PROSPECTUS
186,183 Shares
II-VI INCORPORATED
Common Stock
This prospectus relates to an aggregate offering of up to 186,183
shares (the "Shares") of common stock, no par value per share (the
"Common Stock"), of II-VI Incorporated, a Pennsylvania corporation
(the "Company"), which may be offered and sold from time to time
by the security holders of the Company listed herein under "Selling
Security Holders" or any affiliate or transferee of a Selling
Security Holder who may be referenced in a supplement or amendment
to this prospectus (the "Selling Security Holders"). Of
the 186,183 shares of Common Stock offered hereby, 49,000 shares
are being offered by Paul J. Johnson, Jr. and Cathleen Johnson;
18,375 shares are being offered by Wayne R. Ignatuk and
Donna Ignatuk; 85,751 shares are being offered J. Christopher Oles
and Patricia H. Oles; 32,160 shares are being offered by
Frederick A. Baumle and Catherine A. Baumle; and 897 shares
are being offered by Patrick J. Gracyalny.
All of the Shares offered hereby were issued by the Company in
transactions exempt from registration under the Securities Act
of 1933, as amended (the "Securities Act"), and applicable state
securities laws. See "Recent Developments."
The Common Stock is quoted on the Nasdaq National Market under the
symbol "IIVI." The reported closing sale price for the Common Stock
on July 23, 1996 was $15.00 per share.
THE SHARES OFFERED HEREBY INVOLVE A SUBSTANTIAL 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
--Cover Page Continued--
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The Shares may be sold from time to time by the Selling Security
Holders or their transferees. No underwriting arrangements have
been entered into by the Selling Security Holders as of the date
hereof. The distribution of the Shares by the Selling Security
Holders may be effected in one or more transactions that may take
place in the over-the-counter market, including ordinary broker's
transactions, privately negotiated transactions, or through sales
to one or more dealers for resale of such Shares as principals, at
prevailing market prices at the time of sale, prices related to such
prevailing market prices, or negotiated prices. Underwriting
discounts and usual and customary or specifically negotiated
brokerage fees or commissions will be paid by the Selling Security
Holders in connection with sales of the Shares. See "Plan of
Distribution."
By agreements with the Selling Security Holders, the Company will
pay all of the expenses incident to the registration of the Shares
under the Securities Act (other than agent's or underwriter's
commissions and discounts), estimated to be approximately $15,496.00.
The Selling Security Holders, and any broker-dealers, agents, or
underwriters through whom the Securities are sold, may be deemed
"underwriters" within the meaning of the Securities Act with respect
to securities offered by them, and any profits realized or commissions
received by them may be deemed underwriting compensation.
The date of this Prospectus is July 23, 1996
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AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the
Securities Exchange Act of 1934 and files reports and other
information with the Securities and Exchange Commission in
accordance therewith. Reports, proxy statements and other
information filed by the Company with the Commission can be
inspected and copied at the public reference facilities of the
Securities and Exchange Commission located at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the following
Regional Offices of the Commission: 7 World Trade Center,
Suite 1300, New York, New York 10048, and at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.
The Company has filed with the Commission a Registration Statement
on Form S-3 under the Securities Act with respect to the shares of
Common Stock to be offered and sold from time to time. This
Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For
further information with respect to the Company and the Common Stock
to be offered and sold from time to time, reference is made to the
Registration Statement and the exhibits and schedules filed therewith.
Statements contained in this Prospectus regarding the contents of
any contract or other document referred to are not necessarily complete,
and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference. The
Registration Statement, including the exhibits and schedules thereto,
may be inspected at the principal offices of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and copies of such materials
may be obtained upon written request from the Public Reference Section
of the Commission, 450 Fifth Street, N.W., Washington, D.C., at
prescribed rates.
In addition, the Common Stock is quoted on the Nasdaq National Market.
Reports and other information concerning the Company may be inspected
at the offices of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference and made a part of this Prospectus are
the following documents filed by the Company with the Commission
pursuant to the Exchange Act:
Annual Report on Form 10-K, for the fiscal year ended
June 30, 1995, as amended by the Form 10-K/A;
Quarterly Report on Form 10-Q for the three months ended
September 30, 1995;
Quarterly Report on Form 10-Q for the three months ended
December 31, 1995;
Quarterly Report on Form 10-Q for the three months ended
March 31, 1996;
Current Report on Form 8-K for the event dated
October 2, 1995;
Current Report on Form 8-K for the event dated October 16, 1995;
Current Report on Form 8-K for the event dated February 22, 1996,
as amended by the Form 8-K/A Amendment No. 1;
The description of the Common Stock, which is registered under
Section 12 of the Exchange Act, contained in the Company's
Registration Statement on Form 8-A.
All other reports and other documents filed by the Company since
June 30, 1995, pursuant to Section 13(a) or 15(d) of the
Exchange Act.
All documents subsequently filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of
this offering will be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the respective dates
of filing of such documents. Any statement contained in any
document incorporated or deemed to be incorporated by reference
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such
2
statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part
of this Prospectus. All information appearing in this Prospectus is
qualified in its entirety by the information and financial statements
(including notes thereto) appearing in the documents incorporated
herein by reference, except to the extent set forth in the immediately
preceding statement.
The Company will provide without charge to each person who receives
a prospectus, upon written or oral request of such person, a copy of
the information that is incorporated by reference herein (not
including exhibits to the information that is incorporated by
reference herein). Requests for such information should be
directed to: II-VI Incorporated, 375 Saxonburg Boulevard, Saxonburg,
Pennsylvania 16056, Attention: James Martinelli, Chief Financial
Officer and Treasurer, telephone: 412-352-4455.
3
RISK FACTORS
In addition to the other information contained or incorporated by
reference in this Prospectus, the following risk factors should be
carefully considered before purchasing shares of Common Stock offered
hereby.
Environmental Concerns
The Company is subject to a variety of federal, state and local
governmental regulations related to the storage, use and disposal of
environmentally hazardous materials. Both the governmental
regulations and the costs associated with complying with such
regulations are subject to change in the future. There can be no
assurance that any such change will not have a material adverse
effect on the Company. The Company manufactures and utilizes
Hydrogen Selenide gas, an extremely hazardous material, in the
production of Zinc Selenide. In its processes, the Company also
generates waste containing Thorium Fluoride, a low-level radioactive
material, and other hazardous by-products such as suspended solids
containing heavy metals and airborne particulates. The Company has
made and continues to make substantial investments in protective
equipment, process controls, manufacturing procedures and training in
order to minimize the risks to employees, surrounding communities
and the environment due to the presence and handling of such
extremely hazardous and hazardous materials. The failure to properly
handle such materials, however, could lead to harmful exposure to
employees or to discharge of certain hazardous waste materials, and,
since the Company does not carry environmental impairment insurance,
to a material adverse effect on the financial condition or results of
operations of the Company. Although the Company has not encountered
material environmental problems in its properties or processes to
date, there can be no assurance that problems will not develop in
the future which would have a material adverse effect on the
business, results of operations or financial condition of the
Company.
Manufacturing and Sources of Supply
The Company utilizes high-quality, optical grade Zinc Selenide in
the production of a majority of its products. The Company is a
leading producer of Zinc Selenide for its internal use and for
external sale. The production of Zinc Selenide is a complex process
requiring production in a highly controlled environment. A number
of factors, including defective or contaminated materials, could
adversely affect the Company's ability to achieve acceptable
manufacturing yields of high-quality Zinc Selenide. Zinc Selenide
is available from only one outside source and quantity and qualities
may be limited. The unavailability of necessary amounts of high-
quality Zinc Selenide would have a material adverse effect upon the
Company. In addition, in fiscal 1992 and 1993, the Company
experienced fluctuations in its manufacturing yields which affected
the Company's results of operations. There can be no assurance that
the Company will not experience manufacturing yield inefficiencies
which could have a material adverse effect on the business, results
of operations or financial condition of the Company.
The Company produces the Hydrogen Selenide gas used in its
production of Zinc Selenide. There are risks inherent in the
production and handling of such material. The inability of the
Company to effectively handle Hydrogen Selenide could result in the
Company being required to curtail its production of Hydrogen
Selenide. Hydrogen Selenide can be obtained from one source, and
the Company has previously purchased and, to supplement its internal
production, currently purchases such material from this source.
The cost of purchasing such material is significantly greater than
the cost of internal production. As a result, if the Company
purchased a substantial portion of such material from its outside
source, it would significantly increase the Company's production
costs of Zinc Selenide. Therefore, the Company's inability to
internally produce Hydrogen Selenide could have a material adverse
effect on the business, results of operations or financial condition
of the Company.
In addition, the Company requires other high-purity, relatively
uncommon materials and compounds to manufacture its products.
Failure of the Company's suppliers to deliver sufficient quantities
of these necessary materials on a timely basis could have a material
adverse effect on the business, results of operations or financial
condition of the Company.
Dependence on Cyclical Industries
The Company's business is significantly dependent on the demand for
products produced by end users of industrial lasers. Many of these
end users are in industries that historically have experienced highly
4
cyclical demand for their products. Therefore, as a result, demand
for the products produced by the Company and its results of operations
are subject to cyclical fluctuations.
Potential Seasonal Fluctuations
Due to customer buying patterns, particularly in Europe, the Company's
revenues for its first fiscal quarter ending in September could be
below those in the preceding quarter. The Company's first fiscal
quarter results often are dependent upon the sales in the last month
of the quarter.
Competition
The Company has a number of present and potential competitors, many
of which have greater financial resources than the Company. The
markets for many of the Company's products can be subject to
competitive pricing in order to gain or retain market share. Such
competitive pressures could affect the Company's pricing and
adversely affect the business, results of operations or financial
condition of the Company.
International Sales and Operations
Sales to customers in countries other than the United States
accounted for approximately 47% of revenues in each of the last
three fiscal years. The Company anticipates that international
sales will continue to account for a significant portion of revenues
for the foreseeable future. In addition, the Company manufactures
products in Singapore and maintains direct sales offices in Japan
and the United Kingdom. Sales and operations outside of the United
States are subject to certain inherent risks, including fluctuations
in the value of the U.S. dollar relative to foreign currencies,
tariffs, quotas, taxes and other market barriers, political and
economic instability, restrictions on the export or import of
technology, potentially limited intellectual property protection,
difficulties in staffing and managing international operations and
potentially adverse tax consequences. There can be no assurance
that any of these factors will not have a material adverse effect
on the Company's business, financial condition or results of
operations. In particular, although the Company's international
sales, other than in Japan, are denominated in U.S. dollars,
currency exchange fluctuations in countries where the Company does
business could have a material adverse effect on the Company's
business, financial condition or results of operations, by rendering
the Company less price-competitive than foreign manufacturers. The
Company's sales in Japan are denominated in yen and, accordingly,
are affected by fluctuations in the dollar/yen currency exchange
rates. The Company generally reduces its exposure to such
fluctuations through forward exchange agreements. The Company does
not engage in the speculative trading of financial derivatives.
There can be no assurance, however, that the Company's practices
will eliminate the risk of fluctuation in the dollar/yen currency
exchange rate.
Acquisitions
The Company's business strategy includes expanding its product
lines and markets through internal product development and
acquisitions. Any acquisition may result in potentially dilutive
issuances of equity securities, the incurrence of debt and contingent
liabilities, and amortization expense related to intangible assets
acquired, any of which could have a material adverse effect on the
Company's business, financial condition or results of operations. In
addition, acquired businesses may be experiencing operating losses.
Any acquisition will involve numerous risks, including difficulties
in the assimilation of the acquired company's operations and products,
uncertainties associated with operating in new markets and working
with new customers, and the potential loss of the acquired company's
key employees. In December 1994, the Company acquired the Virgo
Optics Division of Sandoz Chemicals Corporation ("Virgo Optics").
In February 1996, the Company acquired Lightning Optical Corporation.
To date, the Company has had little experience in integrating
businesses other than Virgo Optics.
Sustaining and Managing Growth
The Company is currently undergoing a period of growth, and there
can be no assurance that such growth can be sustained or managed
successfully. This expansion has resulted in a higher fixed-cost
structure which will require increased revenue in order to maintain
historical gross margin and operating margins. There can be no
assurance that the Company will obtain the increased orders
necessary to generate increased revenue sufficient to cover this
higher cost structure. Failure by the Company to manage growth
successfully or have the systems and capacities necessary to sustain
5
its growth could have a material adverse effect on the Company's
business, results of operations or financial condition. In addition,
in connection with any future acquisitions, the Company expects that
it will hire additional senior management with experience in the new
markets acquired by the Company. There can be no assurance that the
Company will be able effectively to achieve growth, including in such
new markets, integrate such new personnel or manage any such growth,
and failure to do so could have a material adverse effect on the
business, results of operations or financial condition of the
Company.
Dependence on New Products and Processes
In order to meet its strategic objectives, the Company must continue
to develop, manufacture and market new products, develop new
processes and improve existing processes. As a result, the Company
expects to continue to make significant investments in research and
development and to continue to consider from time to time the
strategic acquisition of businesses, products, or technologies
complementary to the Company's business. The success of the Company
in developing, introducing and selling new and enhanced products
depends upon a variety of factors, including product selection,
timely and efficient completion of product design and development,
timely and efficient implementation of manufacturing and assembly
processes, effective sales and marketing, and product performance
in the field. There can be no assurance that the Company will be
able to develop and introduce new products or enhancements to its
existing products and processes in a manner which satisfies customer
needs or achieves market acceptance. The failure to do so could have
a material adverse effect on the Company's ability to grow its
business.
Dependence on Key Personnel
The Company is highly dependent upon the experience and continuing
services of certain scientists, engineers and production and
management personnel. Competition for the services of these
personnel is intense, and there can be no assurance that the Company
will be able to retain or attract the personnel necessary for the
Company's success. The loss of the services of the Company's key
personnel could have a material adverse effect on the business,
results of operations or financial condition of the Company.
Proprietary Technology Claims
The Company does not currently hold any material patents applicable
to its processes and relies on a combination of trade secret,
copyright and trademark laws and employee non-compete and
nondisclosure agreements to protect its intellectual property
rights. There can be no assurance that the steps taken by the Company
to protect its rights will be adequate to prevent misappropriation
of the Company's technology. Furthermore, there can be no assurance
that, in the future, third parties will not assert infringement
claims against the Company. Asserting the Company's rights or
defending against third-party claims could involve substantial
expense, thus materially and adversely affecting the business,
results of operations or financial condition of the Company. In the
event a third party were successful in a claim that one of the
Company's processes infringed its proprietary rights, the Company
may have to pay substantial damages or royalties, or expend
substantial amounts in order to obtain a license or modify the
process so that it no longer infringes such proprietary rights,
any of which could have an adverse effect on the business, results
of operations or financial condition of the Company.
Reliance on European Distributor
Nearly all of the Company's European sales have been made through
its European distributor. This distributor also provides service
and support to the end users of the Company's products. Thus, a
reduction in the sales efforts of such distributor could adversely
affect the Company's European sales and its ability to support the
end users of the Company's products. There can be no assurance that
this distributor will continue to distribute, or to distribute
successfully, the Company's products and, in such an event, the
Company's results of operations and earnings could be adversely
affected.
Possible Volatility of Stock Price
The market price for the Common Stock may be highly volatile.
Factors such as the announcement of innovations or new products by
the Company, seasonal or other variations in anticipated or actual
results of operations, market conditions and general economic
conditions may have a significant impact on the market price of the
Common Stock.
6
Antitakeover Provisions
The Company's Articles of Incorporation and By-Laws contain
provisions which could make it a less attractive target for a
hostile takeover than it might otherwise be or make more difficult
or discourage a merger proposal, a tender offer or a proxy contest.
This could limit the price that certain investors might be willing
to pay in the future for shares of the Common Stock. The provisions
include: (i) classification of the Board of Directors into three
classes; (ii) a procedure which requires shareholders or the Board
of Directors to nominate directors in advance of a meeting to elect
such directors; (iii) the ability of the Board of Directors to issue
additional shares of Common Stock or Preferred Stock without
shareholder approval; and (iv) supermajority approval of certain
matters (at least two-thirds of the votes cast by all shareholders
entitled to vote thereon, voting together as a single class).
In addition, the Pennsylvania Business Corporation Law contains
provisions which may have the effect of delaying or preventing a
change in control of the Company. See "Description of Capital
Stock."
Control by Management
The Company's executive officers, directors and their affiliates
and members of their immediate families own approximately 27% of
the outstanding shares of Common Stock, excluding shares issuable
upon exercise of options. As a result, these shareholders, if
acting together, will be able to exert substantial influence over
actions requiring shareholders' approval, including elections of the
Company's directors, amendments to the Articles of Incorporation,
mergers, sales of assets or other business acquisitions or
dispositions.
7
THE COMPANY
The following summary is qualified in its entirety by reference to
the more detailed information provided herein or incorporated herein
by reference. As used in this Prospectus, the term "Company" means,
unless the context requires otherwise, the Company and its
subsidiaries, and their respective predecessors. Each prospective
investor is urged to read this Prospectus and the documents
incorporated herein in their entirety. Investment in the securities
offered hereby involves a high degree of risk. See "Risk Factors."
II-VI Incorporated ("II-VI" or the "Company"), designs, manufactures
and markets optical and electro-optical components, devices and
materials for precision use in infrared, near infrared, visible light
and x-ray instruments and applications. The Company believes that
it supplies more than half of the infrared optics used in high-power
CO2 (carbon dioxide) lasers for industrial processing worldwide.
The Company's infrared products also are used for commercial and
military sensing systems. The Company's near infrared and visible
light products are used in industrial, scientific and medical
instruments and solid-state YAG (Yttrium Aluminum Garnet) YLF
(Yttrium Lithium Fluoride) lasers. Frequency doubling and single
crystal substrate materials produced by the Company are utilized
as building blocks in the emerging blue light laser market segment.
II-VI also is developing and marketing solid state x-ray and gamma-
ray products for the nuclear radiation detection industry. The
Company's products are produced utilizing proprietary processes and
specialized equipment that are complex and difficult to duplicate.
The majority of the Company's revenues are attributable to the sale
of optical devices and components for the laser processing industry.
Applications for laser processing are increasing worldwide as
manufacturers seek solutions to increasing demands for quality,
precision, speed, throughput, flexibility, automation and cost
control. High-power CO2, YAG and YLF lasers provide these benefits
in a wide variety of cutting, welding, drilling, ablation, balancing,
cladding, heat treating and marking applications for end users in
such diverse fields as automotive, consumer electronics, office
furniture and consumer product marking.
Precision optics are critical to the operation of lasers and laser
systems, with many CO2 and YAG laser systems containing up to 15
optical elements. Optics wear or become contaminated during
operation. The Company supplies replacement optics to the
aftermarket demand generated by an estimated current worldwide
installed base of 40,000 to 45,000 industrial YAG and CO2 lasers.
The overall strategy of II-VI is to be the quality, cost and service
leader in every market it serves. The Company believes that it is
the market leader in the supply of infrared optics to industrial
material processors using high-power CO2 lasers and is focused on
developing a similar position in the emerging high-power YAG laser
industry. The Company strives to maintain technological leadership
through a balanced combination of internal and contract research and
development. The Company's growth strategy involves internal
investment in emerging new products, as well as the search for
complementary technologies and companies for potential acquisition.
The Company's products are sold to over 2,400 customers in 35
countries. The Company sells its products in the United States,
Japan, United Kingdom and certain Southeast Asian markets through
its direct sales force. European sales are effected through a
distributor and sales throughout the rest of the world are made
through manufacturers' representatives. Sales to customers in
countries other than the United States accounted for approximately
47% of revenues in fiscal 1995. The Company's principal
international markets are Germany and Japan.
The Company's executive offices are located at 375 Saxonburg
Boulevard, Saxonburg, Pennsylvania 16056. Its telephone number
is 412-352-4455. The Company's name is pronounced "Two-Six
Incorporated."
8
RECENT DEVELOPMENTS
On February 22, 1996, Lightning Optical Corporation, a Florida
corporation located in Tarpon Springs, Florida ("Lightning
Optical"), merged with and into II-VI Lightning Optical
Incorporated ("II-VI Lightning"), a newly-formed wholly-owned
Pennsylvania subsidiary of II-VI. As a result of the merger,
II-VI Lightning acquired substantially all of the assets and assumed
certain liabilities of Lightning Optical. The aggregate purchase
price paid to the shareholders of Lightning Optical (the "Sellers")
consisted of approximately $2.5 million in cash and the Shares
offered hereby. The Company also agreed to file this Registration
Statement with respect to a market offering of the Shares.
The assets of Lightning Optical acquired by II-VI Lightning in
the merger include inventory, accounts receivable, machinery and
equipment, real estate and intangibles. These assets were used by
Lightning Optical in the design and manufacture of optics and
materials for visible and near visible infrared applications.
These products are used in industrial, medical and scientific
solid-state lasers and electro-optic equipment. The Registrant
intends to use the acquired assets in a similar fashion.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Shares.
9
SELLING SECURITY HOLDERS
The following table sets forth information with respect to the
beneficial ownership of Common Stock by each Selling Security Holder
as of the close of business of May 15, 1996, and the shares which
may be offered by each from time to time hereby. Unless otherwise
indicated, each Selling Security Holder has sole voting and sole
dispositive power with respect to all Shares shown. The address
for each Selling Shareholder is c/o II-VI Lightning Optical
Incorporated, 431 E. Spruce Street, Tarpon Springs, Florida 34689.
As a result of the merger, Paul J. Johnson, Jr., Wayne R. Ignatuk,
J. Christopher Oles and Frederick A. Baumle became employed by
II-VI Lightning Optical Incorporated and each have employment
agreements.
<TABLE>
<CAPTION>
Beneficial Ownership
______________________________________________________________________________
<S> <C> <C> <C>
Selling Security Holder Prior to the Offering Number of Shares Offered After the Offering
_______________________ _____________________ ________________________ __________________
Number Percent Number Percent
______ _______ ______ _______
Paul J. Johnson, Jr. 49,000 * 49,000 0 --
and Cathleen Johnson
Wayne R. Ignatuk 18,375 * 18,375 0 --
and Donna Ignatuk
J. Christopher Oles 85,751 1.4 85,751 0 --
and Patricia H. Oles
Frederick A. Baumle 32,160 * 32,160 0 --
and Catherine A. Baumle
Patrick J. Gracyalny 897 * 897 0 --
________________________
All Selling Security Holders 186,183
_____________________
*Less than one percent.
</TABLE>
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DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 30,000,000
shares of Common Stock, no par value, and 5,000,000 shares of
Preferred Stock, no par value.
Common Stock
Holders of Common Stock are entitled to one vote per share on all
matters to be voted on by shareholders, except that shareholders
are entitled to cumulate their votes in any election of directors.
Subject to preferences that may be applicable to any outstanding
Preferred Stock, holders of Common Stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors
in its discretion out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference
of any outstanding Preferred Stock. Holders of Common Stock have
no preemptive rights and have no right to convert their Common Stock
into any other securities. The outstanding shares of Common Stock
are, and the Common Stock to be outstanding upon completion of the
offering will be, fully paid and nonassessable.
The By-Laws of the Company, as amended, provide for the Board of
Directors to be divided into three classes of directors, each class
to be as nearly equal in number of directors as possible, serving
staggered three-year terms. As a result, approximately one-third
of the Board of Directors is elected in each year, and at least
two annual meetings are necessary to effect a change in a majority
of the Company's directors. The effect of the staggered Board of
Directors under cumulative voting as provided by the By-Laws of the
Company is that shareholders entitled to vote a majority of the
shares outstanding could not necessarily control the election of all
positions on the Board of Directors subject to election in any one
year, and that shareholders voting less than a majority of shares
entitled to vote may be able to elect at least one director in any
one year.
The Articles of Incorporation and By-Laws of the Company require
the approval by the holders of at least two-thirds of the
outstanding shares of Common Stock for the removal of any director,
class of director or the entire Board of Directors and for any
change to any provision of the Articles of Incorporation or By-Laws
providing for the number of directors, the classification of
directors or the filling of vacancies on the Board of Directors,
unless any such change is unanimously approved by the Board of
Directors of the Company. The overall effect of these provisions
regarding the classification of the Company's Board of Directors
may be to render more difficult or to delay a change in control of
the Company or the removal of incumbent management of the Company.
All other matters submitted to a vote of the shareholders of the
Company shall be adopted by the vote of a majority of the votes
present, in person or by validly executed proxy, at any duly
authorized meeting of shareholders.
Preferred Stock
The Preferred Stock may be issued in one or more series with such
rights, preferences, privileges and restrictions as the Board of
Directors may determine, including, but not limited to, voting
rights, redemption provisions, dividend rates, liquidation
preferences and conversion privileges, without further shareholder
approval. The issuance of Preferred Stock, which could occur in a
private placement, may have the effect of delaying, deferring or
preventing a change in control of the Company. Issuance of
Preferred Stock with special voting and conversion rights may
adversely affect the voting power of the holders of Common Stock,
possibly resulting in the loss of voting control to others. No such
class or series is currently established, and no shares of Preferred
Stock are outstanding, and at present the Company has no plans to
issue any shares of Preferred Stock.
Anti-Takeover Provisions
In addition to certain provisions of its Articles of Incorporation
and By-Laws discussed in "Description of Capital Stock--Common
Stock" and "--Preferred Stock" above which could have the effect
of delaying, deferring or preventing a change in control of the
Company, the Company is governed by certain "antitakeover"
provisions in the Pennsylvania Business Corporation Law ("PABCL"),
including provisions that (i) prohibit certain business combinations,
(ii) restrict voting rights associated with "controlling shares,"
(iii) require disgorgement of short-term profits upon disposition of
11
stock by certain controlling persons, (iv) require severance payments
and protection of collective bargaining agreements following certain
control share acquisitions, (v) require a fair value be paid by
that controlling shareholder for voting shares, (vi) allow a
corporation to say "no" to a takeover bid, and (vii) allow the
Board of Directors broad latitude in considering the best interests
of the Company.
Certain Business Combinations. The PABCL prohibits certain
business combinations (as defined in the PABCL) involving a
Pennsylvania corporation that has voting shares registered under
the Exchange Act and an "interested shareholder" unless certain
conditions are satisfied or an exemption is applicable. An
"interested shareholder" is generally defined to include a person
who beneficially owns at least 20% of the votes that all
shareholders would be entitled to cast in an election of directors
of the corporation.
Control Share Acquisitions. The PABCL provides that in a "control-
share acquisition" the voting rights of a significant new shareholder
of the corporation are conditioned upon the consent, given by a
majority vote at a meeting of the independent shareholders of the
corporation after disclosure by the new shareholder of certain
information. If consent is not obtained, the new shareholder is
effectively deprived of voting rights.
Disgorgement. The PABCL provides that any profit realized
by a "controlling person or group," generally defined as a 20%
beneficial owner, from the disposition of any equity securities
within twenty-four (24) months prior to and eighteen (18) months
succeeding the acquisition of such control is recoverable by the
corporation.
Severance Compensation and Protection of Labor Contracts. The PABCL
provides severance payments to any eligible employee of a covered
corporation whose employment is terminated, other than for willful
misconduct, with ninety (90) days before or twenty-four (24) months
after a control-share acquisition. In addition, the PABCL is designed
to prevent the termination of any covered labor contract as a result
of a business combination.
Control Transactions. The PABCL provides that any holder of voting
shares of a registered corporation who objects to a "control
transaction" will be entitled to make a written demand on the
"controlling person or group" for payment of the fair value of the
voting shares of the corporation held by the shareholder. A "control
transaction" is defined as the acquisition by a person or group (the
controlling person or group) that would entitle the holders thereof to
cast at least 20% of the votes that all shareholders would
be entitled to cast in an election of the directors of the
corporation.
"Just Say No" Provisions. The PABCL contains a set of interrelated
provisions designed to support the validity of company-specific
arrangements to discourage hostile takeovers of corporations. The
PABCL expressly provides a corporation the power to "accept, reject
or take no action" with respect to a takeover bid. The PABCL also
permits the unfavorable disparate treatment of a takeover bidder.
Other Considerations. The PABCL allows the directors broad
discretion in considering the best interests of the corporation.
In addition to the "standard factors" the directors may consider
in protecting the best interests of the Company, the directors may
also consider the short- and long-term interests of the corporation
and the resources, intent and conduct of any person seeking to
acquire the corporation.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time to
purchasers directly by any of the Selling Shareholders or certain
transferees or affiliates of such Selling Shareholders (a "Selling
Party"). Alternatively, a Selling Party may from time to time offer
the Shares through underwriters, dealers or agents who may receive
compensation in the form of underwriting discounts, concessions or
commissions from the Selling Party and/or the purchasers of the
Shares for whom they may act as agents.
Sales of the Shares offered hereby may be made on the Nasdaq National
Market or the over-the-counter market or otherwise at prices and on
terms then prevailing or at prices related to the then-current market
price, or in negotiated transactions. Such prices will be determined
by the Selling Party or by agreement between the Selling Party and
underwriters or dealers.
12
The Shares may be sold in or by (a) a block trade in which the broker
or dealer so engaged will attempt to sell the Shares as agent, but
may position and resell a portion of the block as principal to
facilitate the transaction, (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account
pursuant to this Prospectus, (c) an exchange distribution in
accordance with the rules of such exchange, (d) ordinary brokerage
transactions and transactions in which the broker solicits purchases,
and (e) privately negotiated transactions.
In effecting sales, brokers or dealers engaged by the Selling
Party may arrange for other brokers or dealers to participate. A
Selling Party also may, from time to time with the consent of the
Company, authorize underwriters acting as his agent to offer and
sell Shares upon such terms and conditions as shall be set forth in
any prospectus supplement. Underwriters, brokers or dealers will
receive commissions or discounts from a Selling Party in amounts to
be negotiated. Such underwriters, brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such
sales and any discounts and commissions received by them, and any
profit realized by them on the resale of the Shares may be deemed
to be underwriting discounts and commissions under the Securities
Act.
In order to comply with certain state securities laws, if applicable,
the Shares will be sold in such jurisdictions only through registered
or licensed brokers or dealers. In certain states, the Shares may
not be sold unless such Shares have been registered or qualified for
sale in such state or an exemption from registration or qualification
is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Shares may not simultaneously
engage in market-making activities with respect to such Shares for a
period of two or nine business days prior to the commencement of
such distribution. In addition to, and without limiting the
foregoing, each Selling Party and any other person participating
in a distribution will be subject to the applicable provisions of
the Exchange Act and the rules and regulations thereunder, including,
without limitation, rules 10b-2, 10b-6, and 10b-7, which provisions
may limit the timing of purchases and sales of any of the Shares by
a Selling Party or any such other person. All of the foregoing may
affect the marketability of the Shares.
Pursuant to certain contractual obligations, the Company will pay
all the fees and expenses incident to the registration of the Shares
(other than underwriting discounts and commissions, if any, and a
Selling Security Party's counsel fees and expenses, if any). In
addition, the Company has agreed to maintain the effectiveness of
the Registration Statement for a period of at least 12 months and
has agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act. In
addition, each of the Selling Shareholders has agreed to indemnify
the Company against certain liabilities, including liabilities under
the Securities Act.
EXPERTS
The consolidated financial statements and related financial
statement schedule of II-VI incorporated by reference in this
Prospectus for the years ended June 30, 1995 and 1994, have been
audited by Alpern, Rosenthal & Company, independent auditors, as
set forth in their reports incorporated by reference herein. The
consolidated financial statements and related financial
statement schedule of II-VI incorporated by reference in this
Prospectus for the year ended June 30, 1993, have been audited by
Deloitte & Touche LLP, independent auditors, as set forth in their
reports incorporated by reference herein. Such consolidated
financial statements are incorporated herein by reference in
reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
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No dealer, salesperson, or any
other person has been authorized
to give any information or to make
any representation not contained
in this Prospectus in connection
with the offering made hereby, and,
if given or made, such information
or representation must not be relied
upon as having been authorized by
the Company. This Prospectus does 186,183 Shares
not constitute an offer to sell,
or a solicitation of an offer to
buy, any of the securities offered
hereby in any jurisdiction to any II-VI
person to whom it is unlawful to make INCORPORATED
such an offer or solicitation in such
jurisdiction. Neither the delivery of
this Prospectus, nor any sale made
hereunder, shall under any circumstances Common Stock
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
the dates as of which such information
is furnished.
______________
TABLE OF CONTENTS
Page
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AVAILABLE INFORMATION...............2
INCORPORATION OF CERTAIN ___________________
DOCUMENTS BY REFERENCE..............2
RISK FACTORS........................4 PROSPECTUS
THE COMPANY.........................8
RECENT DEVELOPMENTS.................9 ___________________
USE OF PROCEEDS.....................9
SELLING SECURITY HOLDERS............10
DESCRIPTION OF CAPITAL STOCK........11
PLAN OF DISTRIBUTION................12 July 23, 1996
EXPERTS.............................13
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