more fully described therein, on the earlier of January
12, 1997, or the first date on which PSC consummates a public offering of its
equity securities, certain of the Escrowed Shares may be released from escrow
and delivered to SPI, and on July 12, 1997, additional Escrowed Shares may be
released from escrow and delivered to SPI when no Indemnification Claim made in
accordance with the Escrow Agreement remains outstanding (or earlier, as
described therein).
During the period when Shares are held in escrow, SPI has the right to
replace any number of the Escrowed Shares with cash, to vote or otherwise
exercise all other shareholder rights with respect to the Escrowed Shares, to
receive and to exercise any right to acquire further PSC stock or other
securities distributed with respect to the Escrowed Shares, and to receive any
dividends or other distributions declared and paid on the Escrowed Shares.
Pursuant to a Registration Rights and Holdback Agreement dated as of July
12, 1996, by and between SPI and PSC (the "Registration Agreement"), PSC granted
to SPI registration rights for the Shares, SPI agreed to certain restrictions on
the sale of such Shares, and PSC agreed to certain restrictions on the sale of
Common Shares in connection with a registered offering by SPI of its Shares.
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Until the earlier of July 12, 1997 or 180 days from the date of the
consummation of the first public offering of equity securities by PSC after July
12, 1996, pursuant to the Registration Agreement, without PSC's prior written
consent, SPI may not effect any public sale or distribution of the Shares
received by SPI pursuant to the Purchase Agreement except pursuant to an
available Piggyback Registration (as defined in the Registration Agreement).
If PSC enters into an underwriting agreement in connection with a firm
underwritten offering of its Common Shares, SPI will not, pursuant to the
Registration Agreement, if requested by the managing underwriter for such
offering and PSC, effect any public sale or distribution of Shares during the 10
days prior to, and during the 90-day period beginning on, the effective date of
such registration statement.
Pursuant to the Registration Agreement, if SPI enters into an underwriting
agreement in connection with a firm commitment underwritten offering of the
Shares (other than in connection with a Piggyback Registration), PSC will not,
if requested by the managing underwriter for such offering and SPI, effect any
public sale or distribution of any Common Shares or securities convertible into
or exchangeable or exercisable for such Common Shares (other than pursuant to a
registration statement on Form S-8 or any successor form), during the 10 days
before, and during the 90-day period beginning on, the effective date of such
registration statement.
The following table summarizes certain information with respect to the
Selling Shareholder:
Number of Number of Percent of
Shares Shares Shares
Beneficially Number of Beneficially Outstanding
Owned Shares Owned After
Selling Prior to Registered After Offering(2)
Shareholder Offering (1) Herein Offering (2)
- ----------- ------------ ------ ------------ -----------
Spectra-Physics Ine. 977,135 977,135 -0- ---
(1) Information as of October 10, 1996
(2) Assumes all shares registered herein are sold.
PLAN OF DISTRIBUTION
Subject to the provisions of the Escrow Agreement and the Registration
Agreement, the Shares may be sold from time to time by the Selling Shareholder
or by pledgees, donees, transferees or other successors in interest. Such sales
maybe made in any one or more transactions (which may involve block
transactions) in the over-the-counter market, on the Nasdaq National Market, and
any exchange on which the Company's Common Shares may then be listed, or
<PAGE>
otherwise in negotiated transactions or a combination of such methods of sale,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholder may
effect such transactions by selling Shares to or through broker-dealers, and
such broker-dealers may sell the shares as agent or may purchase such Shares as
principal and resell them for their own account pursuant to this Prospectus.
Such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Shareholder and/or
purchasers of Shares from whom they may act as agent (which compensation may be
in excess of customary commissions).
The Company has informed the Selling Shareholder that the
anti-manipulative rules under the Exchange Act (Rules 10b-6 and 10b-7) may apply
to their sales of Shares in the market. Also, the Company has informed the
Selling Shareholder of the need for delivery of copies of the Prospectus in
connection with any sale of securities registered hereunder in accordance with
applicable prospectus delivery requirements.
In connection with such sales, the Selling Shareholder and any
participating brokers and dealers may be deemed to be "underwriters" as defined
in the Securities Act. In addition, any of the Shares that qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus.
In order to comply with certain state securities laws, if applicable, the
Shares will not be sold in a particular state unless such securities have been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and complied with.
Pursuant to the Registration Agreement, the Company will use its best
efforts to keep this Registration Statement continuously effective for a period
of three years from the effective date hereof or such shorter period that will
terminate when all Shares have been (i) disposed of pursuant to an effecting
registration statement, (ii) sold under circumstances in which all of the
applicable conditions of Rule 144 are met, or (iii) otherwise transferred if the
Company has delivered a new certificate or other evidence of ownership for such
Shares not bearing any restrictive legend citing the absence of registration
thereof and such Shares may be resold without subsequent registration under the
Securities Act of 1933, as amended, provided, however, that the Company's
obligation to keep this Registration Statement effective will cease three months
after such time as Selling Shareholder owns less than 10% of the Shares it owns
on the date hereof, unless the reason Selling Shareholder owns less than 10% of
the Shares is due to a certain "out-back" provision contained in the
Registration Agreement. There can be no assurance that the Selling Shareholder
will sell any or all of the Shares which may be offered under this Registration
Statement.
LEGAL MATTERS
The validity of the issuance of the Shares being offered hereby will be
passed upon for the Company by Boylan, Brown, Code, Fowler, Vigdor & Wilson,
LLP, Rochester, New York. Justin L. Vigdor, a partner of this firm, is a
director of the Company, and Martin S. Weingarten, Secretary of the Company, is
counsel to this firm. As of the date of this Prospectus, members of Boylan,
Brown, Code, Fowler, Vigdor & Wilson, LLP beneficially own 17,249 Common Shares.
<PAGE>
EXPERTS
The consolidated financial statements and schedules incorporated by
reference in this Prospectus and elsewhere in the Registration Statement from
the Company's Annual Report on Form 10-K for the year ended December 31, 1995
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
The combined balance sheets of The Data Capture Group of Spectra-Physics
AB as of December 31, 1995 and 1994, and the combined statements of operations,
cash flows and changes in Spectra-Physics AB's investment for each of the three
years ended in the period December 31, 1995, incorporated by reference in this
Prospectus from the Company's Current Report on Form 8-K/A dated September 23,
1996, have been incorporated herein in reliance on the report of Coopers &
Lybrand L. L. P., independent accountants, given on the authority of that firm
as experts in accounting and auditing.
