As filed with the Securities and Exchange Commission on February 20, 1996
Registration No. 333-441
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CORNING INCORPORATED
(Exact name of registrant as specified in its charter)
NEW YORK 16-0393470
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
---------------
One Riverfront Plaza
Corning, New York 14831
(607) 974-9000
(Address, including zip code and telephone number of issuer's
principal executive offices)
---------------
William C. Ughetta
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
(607) 974-9000
(Name, address, including zip code and telephone number of agent for service)
---------------
Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===========================================================================================
Proposed
Maximum Proposed
Offering Maximum
Title of Each Amount to Price Aggregate Amount of
Class of Securities be Per Share Offering Registration
to be Registered Registered (1) Price Fee
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($.50 par value) 509,960 shs. $29.4375 $15,011,948 $5,177
===========================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating
the registration fee on the basis of the average of the high and low prices
of the Registrant's Common Stock on the New York Stock Exchange Composite
Tape on January 19, 1996.
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
==============================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities inany State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
PRELIMINARY PROSPECTUS DATED FEBRUARY 20, 1996
509,960 shares
CORNING INCORPORATED
Common Stock
($.50 par value)
---------------
The Company's Common Stock is listed
on the New York Stock Exchange
---------------
This Prospectus relates to 509,960 presently outstanding shares of Common
Stock, $.50 par value (the "Common Stock"), of Corning Incorporated, a New
York corporation ("Corning" or the "Company"), which may be offered from time
to time by certain stockholders of the Company as identified herein under
"Selling Stockholders." The term "Shares" as used herein includes the shares
of Common Stock held by the Selling Stockholders. The distribution of the
Shares by the Selling Stockholders, or by pledgees, donees, distributees,
transferees or other successors in interest, may be effected from time to
time by underwriters who may be selected by the Selling Stockholders and/or
broker-dealers, in one or more transactions (which may involve crosses and
block transactions) on the New York Stock Exchange or other stock exchanges,
in special offerings, exchange distributions or secondary distributions
pursuant to and in accordance with the rules of such exchanges, in the
over-the-counter market, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. In connection with the distributions
of the Shares or otherwise, the Selling Stockholders may enter into hedging
or option transactions with broker-dealers and may sell Shares short and
deliver the Shares to close out such short positions. On January 19, 1996,
the closing price of the Common Stock on the New York Stock Exchange was
$29.4375. None of the proceeds from the sale of the Shares will be received
by the Company. The Company has agreed to indemnify the Selling Stockholders,
underwriters who may be selected by the Selling Stockholders and certain
other persons against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). See "Plan of
Distribution" and "Selling Stockholders."
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
The date of this Prospectus is 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (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 and the Registration Statement referred to below may be
inspected at the Commission's public reference facilities, Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as the following regional
offices: 7 World Trade Center, 13th Floor, New York, New York 10048, and 500
West Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such
materials may be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, such reports, proxy statements and other information concerning the
Company and such Registration Statement may also be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York
10005, upon which Exchange certain securities of the Company are listed.
This Prospectus constitutes a part of the Registration Statement with
respect to the Shares filed by the Company with the Commission under the
Securities Act. This Prospectus omits certain of the information contained in
the Registration Statement, and reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company and the Shares. Any statements contained herein
concerning the provisions of any document are not necessarily complete, and
in each instance reference is made to the copy of such document filed with
the Commission. Each such statement is qualified in its entirety by such
reference.
Corning's By-Laws provide that Corning shall indemnify each of its
directors and officers against all costs and expenses actually and reasonably
incurred by him or her in connection with the defense of any claim, action,
suit or proceeding against him or her by reason of his or her being or having
been a director or officer of Corning to the full extent permitted by, and
consistent with, the Business Corporation Law of the State of New York.
Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers or persons controlling Corning pursuant to
the foregoing provisions, Corning has been informed that, in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
(File No. 1-3247) are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
January 1, 1995, filed pursuant to Section 13(a) of the Exchange Act.
2. All other reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of said Act since January 1, 1995, consisting of the
Company's Quarterly Reports on Form 10-Q for the twelve, twenty-four and
forty weeks ended March 26, 1995, June 18, 1995 and October 8, 1995,
respectively; and the Company's Current Reports on Form 8-K dated January 23,
1995, January 24, 1995, March 23, 1995, April 4, 1995, May 15, 1995, June 7,
1995, June 27, 1995, October 5, 1995, October 17, 1995, December 7, 1995,
January 22, 1996, and February 15, 1996, respectively.
3. The Company's Current Report on Form 8-KA dated December 12, 1994
which includes certain historical financial statements of Moran Research
Labs.
4. The registration statement on Form 8-A filed by the Company on July
8, 1986 which contains a description of the Company's Preferred Share
Purchase Rights Plan and the Registration Statement on Form 8-A filed by the
Company on October 9, 1989 which contains a description of an amendment of
the Company's Preferred Share Purchase Rights Plan.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 after the date of this
Prospectus and prior to the termination of this offering of Common Stock
shall be deemed to be incorporated by reference in this Prospectus and to be
a part hereof from the dates of filing of such documents.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents incorporated by reference herein, other than exhibits to such
documents, unless
2
<PAGE>
such exhibits are specifically incorporated by reference in such documents.
Such request should be directed to the Secretary, Corning Incorporated, One
Riverfront Plaza, Corning, New York 14831; telephone (607) 974-9000.
IN CONNECTION WITH THIS OFFERING, UNDERWRITERS ACTING ON BEHALF OF THE
SELLING STOCKHOLDERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR
MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED
ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE.
SUCH STABILIZING MAY TAKE PLACE IN CONNECTION WITH THE OFFERING OF ANY OF THE
SHARES OFFERED HEREBY OTHER THAN AT THE MARKET AND, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
THE COMPANY
Corning Incorporated traces its origin to a glass business established by
the Houghton family in 1851. The present corporation was incorporated in the
State of New York in December 1936, and its name was changed from Corning
Glass Works to Corning Incorporated on April 28, 1989.
Corning competes in four broadly-based business segments: specialty
materials, communications, health care services and consumer products.
Corning is engaged directly or through subsidiaries and affiliates
principally in the manufacture and sale of products made from specialty
glasses and related inorganic materials having special properties of chemical
stability, electrical resistance, heat resistance, light transmission and
mechanical strength. In addition, Corning, through subsidiaries and
affiliates, engages in health care services businesses, including health care
management, life and environmental sciences and clinical-laboratory testing.
Corning's executive offices are located at One Riverfront Plaza, Corning,
New York 14831, telephone (607) 974-9000.
Other information concerning Corning's business, securities and financial
condition is incorporated by reference from its reports filed with the
Commission. See "Incorporation of Certain Documents by Reference."
SELLING STOCKHOLDERS
The Shares as listed below may be offered by the Selling Stockholders
named below (and by their donees, distributees and pledgees) and constitute
all of the Shares held by the Selling Stockholders as of January , 1996. On
February 17, 1995, the Selling Stockholders acquired the Shares from the
Company pursuant to an Agreement and Plan of Merger dated as of February 17,
1995 (the "Agreement") among the Company; Corning HCM Inc., a New Jersey
corporation; Franklin Health Group, Inc., a New Jersey corporation; and the
shareholders of such entity.
<TABLE>
<CAPTION>
Number of Shares of Number of Shares of
Common Stock Common Stock Offered
Name Beneficially Owned by this Prospectus
- ---- ------------------ ------------------
<S> <C> <C>
Richard K. Blodgett 50,996 50,996
David J. Hines 10,199 10,199
Paul J. Kofmehl 191,235 191,235
David L. Levy, M.D. 257,530 257,530
</TABLE>
Prior to the acquisition, the Selling Stockholders held the positions in
Franklin Health Group, Inc. indicated next to their names below.
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
Paul J. Kofmehl Chairman of the Board and a director
David L. Levy, M.D. President and a director
Richard K. Blodgett Chief Financial Officer, Secretary and a director
</TABLE>
Following the acquisition, Dr. Levy remained President and is now Chairman
of the Board of Corning Franklin Health, Inc., formerly called Franklin
Health Group, Inc., the surviving corporation in the merger acquisition
effected pursuant to the Agreement.
3
<PAGE>
DESCRIPTION OF CORNING CAPITAL STOCK
General
The following is a brief summary of certain provisions of the Restated
Certificate of Incorporation of Corning (the "Restated Certificate") and does
not relate to or give effect to provisions of statutory or other law except as
specifically stated. The Restated Certificate authorizes the issuance of
500,000,000 shares of Corning Common Stock. As of December 31, 1995,
229,814,112 shares of Corning Common Stock were outstanding. The rights of
holders of Corning Common Stock are governed by the Restated Certificate,
Corning's By-Laws and by the New York Business Corporation Law (the "NYBCL").
Voting Rights
Subject to the voting of any shares of Series Preferred Stock (as defined
below) that may be outstanding, voting power is vested in Corning Common
Stock, each share having one vote.
Preemptive Rights
The Restated Certificate provides that no holder of Corning Common Stock or
Series Preferred Stock shall have any preemptive rights except as the Board of
Directors of Corning (the "Corning Board") may determine from time to time. No
such rights have been granted by the Corning Board.
Corning Common Stock
Liquidation Rights. Subject to the preferential rights of any outstanding
Series Preferred Stock, in the event of any liquidation of Corning, holders of
Corning Common Stock then outstanding are entitled to share ratably in the
assets of Corning available for distribution to such holders.
Dividend Rights and Restrictions. Subject to any preferential rights of
any outstanding Series Preferred Stock and any outstanding preferred
securities of Corning, such dividends as may be determined by the Corning
Board may be declared and paid on Corning Common Stock from time to time out
of any funds legally available therefor. Corning has regularly paid cash
dividends since 1881 and currently expects to continue to pay cash dividends.
Corning's current quarterly cash dividend is $.18 per share of Corning Common
Stock. The continued declaration of dividends by the Corning Board is subject
to, among other things, Corning's current and prospective earnings, financial
condition and capital requirements and such other factors as the Corning
Board may deem relevant.
Other Provisions. Corning Common Stock has no redemption, sinking fund or
conversion privileges applicable thereto and holders of Corning Common Stock
are not liable to assessments or to further call.
MIPS Offering
On July 21, 1994 Corning and Corning Delaware, L.P., a Delaware special
purpose limited partnership in which Corning is the sole general partner,
completed the offering (the "MIPS Offering") of $373.8 million aggregate
principal amount of 6% Convertible Monthly Income Preferred Securities (the
"Preferred Securities") of Corning Delaware.
Dividends on the Preferred Securities will be cumulative and will be
payable monthly at an annual rate of six percent. In certain circumstances,
holders of the Preferred Securities, voting as a class or by written consent,
may cause the exchange of the Preferred Securities for shares of Corning's
Series C Preferred Stock (herein defined), at a rate of one share of Series C
Preferred Stock for every two Preferred Securities. Each Preferred Security
is convertible at the option of the holder into Corning Common Stock at the
rate of 1.2821 shares of Corning Common Stock for each Preferred Security
(equivalent to a conversion price of $39.00 per share of Corning Common
Stock), subject to adjustment in certain circumstances. From time to time
after four years from the date of issuance, the Preferred Securities will be
redeemable, at the option of Corning Delaware, in whole or in part, for cash
at stated redemption prices. The Preferred Securities are subject to
mandatory redemption on the 30th anniversary of the date of original issuance
at a redemption price of $50 per Preferred Security together with accumulated
and unpaid dividends (whether or not earned or declared). Holders of the
Preferred Securities do not have any voting rights, except in certain
instances of default.
Series Preferred Stock
The Restated Certificate authorizes the issuance of up to 10,000,000 shares
of Series Preferred Stock, par value $100 per share (the "Series Preferred
Stock"). The Corning Board has the authority to issue such shares from time to
time, without stockholder approval, and the authority to determine the
designations, preferences, rights, including voting rights, and restrictions
of such shares, subject to the
4
<PAGE>
NYBCL. Pursuant to this authority, the Corning Board has designated 600,000
shares of Series Preferred Stock as Series A Preferred Stock, 316,822 shares
of Series Preferred Stock as Series B Preferred Stock (the "Series B
Preferred Stock"), and 4,683,710 shares of Series Preferred Stock as Series C
6% Cumulative Convertible Preferred Stock (the "Series C Preferred Stock").
No other class of Series Preferred Stock has been designated by the Corning
Board.
Series B Preferred Stock
Cumulative cash dividends at the rate of 8% per annum are payable on
shares of the Series B Preferred Stock that have been issued. Corning has
regularly paid dividends on the Series B Preferred Stock. No dividends may be
paid or declared on the Series A Preferred Stock or Corning Common Stock
unless all dividends for all prior dividend periods have been paid or
declared on the Series B Preferred Stock, the Series C Preferred Stock and
the Preferred Securities.
Holders of Series B Preferred Stock are entitled to vote, voting together
with Corning Common Stock and not as a separate class, on all matters
submitted to holders of Corning Common Stock, each share of Series B
Preferred Stock having four votes, subject to adjustment.
Holders of Series B Preferred Stock have no preemptive rights. In the
event of a liquidation, dissolution or winding-up of Corning, holders of
Series B Preferred Stock shall be entitled to receive a distribution in the
amount of $100 per share, plus accrued and unpaid dividends, before any
distribution on Corning Common Stock or Series A Preferred Stock.
The Series B preferred Stock is redeemable, in whole or in part, at the
election of Corning, at any time, at the following redemption prices per
share:
<TABLE>
<CAPTION>
During the Twelve-
Month Period Price Per
Beginning October 1, Share
- -------------------- -----
<S> <C>
1995 $102.00
1996 $101.00
</TABLE>
and thereafter at $100.00 per share plus, in each case, accrued and unpaid
dividends.
The Series B Preferred Stock is subject to redemption, at the option of
the holder, at any time upon five business days' notice, at a redemption
price equal to $100.00 plus accrued and unpaid dividends, if the proceeds are
necessary (i) to make a distribution pursuant to an investment election made
under the employee benefit plan or (ii) to satisfy any indebtedness to which
the employee benefit plan is subject, provided that such payment is necessary
to remedy or prevent a default under such indebtedness.
Corning, at its option, may make payment of the redemption price required
upon redemption of shares of Series B Preferred Stock in cash or in Corning
Common Stock, or in any combination of such shares and cash.
The Series B Preferred Stock is convertible at the option of the holder,
at any time, into Corning Common Stock at a conversion price of $25.00 per
share of Corning Common Stock, each share of Series B Preferred Stock being
valued at $100 for the purpose of such conversion, producing a conversion
ratio equal to four shares of Corning Common Stock for each share of Series B
Preferred Stock so converted, subject to certain adjustments to prevent
dilution.
Series C Preferred Stock
In certain circumstances, the holders of a majority of the aggregate
liquidation preference of the Preferred Securities then outstanding, voting
as a class or by written consent, may cause the exchange of the Preferred
Securities for Series C Preferred Stock at a rate of one share of Series C
Preferred Stock for every two Preferred Securities.
The terms of the Series C Preferred Stock are substantially similar to
those of the Preferred Securities except that, among other differences, (i)
in certain events of default, the number of directors of Corning shall be
increased by two persons and the holders of the Series C Preferred Stock will
be entitled to elect the persons to fill such positions and (ii) the Series C
Preferred Stock will not be subject to mandatory redemption.
The Series C Preferred Stock ranks senior to the Corning Common Stock and
the Series A Preferred Stock with respect to the payment of dividends and
amounts on liquidation, dissolution and winding-up. In the event of a
voluntary or involuntary bankruptcy, liquidation, dissolution or winding-up
of Corning, the
5
<PAGE>
holders of Series C Preferred Stock are entitled to receive out of the net
assets of Corning, but before any distribution is made on any class of
securities ranking junior to the Series C Preferred Stock, $100.00 per share
in cash plus accumulated and unpaid dividends (whether or not earned or
declared) to the date of final distribution to such holders.
Preferred Share Purchase Rights
Attached to each share of Corning Common Stock is one Right, which entitles
the registered holder to purchase from Corning one four-hundredth of a share
of Series A Preferred Stock at a price of $62.50 per one four-hundredth of a
share of Series A Preferred Stock (the "Exercise Price"), subject to
adjustment. The Rights expire on July 15, 1996 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed by Corning.
The Rights represented by the certificates for Corning Common Stock are
not exercisable, and are not transferable apart from the Corning Common Stock
until the earlier of (i) ten days following the public announcement by
Corning or an Acquiring Person (as defined below) that a person or group has
acquired beneficial ownership of 20% or more of the Corning Common Stock (an
"Acquiring Person") or (ii) ten business days (or such later date as the
Corning Board may determine) after the commencement or first public
announcement of a tender or exchange offer that would result in a person or
group beneficially owning 20% or more of the Corning Common Stock (the
earlier of such dates being called the "Distribution Date"). Separate
certificates for the Rights will be mailed to holders of record of Corning
Common Stock as of such date. The Rights could then begin trading separately
from Corning Common Stock.
Generally, in the event that a person or group becomes an Acquiring
Person, each Right, other than the Rights owned by the Acquiring Person, will
thereafter entitle the holder to receive, upon exercise of the Right, Corning
Common Stock having a value equal to two times the Exercise Price of the
Right. In the event that Corning is acquired in a merger, consolidation, or
other business combination transaction or more than 50% of Corning's assets,
cash flow or earning power is sold or transferred, each Right, other than the
Rights owned by an Acquiring Person, will thereafter entitle the holder
thereof to receive, upon the exercise of the Right, common stock of the
surviving corporation having a value equal to two times the Exercise Price of
the Right.
The Rights are redeemable in whole, but not in part, at $0.125 per Right
at any time on or prior to any person or group becoming an Acquiring Person.
The right to exercise the Rights terminates at the time that the Corning
Board elects to redeem the Rights. Notice of redemption shall be given by
mailing such notice to the registered holders of the Rights. At no time will
the Rights have any voting rights. The Rights Agent is Harris Trust and
Savings Bank (the "Rights Agent").
The exercise price payable, and the number of shares of Series A Preferred
Stock or other securities or property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of, the shares of Series A Preferred Stock, (ii) upon the
grant to holders of the shares of Series A Preferred Stock of certain rights
or warrants to subscribe for or purchase shares of Series A Preferred Stock
at a price, or securities convertible into shares of Series A Preferred Stock
with a conversion price, less than the then current market price of the
shares of Series A Preferred Stock or (iii) upon the distribution to holders
of the shares of Series A Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in shares of Series A Preferred Stock)
or of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one four-hundredths of
a share of Series A Preferred Stock issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of, or stock
dividend on, or subdivision, consolidation or combination of, Corning Common
Stock prior to the Distribution Date. With certain exceptions, no adjustment
in the exercise price will be required until cumulative adjustments require
an adjustment of at least 1% in such exercise price.
Upon exercise of the Rights, no fractional shares of Series A Preferred
Stock will be issued (other than fractions which are integral multiples of
one four-hundredth of a share, which may, at the election of Corning, be
evidenced by depositary receipts) and in lieu thereof an adjustment in cash
will be made.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire Corning on
terms not approved by the Corning Board, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved
by the Corning Board since the Rights may be
6
<PAGE>
redeemed by Corning at $.125 per Right prior to the fifteenth day after the
acquisition by a person or group of beneficial ownership of 20% or more of
the Corning Common Stock (subject to certain exceptions).
The shares of Series A Preferred Stock purchasable upon exercise of the
Rights will rank junior to all other series of Corning's preferred stock
(including the Series B and Series C Preferred Stock) or any similar stock
that specifically provides that they shall rank prior to the shares of Series
A Preferred Stock. The shares of Series A Preferred Stock will be
nonredeemable. Each share of Series A Preferred Stock will be entitled to a
minimum preferential quarterly dividend of $10.00 per share, but will be
entitled to an aggregate dividend of 100 times the dividend declared per
share of Corning Common Stock. In the event of liquidation, the holders of
the shares of Series A Preferred Stock will be entitled to a minimum
preferential liquidation payment of $100 per share, but will be entitled to
an aggregate payment of 100 times the payment made per share of Corning
Common Stock. Each share of Series A Preferred Stock will have 100 votes,
voting together with the Corning Common Stock. In the event of any merger,
consolidation or other transaction in which Corning Common Stock is
exchanged, each share of Series A Preferred Stock will be entitled to receive
100 times the amount and type of consideration received per share of Corning
Common Stock. These rights are protected by customary antidilution
provisions. Because of the nature of the Series A Preferred Stock's dividend,
liquidation and voting rights, the value of the interest in a share of Series
A Preferred Stock purchasable upon the exercise of each Right should
approximate the value of one share of Corning Common Stock.
The foregoing description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the description of the
Rights contained in the Rights Agreement, dated as of July 2, 1986 between
Corning and the Rights Agent, as amended by the Amended Rights Agreement,
dated as of October 4, 1989, which has been previously filed with the
Commission.
Corning's Fair Price Amendment
In 1985 Corning's stockholders adopted an amendment (the "Fair Price
Amendment") to the Restated Certificate that, in general, requires the
approval by the holders of at least 80% of the voting power of the outstanding
capital stock of Corning (other than the Series C Preferred Stock) entitled to
vote generally in the election of directors (the "Corning Voting Stock") as a
condition for mergers and certain other business combinations with any
beneficial owner of more than 10% of such voting power unless (1) the
transaction is approved by at least a majority of the Continuing Directors (as
defined in the Restated Certificate) or (2) certain minimum price, form of
consideration and procedural requirements are met. Certain terms used herein
are defined in the Restated Certificate.
Amendment or repeal of this provision or the adoption of any provision
inconsistent therewith would require the affirmative vote of at least 80% of
the Corning Voting Stock unless the proposed amendment or repeal or the
adoption of the inconsistent provisions were approved by two-thirds of the
entire Corning Board and a majority of the Continuing Directors.
Certain Other Provisions of Corning's Restated Certificate and By-Laws
In addition to the Preferred Share Purchase Rights and the Fair Price
Amendment, the Restated Certificate and By-Laws contain other provisions that
may discourage a third party from seeking to acquire Corning or to commence a
proxy contest or other takeover-related action. Corning has classified its
Board such that one-third of the Corning Board is elected each year to
three-year terms of office. In addition, holders of Corning Common Stock may
remove a Director from office at any time prior to the expiration of his or
her term only with cause and by vote of a majority of holders of Corning
Common Stock outstanding. These provisions, together with provisions
concerning the size of the Corning Board and requiring that premature
vacancies on the Corning Board be filled only by a majority of the entire
Corning Board, may not be amended, altered or repealed, nor may Corning adopt
any provisions inconsistent therewith, without the affirmative vote of at
least 80% of the Corning Voting Stock of Corning or the approval of two-
thirds of the entire Corning Board.
Corning's By-Laws contain certain procedural requirements with respect to
the nomination of directors by stockholders that require, among other things,
delivery of notice by such stockholders to the Secretary of Corning not later
than 60 days nor more than 90 days prior to the date of the stockholders
meeting at which such nomination is to be considered. The Corning By-Laws do
not provide that a meeting of the Corning Board may be called by
stockholders.
The Restated Certificate provides that no director will be liable to
Corning or its stockholders for a breach of duty as a director except as
provided by the NYBCL.
7
<PAGE>
The effect of these provisions may be to deter attempts either to obtain
control of Corning or to acquire a substantial amount of its stock, even if
such a proposed transaction were at a significant premium over the
then-prevailing market value of the Corning Common Stock, or to deter attempts
to remove the Corning Board and management of Corning, even though some or a
majority of the holders of Corning Common Stock may believe such actions to be
beneficial.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders, or
by pledgees, donees, distributees, transferees or other successors in
interest. Such sales may be made on the New York Stock Exchange or one or
more other exchanges or in the over-the-counter market or otherwise, at
prices and at terms then prevailing or at prices related to the then current
market price, or in negotiated transactions. The Shares may be sold by one or
more of the following, without limitation: (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
purchasers; and (e) face to face transactions between sellers and purchasers
without a broker-dealer. In effecting sales, brokers or dealers engaged by
the Selling Stockholders may arrange for other brokers or dealers to
participate in the resales.
In connection with distributions of the Shares or otherwise, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales
of the Shares registered hereunder in the course of hedging the positions
they assume with Selling Stockholders. The Selling Stockholders may also sell
Shares short and deliver the Shares to close out such short positions. The
Selling Stockholders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the Shares
registered hereunder, which the broker-dealer may resell pursuant to this
Prospectus. The Selling Stockholders may also pledge the Shares registered
hereunder to a broker or dealer and upon a default the broker or dealer may
effect sales of the pledged Shares pursuant to this Prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Stockholders in amounts to
be negotiated in connection with the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Act"), in
connection with such sales and any such commission, discount or concession
may be deemed to be underwriting discounts or commissions under the Act. In
addition, any securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus.
All costs, expenses and fees in connection with the registration of the
Shares will be borne by the Company. Commissions and discounts, if any,
attributable to the sale of the Shares will be borne by the Selling
Stockholders. The Company has agreed to indemnify the Selling Stockholders
and certain persons including underwriters, brokers and dealers against
certain liabilities in connection with the offering of the Shares, including
liabilities arising under the Act.
Information as to whether underwriters who may be selected by the Selling
Stockholders, or any other broker-dealer, is acting as principal or agent for
the Selling Stockholders, the compensation to be received by underwriters who
may be selected by the Selling Stockholders, or any broker-dealer, acting as
principal or agent for the Selling Stockholders and the compensation to be
received by other broker-dealers, in the event the compensation of such other
broker-dealers is in excess of usual and customary commissions, will be
disclosed in a prospectus filed pursuant to Rule 424(b) under the Securities
Act, or in a supplement to this Prospectus filed pursuant to Rule 424(c) of
the Securities Act to the extent required.
The Company has agreed with the Selling Stockholders to maintain the
continuous effectiveness of the Registration Statement (of which this
Prospectus is a part) during the period commencing on the date the
Registration Statement is declared effective and ending on the second
anniversary of the effective date of the Registration Statement or such
shorter period which will terminate when all the Shares have been sold
pursuant to the Registration Statement.
8
<PAGE>
LEGAL OPINIONS
The validity of the shares of Corning Common Stock offered hereby is being
passed on for the Company by William C. Ughetta, Esq., Senior Vice President
and General Counsel of Corning. Mr. Ughetta owns substantially less than 1%
of the outstanding shares of Corning Common Stock.
EXPERTS
The consolidated financial statements of the Company and of Dow Corning
Corporation incorporated in this Prospectus by reference to Corning's Annual
Report on Form 10-K for the fiscal year ended January 1, 1995 have been so
incorporated in reliance on the reports of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
The financial statements of Moran Research Labs as of and for the year
ended December 31, 1993 incorporated in this Prospectus by reference to
Corning's Current Report on Form 8-KA dated Decem- ber 12, 1994 have been so
incorporated in reliance on the report of Leverone & Company, certified
public accountants, given on the authority of said firm as experts in
auditing and accounting.
9
<PAGE>
===============================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations, other than those contained in
this Prospectus in connection with the offering described herein, and, if
given or made, such other information or representations must not be relied
upon as having been authorized by the Company, the Selling Stockholders or
any Underwriter. This Prospectus does not constitute an offer to sell or
solicitation of an offer to buy any securities other than those specifically
offered hereby or any securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make an offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to its date.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information 2
Incorporation of Certain Documents by
Reference 2
The Company 3
Selling Stockholders 3
Description of Common Stock 4
Plan of Distribution 8
Legal Opinions 9
Experts 9
</TABLE>
===============================================================================
509,960 Shares
Corning Incorporated
Common Stock
---------------
PROSPECTUS
---------------
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses to be incurred in
connection with the distribution of the securities to be registered, other
than underwriting discounts and commissions. The Company will pay the
following expenses:
<TABLE>
<CAPTION>
<S> <C>
Registration Fee $ 5,177
Legal Fees $ 3,000
Printing Fees $ 2,000
Accounting Fees $ 5,000
Miscellaneous $ 1,823
Total $17,000
</TABLE>
Item 15. Indemnification of Directors and Officers.
Under the NYBCL, a corporation may indemnify its directors and officers
made, or threatened to be made, a party to any action or proceeding, except
for stockholder derivative suits, if such director or officer acted in good
faith, for a purpose which he or she reasonably believed to be in or, in the
case of service to another corporation or enterprise, not opposed to, the best
interests of the corporation, and, in criminal proceedings, had no reasonable
cause to believe his or her conduct was unlawful. In the case of stockholder
derivative suits, the corporation may indemnify a director or officer if he or
she acted in good faith for a purpose which he or she reasonably believed to
be in or, in the case of service to another corporation or enterprise, not
opposed to the best interests of the corporation, except that no
indemnification may be made in respect of (i) a threatened action, or a
pending action which is settled or otherwise disposed of, or (ii) any claim,
issue or matter as to which such person has been adjudged to be liable to the
corporation, unless and only to the extent that the court in which the action
was brought, or, if no action was brought, any court of competent
jurisdiction, determines upon application that, in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such portion of the settlement amount and expenses as the court
deems proper.
Any person who has been successful on the merits or otherwise in the
defense of a civil or criminal action or proceeding will be entitled to
indemnification. Except as provided in the preceding sentence, unless ordered
by a court pursuant to the NYBCL, any indemnification under the NYBCL
pursuant to the above paragraph may be made only if authorized in the
specific case and after a finding that the director or officer met the
requisite standard of conduct by (i) the disinterested directors if a quorum
is available, (ii) the board upon the written opinion of independent legal
counsel or (iii) the stockholders.
The indemnification described above under the NYBCL is not exclusive of
other indemnification rights to which a director or officer may be entitled,
whether contained in the certificate of incorporation or by-laws or when
authorized by (i) such certificate of incorporation or by-laws, (ii) a
resolution of stockholders, (iii) a resolution of directors or (iv) an
agreement providing for such indemnification, provided that no
indemnification may be made to or on behalf of any director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that his or her acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to the cause of
action so adjudicated, or that he or she personally gained in fact a
financial profit or other advantage to which he or she was not legally
entitled.
The foregoing statement is qualified in its entirety by reference to
Sections 715, 717 and 721 through 725 of the NYBCL.
Article VIII of the registrant's By-Laws provides that the registrant
shall indemnify each director and officer against all costs and expenses
actually and reasonably incurred by him in connection with the defense of any
claim, action, suit or proceeding against him by reason of his being or
having been a director or officer of the registrant to the full extent
permitted by, and consistent with, the NYBCL.
The directors and officers of the registrant are covered by insurance
policies indemnifying them against certain liabilities, including certain
liabilities arising under the Securities Act, which might be incurred by them
in such capacities.
II-1
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
2.01 Agreement and Plan of Merger dated as of February 17, 1995, among Corning
Incorporated; Corning HCM Inc.; Franklin Health Group, Inc.; David L. Levy;
Paul J. Kofmehl; Richard K. Boldgett; and David J. Hines.
3.01 Restated Certificate of Incorporation of the registrant, dated July 12, 1989,
and the Certificate of Amendment, dated September 28, 1989, to the Restated
Certificate of Incorporation of the registrant (incorporated by reference
to Exhibit 3(a) of the registrant's Annual Report on Form 10-K for the fiscal
year ending December 31, 1989).
3.02 By-laws of the registrant (incorporated by reference to an exhibit to
registrant's Current Report on Form 8-K dated January 24, 1995).
3.03 Certificate of Amendment, dated April 30, 1992, to the Restated Certificate
of Incorporation of the registrant (incorporated by reference to Exhibit 3(a)
of the registrant's Annual Report on Form 10-K for the fiscal year ended January
3, 1993).
3.04 Certificate of Amendment dated July 15, 1994, as amended by the Certificate
of Correction filed on July 26, 1994, to the Restated Certificate of Incorporation
of the registrant (incorporated by reference to Exhibit 3 of the registrant's
Annual Report on Form 10-K for the fiscal year ended January 1, 1995).
3.05 Certificate of Amendment, dated October 24, 1994, to the Restated Certificate
of Incorporation of the registrant (incorporated by reference to Exhibit 3
of the registrant's Annual Report on Form 10-K for the fiscal year ended January
1, 1995).
4.01 Form of Common Stock Certificate of the registrant (incorporated by reference
to Exhibit 4 to Registration Statement on Form S-4 filed with the Commission
on June 17, 1992 (Registration Statement No. 33-48488)).
4.02 Rights Agreement, dated as of July 2, 1986, between the registrant and Harris
Trust and Savings Bank, as amended (incorporated by reference to Exhibit 1
to Registration Statement on Form 8-A, filed with the Commission on July 2,
1986, and Exhibit 1 to Amendment No. 1 on Form 8, filed with the Commission
on October 10, 1989).
4.03 Form of Preferred Share Purchase Right of the registrant (included in Exhibit
4.02).
5.01 Opinion of William C. Ughetta, Senior Vice President and General Counsel of
the registrant, as to the legality of the securities being registered.
23.01* Consent of William C. Ughetta, Esq. (included in Exhibit 5.01).
23.02* Consent of Price Waterhouse LLP
23.03* Consent of Leverone & Company
24.01* Powers of Attorney
</TABLE>
* Peviously filed.
Item 17. Undertakings.
(a) The Company hereby undertakes (1) to file, during any period in which
offers or sales are being made, a post-effective amendment to this
registration statement; (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of this registration
statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and (iii) to include any material
information with respect to the plan of distribution not previously disclosed
in this registration statement or any material change to such information in
the registration statement; provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included in a
post-effective amendment thereby is contained in periodic reports filed by the
Company pursuant to Section 13 or Sec-
II-2
<PAGE>
tion 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement; (2) that, for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; (3) to remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering; and (4) that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in this registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bonafide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the event a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in such Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Corning Incorporated, a New York corporation, certifies that it
has reasonable grounds to believe it meets all the requirements for filing on
Form S-3 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Corning,
State of New York, on the 20th day of February, 1996.
Corning Incorporated
(Registrant)
by /s/ William C. Ughetta
-----------------------------------------
WILLIAM C. UGHETTA, SENIOR VICE PRESIDENT
Pursuant to the requirements of the Securities Act of 1933 this
Registration Statement has been signed below on February 20, 1996 by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
Signature Capacity
--------- --------
<S> <C>
/s/ James R. Houghton
- --------------------------------------- Chairman of the Board, Principal
(James R. Houghton) Executive Officer and Director
/s/ Van C. Campbell
- --------------------------------------- Vice Chairman, Principal Financial
(Van C. Campbell) Officer and Director
/s/ Katherine A. Asbeck
- ---------------------------------------
(Katherine A. Asbeck) Principal Accounting Officer
*
- --------------------------------------- President, Principal Operating Officer
(Roger G. Ackerman) and Director
- ---------------------------------------
(Robert Barker) Director
- ---------------------------------------
(John S. Brown) Director
*
- ---------------------------------------
(Mary L. Bundy) Director
- ---------------------------------------
(Lawrence S. Eagleburger) Director
*
- ---------------------------------------
(David A. Duke) Director
*
- ---------------------------------------
(John H. Foster) Director
*
- ---------------------------------------
(Gordon Gund) Director
- ---------------------------------------
(John M. Hennessy) Director
*
- ---------------------------------------
(Vernon E. Jordan, Jr.) Director
*
- ---------------------------------------
(James W. Kinnear) Director
*
- ---------------------------------------
(James J. O'Connor) Director
II-4
<PAGE>
<CAPTION>
Signature Capacity
--------- --------
<S> <C>
*
- ---------------------------------------
(Catherine A. Rein) Director
*
- ---------------------------------------
(Henry Rosovsky) Director
*
- ---------------------------------------
(H. Onno Ruding) Director
*
- ---------------------------------------
(William D. Smithburg) Director
*By /s/ William C. Ughetta
- ---------------------------------------
(William C. Ughetta)
Attorney-in-fact
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
2.01 Agreement and Plans of Merger dated as of February 17, 1995, among
Corning Incorporated; Corning HCM Inc.; Franklin Health Group, Inc.;
David L. Levy; Paul J. Kofmehl; Richard K. Boldgett; and David J. Hines.
3.01 Restated Certificate of Incorporation of the registrant, dated July 12,
1989, and the Certificate of Amendment, dated September 28, 1989, to the
Restated Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit 3(a) of the registrant's Annual Report on Form 10-K
for the fiscal year ending December 31, 1989).
3.02 By-laws of the registrant (incorporated by reference to an exhibit to
the registrant's Current Report on Form 8-K dated January 24, 1995).
3.03 Certificate of Amendment, dated April 30, 1992, to the Restated
Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit 3(a) of the registrant's Annual Report on Form 10-K
for the fiscal year ended January 3, 1993).
3.04 Certificate of Amendment dated July 15, 1994, as amended by the
Certificate of Correction filed on July 26, 1994, to the Restated
Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit 3 of the registrant's Annual Report on Form 10-K
for the fiscal year ended January 1, 1995).
3.05 Certificate of Amendment, dated October 24, 1994, to the Restated
Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit 3 of the registrant's Annual Report on Form 10-K
for the fiscal year ended January 1, 1995).
4.01 Form of Common Stock Certificate of the registrant (incorporated by
reference to Exhibit 4 to Registration Statement on Form S-4 filed with
the Commission on June 17, 1992 (Registration Statement No. 33-48488)).
4.02 Rights Agreement, dated as of July 2, 1986, between the registrant and
Harris Trust and Savings Bank, as amended (incorporated by reference to
Exhibit 1 to Registration Statement on Form 8-A, filed with the
Commission on July 2, 1986, and Exhibit 1 to Amendment No. 1 on Form 8,
filed with the Commission on October 10, 1989).
4.03 Form of Preferred Share Purchase Right of the registrant (included in
Exhibit 4.02).
5.01 Opinion of William C. Ughetta, Senior Vice President and General Counsel
of the registrant, as to the legality of the securities being
registered.
23.01* Consent of William C. Ughetta, Esq. (included in Exhibit 5.01).
23.02* Consent of Price Waterhouse LLP.
23.03* Consent of Leverone & Company.
24.01* Powers of Attorney.
</TABLE>
* Previously filed.
II-6
AGREEMENT AND PLAN OF MERGER dated as of February 17, 1995, among
Corning Incorporated, a New York corporation ("Corning"), Corning HCM Inc., a
New Jersey corporation ("Sub") and a wholly owned subsidiary of Corning (Corning
and Sub being collectively referred to as the "Corning Parties"), Franklin
Health Group, Inc., a New Jersey corporation (the "Company") and David L. Levy,
Paul J. Kofmehl, Richard K. Blodgett and David J. Hines (collectively the
"Stockholders"; the Company and the Stockholders being collectively the
"Sellers").
WHEREAS, the Stockholders own in the aggregate 2,000,000 shares of
common stock, no par value ("Common Stock") of the Company, which shares
represent all of the issued and outstanding capital stock of the Company.
WHEREAS, the Company operates a disease state management services
business (the "Business").
WHEREAS, the Stockholders and the respective Boards of Directors of
Corning, Sub and the Company have approved the merger of Sub into the Company,
as set forth below (the "Merger"), upon the terms and subject to the conditions
set forth in this Agreement, and intended, for Federal income tax purposes, to
qualify as a reorganization within the meaning of Sections 368(a), 1(A) and 2(E)
of the Internal Revenue Code of 1986, as amended (the "Code") upon the terms and
conditions hereinafter set forth.
WHEREAS, Corning, Sub, and the Stockholders desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger; and
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties, intending to
be legally bound, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the New Jersey Business
Corporation Act (the "NJBA"), Sub shall be merged with and into the Company at
the Closing Date (as hereinafter defined). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as
1
<PAGE>
the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of Sub in accordance with the NJBA.
SECTION 1.02. Closing. The closing of the Merger will take place at
9:00 A.M. on February 17, 1995 at the offices of Corning Clinical Laboratories
Inc., One Malcolm Avenue, Teterboro, NJ 07608.
SECTION 1.03. Closing Date. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article III, the parties
shall file a certificate of merger or other appropriate documents (the
"Certificate of Merger") executed in accordance with the relevant provisions of
the NJBCA and shall make all other filings or recordings required under the
NJBCA. The Merger shall become effective on February 17, 1995 or, if later, at
such time as the Certificate of Merger is duly filed with the New Jersey
Secretary of State (the date on which the Merger becomes effective being the
"Closing Date" and the Merger being deemed to have occurred for all purposes at
12:01 A.M. on the Closing Date).
SECTION 1.04. Effect on Capital Stock. As of the Closing Date, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each share of capital stock
of Sub issued and outstanding immediately prior to the Closing
Date shall be converted by virtue of the Merger into, and from
and after the Closing Date shall evidence, one validly issued
and outstanding share of capital stock of the same class and
series of the Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of
Company Common Stock that is owned by the Company shall
automatically be cancelled and retired and shall cease to
exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Each issued
and outstanding share of Company Common Stock (other than
shares to be cancelled in accordance with Section 1.04(b)
shall be converted into 0.25498 shares of common stock, par
value $.50 per shares of Corning ("Corning Common Stock") or a
total of 509,960 shares of Corning Common Stock.
2
<PAGE>
(d) Corning shall cause to be delivered to the Escrow
Agent, pursuant to the Escrow Agreement, a certificate
representing 10% of the above number of shares of Corning
Common Stock, rounded to the nearest whole number, to be
deposited with the Escrow Agent (as defined in Section
3.01(i)) on behalf of each Stockholder, allocated in
accordance with Schedule 1.04.
(e) Certificates representing the remaining 90% of
the above number of shares of Corning Common Stock shall be
distributed to each Stockholder, allocated in accordance with
Schedule 1.04.
(f) Certificates representing shares of Corning
Common Stock delivered at Closing are being issued in a
private placement pursuant to Section 4(2) of the Securities
Act of 1933, as amended (the "1933 Act"), and are therefore
exempt from registration under the 1933 Act, and will bear the
legend set forth below reflecting that such shares are not
issued in a transaction registered under the 1933 Act, and
cannot be resold in the absence of a registration under the
1933 Act or pursuant to an exemption thereto.
The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended and may not be sold or transferred in the
absence of registration or an exemption therefrom
under said Act.
(g) No certificates representing fractional shares
will be issued by Corning on account of the Merger. Fractional
interests in shares of Corning Common Stock shall be
eliminated by rounding up to the nearest share interests of
the Stockholders.
SECTION 1.05. Other Effects of the Merger. The Merger shall have the
effect set forth in Section 14A:10-6 of the NJBCA.
SECTION 1.06. Certificate of Incorporation and By-laws. (a) The
certificate of incorporation of the Company as in effect immediately prior to
the Closing Date shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The by-laws of Sub as in effect at the Closing Date shall become
the by-laws of the Surviving Corporation, until thereafter changed or amended as
provided therein or by applicable law.
3
<PAGE>
SECTION 1.07. Directors. The directors of Sub at the Closing Date shall
become the directors of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
SECTION 1.08. Officers. The officers of Sub immediately prior to the
Closing Date shall become the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Representations and Warranties of the Sellers. The
Stockholders hereby jointly and severally represent and warrant as of the
Closing Date to Corning and Sub as follows except that, insofar as a
representation involves a Stockholder's ownership of shares, his power and
authority to enter this Agreement, his being a party to any agreement to which
neither the Company nor any other Stockholder is a party or any approval or
consent required to be obtained by such Stockholder, such representation and
warranty shall be deemed to be made severally by such Stockholder:
(a) Organization; Subsidiaries. The Company is a
corporation duly organized and validly existing under the laws
of New Jersey, has the requisite power and authority to own
and operate its properties and assets and the Business and
except as set forth on Schedule 2.01(a) is duly qualified as a
foreign corporation, and is in good standing, in each
jurisdiction where the character of its properties or the
nature of its business makes such qualification necessary. The
Company has all requisite power and authority to consummate
the transactions contemplated hereby. The principal place of
business of the Company is located at 500 North Franklin
Turnpike, Ramsey, New Jersey 07446. Accurate and complete
copies of the certificate of incorporation and by-laws of the
Company are set forth in Schedule 2.01A. The minute books of
the Company, a true and correct copy of which has been
delivered to Corning, contain true, complete and accurate
records of all meetings, consents in lieu of meetings and all
other proceedings of the incorporator, Board of Directors, any
committees thereof (or persons performing similar functions)
and the stockholders of the Company since the time of its
organization. The stock books of the Company are complete and
accurate. The Company does not own, directly or
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indirectly, any capital stock or other equity securities or
any general or limited partnership interest of or similar
investment in any entity. The Company does not control the
management of, or have the right or ability to designate a
majority of the directors of the governing party of any
entity, whether by agreement or otherwise. The Company does
not conduct (and has not conducted) and does not have (and has
never had) any direct or indirect ownership interest in any
business except the Business.
(b) Capitalization and Ownership. The authorized
capital stock of the Company consists of 25,000,000 shares of
common stock, no par value, of which 2,000,000 shares are
issued and outstanding on the date hereof, all of which shares
are owned of record and beneficially by the Stockholders. Each
of the Stockholders owns and holds of record the number of
shares of Common Stock listed in Schedule 2.01B. Each of the
Stockholders has good title to said shares of Common Stock,
free and clear of all claims, liens, charges and encumbrances
of any nature whatsoever. Except for the stockholders
agreement and proxies listed in Schedule 2.01(b) (which have
been terminated effective as of the date hereof), each of the
Stockholders has full voting power over said shares of Common
Stock, subject to no proxy, shareholders' agreement, voting
trust or similar arrangement. All issued and outstanding
shares of capital stock of the Company are validly issued,
fully paid and nonassessable. There are not outstanding any
(i) securities convertible into or exchangeable for the
capital stock of the Company; (ii) options, warrants or other
rights to purchase or subscribe to capital stock of the
Company or securities convertible into or exchangeable for
capital stock of the Company; or (iii) contracts, commitments,
agreements, understandings or arrangements of any kind
relating to the issuance, transfer or voting of any capital
stock of the Company, any such convertible or exchangeable
securities or any such options, warrants or rights.
(c) Authority. Each of the Sellers has the full
capacity, legal right, power and authority to, and has taken
all actions necessary to authorize each Seller to, execute,
deliver and perform its obligations under this Agreement and
all instruments and agreements delivered pursuant hereto and
to consummate the transactions contemplated hereby and
thereby. This Agreement and all instruments and agreements to
be delivered in connection herewith or therewith by any of the
Sellers have been duly executed and delivered by such
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party (to the extent they are a party hereto) and constitute
their respective legal, valid and binding obligations,
enforceable against each of them (to the extent they are a
party thereto) in accordance with their respective terms,
subject to laws of general application relating to the rights
of creditors generally.
(d) No Default. The Company is not in default under
or in violation of any provision of its certificate of
incorporation and by-laws, as amended to date, nor is any
Seller in default under or in violation of any provision of
any restriction, lien, encumbrance, indenture, contract,
lease, loan agreement, note or other obligation or liability
to which the Company is a party or by which ownership of the
Company is bound and with respect to the Stockholders, which
could adversely affect the Company or the transactions
contemplated hereby. Neither the execution and delivery of
this Agreement or any other agreement or instrument to be
delivered to Corning in connection herewith, nor the
consummation of the transactions contemplated hereby or
thereby, by any Seller shall (i) result in the acceleration
of, or the creation in any party of the right to accelerate,
terminate, modify or cancel, or cause a payment obligation to
arise under, any indenture, contract, lease, sublease, loan
agreement, note or other obligation or liability to which it
is a party or by which it is bound which could adversely
affect the Company or the transactions contemplated hereby,
(ii) conflict with or result in a breach of or constitute a
violation or default under (A) any provision of its
certificate of incorporation or by-laws, as amended to date or
(B) any restriction, lien, encumbrance, license, permit,
indenture, contract, lease, loan agreement, note or other
obligation or liability to which it is a party or by which it
is bound, and which could adversely affect the Company or the
transactions contemplated hereby or (C) any order, writ,
injunction, decree, law, statute, rule or regulation, license
or permit applicable to it, or (iii) result in the creation of
any lien or encumbrance upon the Common Stock or any of the
Company's assets.
(e) Approvals; Consents. No approval, consent, order
or authorization of, exemption by, or registration,
declaration or filing with, any federal or state governmental
authority or any person not a party to this Agreement is
required by or with respect to the Company or any of the
Stockholders in connection with the execution, delivery and
performance of this Agreement by the Company or the
Stockholders or any other agreement or instrument
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to be delivered to Corning in connection herewith or the
consummation by the Company or the Stockholders of the
transactions contemplated hereby or thereby, other than
notification to and consents from the persons and entities
specified on Schedule 2.01E hereto. Except as set forth on
Schedule 2.01E, each consent listed on Schedule 2.01E shall
have been duly and unconditionally obtained and shall be in
full force and effect as of the Closing Date. Without limiting
the generality of the foregoing, the total assets of the
Company and David Levy, taken as a whole, are below
$10,000,000 for purposes of Section 7A(a)(2)(B) of the Clayton
Act, as amended.
(f) No Investigations; Litigation. No Seller or any
individual or entity having an ownership interest in, or who
is an officer or director of the Company has been convicted
of, charged with or, to the knowledge of any of the Sellers,
investigated for a Medicare, Medicaid or state health
program-related offense or within the past three (3) years,
convicted of, charged with or, to the knowledge of any of the
Sellers, investigated for a violation of federal or state law
related to fraud, theft, embezzlement, breach of fiduciary
responsibility, financial misconduct, obstruction of an
investigation or controlled substances, or has been excluded
or suspended from participation in Medicare, Medicaid or any
federal or state health program or within the past three (3)
years has been subject to any judgment, stipulation, order or
decree of, or criminal or civil fine or penalty imposed by,
any court or governmental agency. Except as set forth in
Schedule 2.01F, there are no actions, suits or proceedings
pending or, to the best of the Sellers' knowledge, threatened
against any Seller or affecting any of their respective
properties or rights, at law or in equity, or before any
federal, state, municipal or other governmental agency or
instrumentality and that could adversely affect the Company or
the transactions contemplated hereby nor are Sellers aware of
any third party claims which to their knowledge could result
in any such action, suit or proceedings. Schedule 2.01F
includes a list of each claim, complaint, suit, action,
proceeding or investigation involving the Company that has
been settled, adjudicated or otherwise disposed of at any time
on or after January 1, 1993.
(g) No Violation of Law. No Seller has received
notice of any deficiency in or violation of any applicable
law, rule, regulation, license, permit, or requirement of any
governmental authority
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relating to the Company and the Sellers have complied with
such laws, rules, regulations, licenses and permits. Without
limiting the generality of the foregoing, none of the Sellers,
nor any of the Company's directors, officers, representatives,
agents or employees, have engaged in any conduct, or have
knowledge of any circumstances, which could lead to an
investigation of the Company, or which has lead to any
investigation of the Company, into any activity, conduct or
arrangement for rebates, kickbacks or other forms of
compensation that could be determined to be illegal, unlawful
or otherwise prohibited by any federal, state, municipal or
other governmental agency or instrumentality. The Company has
obtained and maintained in effect through the date hereof all
governmental licenses, permits, authorizations, certifications
and approvals necessary to conduct the Business as it has been
conducted, all of which are listed on Schedule 2.01G. Neither
the Company nor any of the Stockholders has received notice of
any threatened, pending or possible revocation, termination,
suspension or limitation of any of the licenses or permits
listed on Schedule 2.01G, nor are there grounds for any of the
foregoing. The Company is in compliance with the terms of all
such licenses and permits and with all requirements, standards
and procedures of the governmental agency or agencies that
issued them. The services performed by the Company, its
employees and affiliated professionals in connection therewith
have at all times heretofore been in compliance with all
applicable federal and state statutory and regulatory
requirements and all applicable contractual obligations and
standards of due care.
(h) Financial Statements. Set forth in Schedule 2.01H
are the Company's unaudited balance sheets as of February 17,
1995, December 31, 1994 and December 31, 1993 and the related
statements of income for each of the two (2) years in the
period ended December 31, 1994 (the balance sheet as of
February 17, 1995 shall be referred to herein as the "Latest
Balance Sheet", February 17, 1995 shall be referred to herein
as the "Latest Balance Sheet Date", and the balance sheet at
December 31, 1994 together with the related statement of
income for the period from January 1, 1994 through December
31, 1994 shall be collectively referred to herein as the
"Latest Financial Statements"). Such financial statements
fairly present the financial condition of the Company at the
dates, and the results of its operations for the periods,
described therein, and all liabilities required to be accrued
by Statement of Financial
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Accounting Standards No. 5 have been so accrued in the
Company's Latest Balance Sheet.
(i) Ownership and Condition of Properties. (i) The
Company has good and clear record and marketable title to, and
possession of, all of its tangible property and assets, free
and clear of all restrictions, liens, encumbrances, rights,
title and interests of others except that the Company has
valid and sustaining leasehold interests or licenses in, and
possession of all of the assets that are leased by the Company
and except for liens for current taxes not yet payable are
liens, if any, as are not substantial in character amount or
extent and do not materially impair the use of such property.
The Latest Balance Sheet reflects all of the tangible assets
(excluding inventory and supplies held in the ordinary course
of business) owned by the Company as of the Latest Balance
Sheet Date. Schedule 2.01I-2 correctly sets forth all of the
tangible assets leased by the Company as of the Latest Balance
Sheet Date; and all leases and licenses pertaining to such
assets are identified on such Schedule opposite the respective
asset. No one other than the Company has any right, title,
interest, restriction, lien or encumbrance in, on or to any of
the personal property located in any premises occupied by the
Company, except for personal office furnishings and effects of
the Company's partners and employees. The assets reflected on
the Latest Balance Sheet constitute substantially all of the
assets necessary to conduct the Business consistent with past
business practices.
(ii) All equipment owned or leased by the Company is
in working order and repair, ordinary wear and tear excepted,
and usable for its intended purpose in the ordinary course of
the Business.
(j) Intellectual Property Rights; Nondisclosure of
Proprietary Information.
(i) Set forth on Schedule 2.01J is a list of
all computer programs and software being used by the Company
but excluding off-the-shelf commercially available systems
owned by or licensed to the Company (collectively the
"Software") and all trade names, assumed names, service marks,
trademarks, logos, patents, applications for patent,
copyrights and other intellectual property rights owned or
used by the Company.
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(ii) The Company has rights necessary to use
the Software and the intellectual properties it uses in its
business free and clear of all liens and claims (other than
those in favor of licensors listed in Schedule 2.01J) and
require no rights in any such properties that it does not have
to conduct its business as presently conducted. There is
currently no claim of infringement of misappropriation
relating to any Software, trade name, service mark, trademark
or logo of any third party or of infringement or
misappropriation by a third party of any Software, trade name,
service mark, trademark or logo of the Company, nor has there
been any such claim in the past.
(iii) Except as set forth on Schedule 2.01J
the Company has not disclosed any material proprietary
information or trade secrets to any third party, except to
counsel or accountants of the Company, the Internal Revenue
Service, other governmental authorities or as required by law
or as is subject to customary confidentiality agreements.
(k) Real Estate. The Company enjoys exclusive,
peaceful and undisturbed possession of all premises which it
is leasing, all of which real estate leases are described on
Schedule 2.01K hereto. The Company has the right to use all
such premises for the respective purposes for which they are
being used currently in the Business. The Company is not in
default under any of such lease nor is its interest in any of
such leases encumbered by any prior transfer, assignment,
mortgage or encumbrance. There are no disputes concerning such
occupancy as of the date hereof. The Company does not own and
has not at any time owned any real estate.
(l) Agreements. Schedule 2.01K includes a list of
each of the Company's commitments and agreements, excluding
agreements listed in Schedule 2.01S and excluding agreements
directly related to, and incurred in the ordinary course of
business, which (i) are terminable without penalty on less
than thirty one (31) days notice or (ii) involve payments of
not more than $1,000 per month and an overall aggregate of not
more than $10,000. The Company has heretofore or
simultaneously herewith delivered to Corning executed
originals or true and complete copies of all agreements listed
on Schedule 2.01K. The Company has no material obligation,
liability, agreement, commitment or understanding of any kind
relating to the
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Business other than under the agreements listed on Schedule
2.01K. The Company is not a party to or bound by any agreement
that limits the Company or any affiliate in any way from
competing anywhere or in any business or from soliciting any
person as a customer. Each agreement listed in Schedule 2.01K
is valid, existing and in full force and effect and no party
thereto is presently asserting or has previously threatened
any default thereunder, nor are there any disputes related
thereto.
(m) Prepaid Expenses. The Latest Balance Sheet
reflects all prepaid expenses and deposits of the Company as
of the Latest Balance Sheet Date.
(n) Accounts and Notes Receivable. All accounts and
notes receivable of the Company shown on the Latest Balance
Sheet, and all receivables acquired by the Company subsequent
to the Latest Balance Sheet Date, have arisen in the ordinary
course of business and have been collected or are in the
process of collection.
(o) Bank Accounts. Schedule 2.01O consists of a true
and complete listing of all bank accounts and credit card
accounts in which all of the Company's cash and cash
equivalents are or may be deposited or from which the funds or
credit of the Company can be accessed.
(p) Customers. The list attached hereto as Schedule
2.01P of the Company's customers (the "Customers"), their
addresses, and the amounts billed by the Company each such
customer during the twelve (12) month period ended December
31, 1994 is true and complete in all respects. Except as
disclosed in Schedule 2.01P, no Seller is aware that any of
the customers intends to cease doing business with or
materially diminish the amount of the business that it is now
doing with the Company.
(q) Insurance. The Company has in full force and
effect the insurance set forth on Schedule 2.01Q hereto, true
and complete copies of which policies have been delivered to
Corning. Schedule 2.01Q also includes a true and complete
summary of the professional liability and disability claims
history of the Company and any predecessor.
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(r) Agents; Powers of Attorney. Set forth on Schedule
2.01R is a list of agents of the Company, other than its
employees and other than doctors and nurses it retains as
independent contractors, authorized to act on behalf of the
Company and the scope of their authority. The Company has no
powers of attorney or similar authorizations outstanding
except as set forth on such Schedule.
(s) Employees and Employee Benefit Plans. Set forth
on Schedule 2.01S hereto are the following:
(i) a complete and accurate list of the
names, titles, dates of hire and rates of pay of all Company
employees as of the date hereto. Except as set forth
separately on Schedule 2.01S, no employment manual or written
employment policy and/or procedures have been provided to
employees, and no written or verbal employment, consultant or
independent contractor agreement exists to which the Company
may be bound;
(ii) a description of the termination or
severance pay policy of the Company;
(iii) a description of each employee benefit
or compensation plan, including without limitation, 401(k),
pension, retirement, deferred compensation, profit sharing,
bonus or incentive, medical, dental, health insurance and life
insurance or other employee benefit plans, arrangements or
undertakings of Company;
(iv) a description of the holiday and
vacation pay policy; and
(v) a description of the workers
compensation loss experience of the Company as of the date
hereof.
Except as set forth in Schedule 2.01S, the Company is
not a party to, bound by, nor does it maintain or make any
contribution to, nor has it incurred any expense with respect
to any employment agreement, pension, retirement, deferred
compensation, profit sharing, bonus or incentive plan,
medical, dental or other health insurance plan, life insurance
plan, or other employee benefit plan, program, arrangement or
undertaking, whether or not legally binding
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<PAGE>
(including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the federal Employee Retirement
Income Security Act ("ERISA")), under which employees of the
Company are eligible to participate or derive a benefit or to
which the Company contributes or is required to contribute
(collectively "Employee Plans" and individually "Employee
Plan"). The Company has furnished or made available to Corning
complete and accurate copies of all the Employee Plans (and,
in the case of any unwritten plans, descriptions thereto), all
trust or other funding agreements, all amendments thereto, and
all favorable determination letters issued by the Internal
Revenue Service with respect to the Employee Plans and
amendments thereto. Each Employee Plan complies in all
material respects with all applicable laws, including, without
limitation, ERISA and the Code. Each Employee Plan that is
intended to be a qualified retirement plan has received a
favorable determination letter from the Internal Revenue
Service that it, as amended as of the date hereof, is
qualified under Section 401(a) of the Code and that each trust
thereunder is exempt from federal taxation under Section
501(a) of the Code; and nothing has occurred since the date of
the most recent letter that could reasonably be expected to
cause the relevant Employee Plan or trust to lose such
qualified status or tax exempt status, respectively. There
have been no prohibited transaction as defined in Section 406
of ERISA or Section 4975 of the Code which could subject the
Company to any liability under ERISA or the Code. The Company
has not and no predecessor to or subsidiary of the Company at
any time has made any contribution to or had any obligation to
make contributions to any defined benefit plan (as defined in
Section 3(34) of ERISA) or any multi-employer plan (as such
term is defined in Section 3(37) or 4001(a)(3) of ERISA).
Except as set forth in Schedule 2.01S, all
compensation, severance pay, vacation pay, bonuses, gifts,
pension, profit sharing, and other arrangements and all other
fringe benefits of all employees or consultants of the Company
have been properly accrued and reflected on its financial
statements included in Schedule 2.01H. The Company has no
obligation to pay post-retirement health or welfare benefits
to its current or former employees.
The Company is not a party to any contract with a
labor union. No election or proceeding relating to the labor
relations of the Company is pending or, to the best knowledge
of any Seller,
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threatened and no Seller has committed any unfair labor
practice with respect to the Business. The Company has not had
any union activity or any labor dispute at any time
heretofore.
None of the Company's employees is currently on short
or long-term or temporary or permanent disability leave.
(t) Environmental Matters. All uses by the Company of
the premises occupied by the Company, have been, and as of the
date hereof, are in compliance with all federal, state and
local laws, rules, regulations and ordinances, including
without limitation, all federal, state and local environmental
laws, rules, regulations and ordinances (collectively "Laws").
The Sellers have not received any notices of any violations of
any Laws regarding such premises. The Sellers have complied
with all Laws regarding the storage, handling and removal of
hazardous or toxic substances and medical wastes. During the
Company's leasing of its premises there has been no release by
the Company or to the best of Sellers knowledge by any other
party (as that term is defined below) of any hazardous
substance (as defined below) on such premises, and, to the
best of the Sellers' knowledge, the same never has occurred on
such premises. Neither the Company nor such premises are
subject to any federal, state or local "superfund" or other
lien, proceeding, claim, liability or action for the cleanup,
removal (as defined below), or remediation of any hazardous
substance. Such premises are not subject of any notice or
notification regarding same of which any of the Sellers is
aware, or subject to the threat or likelihood thereof.
The terms "hazardous substance", "release" and
"removal" as used herein shall have the same meaning and
definition as set forth in paragraphs (14), (22) and (23),
respectively, of Title 42 U.S.C. Section 9601 et seq. and any
applicable state laws, as well as regulations provided
thereunder however, the term "hazardous substance" as used
herein shall include: (i) "hazardous waste" as defined in
paragraph (5) of 42 U.S.C. Section 6903; (ii) "petroleum" as
defined in paragraph (8) of 42 U.S.C. Section 6991; (iii) any
asbestos containing material; (iv) any polychlorinated
biphenyls or PCB'S; and (v) radon.
The term "superfund" as used herein means the
Comprehensive Environmental Response, Compensation and
Liability Act, as amended, being Title 42 U.S.C. Section 9601
et seq.
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as amended, and any similar state statute or local ordinance
applicable to the Company premises, and all rules and
regulations promulgated, administered and enforced by any
governmental agency or authority pursuant thereto.
(u) Taxes. (i) The term "Taxes" shall mean all
Federal, state, local and foreign income, profits, franchise,
gross receipts, payroll, sales, employment, use, occupation,
property, excise, value added, unitary and other taxes, duties
or assessments (including the recapture of any tax items such
as investment credits), together with all interest, penalties
and additions imposed with respect to such amounts.
(ii) Pursuant to an election made effective
as of January 1, 1987, for U.S. Federal income tax purposes
the Company has qualified on a continuous basis as a
corporation taxed under Subchapter S until the termination of
such election effective December 31, 1993. During the entire
period of its treatment as a qualified S Corporation, the
Company has not been liable for any S Corporation level tax
under Section 1374 and 1375 of the Code. The Company duly
revoked its election to be taxed as an S Corporation effective
as of December 31, 1993. The Company has delivered to Corning
true and complete copies of its federal income and state and
local income tax returns for its tax years ended December 31,
1991, 1992 and 1993.
(iii) The Latest Balance Sheet includes full
and complete accruals for all unpaid Taxes, whether or not
disputed, whether or not due or assessed as of the Closing
Date including all taxes arising out of the Merger and the
transactions contemplated by this Agreement. There have been
timely filed with the appropriate governmental agencies (or
appropriate extension secured) all Federal, foreign, state and
local tax returns, reports and forms (including consolidated,
combined, unitary or similar tax returns, reports and forms
and estimated tax and information returns) ("Returns")
required to have been filed on or prior to the date hereof
with respect to the Company for the periods covered thereby
and such Returns are complete and accurate in all material
respects and correctly reflect all Taxes owed. All Taxes owed
pursuant to such Returns have been paid or adequate provision
has been made for such amounts. None of such Returns is
currently being audited by the applicable taxing authority.
Moreover, no taxing authority has
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audited any portion of a tax return relating to the Company.
No Seller (i) has received or has knowledge of any notice of
audit, deficiency or assessment or proposed audit, deficiency
or assessment with respect to the Company or the properties of
the Company from the Internal Revenue Service or any other
taxing authority or (ii) has waived or has knowledge of any
waiver of any law or regulation fixing, or has consented or
has knowledge of any consent to the extension of any period of
time for assessment of, any Tax with respect to the Company or
the properties of the Company. The Company is not a party to
any agreement which would fall within the provisions of
Section 28OG of the Code.
(v) Absence of Certain Changes. Except as set forth
in Schedule 2.01S or Schedule 2.01V, since the Latest Balance
Sheet Date, there has not been (i) any adverse change in the
financial condition, assets, business or net worth of the
Company nor, to the best knowledge of the Sellers, are any
such changes threatened, anticipated or contemplated; (ii) any
actual or any threatened, anticipated or contemplated damage,
destruction, loss, conversion, termination, cancellation,
default or taking by eminent domain or other action by
governmental authority which has materially adversely affected
or may hereafter materially adversely affect the properties,
assets, business or prospects of the Company; (iii) any
adverse pending or, to the best knowledge of the Sellers, any
threatened, anticipated or contemplated dispute of any kind
with any customer, supplier, source of financing, employee,
landlord, subtenant or licensee of the Company or any pending
or, to the best knowledge of the Sellers, any threatened,
anticipated or contemplated occurrence or situation of any
kind, nature or description in either case which is reasonably
likely to result in any reduction in the amount, or any
material adverse change in the terms or conditions, of
business with any substantial customer, supplier, or source of
financing of the Company; (iv) any bonuses or similar payment
or any increase in the compensation or benefits payable or to
become payable to the Company's officers, employees, agents or
consultants other than any such increase in the ordinary
course of business; (v) any pending or, to the best knowledge
of the Sellers, any threatened, anticipated or contemplated
occurrence or situation of any kind, nature or description
materially adversely affecting the assets, business or affairs
of the Company; or (vi) any dividend or distribution declared
or paid or (other than salary consistent with the
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salary reflected in Schedule 2.01S) any compensation paid to
the Stockholders.
(w) No Undisclosed Liabilities of the Company. The
Company has no liabilities or obligations of any nature,
whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due, except those which
(i) are reflected on the Latest Financial Statements; (ii) are
not required to be accrued on a balance sheet under Statement
of Financial Accounting Standards No. 5; (iii) have been
disclosed in the Schedules hereto; (iv) are exempt from
disclosure in the Schedules pursuant to the terms of the
applicable provisions relating to such disclosure; or (v) have
been incurred by the Company in the ordinary course of
business since the Latest Balance Sheet Date which do not vary
materially in amount and nature from those incurred as of the
Latest Balance Sheet Date.
(x) No Misrepresentations. Neither the Company nor
any of the Stockholders has made any material misstatement of
fact herein or in any document delivered to Corning pursuant
hereto or omitted to state any material fact necessary or to
make complete, accurate and not misleading every
representation, warranty and agreement set forth herein or in
any document to be delivered pursuant hereto.
(y) Brokers and Finders. None of the Sellers nor any
person acting on behalf of the Sellers has employed any
broker, agent or finder, or incurred any liability for any
brokerage fees, agents' commissions or finders' fees in
connection with the transactions contemplated herein.
(z) Continuity of Interest. No Stockholder has any
present plan or intention to sell or otherwise dispose of the
shares of the Corning Common Stock being used to him pursuant
to Schedule 1.04.
(aa) Investment Purpose. Each Stockholder is
purchasing the shares of Corning Common Stock being issued to
him pursuant to Schedule 1.04 (the "Shares") for investment
only and not with a view to resale in connection with any
distribution of any of the Shares except in compliance with
the 1933 Act, and all other applicable securities laws. Each
Stockholder understands that the
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shares of Corning Common Stock being issued to him have not
been registered under the 1933 Act or under the securities
laws of any state and that the Shares may not be sold,
transferred, offered for sale, pledged, hypothecated or
otherwise disposed of in the absence of an effective
registration under the 1933 Act except pursuant to a valid
exemption from such registration. Each Stockholder is
domiciled in the state indicated in Schedule 1.04 and, except
as indicated in Schedule 1.04, is an accredited investor under
Regulation 501(a) issued under the Act. Each Seller has such
knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of the
Shares and is able to bear the economic risk of an investment
in the Shares. Each Stockholder acknowledges receipt and his
review of this Agreement and Corning's most recent annual
report on Form 10-K and quarterly report on Form 10-Q. Each
Stockholder acknowledges that (a) he has been furnished by
Corning with all information regarding Corning which he had
reasonably requested or desired to know and (b) has been
afforded the opportunity to ask questions of and receive
answers from officers or other representatives of Corning.
(bb) Affiliates. Each of the Stockholders is
considered an affiliate under Rule 144(a)(1) issued under the
1933 Act. No person other than the Stockholders is directly or
indirectly receiving any interest in Corning Common Stock by
reason of this transaction.
SECTION 2.02. Representations and Warranties of Corning. Corning and
Sub hereby jointly and severally represent and warrant as of the Closing Date to
the Stockholders as follows:
(a) Organization; Subsidiaries. Each Corning Party is
a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation
and has all requisite power and authority to consummate the
transactions contemplated hereby.
(b) Corporation Authority. Each Corning Party has
taken all corporate and other actions necessary to authorize
it to execute, deliver and perform its obligations under this
Agreement and all instruments and agreements delivered
pursuant hereto and to consummate the transactions
contemplated hereby and thereby, including any necessary
approval by its Board of Directors or shareholders, and this
Agreement and all instruments and agreements
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to be delivered in connection herewith or therewith by each
Corning Party constitute its legal, valid and binding
obligation, enforceable against each Corning Party in
accordance with their respective terms, subject to laws of
general application relating to the rights of creditors
generally.
(c) No Default. Neither the execution and delivery of
this Agreement or any other agreement or instrument to be
delivered to the Sellers in connection herewith, nor the
consummation of the transactions contemplated hereby or
thereby, by any Corning Party, shall conflict with or result
in a breach of or constitute a violation or default under (A)
any provision of the Charter or By-laws, each as amended to
date, of such Corning Party, or (B) any restriction, lien,
encumbrance, license, permit, indenture, contract, lease, loan
agreement, note or other obligation or liability to which such
Corning Party is a party or by which it is bound, or (C) any
order, writ, injunction, decree, law, statute, rule or
regulation, license or permit applicable to any Corning Party.
(d) Capitalization. The authorized capital stock of
Corning consists of 10,000,000 shares of Series Preferred
Stock, par value $100 each, and 500,000,000 shares of Corning
Common Stock par value $.50 per share. As of December 31,
1994, 254,157 shares of Series B 8% Convertible Preferred
Stock, $100 par value per share were issued and outstanding.
As of February 1, 1995, 228,348,662 shares of Corning Common
Stock were issued and outstanding, 27,613,606 shares were held
in Corning's treasury, and 23,398,832 shares were reserved for
issuance in connection with employee stock option plans,
convertible securities and an incentive stock plan. All of the
outstanding shares of Corning Common Stock are, and the shares
of Corning Common Stock to be issued to the Stockholders will
be, when issued, duly authorized, validly issued, fully paid
and non-assessable free of any preemptive rights.
(e) Financial Statements. Corning's annual report on
Form 10-K for the fiscal year ended January 2, 1994 (the
"Corning 1993 10-K"), and its quarterly reports on Form 10-Q
for the periods ended March 27, 1994, June 19, 1994 and
October 9, 1994 (the "Corning 1994 10-Qs"), and all 8-K's
filed by Corning since January 2, 1994 (the "Corning 1994
8-K's) and its 1994 Annual Proxy Statement, copies of which
have been filed with or furnished to the Securities and
Exchange Commission, were when filed or furnished,
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accurate in all material respects and did not include any
untrue statement of material fact or omit to state a material
facts necessary to make the statements therein not misleading.
The financial statements included in the Corning 1993 10-K and
the Corning 1994 10-Qs present fairly the financial position
of Corning and its subsidiaries at such dates and the results
of their operations and cash flows for the periods then ended,
in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods covered
by such statements, except as set forth in the report of
independent accountants relating to the financial statements
included in the Corning 1993 10-K.
(f) Litigation. Except as disclosed in the Corning
1993 10-K and the Corning 1994 10-Qs and 8-Ks, there are no
suits, actions or legal, administrative, arbitration or other
proceedings or governmental investigations or other
controversies pending, or to the knowledge of Corning
threatened, or as to which Corning has received any notice,
claim or assertion, which involves a potential cost or
liability to Corning which would singly or in the aggregate,
materially and adversely affect the financial condition,
result of operations, business or prospects of Corning and its
subsidiaries considered as a whole. Corning is not in default
with respect to any order, writ, injunction or decree of any
court or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign affecting or relating to
it which is material to the financial condition, results of
operations or business of Corning and its subsidiaries
considered as a whole.
(g) Continuity of Business. It is the present
intention of Corning (i) to cause the Company to continue the
business that the Company currently conducts and (ii) not to
dispose of the shares of Common Stock acquired by Corning
pursuant to this Agreement or liquidate the Company, except
that Corning may contribute the shares of the Company to any
direct or indirect wholly owned subsidiary of Corning, or
merge or liquidate such company into other wholly owned direct
or indirect subsidiaries of Corning.
(h) No Material Adverse Change. Since January 2,
1994, other than as disclosed in Corning's 1994 10-Qs and
8-Ks, there has been no material adverse change in the assets,
business, operations or
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financial condition of Corning and its subsidiaries considered
as a whole.
(i) S-3 Qualification. Corning is eligible to use
Form S-3 under the Securities Act in connection with the
"shelf" registration pursuant to Rule 415 under the Securities
Act, as contemplated by the Registration Rights Agreement (as
hereinafter defined) of the shares of Corning Common Stock to
be issued to the Stockholders in the Merger.
(j) No Misrepresentations. No Corning Party has made
any material misstatement of fact herein or in any document
delivered to the Sellers pursuant hereto or omitted to state
any material fact necessary or desirable to make complete,
accurate and not misleading every representation, warranty and
agreement set forth herein or in any document to be delivered
pursuant hereto.
(k) Brokers and Finders. No Corning Party nor any
person acting on behalf of any Corning Party has employed any
broker, agent or finder, or incurred any liability for any
brokerage fees, agents' commissions or finders' fees in
connection with the transactions contemplated herein.
ARTICLE Ill
CONDITIONS PRECEDENT TO CLOSING
SECTION 3.01. Conditions Precedent to the Corning Parties' Obligations.
The obligations of the Corning Parties to perform their obligations at the
Closing will be subject to the receipt by Corning or satisfaction of the
following other conditions:
(a) the Certificate of Merger as filed
with the New Jersey Secretary of State;
(b) a long form certificate of good standing
for the Company and a copy of the Company's Certificate of
Incorporation, as amended to the date hereof, issued by the
New Jersey Secretary of State;
(c) a copy of the Certificate of
Incorporation and the by-laws of the Company, each as amended
to the date hereof, certified by the Secretary of the Company
together with an
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incumbency certificate and a certified copy of all corporate
actions required for the consummation of the Merger and the
performance by the Company of all of its obligations
hereunder;
(d) stock certificates representing all
outstanding shares of Company Common Stock together with stock
powers executed by the appropriate Stockholder;
(e) the consents of third parties to the
Merger with respect to all agreements of the Company
requiring such consents;
(f) a favorable opinion dated as of the
Closing Date, of Richards & O'Neil, counsel for the Sellers,
in form and substance satisfactory to Corning;
(g) proof of insurance coverage for the
Company for professional liability and comprehensive general
liability, with coverage and limits satisfactory to Corning;
(h) a Registration Rights Agreement executed
by the Stockholders in form and substance satisfactory to
Corning (the "Registration Rights Agreement");
(i) an Escrow Agreement executed by the
Stockholders and The Bank of New York as Escrow Agent (the
"Escrow Agent") in form and substance satisfactory to Corning
(the "Escrow Agreement");
(j) key man life insurance on the life of
David Levy in amount and with carriers satisfactory to
Corning;
(k) except as contemplated by the Employment
Agreements, resignations of the Company's directors and
officers of the Company effective as of the Closing Date;
(l) the New York Stock Exchange's approval
for listing, subject to official notice of issuance, of the
shares of Corning Common Stock to be issued pursuant to the
Merger;
(m) releases of the Company executed by each
of the Stockholders; and
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(n) termination of the Shareholder Agreement
set forth in Schedule 2.01(b).
SECTION 3.02. Conditions Precedent to the Sellers' Obligations. The
obligations of the Sellers to perform their obligations at the Closing will be
subject to the receipt by the Company or satisfaction of the following other
conditions:
(a) stock certificates for the Corning
Common Stock required by Schedule 1.04;
(b) a copy of the Certificate of
Incorporation and the by-laws of each Corning Party, each as
amended to the date hereof, certified by the Secretary of each
Corning Party together with an incumbency certificate and a
certified copy of all corporate actions required for the
consummation of the Merger and the performance by each Corning
Party of all of its obligations hereunder;
(c) a favorable opinion dated as of the
Closing Date, of William Ughetta, Esq., General Counsel of
Corning, in form and substance satisfactory to the Sellers;
(d) the Registration Rights Agreement
executed by Corning;
(e) the Escrow Agreement executed by Corning
and the Escrow Agent;
(f) the New York Stock Exchange's approval
for listing, subject to official notice of issuance, of the
shares of Corning Common Stock to be issued pursuant to the
Merger.
ARTICLE IV
SELLER'S NON-COMPETITION AGREEMENTS
SECTION 4.01. Seller's Agreement Not to Compete.
For a period of five (5) years from the Closing Date, each Stockholder
agrees that it will not, directly or indirectly, (i) engage in or acquire an
interest in, as employee, owner, partner, through stock ownership (other than a
less-than-2%-interest in a corporation having securities which are listed for
trading on a national securities exchange or traded in the over the counter
market), investment of
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capital, lending of money or property, rendering of services or otherwise,
either alone or in association with others, the operation of any business, other
than that of Corning or its affiliates, that offers disease state management
services and/or other health care management services that compete with the
business conducted by the Company at the Closing Date or any other business
conducted by Corning or its affiliates with respect to which such Stockholder
been assigned significant executive duties during the term of his employment by
Corning or its affiliates (collectively "Management Benefit Services"), (ii)
induce or attempt to induce any customer for Management Benefit Services of
Corning or its affiliates to reduce such customer's purchases from Corning or
its affiliates, (iii) divert or attempt to divert from Corning or its affiliates
any potential customers with whom such Stockholder has had substantial dealings
on behalf of Management Benefit Services of Corning or its affiliates, (iv) use
for its or his own benefit or except as required by law or in the ordinary
course of his employment by Corning or its affiliates, disclose the name and/or
requirements of any such customer of Corning or its affiliates to any other
person or persons, natural or corporate, (v) solicit and or hire any person who
is then an employee or consultant of Corning or its affiliates to leave the
employ thereof or employ or negotiate for employment of any person employed by
or under contract with Corning or its affiliates, or (vi) use for the benefit of
or, except as required by law, disclose to any one other than Corning or its
affiliates, any and all client and customer lists, trade secrets or other
information pertaining to the financial condition, business, client plans or
prospects of Corning or its affiliates. For purposes of this Section 4.01(a) a
Seller will without limitation be deemed to have an interest in the operation of
a Benefit Management Benefit Services business if such interest is held by
Seller's spouse, child or parent, or by any other person or entity if it is held
for the benefit of Seller in whole or in part. Notwithstanding the foregoing,
Dr. Levy will not be precluded from practicing medicine or from owning any
interest in the Northwest Bergen Family Practice or any other health care
provider provided that such provider does not offer Management Benefit Services.
SECTION 4.02. Additional Non-Competition Agreements Related to
Remedies.
(a) The Stockholders acknowledge and agree that the
provisions of this Article IV are necessary to protect all of
the assets of the Company being purchased by Corning, and in
no way impose a significant hardship or prevent any
Stockholder from earning a future livelihood.
(b) In the event that this Agreement or any portion
hereof shall be determined by any court of competent
jurisdiction to be
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unenforceable by reason of its extending for too great a
period of time or over too great a geographic area or range of
activities, it shall be interpreted to extend only over the
maximum period of time, geographic area or range of activities
as to which it may be enforceable.
(c) Each Stockholder recognizes and acknowledges that
in the event of Seller's failure to comply with any of the
covenants contained in this Agreement, it may be impossible to
measure in money the damages to Corning or its successor and
that in the event of such failure, Corning or its successor
may not have an adequate remedy at law. It is therefore agreed
that Corning or its successor, in addition to any other rights
or remedies which it may have, shall be entitled to immediate
injunctive relief to enforce such covenants, and that if any
action or proceeding is brought in equity to enforce the same,
no Stockholder will urge, as a defense, that there is an
adequate remedy at law.
ARTICLE V
POST-CLOSING MATTERS
SECTION 5.01 [INTENTIONALLY OMITTED]
SECTION 5.02. Taxes. All sales taxes and transfer taxes incurred in
connection with the transfer of the Company Common Stock shall be borne by the
Stockholders.
SECTION 5.03. Tax Treatment. The parties intend that the Merger shall
be a tax free reorganization under Section 368 of the Code. Each of Corning and
the Sellers agrees to treat the Merger and the issuance and receipt of the
Corning Common Stock as a tax free reorganization for purposes of any applicable
Tax, including any Federal, state or local income tax return required to be
filed.
SECTION 5.04. No Referral Obligations. Nothing herein will require any
Stockholder to refer, or to recommend to or arrange for any other person or
entity to refer, clinical laboratory testing business to Corning or its
affiliates.
SECTION 5.05. Further Instruments and Actions. Each party shall execute
and deliver such instruments and take such other action as shall be reasonably
required, or as shall be reasonably requested by any other party, in order to
carry out all transactions, agreements and covenants contemplated by this
Agreement, whether prior to or after the Closing Date. Each of the Stockholders
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shall take such action as shall be reasonably requested by Corning, and Corning
shall take such action as may or reasonably required by any Stockholder
including answering interrogatories, having such Stockholder's or employees of
Coring or its affiliates deposition taken and appearing as a witness at trial
(but in no event consenting to be a defendant or involving the payment of
money), in connection with any claim brought by or against the Company relating
to operations of the Company prior to the Closing Date or relating to the
transactions contemplated by this Agreement.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
SECTION 6.01. Survival of Representations and Warranties. Every
representation, warranty and agreement of the parties set forth in this
Agreement and every one of the rights and remedies of the non-breaching party
for any one or more breaches of this Agreement by the other party shall survive
the Closing. All such representations and warranties shall be effective
regardless of any investigation that may have been made at any time by or on
behalf of the non-breaching party by its directors, officers, employees or
agents. No claim for indemnification pursuant to 6.02(a), 6.02(b) or 6.05(a) may
be brought with respect to breaches of representations or warranties contained
in this Agreement, unless prior to February 17, 1996, a written notice as to
such claim is given by the party asserting such breach of representation or
warranty to the other parties hereto.
SECTION 6.02. Indemnification of Corning. The Stockholders jointly and
severally agree with respect to subsections (a), (c), (d) and (e) below are each
Stockholder severally agrees with respect to subsection (b) below to indemnify
each Corning Party, its affiliates and its directors, officers and employees
(collectively ("Buyers") and hold Buyers harmless from and against any and all
claims, liabilities, obligations, losses, deficiencies, damages, costs and
expenses (including without limitation interest, penalties and reasonable fees
and disbursements of counsel) of any kind, nature, and description (collectively
"Claims") which arise out of or result from
(a) any breach of any representation,
warranty, covenant or agreement made jointly and severally by
any Seller in this Agreement, including exhibits and
schedules, or in any certificate, document or other instrument
delivered in connection herewith;
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(b) any breach of any representation,
warranty, covenant or agreement made severally by such
Stockholder in this Agreement, including exhibits and
schedules, or in any certificate, document or other instrument
delivered in connection herewith by such Stockholder;
(c) any professional liability claims
against the Company not covered and reimbursed by insurance,
which claim arose out of operations of the Company prior to
the Closing and which are brought within one year after the
Closing Date;
(d) any claim for a finder's fee, brokerage
or other commission arising by reason of any services alleged
to have been rendered to or at the instance of any Seller with
respect to the transactions contemplated hereby; and
(e) any and all actions, suits, proceedings,
claims, demands, assessments, judgment, costs and expenses,
including without limitation, reasonable legal fees and
expenses, incident to any of the foregoing incurred in
attempting to oppose the imposition thereof, or in enforcing
this indemnity.
Any indemnification required to be made by the Sellers shall be paid
in Corning Common Stock valued for this purpose at $31.375 per share.
SECTION 6.03. Tax Indemnification. The Stockholders shall jointly and
severally pay or cause to be paid and shall be liable for and indemnify and hold
Corning harmless against, and shall be entitled to any refund of, any and all
Taxes imposed on the Company in respect of its income, profits, gains, business,
property or operations for which the Company may otherwise be liable for any
taxable year ending on or before the Closing Date (treating the Closing Date as
the end of a taxable year for this purpose), whether or not such Tax was due or
had been assessed as of the Closing Date; provided, however, that the
Stockholders' liability hereunder for Taxes shall only be for amounts in excess
of the amount accrued for Taxes on the Latest Balance Sheet. The Stockholders
will cause to be prepared and timely filed any income Tax returns of the Company
(including any amendments therewith) with respect to any taxable year ending on
or before the Closing Date that have not been filed prior to the Closing Date.
Such returns shall be submitted to the Company for its review, approval and
filing not less than 20 business days before the filing date. Neither the
Stockholders nor the Company shall amend any Tax Returns for any period prior to
or including the Closing Date in a manner that would cause any Corning Party to
be subject to any liability for
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Taxes. In the event the Company or the Stockholders shall receive notice of an
audit or an adjustment without audit by any federal, state or local taxing
authority with regard to any taxable period ending at or prior to the Closing
Date, they shall promptly give notice of such audit or adjustment to the other
parties. Corning and the Stockholders shall promptly provide each other with
copies of all correspondence with such taxing authority and shall permit the
others, through their designated representative, to participate in any
conferences with such taxing authorities.
SECTION 6.04. Limitations; Right of Set-Off.
(a) No indemnification shall be required to
be made by the Stockholders or by Corning under this Article
VI (other than any breach of Sections 2.01(v)(iv), 2.01(v)(vi)
or 6.03) unless the aggregate amount of Claims applicable to
the Stockholders or Corning as the case may be, exceeds
$500,000 (the "Basket"), in which event the Stockholders or
Corning, as the case may be, shall be obligated only to the
extent of such excess provided that each separate claim
asserted by Corning shall be for at least $25,000.
(b) Except with respect to any breach of
Section 2.01(b) as to which the aggregate amount of
indemnification due under this Agreement by the Stockholders
shall not exceed $16,000,000, the aggregate amount of the
indemnification due under this Agreement by the Stockholders
on the one hand and by Corning on the other hand shall not
exceed $9,000,000 and as to any Stockholder shall not exceed
the value of Corning Common Stock received by such Stockholder
valued at $31.375 per share; provided; however, that the
limitation on indemnification set forth in this Section 6.04
shall not apply to any obligation to indemnify or any
liability for a Claim which arises out of any breach of any
representation, warranty or agreement which was made
fraudulently.
(c) If not paid in Corning Common Stock
valued at $31.375 per share, Corning shall have the right to
set-off the amount of any monies which may become due and
payable from the Stockholders hereunder or otherwise,
including without limitation, any indemnity to the extent that
the Stockholders or any of them are liable therefore, against
any sums of money at any time payable to the Stockholders, or
any of them, or their agents or assigns.
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(d) Notwithstanding anything to the contrary
contained herein, the amount of indemnification due by the
Stockholders under Section 6.02(c) shall be reduced by the
amount of insurance proceeds received by Corning or its
affiliates, or that would have been received by Corning or its
affiliates, under the insurance policies maintained by the
Company as of the date of this Agreement if the claim had been
made immediately before the Closing Date.
SECTION 6.05. Indemnification by Corning. Corning agrees to indemnify
and hold harmless the Stockholders and their directors and officers and
employees (collectively "Selling Parties") from and against any and all Claims
which arise out of or result from (a) any breach of any representation,
warranty, covenant or agreement made by Corning in this Agreement, including
exhibits and schedules, or in any certificate, document or other instruments
delivered in connection herewith, (b) any and all claims, demands, liabilities,
penalties, actions, lawsuits, or proceedings brought against any Seller to the
extent that they relate to actions taken or omitted to be taken by Corning after
the Closing in connection with the Company, except to the extent that any such
matters are the responsibility of Sellers under Section 6.02 or Section 6.03,
(c) any claim for a finder's fee, brokerage or other commission arising by
reason of any services alleged to have been rendered to or at the instance of
any Corning Party or any of its affiliates with respect to the transactions
contemplated hereby, or (d) if Corning is liable for any such indemnity, any and
all actions, suits, proceedings, claims, demands, assessments, judgments, costs
and expenses, including without limitation, reasonable legal fees and expenses,
incident to any of the foregoing incurred in attempting to oppose the imposition
thereof, or in enforcing this indemnity. Any indemnity paid by Corning in
Corning Common Stock shall be valued at $31.375 per share.
SECTION 6.06. Notice of Defense of Claims. With respect to any Claim
for which either Corning on the one hand or the Stockholders on the other hand
shall seek indemnification from the other under Section 6.02, Section 6.03 or
Section 6.05, the party requesting indemnification (the "Indemnitee") shall
promptly give the party which is obligated to provide indemnification (the
"Indemnitor") written notice thereof in accordance with this Agreement. Such
notice shall describe the claim in reasonable detail and shall indicate the
dollar amount (if and to the extent reasonably ascertainable) of the claim that
has been or may be sustained by the Indemnitee if any third party shall commence
an action against any Indemnitee with respect to any matter that may give rise
to indemnifications hereunder. Unless (i) the defense of such asserted liability
by the Indemnitor, in the reasonable judgment of the Indemnitee, has any
material
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adverse effect on the Indemnitee's business or (ii) where Corning is the
Indemnitee, the claim is related to a continuing source of revenue to Corning or
any of its affiliates , the Indemnitor may elect to compromise or defend, at the
Indemnitor's own expense, the asserted liability, by so notifying the Indemnitee
within thirty (30) days after Indemnitee's notice (or sooner, if the nature of
the asserted liability so requires and the Indemnitee has so request in its
notice); provided, however, that after the Indemnitee's notice, the Indemnitee
may notify the Indemnitor in writing that it has rescinded its claim for
indemnification and relieved the Indemnitor of its obligations under Section
6.02, Section 6.03 or Section 6.05 with respect to a particular asserted
liability, and the Indemnitee shall thereafter have the sole right to compromise
or defend such asserted liability. If the Indemnitor elects to compromise or
defend such asserted liability, the defense shall be conducted by counsel chosen
by the Indemnitor and approved by the Indemnitee, which approval shall not be
unreasonably withheld or delayed, the proceedings shall be promptly settled or
diligently prosecuted to a final conclusion by the Indemnitor, and the
Indemnitee shall cooperate, at the expense of the Indemnitor, in the compromise
of, or defense of, any such asserted liability. If the Indemnitor may not elect
to compromise or defend a claim pursuant to the provisions of (i) or (ii) above,
or if the Indemnitor elects not to compromise or defend such asserted liability,
or fails to notify the Indemnitee of its election as herein provided, the
Indemnitee may pay, compromise or defend such asserted liability, at the expense
of the Indemnitor and without need of the consent of the Indemnitor (but without
prejudice to an Indemnitor's right to claim that any amount paid by an
Indemnitee is not subject to the indemnification provisions of this Article VI).
In all other circumstances, neither the Indemnitor nor the Indemnitee may settle
or compromise any claim over the objection of the other; provided, however, that
in the event consent of the Stockholders is required pursuant to this provision,
David Levy shall have the authority to consent on their behalf; provided
further, however, that consent to settlement or compromise shall not be
unreasonably withheld or delayed. If the Indemnitor chooses to defend or
compromise any claim, the Indemnitee shall make available to the Indemnitor any
books, records or other documents within its control that are necessary or
appropriate for such defense or compromise.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices. All notices delivered in connection with this
Agreement shall be deemed to have been duly delivered on the date of delivery,
if delivered personally, by facsimile transmission, or by overnight courier, or
three days after mailing, if mailed by certified or registered mail, return
receipt requested, addressed as follows:
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Name Address
To Corning, Corning Incorporated
Sub or the One Riverfront Plaza
Company MPHQE203A7
Corning, NY 14831
Attn: General Counsel
Facsimile (607) 974-8656
with a copy to: Corning Life Sciences Inc.
One Malcolm Avenue
Teterboro, NJ 07608
Attn: General Counsel
Facsimile (201) 393-5289
To the Stockholders: Richard K. Blodgett
110 Valeview Road
Wilton, CT 06897
(203) 762-8597
David J. Hines
267 Larch Lane
Mahwah, NJ 07430
(201) 327-1619
Paul J. Kofmehl
20 Church Street, A-41
Greenwich, CT 06830
(203) 869-2511
David Levy, M.D.
6 Washington Lane
Mahwah, NJ 07430
(201) 934-7333
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with a copy to: Richard & O'Neil, LLP
885 Third Avenue
New York, NY 10022
Attn: Craigh Leonard
Facsimile (212) 750-8022
or to such other address or addressee as such party shall designate by notice to
the other from time to time in accordance with this Section 7.01. Any notice
delivered by facsimile shall be confirmed by a written notice delivered in the
mails, by overnight courier or personally; provided that the foregoing shall not
effect the time for when such facsimile notice shall have been considered to
have been delivered, such delivery being determined as provided in the first
sentence of this Section 7.01.
SECTION 7.02. Sole Agreement. This Agreement constitutes the only
agreement by and among the parties hereto with respect to the subject matter
hereof and supersedes any prior understandings or written or oral agreements
between the parties with respect to the subject matter of this Agreement and as
such supersedes all prior understandings and agreements.
SECTION 7.03. Expenses. The Corning Parties on the one hand and the
Company on the other hand shall pay all of their own expenses incident to the
negotiation and preparation of this Agreement, and the consummation of all
transactions contemplated hereby, provided that the Stockholders shall pay any
such expenses of the Company in excess of $100,000. Notwithstanding the
foregoing, whether or not the closing occurs, the legal fees of the Company (not
exceeding $100,000) related to the negotiation and preparation of this Agreement
and the consummation of the transactions contemplated hereby and incurred prior
to the Closing Date shall be paid by Corning.
SECTION 7.04. Full Agreement. This Agreement sets forth all rights,
obligations and liabilities of the parties, and no terms and provisions hereof
or thereof, including without limitation the terms and provisions contained in
this sentence, shall be waived, modified or altered so as to impose any
additional obligations or liability or grant any additional right or remedy and
no custom, payment, act, knowledge, extension of time, favor or indulgence,
gratuitous or otherwise, or words or silence at any time, waiver or release of
any obligation, liability, right or remedy except as set forth in a written
instrument properly executed and delivered by the party sought to be charged,
expressly stating that it is, and the extent to which it is, intended to be so
effective. No assent, express or implied, by any party, or waiver by any party,
to or of any breach of any term or provision of this Agreement shall be deemed
to be an assent or waiver to or of such or any succeeding breach of the same or
any other such term or provision.
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SECTION 7.05. Partial Invalidity. If any term or provision of this
Agreement or the application thereof to any person, property or circumstances
shall to any extent be invalid or unenforceable, the remainder of this Agreement
or the application of such term or provision to persons, property or
circumstances other than those as to which it is invalid or unenforceable shall
not be affected thereby, and each term and provision of this Agreement shall be
valid and enforced to the fullest extent permitted by law.
SECTION 7.06. Publicity. No Seller shall make or issue, or cause to be
made or issued, any announcement or written statement concerning this Agreement
or the transactions contemplated hereby for dissemination to the general public
without the prior written consent of Corning. This provision shall not apply,
however, to any announcement or written statement which in the opinion of
counsel to such party is required to be made by law or the regulations of any
federal or state governmental agency or any stock exchange.
SECTION 7.07. Successors; Benefit. This Agreement shall inure to the
benefit of and be binding upon the heirs, executors, legal representatives,
successors and assigns of the parties hereto. The parties do not intend to
confer any benefit under this Agreement on anyone other than a party hereto or
its successors in interest and nothing contained herein shall be deemed to
confer any such benefit on any such person.
SECTION 7.08. Governing Law and Forum Selection. This Agreement and the
transactions contemplated hereby shall be construed and enforced in accordance
with the laws of New Jersey without regard to the conflict of law provisions
thereof. Jurisdiction and venue for litigation of any dispute, controversy or
claim arising out of or in connection with this Agreement shall be only in a
United States federal court or a New Jersey state court having subject matter
jurisdiction located in New Jersey. Each of the parties hereby expressly submit
to the personal jurisdiction of the foregoing courts located in New Jersey, and
waive any objection or defense based on personal jurisdiction or venue that
might otherwise be asserted to proceedings in such courts.
SECTION 7.09. Headings. The various section headings in this Agreement
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement or any provisions hereof
SECTION 7.10. Counterparts. This Agreement may be executed
simultaneously in one or more counterparts each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
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SECTION 7.11 Affiliates. The term "affiliates" as used in this
Agreement shall mean a person or entity controlling, controlled by or controlled
in common with another person or entity.
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IT WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: CORNING INCORPORATED
By:
- --------------------- --------------------------------
Name:
Title:
ATTEST: CORNING HCM INC.
By:
- --------------------- --------------------------------
Name:
Title:
ATTEST: FRANKLIN HEALTH GROUP, INC.
By:
- --------------------- --------------------------------
Name: John J. Donahue
Title: Vice President
DAVID L. LEVY
-----------------------------------
PAUL J. KOFMEHL
-----------------------------------
RICHARD K. BLODGETT
-----------------------------------
DAVID J. HINES
-----------------------------------
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SCHEDULES
1.04 Issuance of Corning Common Stock;
Domicile
2.01A Certificate of Incorporation and By-Laws
of the Company
2.01B Capitalization and Ownership
2.01E Consents
2.01F Litigation
2.01G Government and other licenses
2.01H Financial statements
2.01I-1 Owned tangible assets
2.01I-2 Leased tangible assets
2.01J Intellectual Properties
2.01K Agreements (also to include all operating
and capital leases and debt instruments to
be assumed and prepayment amounts)
2.01M Prepaid expenses and deposits
2.01O Bank accounts
2.01P Customer List, including annual net sales
2.01Q Insurance
2.01R Agents; powers of attorney
2.01S Employee benefit plans
2.01X Certain changes
