As filed with the Securities and Exchange Commission on March __, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CORNING INCORPORATED
(Exact name of registrant as specified in its charter)
New York 3231 16-0393470
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
One Riverfront Plaza, Corning, New York 14831
(607) 974-9000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
William D. Eggers, Esq.
Senior Vice President and General Counsel
Corning Incorporated
One Riverfront Plaza, Corning, New York 14831
Telephone No.: (607) 974-9000/Facsimile No.: (607) 974-8656
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies To:
Nixon Peabody LLP Edwards & Angell, LLP
Clinton Square 250 Royal Palm Way, Suite 300
Rochester, New York 14603 Palm Beach, Florida 33480
Attention: Deborah McLean Quinn, Esq. Attention: Jonathan E. Cole, Esq.
Telephone No.: (716) 263-1307 Telephone No.: (561) 833-7700
Facsimile No.: (716) 263-1600 Facsimile No.: (561) 655-8719
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<PAGE>
-2-
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective and all
other conditions to the merger referred to herein have been satisfied or waived.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule
462(d) 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.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed
<S> <C> <C> <C> <C>
Title of Each Class of Amount to Maximum Proposed Maximum Amount of
Securities to be be Offering Price Aggregate Offering Registration
Registered Registered Per Security Price (2) Fee
(1) (2)
Common Stock, par 12,080,607 $149.625 $2,008,400,814 $530,218
value $.50 per share shares
</TABLE>
(1) Based on the maximum number of shares of Corning Incorporated ("Corning")
common stock, par value $.50 per share, that may be required to be issued
in connection with the merger, calculated as the product of (a)
13,422,896, which is the sum of (i) the number of shares of common stock
of NetOptix Corporation ("NetOptix"), par value $.01 per share,
outstanding on March 16, 2000, (ii) the number of shares of NetOptix
common stock issuable pursuant to outstanding stock options through the
date the merger is expected to be consummated, and (iii) the number of
shares of NetOptix common stock issuable pursuant to an outstanding
warrant to purchase common stock of NetOptix, and (b) the exchange ratio
of 0.9 of a share of Corning common stock issued for each share of
NetOptix common stock outstanding.
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933 as amended (the
"Securities Act"), and calculated pursuant to Rule 457(f)(1) and rule
457(c) thereunder on the basis of the fair market value of the NetOptix
common stock to be exchanged in the merger as the product of (a) $149.625
(the average high and low sales price per share of NetOptix common stock
as reported on the NASDAQ on March 15, 2000) and (b) 13,422,896, the sum
of (i) the number of shares of common stock of NetOptix, par value $.01
per share, outstanding on March 16, 2000, (ii) the number of shares of
NetOptix common stock issuable pursuant to outstanding stock options
through the date the merger is expected to be consummated and (iii) the
number of shares of NetOptix common stock issuable pursuant to an
outstanding warrant to purchase the common stock of NetOptix.
--------------------
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>
SUBJECT TO COMPLETION - ________ ___, 2000
NETOPTIX CORPORATION LOGO
________ __, 2000
Dear Stockholder of NetOptix Corporation:
The Board of Directors of NetOptix Corporation has unanimously approved
a merger in which Corning Incorporated will acquire NetOptix. In the merger,
each share of NetOptix common stock will be converted into the right to receive
0.90 of a share of Corning common stock, and NetOptix will become a wholly-owned
subsidiary of Corning. Corning common stock is listed on the New York Stock
Exchange under the symbol "GLW". As of ________, Corning's closing stock price
was $________.
The merger cannot be completed unless the holders of a majority of the
outstanding shares of NetOptix's common stock approve the merger and adopt the
merger agreement. NetOptix has scheduled a special meeting of its stockholders
for _________, 2000 to vote on this matter. If you were a stockholder of record
on _________, you may vote at this meeting. Your vote is very important.
Whether or not you plan to attend the meeting, please take the time to
vote by completing and mailing the enclosed proxy card to us. If you sign, date
and mail your proxy card without indicating how you want to vote, your proxy
will be counted as a vote in favor of the merger.
THIS PROXY STATEMENT/PROSPECTUS CONTAINS ANSWERS TO FREQUENTLY ASKED
QUESTIONS AND A SUMMARY DESCRIPTION OF THE MERGER (BEGINNING ON PAGE 1),
FOLLOWED BY A MORE DETAILED DISCUSSION OF THE MERGER AND OTHER RELATED MATTERS.
YOU SHOULD ALSO CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS RELATING TO
THE MERGER" COMMENCING ON PAGE __ OF THE ENCLOSED PROXY STATEMENT/PROSPECTUS. WE
URGE YOU TO REVIEW CAREFULLY THE ENTIRE PROXY STATEMENT/PROSPECTUS.
Sincerely,
Ralf T. Faber Gerhard R. Andlinger
President Chairman and Chief Executive Officer
NetOptix Corporation NetOptix Corporation
YOUR VOTE IS IMPORTANT.
PLEASE CAST YOUR VOTE BY
COMPLETING, SIGNING, DATING AND RETURNING YOUR
PROXY IN THE ENCLOSED ENVELOPE.
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Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved the merger described in the proxy
statement/prospectus or the Corning common stock to be issued in connection with
the merger, or determined if the proxy statement/prospectus is accurate or
adequate. Any representation to the contrary is a criminal offense.
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THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS IS DATED ________ ___, 2000,
AND IS FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT ________ __,2000.
We will amend and complete the information in this prospectus/proxy statement.
This prospectus/proxy statement is not an offer to sell these securities or our
solicitation of your offer to buy these securities, nor will we sell these
securities or accept your offer to buy them, in any jurisdiction where that
would not be permitted or legal prior to registration or qualification in that
jurisdiction.
<PAGE>
NETOPTIX CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ____________ __, 2000
To the Stockholders of NetOptix Corporation:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of
NetOptix Corporation has been called by the Board of Directors of NetOptix and
will be held at ______________________ on ___________, ________ __, 2000, at
[9:00 a.m.], local time for the following purposes:
1. To consider and vote upon a proposal to approve a merger of CI
Subsidiary, Inc., a wholly-owned subsidiary of Corning, with and into
NetOptix and to adopt the Agreement and Plan of Merger, dated as of
February 13, 2000, among Corning Incorporated, CI Subsidiary, Inc. and
NetOptix Corporation. The merger agreement provides, among other
things, for the merger of CI Subsidiary, Inc. with and into NetOptix,
with NetOptix surviving the merger as a wholly-owned subsidiary of
Corning.
2. To vote upon other matters as may properly come before the special
meeting or any adjournment or postponement of such special meeting.
NetOptix has fixed the close of business on ___________ ___, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the special meeting or any adjournment or postponement of such
meeting. Only holders of record of shares of NetOptix common stock at the close
of business on the record date are entitled to vote at the special meeting. A
list of stockholders entitled to vote will be available for inspection at the
offices of NetOptix, located at Sturbridge Business Park, Sturbridge,
Massachusetts 01566, for a period of ten days prior to the special meeting.
Your Board of Directors recommends that you vote to approve the merger
and adopt the merger agreement, which is described in detail in the accompanying
Proxy Statement/Prospectus.
You can ensure that your shares of NetOptix common stock are voted at
the special meeting by signing and dating the enclosed proxy and returning it in
the postage pre-paid envelope provided. Sending in a signed proxy will not
affect your right to attend the special meeting and vote in person. You may
revoke your proxy at any time before it is voted by (1) giving written notice to
the secretary of NetOptix at Sturbridge Business Park, Sturbridge, Massachusetts
01566, (2) signing and returning a later dated proxy, or (3) voting in person at
the special meeting. All stockholders are cordially invited to attend the
special meeting in person.
WHETHER OR NOT YOU EXPECT TO ATTEND, WE URGE YOU TO SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE POSTAGE PRE-PAID ENVELOPE PROVIDED.
By Order of the Board of Directors,
Stephen A. Magida
Secretary
Sturbridge, Massachusetts
________ __, 2000
<PAGE>
TABLE OF CONTENTS
Page
QUESTIONS AND ANSWERS ABOUT THE MERGER.......................................iv
SUMMARY.......................................................................1
RISK FACTORS RELATING TO THE MERGER..........................................20
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS...................21
THE SPECIAL MEETING..........................................................22
DATE, TIME AND PLACE......................................................22
PURPOSES OF THE SPECIAL MEETING...........................................22
RECORD DATE...............................................................22
REQUIRED VOTES............................................................22
PROXIES, VOTING AND REVOCATION............................................23
SOLICITATION OF PROXIES...................................................23
THE MERGER...................................................................24
BACKGROUND OF THE MERGER..................................................24
REASONS FOR THE MERGER; RECOMMENDATION OF THE NETOPTIX
BOARD OF DIRECTORS........................................................26
OPINION OF SALOMON SMITH BARNEY INC..........................................27
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER............................37
CERTAIN COMPENSATION ARRANGEMENTS............................................40
SEVERANCE AGREEMENTS......................................................40
EMPLOYMENT AGREEMENT......................................................40
EQUITY BASED AWARDS..........................................................40
OPTIONS...................................................................40
DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION OF
NETOPTIX DIRECTORS AND OFFICERS............................................42
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.....................................42
-i-
<PAGE>
ACCOUNTING TREATMENT.........................................................44
REGULATORY APPROVALS.........................................................44
RESTRICTIONS ON SALES OF CORNING COMMON STOCK................................44
STOCK EXCHANGE LISTING.......................................................45
NO APPRAISAL RIGHTS..........................................................45
THE MERGER AGREEMENT.........................................................46
CONVERSION OF SECURITIES..................................................46
EXCHANGE OF CERTIFICATES..................................................46
STOCK OPTIONS.............................................................46
ANDLINGER CAPITAL WARRANT.................................................46
CONDITIONS TO CLOSING.....................................................47
REPRESENTATIONS AND WARRANTIES OF CORNING AND NETOPTIX....................47
CONDUCT OF BUSINESS PRIOR TO THE CLOSING..................................49
NO SOLICITATION PROVISION.................................................50
MUTUAL COVENANTS OF CORNING AND NETOPTIX..................................51
TERMINATION AND TERMINATION FEES..........................................51
EXPENSES..................................................................53
UNAUDITED PRO FORMA CONDENSED COMBINED SUPPLEMENTAL FINANCIAL
INFORMATION ................................................................54
UNAUDITED PRO FORMA COMBINED BALANCE SHEET................................55
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME.........................56
THE COMPANIES ...............................................................58
CORNING...................................................................58
BUSINESS..................................................................58
MANAGEMENT AND ADDITIONAL INFORMATION.....................................59
NETOPTIX..................................................................59
BUSINESS..................................................................59
-ii-
<PAGE>
MANAGEMENT AND ADDITIONAL INFORMATION.....................................60
DESCRIPTION OF CORNING CAPITAL STOCK.........................................61
AUTHORIZED CAPITAL STOCK..................................................61
COMMON STOCK..............................................................61
PREFERRED STOCK...........................................................61
RIGHTS AGREEMENT..........................................................62
INDEMNIFICATION AND LIABILITY OF DIRECTORS AND OFFICERS...................62
TRANSFER AGENT AND REGISTRAR..............................................62
COMPARISON OF STOCKHOLDER RIGHTS.............................................62
NUMBER, CLASSIFICATION AND REMOVAL OF DIRECTORS...........................63
ADVANCE NOTICE OF STOCKHOLDER PROPOSALS...................................63
RIGHT TO CALL SPECIAL MEETINGS............................................64
SHAREHOLDER ACTION BY WRITTEN CONSENT.....................................64
TRANSACTIONS WITH INTERESTED SHAREHOLDERS.................................64
AMENDMENT OF CHARTER AND BYLAWS...........................................65
LEGAL MATTERS................................................................65
EXPERTS......................................................................65
WHERE YOU CAN FIND MORE INFORMATION..........................................66
-iii-
<PAGE>
Annexes
Annex A Agreement and Plan of Merger
Annex B Opinion of Salomon Smith Barney Inc.
Annex C Stockholder Voting Agreement and Irrevocable Proxy
-iv-
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
The Board of Directors of NetOptix Corporation has unanimously approved
a merger in which Corning Incorporated will acquire NetOptix. The following
questions and answers provide an overview of certain important facts in
connection with the proposed transaction. You should read this entire proxy
statement/prospectus and the other materials referred to before determining how
to vote at the special meeting of NetOptix stockholders on June __, 2000.
Q: WHY ARE CORNING AND NETOPTIX PROPOSING TO MERGE?
A: The combination of the two companies and their complementary businesses
serving the telecommunications industry will create a company we believe is
uniquely qualified to capitalize on new opportunities domestically and
around the world.
Q: WHAT WILL HAPPEN IN THE MERGER?
A: NetOptix will become a direct subsidiary of Corning by the merger of CI
Subsidiary, Inc., a wholly-owned subsidiary of Corning,
into NetOptix.
Q: WHAT WILL NETOPTIX STOCKHOLDERS RECEIVE?
A: NetOptix stockholders will be entitled to receive 0.90 of a share of
Corning common stock in exchange for each of their shares of NetOptix
common stock. Corning will not issue fractional shares. Instead, you will
receive a cash payment equal to the market value of the fractional share.
For example:
If you currently own 1,000 shares of NetOptix common stock, then after the
merger you will be entitled to receive 900 shares of Corning common stock.
If you currently own 175 shares of NetOptix common stock, then after the
merger you will be entitled to receive 157 shares of Corning common stock
and a check for the market value of the .50 fractional share of Corning
common stock.
On _________, 2000 the closing price per share of Corning common stock on
the NYSE was $_____.__ and of NetOptix common stock on the NASDAQ was
$____.__.
Q: AS A STOCKHOLDER, HOW WILL THE MERGER AFFECT ME?
A: After the merger, you will own shares of Corning, a company that will
then own NetOptix as well as Corning's ongoing businesses. Holders of
NetOptix common stock will receive Corning common stock in exchange for
their NetOptix common stock.
Q: WHAT AM I BEING ASKED TO VOTE UPON?
A: You are being asked to vote to approve the merger and to adopt the merger
agreement.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information contained in
this proxy statement/prospectus, indicate in the enclosed proxy card how
you want to vote, and sign and submit it in the enclosed return envelope as
soon as possible so that your shares may be represented at the special
meeting. All proxy cards received prior to the special meeting will be
voted at the special meeting. If you sign and send in your proxy and do not
indicate how you want to vote, we will count your proxy as a vote in favor
of the merger and for adoption of the merger agreement. If you do not vote,
or if you abstain, it will have the effect of a vote against the merger.
-v-
<PAGE>
THE NETOPTIX BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING IN FAVOR OF
THE PROPOSED MERGER.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?
A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do this in one of three ways. First, you can send
a written notice stating that you would like to revoke your proxy. Second,
you can complete and submit a new proxy. If you choose either of these two
methods, you must submit your notice of revocation or your new proxy to the
Secretary of NetOptix at the address set forth below. Third, you can attend
the special meeting and vote in person.
Q: IF MY NETOPTIX SHARES ARE HELD IN THE NAME OF MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A: Your broker will vote your NetOptix shares only if you provide instructions
on how to vote. You should instruct your broker to vote your shares
according to your directions. Without instructions, your shares will not be
voted by your broker which will have the effect of a vote against the
merger. You should follow the directions provided by your broker.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. Corning has appointed Harris Trust & Savings Bank as exchange agent to
coordinate the exchange of your shares of NetOptix common stock for shares
of Corning common stock. After the merger is completed, you will receive
written instructions for exchanging your stock certificates. Please do not
send in your stock certificates with your proxy.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working to complete the merger as quickly as possible. In addition
to NetOptix's shareholder approval, we must also obtain regulatory
approvals and satisfy other customary requirements set forth in the merger
agreement. We hope to complete the merger shortly after the special
meeting.
Q: WHAT ARE MY TAX CONSEQUENCES AS A RESULT OF THE MERGER?
A. The exchange of NetOptix common stock for Corning common stock will be tax
free for federal income tax purposes. However, you will have to pay taxes
on any cash received for fractional shares. We recommend that you read the
more detailed explanation of the U.S. federal income tax consequences on
pages __ through ___ carefully.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the merger or if you need additional copies
of this proxy statement/prospectus or the enclosed proxy, you should
contact:
NetOptix Corporation
6401 Congress Avenue
Boca Raton, Florida 33487
Attention: Thomas J. Mathews
Telephone: (561) 994-0202
-vi-
<PAGE>
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and does not contain all of the information that is
important to you. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should carefully read this
entire proxy statement/prospectus and the other documents to which we have
referred you. See "Where You Can Find More Information" on page __.
We have included page references parenthetically to direct you to a
more complete description of the topics presented in this summary. (As used in
this proxy statement/prospectus, "we" and "our" refers to Corning and NetOptix.)
THE COMPANIES
NETOPTIX CORPORATION
Sturbridge Business Park
Sturbridge, Massachusetts 01566
Attention:
Telephone: (508) 347-9191
NetOptix was incorporated in Delaware in 1973 as the successor to a
business which was founded in 1959. NetOptix was named Galileo Corporation until
September 1999, and prior to that was named Galileo Electro Optics from its
incorporation to September 1996.
NetOptix:
- designs, manufactures and markets a broad range of optical components
and systems, including:
- optical filters;
- optical lens coatings for medical devices;
- laser systems; and
- infrared thermal imaging devices and optical analytic
instruments;
- has one of the world's largest and most technically advanced diamond
point turning facilities, which manufactures highly sophisticated optical
components and systems for industrial lasers and semiconductor
instrumentation; and
- beginning in 1999, developed and readied for commercial production
optical filters for use in Dense Wavelength Division Multiplexing (DWDM)
components of fiberoptic networks serving the telecommunications industry.
CORNING INCORPORATED
One Riverfront Plaza
Corning, New York 14831
Attention: Secretary
Telephone: (607) 974-9000
Corning is a global, technology based corporation that operates in
three broadly-based operating business segments:
<PAGE>
- TELECOMMUNICATIONS: this segment produces optical fiber and cable,
optical hardware and equipment and photonic components for the worldwide
telecommunications industry;
- ADVANCED MATERIALS: this segment manufactures specialized products
with unique properties for customer applications utilizing glass ceramic and
polymer technologies. Businesses within this segment include environmental
products, science products, semiconductor materials and optical and lighting
products; and
- INFORMATION DISPLAY: this segment manufactures glass panels and
funnels for television and computer displays, projection video lens assemblies
and liquid-crystal display for flat panel displays.
CI SUBSIDIARY, INC.
c/o Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
CI Subsidiary, Inc. is a wholly-owned subsidiary of Corning, formed
under the laws of the State of Delaware solely for purposes of acting as a party
to the merger. CI Subsidiary, Inc. will merge with and into NetOptix and
NetOptix will be the surviving corporation.
REASONS FOR THE MERGER (PAGES __ THROUGH __)
The NetOptix board of directors believes that the merger is in the best
interests of NetOptix and its stockholders. In reaching its decision to approve
the merger the NetOptix board of directors considered a number of factors,
including the following:
- - the effect of the merger on implementing and accelerating NetOptix's basic
long-term growth strategy in light of the current economic, financial and
business environment, the limited size of NetOptix, its limited financial
resources and customer base and its dependence on a single line of
business;
- - NetOptix's financial condition, results of operations, business and
prospects compared to those of the combined companies the price and other
terms of the merger agreement, as well as other information concerning the
merger, including the structure of the merger;
- - Corning's strong research and development capabilities, and its existing
commitment to the optical filter market, which would significantly
strengthen NetOptix's existing technology and product development efforts;
and Corning's financial resources, customer relationships and commitment to
drive NetOptix's business forward;
- - the alternatives available to NetOptix in lieu of the transaction,
including acquiring other companies or seeking joint venture partners and
remaining as a stand-alone entity;
- - the benefits of the merger, including its view that the combined company
might be able to capitalize on operational and competitive elements that
may not be available otherwise to NetOptix on a stand-alone basis;
- - the opportunity for you to become holders of Corning common stock, which
the NetOptix board of directors believed would perform at least as well as
NetOptix common stock over the long term and would have greater liquidity
and lower volatility than NetOptix common stock;
-2-
<PAGE>
- - the opinion of Salomon Smith Barney Inc. that as of date of that opinion
the exchange ratio pursuant to the merger agreement was fair from a
financial point of view to holders of NetOptix common stock;
- - Corning's reputation and policies with respect to its employees, and the
impact on NetOptix's employees of becoming employees of Corning;
- - economies of scale because the telecommunications industry, particularly
the fiberoptics transmission materials industry, is currently characterized
by intense competition and large-scale consolidation; and
- - the effect on NetOptix stockholders of NetOptix continuing as a stand-alone
entity compared to the effect of NetOptix combining with Corning, in light
of the factors summarized above.
To review the reasons for the merger in greater detail, see pages __
through __.
RECOMMENDATION OF THE NETOPTIX BOARD OF DIRECTORS (PAGES __ THROUGH __)
The NetOptix board of directors has unanimously approved the merger
agreement and the transactions contemplated thereby, including the merger, and
unanimously recommends that you vote in favor of the approval and adoption of
the merger agreement.
PURPOSES OF THE SPECIAL MEETING (PAGE ___)
The purposes of the special meeting are to consider and vote upon:
- a proposal to approve the merger and adopt the merger agreement; and
- such other business as may properly be brought before the special
meeting.
DATE, TIME AND PLACE (PAGE __)
The special meeting of the NetOptix stockholders will be held on
_______, 2000 at ______ Eastern Standard Time at _____________.
RECORD DATE; REQUIRED VOTES (PAGES __ AND __)
The close of business on _________, 2000 is the record date for the
special meeting. Only NetOptix stockholders on the record date are entitled to
receive notice and vote at the special meeting. On the record date, there were
________ shares of NetOptix common stock outstanding. Each share of NetOptix
common stock will be entitled to one vote on each matter to be acted upon at the
special meeting.
A majority vote of the shares of NetOptix common stock outstanding and
entitled to vote on the record date is required to approve the merger and adopt
the merger agreement. Non-voting shares, including abstentions, and shares held
by brokers who are not given authority to vote in favor of the merger ("broker
non-votes") will have the effect of a vote against the merger agreement. On the
record date, NetOptix's executive officers and directors collectively
beneficially owned an aggregate of 4,019,117 shares of NetOptix common stock or
approximately 35.05% of the outstanding common stock. In addition, a total
of 3,978,117 shares of NetOptix common stock (5,003,117 shares if the Andlinger
Capital XIII LLC warrants and the vested portion of the ANC Management options
are exercised prior to the special meeting) is subject to the stockholder voting
-3-
<PAGE>
agreement and irrevocable proxy described under "Interests of Directors and
Officers in the Merger" and attached as Annex C to this prospectus/proxy
statement.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER (PAGES __ THROUGH __)
In determining how to vote at the special meeting, you should be aware
that certain officers and directors of NetOptix may have interests in the merger
that are different from your interests as holders of common stock. These include
the following:
- A portion of the outstanding unvested stock options held by
NetOptix officers and directors may, at NetOptix's option and with
the holder's consent, become fully vested and exercisable prior to
the effective time of the merger. As of March 16, 2000, options to
purchase 122,500 shares of NetOptix common stock held by executive
officers of NetOptix had become fully vested and exercisable.
- Options to purchase 100,000 shares of NetOptix common stock held
by ANC Management Corp., a corporation 100% of which is owned by
Gerhard R. Andlinger, the Chairman of the Board and Chief
Executive Officer of NetOptix as well as its principal
stockholder, will be amended to remove conditions to the vesting
of such options, other than the passage of time, and to eliminate
their acceleration as of the effective time of the merger.
- NetOptix may, prior to the closing, amend options to purchase an
aggregate of 150,000 shares of NetOptix common stock granted to
members of the NetOptix board of directors in order to continue to
permit exercise and vesting following the effective time of the
merger and to permit their transfer for tax or estate planning
purposes.
- NetOptix may, prior to the closing, amend options to purchase an
aggregate of 381,450 shares of NetOptix common stock granted to
employees of NetOptix (of which 140,000 were granted to NetOptix
executive officers) in order to immediately vest these options if
the employee is terminated without cause or resigns for good
reason, in each case prior to January 27, 2003.
- NetOptix may, prior to the closing, amend the terms of the
Non-Qualified Stock Option Agreement in connection with the ANC
Management Options to permit the transfer of these options for
estate or tax planning purposes.
- Andlinger Capital XIII LLC, Mr. Andlinger, Stephen A. Magida, a
director of NetOptix, acting in his capacity as manager of
Andlinger Capital XIII LLC and as trustee of the Gerhard R.
Andlinger Intangible Asset Management Trust dated as of December
29, 1997, and John F. Blais, Jr. entered into a Stockholder
Voting Agreement and Irrevocable Proxy, dated as of February 13,
2000. A total of 3,978,117 shares (5,003,117 shares if the
Andlinger Capital XIII LLC warrants and the vested portion of the
ANC Management options are exercised prior to the special
meeting) of NetOptix common stock is subject to this agreement
representing 34.70 percent of the total number of shares of
NetOptix common stock outstanding as of the record date. Under
this agreement each stockholder:
- agreed to vote the shares of NetOptix beneficially owned by
him or it in favor of the merger and to approve the merger
agreement;
- granted Corning an irrevocable proxy to vote his or its shares
for the merger and against any proposal in conflict with the
merger; and
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- agreed not to solicit any proposal from any third person which
would interfere with the merger with Corning.
- Andlinger Capital XIII LLC holds a warrant to purchase 1,000,000
shares of NetOptix common stock for a price of $1.50 per share
which will, as a result of the merger, and unless exercised prior
thereto, be converted into a warrant to acquire 900,000 shares of
Corning common stock at an exercise price equal to $1.66 ($1.50
divided by the exchange ratio of 0.90).
- On February 13, 2000, Corning entered into a letter agreement with
Ralf T. Faber, the President of NetOptix, to clarify the terms of
his continued employment after the closing date of the merger.
Under the letter agreement, Mr. Faber has agreed to serve as the
President and CEO of Corning NetOptix, Inc. the proposed new name
of NetOptix, for a term of three years.
- Corning will indemnify and maintain directors and officers
liability insurance for NetOptix's directors and officers for six
years after the effective time of the merger.
- The NetOptix board of directors intends to adopt a resolution
exempting the disposition to Corning of NetOptix securities by
NetOptix directors and executive officers from liability under the
federal securities laws for short-swing trading.
OPINION OF SALOMON SMITH BARNEY INC. (PAGES __ THROUGH __)
Salomon Smith Barney Inc., as financial advisor to NetOptix, delivered
its written opinion, dated February 13, 2000, to the NetOptix board of directors
that, as of such date, the exchange ratio was fair to the stockholders of
NetOptix common stock from a financial point of view. The full text of the
opinion of Salomon Smith Barney Inc., dated February 13, 2000, is attached as
Annex B and should be read carefully in its entirety to understand the
procedures followed, assumptions made, matters considered and limitations on the
review undertaken by Salomon Smith Barney Inc. in providing its opinion. The
Salomon Smith Barney Inc. opinion is directed to the NetOptix board of directors
and does not constitute a recommendation to any NetOptix stockholder as to how
such stockholder should vote on the proposed merger.
THE MERGER AGREEMENT
CONVERSION OF SECURITIES (PAGE __)
In the merger, CI Subsidiary will be merged with and into NetOptix.
NetOptix will be the surviving corporation and will continue as a wholly-owned
subsidiary of Corning. As a result of the merger, you will be entitled to
receive 0.90 of a share of Corning common stock for each share of NetOptix
common stock that you own. You will not receive fractional shares of Corning
common stock. Instead, you will receive a cash payment for any fractional shares
you might otherwise have been entitled to receive, based on the market value of
the Corning common stock.
Each NetOptix stock option outstanding at the effective time of the
merger will be assumed by Corning and will become an option to purchase that
number of shares of Corning common stock equal to the product of:
- the number of shares of NetOptix common stock issuable upon
exercise of the stock option; and
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- 0.90.
The exercise price per share of each converted stock option will be
equal to the result of:
- The exercise price per share of NetOptix common stock under the
original stock option; divided by
- 0.90.
In the case of any NetOptix stock option to which Section 422 of the
Internal Revenue Code of 1986, as amended, applies, the exercise price and the
number of shares purchasable pursuant to such NetOptix stock option will be
determined in order to comply with Section 424(h) of the Internal Revenue Code.
CONDITIONS TO CLOSING (PAGE ___)
Corning's and NetOptix's obligations to complete the merger are subject
to the satisfaction or waiver of several conditions, including the following:
- holders of a majority of the outstanding shares of NetOptix's
common stock approve the adoption of the merger agreement;
- the shares of Corning common stock to be issued in the merger and
reserved for issuance upon exercise of NetOptix stock options and
warrant are authorized for listing on the New York Stock Exchange,
subject to official notice of issuance;
- no court order prohibits the merger or makes the merger illegal;
- Corning and NetOptix obtain all regulatory approvals and third
party consents necessary to complete the merger;
- each of Corning and NetOptix has certified to the other that its
representations and warranties are true and correct except as
would not have a material adverse effect and that its material
obligations under the merger agreement have been complied with in
all material respects; and
- each of Corning and NetOptix has obtained an opinion from tax
counsel that the merger will qualify as a tax-free reorganization.
NO SOLICITATION PROVISION (PAGE ___)
NetOptix has agreed that it will not solicit or encourage the
initiation of any proposals regarding alternative acquisition transactions with
third parties. If NetOptix receives such a proposal, it must promptly notify
Corning. The NetOptix board of directors may respond to certain unsolicited
written proposals regarding alternative acquisition transactions and may
recommend such transaction proposals to NetOptix's stockholders only under
limited circumstances.
Under limited circumstances, NetOptix may be required to pay Corning
the termination fee described below. The no-solicitation and the termination fee
provisions of the merger agreement may have the effect of discouraging persons
who might be interested in entering into a business combination with NetOptix
from proposing a business combination transaction. This may be so even where the
consideration payable to NetOptix stockholders in the other transaction would
exceed the consideration payable in the merger.
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In addition, under the stockholder voting agreement and irrevocable
proxy, the principal stockholders of NetOptix: Andlinger Capital XIII LLC, Mr.
Andlinger, Mr. Magida, acting in his capacity as manager of Andlinger Capital
and as trustee of a trust for Mr. Andlinger and Mr. Blais have agreed to vote
their shares in favor of the merger and not to solicit other offers, among other
things. This agreement also has the effect of discouraging other persons who may
be interested in acquiring NetOptix.
TERMINATION AND TERMINATION FEES (PAGES ___ THROUGH ___)
Corning and NetOptix can agree to terminate the merger agreement
without completing the merger and either company can terminate the merger
agreement if any of the following occurs:
- the other party materially breaches the merger agreement and does
not cure such breach in all material respects;
- the merger is not completed by July 31, 2000 so long as the
terminating party is not otherwise in material breach of the
merger agreement;
- a court order permanently prohibits the merger; or
- NetOptix's stockholders do not approve the merger, in which case,
under certain conditions, NetOptix must pay the termination fee
described below.
NetOptix also may terminate the merger agreement if the following
occurs, in which case, under certain conditions, NetOptix must pay the
termination fee described below:
- if NetOptix receives a superior acquisition proposal, before the
special meeting, from a potential acquirer that the NetOptix board
of directors considers to be a more favorable competing offer;
- NetOptix provides Corning with sufficient notice of its decision
to terminate as required by the merger agreement;
- Corning does not make an offer to NetOptix that the NetOptix board
of directors considers to be at least as favorable as the
competing offer; and
- NetOptix pays the termination fee described below.
Corning also may terminate the merger agreement and, under certain
conditions, NetOptix must pay the termination fee described below, if the
NetOptix board of directors:
- withdraws or modifies its approval of the merger;
- enters into negotiations with any person concerning an acquisition
proposal in violation of the merger agreement; or
- approves or recommends an acquisition proposal as materially more
favorable to the stockholders of NetOptix.
In these cases, NetOptix must pay the termination fee described below
unless:
- NetOptix has not received a competing offer or engaged in
discussions with or provided confidential information to any
person in respect of any acquisition proposal; and
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- the NetOptix board of directors determines in good faith that it
is obligated by its fiduciary duties to withhold or adversely
change its recommendation of Corning's offer.
As noted above, under certain circumstances, if the merger agreement is
terminated, NetOptix may be required to pay Corning a termination fee of up to
$50 million. One-half of the termination fee, $25 million, is due and must be
paid by NetOptix within two days of notice of termination of the merger
agreement. The remaining one-half of the termination fee must be paid when
NetOptix closes any acquisition transaction entered into within twelve months
after termination of the merger agreement.
EXPENSES (PAGE ___)
All costs and expenses will be paid by the party incurring them, except
that in the event the merger agreement is terminated in accordance with its
terms, Corning will pay the costs and expenses of filing and printing this proxy
statement/prospectus and of filings with certain governmental authorities in
connection with the merger.
REGULATORY APPROVALS (PAGES ___ THROUGH ___)
On April __, 2000, the required waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act relating to the merger will
terminate. The Antitrust Division of the Department of Justice and the Federal
Trade Commission continue to have the authority to challenge the merger on
antitrust grounds before and after the merger is completed.
NetOptix and Corning are required to make filings with, or obtain
approvals from, some other international regulatory authorities in connection
with the merger. Corning and NetOptix expect that none of these regulatory
authorities would prohibit consummation of the merger. However, we cannot assure
you that the required consents, approvals and authorizations will be obtained.
NO APPRAISAL RIGHTS (PAGE __)
Under applicable Delaware law, you do not have any right to an
appraisal of the value of your shares in connection with the merger since the
shares of NetOptix common stock are traded on NASDAQ.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES (PAGES ___ THROUGH ___)
Corning's tax counsel, Nixon Peabody LLP, and NetOptix's tax counsel,
Edwards & Angell LLP, will each provide an opinion that the merger qualifies as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. NetOptix stockholders will not be taxed as a result of the exchange of
NetOptix common stock for Corning common stock in the merger, unless and only to
the extent they receive a payment for fractional shares. Receipt of the Nixon
Peabody LLP opinion is a condition to the closing of the merger.
THE TAX CONSEQUENCES OF THE MERGER TO YOU WILL DEPEND ON THE FACTS OF
YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISORS FOR A FULL
UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER TO YOU.
ACCOUNTING TREATMENT (PAGE ___)
Corning will account for the merger under the purchase method of
accounting in accordance with generally accepted accounting principles. The
purchase price will be allocated based on the fair value of the assets acquired
and the liabilities assumed. Any excess of the purchase price will be allocated
to
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goodwill and any acquired in-process research and development will be charged
to expense in the period in which the transaction closes.
RISK FACTORS RELATING TO THE MERGER (PAGE ___)
You should consider the following risk factors, among others, in
deciding how to vote at the special meeting:
- the consideration is a fixed exchange ratio, which will not be
adjusted as a result of any increase or decrease in the price
of either Corning or NetOptix common stock; and
- integrating Corning's and NetOptix's photonics business
operations may be difficult.
EXCHANGE OF CERTIFICATES (PAGE ___)
After the merger, Corning or its agent will mail a letter to you with
instructions for exchanging your stock certificates for certificates
representing shares of Corning common stock and a cash payment in lieu of
fractional shares, if any. YOU SHOULD NOT SEND ANY STOCK CERTIFICATES AT THIS
TIME. The letter of transmittal which you receive will contain instructions as
to when and where to send your NetOptix stock certificates.
SELECTED FINANCIAL INFORMATION
SELECTED SUPPLEMENTAL FINANCIAL INFORMATION OF CORNING
Corning is providing the following information to aid your analysis of
the financial aspects of the merger. The following tables contain Corning's
consolidated supplemental financial data for the periods presented. The
financial data for each of the five years ended December 31, 1999 have been
derived from Corning's audited supplemental financial statements. The
supplemental financial statements give retroactive effect to the acquisition by
Corning of Oak Industries, Inc. on January 28, 2000, which has been accounted
for as a pooling of interests. The financial information included in this filing
will become the historical consolidated financial statements of Corning after
financial statements covering the date of consummation of the business
combination are issued. This information is only a summary. You should read it
along with Corning's historical financial statements and related notes and the
section titled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in Corning's annual reports, quarterly reports
and other information on file with the Securities and Exchange Commission and
incorporated by reference in this proxy statement/prospectus. See "Where You Can
Find More Information" on pages ___ through ___.
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<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------
(In millions, except per share amounts)
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net sales $ 4,741.1 $ 3,831.9 $3,831.2 $3,327.5 $2,900.1
Non-operating gains 30.0 (a) 39.7 (e)(f) 21.5(h)
Gross margin 1,810.8 1,471.4 1,606.9 1,321.5 1,137.1
Research, development and engineering expenses 378.2 307.4 262.9 200.1 177.3
Provision for impairment and restructuring 1.4 (b)(c) 84.6 (c) 5.9 26.5(l)
Income from continuing operations before 674.9 482.3 665.8 519.1 421.9
tax on income
Minority interest in earnings of subsidiaries 66.8 61.6 77.4 59.8 75.2
Equity in earnings (losses)
of associated companies:
Other than Dow Corning Corporation 112.3 97.3 79.2 83.8 68.2
Dow Corning Corporation (348.0)(l)
Income (loss) from continuing operations 511.0(a)(b)(c) 354.8(e)(c)(f) 430.6 355.2 (130.3)(l)(m)
Income (loss) from discontinued operations,
net of income taxes 4.8 (d) 66.5 (g) 30.9 (136.9)(i)(j) 29.0
Extraordinary charge, net of income taxes
(0.9)(k) (1.6)(k)
NET INCOME (LOSS) $ 515.8 $ 421.3 $ 461.5 $ 217.4 $ (102.9)
- ---------------------------------------------------------------------------------------------------------------------
BASIC EARNINGS PER SHARE
Continuing operations $ 2.00 $ 1.45 $ 1.77 $ 1.46 $ (0.55)
Discontinued operations 0.02 0.27 0.12 (0.57) 0.11
Net income (loss) $ 2.02 $ 1.72 $ 1.89 $ 0.89 $ (0.44)
DILUTED EARNINGS PER SHARE
Continuing operations $ 1.95 $ 1.42 $ 1.71 $ 1.44 $ (0.49)
Discontinued operations 0.02 0.25 0.11 (0.54) 0.11
Net income (loss) $ 1.97 $ 1.67 $ 1.82 $ 0.90 $ (0.38)
Book value per share 9.47 6.93 5.80 4.64 9.09
Dividends declared per share $ 0.72 $ 0.72 $ 0.72 $ 0.72 $ 0.72
FINANCIAL POSITION:
Cash and cash equivalents $ 280.4 $ 59.2 $ 105.6 $ 221.2 $ 193.5
Working capital 430.2 347.7 326.2 524.2 349.7
Total assets 6,526.0 5,464.3 5,079.7 4,557.7 5,647.0
Loans payable beyond one year (n) 1,490.4 1,217.8 1,277.3 1,333.3 1,417.6
Minority interest in
subsidiary companies 284.8 346.1 354.3 320.8 305.8
Convertible preferred securities
of subsidiary 365.2 365.3 365.1 364.7
Convertible preferred stock 13.5 17.9 19.8 22.2 23.9
Common shareholders' equity (o) 2,462.7 1,706.6 1,428.7 1,132.8 2,222.2
======================================================================================================================
</TABLE>
(a) During the third quarter of 1999, Corning sold Republic Wire and Cable, a
manufacturer of elevator cables and a subsidiary of Siecor Corporation,
for approximately $52 million in cash and short-term notes. Corning
recorded a non-operating gain of $30 million ($9.5 million after tax and
minority interest) or $0.04 per share as a result of this transaction.
(b) In the third quarter of 1999, Corning recognized an impairment loss of
$15.5 million pretax ($10.0 million after tax), or $0.04 per share, in
connection with management's decision to sell Quanterra Incorporated. The
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impairment loss reduces Corning's investment in these assets to an amount
equal to management's current estimate of fair value. Disposition of the
business occurred in February 2000.
(c) In the second quarter of 1998, Corning recorded a restructuring charge of
$84.6 million ($49.2 million after tax and minority interests), or $0.19
per share. During the fourth quarter of 1999, Corning determined that the
actual costs of certain benefits included in the retirement incentive
program were less than estimated in the second quarter of 1998 and
released restructuring reserves totaling $14.1 million ($8.6 million
after tax) or $0.03 per share.
(d) During the fourth quarter of 1999, certain indemnification agreements
related to the April 1998 sale of Corning's consumer housewares business
expired. As a result, Corning recognized income from discontinued
operations of $7.8 million ($4.8 million after tax) or $0.02 per share in
the fourth quarter from the release of reserves provided at the date of
the transaction.
(e) In the second quarter of 1998, Molecular Simulations, Inc. (MSI) merged
with Pharmacopeia, Inc., a publicly traded company (NASDAQ: PCOP).
Corning previously owned 35% of MSI and owned approximately 15% of the
combined entity at the time of the merger. Corning realized a gain of
$20.5 million ($13.2 million after tax), or $0.05 per share, from this
transaction.
(f) In the fourth quarter of 1998, Corning recorded a non-operating gain of
$19.2 million ($9.7 million after tax), or $0.04 per share, related to
the divestiture of several small businesses within the science products
division.
(g) On April 1, 1998, Corning completed the recapitalization and sale of a
controlling interest in its consumer housewares business to an affiliate
of Borden, Inc. Corning received cash proceeds of $593 million and
continues to retain a 3% interest in World Kitchen Inc., formerly the
Corning Consumer Products Company. Corning recorded an after-tax gain of
$67.1 million, or $0.26 per share, in the second quarter of 1998. The
$66.5 million net income from discontinued operations includes a $0.6
million loss from operations of the discontinued business through March
31, 1998.
(h) During 1996 Oak Industries, Inc. sold its 49% interest in Video 44 (WSNS
- TV Channel 44) and recorded a pre-tax gain of $20.5 million ($12.7
million after tax), or $0.05 per share. Oak Industries also sold its 45%
interest in O/E/N India Ltd. for a pre-tax gain of $1.0 million ($0.6
million after tax).
(i) On December 31, 1996, Corning distributed all of the shares of Quest
Diagnostics Incorporated and Covance Inc., which collectively comprised
Corning's Health Care Services segment, to its shareholders on a pro rata
basis (the Distribution). Corning recorded a provision for loss on the
Distributions of $176.5 million after tax, or $0.69 per share.
(j) During 1996, Oak Industries, Inc. sold its Nordco Inc. subsidiary for an
after tax gain of $9.4 million. Included in income from discontinued
operations is income related to Nordco of $1.4 million after tax and $2.5
million after tax in 1996 and 1995 respectively.
(k) Oak Industries Inc.'s previously existing $30 million and $200 million
credit agreements were terminated on August 30, 1995 and November 1,
1996, respectively. As a result, Oak Industries recorded non-cash, after
tax charges of $1.6 million and $0.9 million in 1995 and 1996,
respectively, related to the early extinguishment of the former credit
facilities.
(l) In 1995, Corning recognized a restructuring charge from continuing
operations totaling $26.5 million ($16.1 million after tax), as a result
of severance for workforce reductions in corporate staff groups and the
write-off of production equipment caused by the decision to exit the
manufacturing facility for glass-ceramic memory disks.
Corning also recorded an after-tax charge of $365.5 million to fully
reserve its investment in Dow Corning Corporation (a 50%-owned equity
company) as a result of Dow Corning Corporation filing for protection
under Chapter 11 of the United States Bankruptcy Code in May 1995.
Corning recognized equity earnings totaling $17.5 million from Dow
Corning Corporation in the first quarter of 1995.
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Corning discontinued recognition of equity earnings from Dow Corning
Corporation beginning in the second quarter of 1995.
(m) Income from continuing operations included an after tax charge of $80.9
million for purchased in-process research and development related to the
acquisition of Lasertron.
(n) In February of 2000, Corning completed an offering of Euro-denominated
securities which generated net proceeds of $485 million. Corning used a
portion of the proceeds as long-term financing of a piece of the cash
purchase price for the acquisition of Siemens AG's worldwide optical
cable and hardware business and the remaining 50% of its investment in
Siecor Corporation and Siecor GmbH. The purchase price of $1.4 billion
included approximately $120 million of assumed debt and contingent
consideration of $145 million.
(o) Corning closed an equity offering of 14,950,000 shares of its common
stock on January 28, 2000. The transaction generated net proceeds of $2.2
billion of which approximately $1.13 billion was used to fund a portion
of the purchase price for the Siemens acquisition.
SELECTED HISTORICAL FINANCIAL INFORMATION OF NETOPTIX
NetOptix is providing the following information to aid your analysis of
the financial aspects of the merger. NetOptix derived this information from
audited financial statements for the years 1995 through 1999 and unaudited
financial statements for the three months ended December 31, 1998 and 1999. In
the opinion of NetOptix management, this unaudited interim information reflects
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the results of operations and financial condition for the
three months ended December 31, 1998 and 1999. Results for interim periods
should not be considered indicative of results for any other periods or for the
year. This information is only a summary. You should read it along with
NetOptix's historical financial statements and related notes and the section
titled "Management's Discussion and Analysis of Financial Condition and Results
of Operations" contained in NetOptix's annual reports, quarterly reports and
other information on file with the SEC and incorporated by reference in this
proxy statement/prospectus. See "Where You Can Find More Information" on pages
____ through ____.
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<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
DECEMBER 31
------------------------------------------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
------------------------------------------------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales................ $4,695 $3,831 $14,366 $14,774 $12,816 $42,634 $40,753
Income (loss) from
continuing operations(a). 619 (4,533) (11,310) (13,735) (12,378) 5,527 1,399
Income (loss) from
discontinued
operations, net.......... -- 392 (1,567) 1,108 1,194 -- --
Extraordinary gain, net.. -- -- -- -- -- 158 --
Net income (loss)........ 619 (4,141) (12,877) (12,627) (11,184) 5,685 1,399
Earnings (loss) per share
from continuing
operations
Basic............... .05 (.56) (1.19) (1.80) (1.81) 0.81 0.21
Diluted............. .05 (.56) (1.19) (1.80) (1.81) 0.80 0.21
Earnings (loss) per share
from discontinued
operations
Basic............... -- .05 (0.16) 0.15 0.18 -- --
Diluted............. -- .05 (0.16) 0.15 0.18 -- --
Earnings per share from
extraordinary gain
Basic............... -- -- -- -- -- 0.02 --
Diluted............. -- -- -- -- -- 0.02 --
Earnings (loss) per share
Basic............... .05 (.51) (1.35) (1.65) (1.63) 0.83 0.21
Diluted............. .05 (.51) (1.35) (1.65) (1.63) 0.82 0.21
Total assets............. 50,106 51,910 48,365 55,654 42,727 53,064 48,173
Long-term obligations.... 2,345 13,596(b) 1,210 1,008 956 132 716
</TABLE>
- --------------
(a) Results of operations and earnings per share data for fiscal years 1997
through 1999 have been restated to reflect NetOptix's discontinued
operations. Since continuing operations principally reflect the optical
filter business, as it was acquired in January 1998, the periods ended
September 30, 1996 and 1995 were not restated as such information would
not be meaningful. See Note 5, "Discontinued Businesses," to NetOptix's
Consolidated Financial Statements contained in its annual report on Form
10-K for the year ended September 30, 1999 incorporated by reference into
this proxy statement/prospectus.
(b) NetOptix was in violation of certain of its covenants and therefore the
loan balance of $13,596 is classified as a short-term liability at
December 31, 1998.
SELECTED UNAUDITED PRO FORMA COMBINED SUPPLEMENTAL FINANCIAL INFORMATION
The following describes the pro forma effect of the merger on Corning's
unaudited supplemental statements of income information for the year ended
December 31, 1999, and the unaudited supplemental balance sheet information as
of December 31, 1999. You should read this selected information in conjunction
with the "Unaudited Pro Forma Combined Financial Information"
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<PAGE>
and the accompanying notes included elsewhere in this proxy statement/prospectus
and the historical financial information and related notes of Corning and
NetOptix, incorporated by reference in this proxy statement/prospectus. The
unaudited pro forma combined supplemental financial information is provided for
informational purposes only and does not purport to represent what the financial
position and results of operations of the combined company would actually have
been had the merger in fact occurred at the dates indicated. The unaudited pro
forma combined supplemental statement of income information and combined
balance sheet information illustrate the estimated effects of the merger as if
the merger had occurred at January 1, 1999, for the statements of income
information and at December 31, 1999 for the balance sheet information. The
unaudited pro forma combined supplemental statements do not include the impact
of non-recurring charges directly attributable to the merger.
Corning will account for the merger under the purchase method of
accounting in accordance with generally accepted accounting principles. The
purchase price will be allocated based on the fair values of the assets acquired
and the liabilities assumed. Any excess of the purchase price will be allocated
to goodwill and any acquired in-process research and development will be charged
to expense in the period in which the transaction closes. Adjustments have been
made to reclassify the presentation of NetOptix historical financial information
to be consistent with Corning's presentation. However, no adjustments have been
made in the unaudited pro forma combined financial information of Corning and
NetOptix to conform the accounting policies of the combined company as the
nature and amounts of such adjustments are not expected to be significant.
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SELECTED UNAUDITED PRO FORMA COMBINED
SUPPLEMENTAL STATEMENT OF INCOME INFORMATION
YEAR ENDED
DECEMBER 31, 1999
(In millions, except per share
amounts)
Net sales.................................. $ 4,755.5
Income from continuing operations.......... $ 204.2
Basic earnings per share from
continuing operations................. $ 0.77
Diluted earning per share from
continuing operations................. $ 0.75
Book value per share....................... $ 16.73
SELECTED UNAUDITED PRO FORMA COMBINED
SUPPLEMENTAL BALANCE SHEET INFORMATION
DECEMBER 31, 1999
(In millions)
Working capital $ 436.2
Total assets $ 8,630.9
Loans payable beyond one year $ 1,491.0
Convertible preferred stock $ 13.5
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COMPARATIVE PER SHARE INFORMATION
The following table summarizes on a per share basis certain (1)
historical financial information and (2) unaudited pro forma and equivalent pro
forma financial information.
The unaudited pro forma supplemental financial information illustrates
the estimated effects of the merger as if the merger had occurred at January 1,
1999 for the statement of income information and at December 31, 1999 for the
balance sheet information. The unaudited pro forma financial information has
been prepared based on the purchase method of accounting and does not include
the impact of non-recurring charges directly attributable to the merger. The
basic unaudited pro forma per share information for Corning is based on the
weighted average number of outstanding shares of Corning common stock adjusted
to include the number of shares of Corning common stock that would be issued in
the merger in exchange for the outstanding NetOptix common stock, based on the
number of shares of NetOptix common stock outstanding for the period reported.
The diluted unaudited pro forma per share information for Corning is based on
the weighted average number of outstanding shares of Corning common stock
adjusted to include (1) the dilutive effect of Corning employee stock options
and (2) the number of shares of Corning common stock that would be issued in the
merger. The effect of NetOptix employee stock options was not dilutive.
The unaudited equivalent pro forma per share information for NetOptix
is based on the unaudited pro forma amounts per share for Corning multiplied by
the exchange ratio of 0.90. The information set forth below is qualified in its
entirety by reference to, and should be read in conjunction with, the historical
consolidated financial information of Corning and NetOptix incorporated by
reference in this proxy statement/prospectus and the "Unaudited Pro Forma
Combined Financial Information" included elsewhere in this proxy
statement/prospectus.
-16-
<PAGE>
YEAR ENDED
DECEMBER 31, 1999
Corning:
Income per share from continuing operations:
Basic:
Historical............................... $ 2.00
Pro forma................................ 0.77
Diluted:
Historical............................... $ 1.95
Pro forma................................ 0.75
Book value per share:
Historical............................... $ 9.47
Pro forma................................ 16.73
Cash dividends declared per share:
Historical............................... $ 0.72
Pro forma................................ 0.72
NetOptix:
Income per share from continuing operations:
Basic:
Historical............................... $ (1.19)
Equivalent pro forma..................... 0.69
Diluted:
Historical............................... $ (1.19)
Equivalent pro forma..................... 0.68
Book value per share:
Historical............................... $ 2.56
Equivalent pro forma..................... 15.06
Cash dividends declared per share:
Historical...............................
Equivalent pro forma..................... 0.65
-17-
<PAGE>
MARKET PRICE AND DIVIDEND INFORMATION
Corning common stock is listed on the New York Stock Exchange under the
ticker symbol "GLW". NetOptix common stock is listed on NASDAQ under the ticker
symbol "OPTX." The following table shows, for the periods indicated, the high
and low sales prices and dividends per share of Corning common stock, as
reported on the NYSE Consolidated Tape, and NetOptix common stock, as reported
on the NASDAQ National Market Systems, for the dates indicated.
<TABLE>
CORNING(a) NETOPTIX(a)
<CAPTION>
----------------------------------------------------------------------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fiscal Year 1997
First Quarter........... $46.38 $33.75 $0.18 $27.75 $21.00 $0
Second Quarter.......... 56.50 43.00 0.18 26.50 6.00 0
Third Quarter........... 65.13 39.75 0.18 7.75 4.50 0
Fourth Quarter.......... 49.56 35.38 0.18 15.25 5.50 0
Fiscal Year 1998
First Quarter........... 43.94 32.00 0.18 14.75 8.75 0
Second Quarter.......... 44.38 33.94 0.18 17.50 9.75 0
Third Quarter........... 36.00 22.88 0.18 16.50 11.13 0
Fourth Quarter.......... 45.69 26.94 0.18 13.13 2.06 0
Fiscal Year 1999
First Quarter........... 61.75 44.75 0.18 3.81 2.75 0
Second Quarter.......... 70.75 47.69 0.18 5.75 3.63 0
Third Quarter........... 75.00 60.31 0.18 7.44 4.38 0
Fourth Quarter.......... 129.06 64.06 0.18 22.25 7.38 0
Fiscal Year 2000
First Quarter (for 71.50 19.00 0
Corning)
(through ______)........
Second Quarter
(through _____)......... N/A N/A N/A ___ ___ ___
</TABLE>
- --------------------
(a) Data is provided for each fiscal quarter included in Corning's fiscal year
which ends on December 31 of each year and NetOptix's fiscal year which
ends on September 30 of each year.
-18-
<PAGE>
Corning NetOptix
February 11, 2000 per
share closing price (a) $165.75 $136.00
_______ __, 2000 per
share closing price _______ _______
(a) February 11, 2000 was the last full trading day before public
announcement of the signing of the merger agreement.
Because the market price of Corning common stock is subject to
fluctuation, the market value of the shares of Corning common stock that holders
of NetOptix common stock will receive in the merger, and the market value of the
NetOptix common stock surrendered in the merger, may increase or decrease prior
to or after the merger. See "Risk Factors Relating to the Merger--Fixed Exchange
Ratio May Result in Lower Value of Merger Consideration" on page __.
NETOPTIX STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE CORNING COMMON STOCK AND THE NETOPTIX COMMON STOCK.
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about Corning and NetOptix from documents that are not
included in or delivered with this proxy statement/prospectus. This information
is available to you without charge upon your written or oral request. You can
obtain documents incorporated by reference in this proxy statement/prospectus by
requesting them in writing or by telephone from the appropriate company at the
following addresses and telephone numbers:
Corning Incorporated NetOptix Corporation
One Riverfront Plaza Sturbridge Business Park
Corning, New York 14831 Sturbridge, Massachusetts 01566
Attention: Secretary Attention: Secretary
Telephone: (607) 794-9000 Telephone: (508) 347-9191
See also "Where You Can Find More Information" beginning on page __. If
you would like to request documents, please do so by ________ __, 2000 in order
to receive them before the NetOptix special meeting.
-19-
<PAGE>
RISK FACTORS RELATING TO THE MERGER
You should consider the following risks, among others, in deciding
whether to approve the merger and adopt the merger agreement. These matters
should be considered along with the other information included or incorporated
by reference in this proxy statement/prospectus.
FIXED EXCHANGE RATIO MAY RESULT IN LOWER VALUE OF MERGER CONSIDERATION.
Upon completion of the merger, each share of NetOptix common stock will be
converted into the right to receive 0.90 of a share of Corning common stock.
The exchange ratio is fixed and will not be adjusted as a result of any
increase or decrease in the price of either Corning or NetOptix common stock.
Any change in the price of Corning common stock will affect the value the
NetOptix stockholders receive in the merger.
In addition, because the merger will be completed only after all the
conditions to the merger are satisfied or waived, including the receipt of
regulatory approvals, there is no way to be sure that the price of Corning
common stock or NetOptix common stock at the time the merger is completed will
be the same as their prices on the date of the special meeting.
Changes in the business, operations or prospects of Corning or
NetOptix, regulatory considerations, general market and economic conditions and
other factors may affect the prices of Corning common stock, NetOptix common
stock or both. Many of those factors are beyond our control. You are encouraged
to obtain current market quotations for both Corning common stock and NetOptix
common stock.
INTEGRATING BUSINESS OPERATIONS MAY BE DIFFICULT AND MAY HAVE A
NEGATIVE IMPACT ON CORNING'S OPTICAL FILTER BUSINESS. The combination of
Corning's and NetOptix's optical filter business involves the integration of
separate businesses that have previously operated independently and have
different corporate cultures. The process of combining the companies may be
disruptive to their businesses and may cause an interruption of, or a loss of
momentum in, these businesses as a result of the following difficulties, among
others:
- loss of key employees or customers;
- possible inconsistencies in standards, controls, procedures
and policies between the business being combined and the need
to implement and harmonize company-wide financial, accounting,
information and other systems;
- failure to maintain the speed and quality of production of
optical filters that NetOptix and the photonics technologies
division of Corning have historically provided; and
- the diversion of management's attention from the day-to-day
businesses of the photonics technologies division of Corning
and NetOptix as a result of the need to deal with the above
disruptions and difficulties and/or the possible need to add
management resources to do so.
Such disruptions and difficulties, if they occur, may cause Corning to
fail to realize the benefits that it currently expects to result from the
integration of NetOptix.
-20-
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This document, and the documents incorporated by reference into this
proxy statement/prospectus, contain both historical and forward-looking
statements within the meaning of section 27A of the Securities Act of 1933 and
section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are not based on historical facts, but rather reflect Corning's and
NetOptix's current expectations concerning future results and events. These
forward-looking statements generally can be identified by use of statements that
includes phrases such as "believe," "expect," "anticipate," "intend," "plan,"
"foresee," "likely," "will" or other similar words or phrases. Similarly,
statements that describe our objectives, plans or goals are or may be
forward-looking statements. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Corning and NetOptix to be different
from any future results, performance and achievements expressed or implied by
these statements. You should review carefully all information, including the
financial statements and the notes to the financial statements, included or
incorporated by reference into this proxy statement/prospectus.
The following important factors could affect future results, causing
these results to differ materially from those expressed in our forward-looking
statements:
- product demand and industry capacity, competitive products and
pricing, manufacturing efficiencies, cost reductions,
availability and costs of critical materials, new product
development and commercialization, manufacturing capacity,
facility expansions and new plant start-up costs;
- changes in economic conditions such as inflation, interest rates
and foreign currency exchange rates;
- acquisition and divestiture activity, capital resource and cash
flow activities and capital spending;
- changes in tax requirements, including tax rate changes, new tax
laws and revised tax law interpretations; and
- the effect of regulatory and legal developments, the rate of
technological change and the ability to preserve trade secrets
and enforce patents.
-21-
<PAGE>
THE SPECIAL MEETING
DATE, TIME AND PLACE
We are sending this proxy statement/prospectus to you as part of the
solicitation of proxies by the NetOptix board of directors for use at the
special meeting to be held on __________, 2000 at ______ Eastern Standard Time
at ____________________. We are first mailing this proxy statement/prospectus,
the attached notice of special meeting of stockholders and the enclosed proxy
card to you on or about __________ __, 2000.
PURPOSES OF THE SPECIAL MEETING
At the special meeting, NetOptix stockholders will consider and vote
upon a proposal to approve the merger and adopt the Agreement and Plan of Merger
dated as of February 13, 2000 among Corning, CI Subsidiary, Inc. and NetOptix.
The merger agreement provides, among other things, that CI Subsidiary will be
merged with and into NetOptix, and each outstanding share of NetOptix common
stock will be converted into the right to receive 0.90 of a share of Corning
common stock. CI Subsidiary, Inc. is a wholly-owned subsidiary of Corning.
NetOptix is not proposing that any matters other than the approval and
adoption of the merger agreement will come before the NetOptix special meeting.
If any matter incident to the conduct of the special meeting should be brought
before the meeting, the persons named in the proxy card will vote in their
discretion with respect to those matters.
THE BOARD OF DIRECTORS OF NETOPTIX HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
MERGER AGREEMENT.
RECORD DATE
The NetOptix board of directors has fixed the close of business on
__________, 2000 as the record date for the special meeting. Only holders of
NetOptix common stock on the record date will be entitled to vote at the special
meeting and any adjournments or postponements thereof. At the record date,
__________ shares of NetOptix common stock were outstanding and entitled to vote
held by approximately _____ holders of record.
The presence, in person or by proxy, of a majority of the shares of
NetOptix common stock is necessary to constitute a quorum at the special
meeting. Abstentions will be included in the determination of shares present and
entitled to vote at the special meeting for purposes of determining a quorum. If
a broker indicates on the proxy that it does not have discretionary authority as
to certain shares to vote on a particular matter, then those shares will not be
considered as present and entitled to vote with respect to that matter.
REQUIRED VOTES
All properly executed proxies delivered and not properly revoked will
be voted at the special meeting as specified in such proxies. If you do not
specify a choice, your shares represented by a signed proxy will be voted for
the approval of the merger agreement.
A majority vote of the shares of NetOptix common stock outstanding and
entitled to vote on the record date is required to approve the merger and adopt
the merger agreement. Non-voting shares, including abstentions, and shares held
by brokers who are not given authority to vote in favor of the
-22-
<PAGE>
merger ("broker non-votes") will have the effect of a vote against the merger
agreement. On the record date, NetOptix's executive officers and directors
collectively beneficially owned an aggregate of 4,019,117 shares of NetOptix
common stock or approximately 35.05% of the outstanding common stock. In
addition, a total of 3,978,117 shares of NetOptix common stock (5,003,117 shares
if the Andlinger Capital XIII LLC warrants and the vested portion of the ANC
Management options are exercised prior to the special meeting) is subject to the
stockholder voting agreement and irrevocable proxy described under "Interests of
Directors and Officers in the Merger" and attached as Annex C to this proxy
statement/prospectus.
If sufficient votes in favor of the merger proposal are not received by
the time scheduled for the special meeting, the persons named as proxies may
propose one or more adjournments of the special meeting to permit further
solicitation of proxies. The persons named as proxies will vote in favor of any
adjournment those proxies which authorize them to vote in favor of the merger.
They will vote against any adjournment those proxies which direct them to vote
against the merger. Any such adjournment will require the affirmative vote of a
majority of the votes cast (or if a quorum is not present, a majority of the
votes represented in person or by proxy) at the session of the special meeting
to be adjourned. The costs of any such additional solicitation and of any
adjourned session will be borne by NetOptix.
PROXIES, VOTING AND REVOCATION
This proxy statement/prospectus is being furnished to NetOptix's
stockholders in connection with the solicitation of proxies by, and on behalf
of, the NetOptix board of directors for use at the special meeting, and is
accompanied by a form of proxy.
Each share of NetOptix common stock is entitled to one vote. Votes will
be tabulated at the special meeting by inspectors of election appointed by
NetOptix.
You may revoke or change your proxy at any time prior to its being
voted by filing a written instrument of revocation or change with the Secretary
of NetOptix (NetOptix, Sturbridge Business Park, Sturbridge, Massachusetts
01566). You may also revoke your proxy by signing and returning a duly executed
proxy bearing a later date or by appearing at the special meeting in person,
notifying the Secretary and voting by ballot at the special meeting.
If you attend the meeting, you may vote in person whether or not you
have previously given a proxy, but your presence, without notifying the
Secretary of NetOptix, at the meeting will not revoke a previously given proxy.
In addition, if you beneficially hold shares of NetOptix common stock that are
not registered in your own name, you will need additional documentation from the
record holder of those shares to attend and vote the shares personally at the
meeting.
SOLICITATION OF PROXIES
NetOptix will pay for the expense of printing and mailing this document
and the material used in this solicitation of proxies. Proxies will be solicited
through the mail and directly by officers, directors and regular employees of
NetOptix not specifically employed for such purpose, without additional
compensation. NetOptix will reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
these proxy materials to the principals. NetOptix will not engage a proxy
solicitor to represent it in connection with the solicitations of proxies.
Under Delaware law, you will not have appraisal or dissenters' rights
in connection with the merger because NetOptix's common stock was designated as
a national market security on the NASDAQ on the record date for the special
meeting.
-23-
<PAGE>
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT
IMPORTANCE TO YOU. WE URGE YOU TO READ AND CAREFULLY CONSIDER THE INFORMATION
PRESENTED IN THIS DOCUMENT, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PRE-PAID ENVELOPE.
THE MERGER
BACKGROUND OF THE MERGER
On January 25, 2000, the President of NetOptix's optical filter
subsidiary, Optical Filter Corporation, was approached by the Business Manager
of Components for Corning who requested a confidential meeting. The NetOptix
President, Corning's Business Manager of Components and a Corning Vice President
for Corporate Development met at dinner and discussed Corning's interest in
exploring options concerning the acquisition of NetOptix's optical filter
business.
On January 26, 2000, the Chairman of the Board and Chief Executive
Officer of NetOptix received a phone call from Corning's Vice President of
Corporate Development at which time they agreed to meet in New York City.
On January 28, 2000, representatives of Corning met with
representatives of NetOptix in New York City. The Chairman of NetOptix and the
Corning Vice President executed a confidentiality agreement on behalf of their
respective companies. The participants discussed the possibility of a business
combination between Corning and NetOptix and the potential terms of such a
combination.
Corning and NetOptix representatives met again on January 31, 2000, at
the Optical Filter Corporation facility in Natick, Massachusetts to discuss
filter technology, planned ramp-up of production, the 12-month financial
projections for filter products and the corporate history of NetOptix. The
President of Optical Filter Corporation delivered a presentation on filter
technology and financial projections.
On February 4, 2000, Corning provided a written preliminary proposal
letter to the Chairman of NetOptix. The proposal letter set forth the potential
terms of the proposed acquisition of NetOptix by Corning.
On February 7, 2000, the NetOptix board of directors met in Boston to
discuss the Corning proposal and to select a financial advisor to NetOptix in
connection with evaluation of the Corning proposal. The NetOptix board of
directors approved the engagement of Salomon Smith Barney Inc. to serve as the
financial advisor to NetOptix in connection with the Corning proposal and other
potential transactions. The NetOptix board of directors also determined that
senior management of NetOptix should continue discussions with Corning and
conduct further due diligence analysis as well as negotiate the terms of
definitive documentation on the basis of the preliminary proposal from Corning.
On February 8, 2000, the first negotiating session between NetOptix and
Corning was held in the Boston office of Edwards & Angell, LLP. NetOptix
representatives included the Chairman, the President, the Vice President and
Chief Financial Officer of NetOptix and several members of the NetOptix board of
directors, as well as its financial and legal advisors. Corning was represented
by its financial advisors and senior management, including its Senior Vice
President-General Counsel, Vice President and Director, Legal Department and
Vice President for Corporate Development.
Discussions and negotiations continued from February 8, 2000 through
February 13, 2000 with respect to the transaction. During this time, each party
conducted due diligence, and senior management
-24-
<PAGE>
of Corning and NetOptix were then separately briefed on the findings that their
teams had reached during due diligence. The parties and their respective
financial and legal advisors met frequently during this period to discuss the
financial and other terms of the proposed transaction, including the exchange
ratio.
The NetOptix board of directors held two special meetings during this
time, the first on February 11, 2000 and the second on February 13, 2000, at
which senior management of NetOptix reviewed with the NetOptix board of
directors its discussions and negotiations with Corning regarding the
transaction, as well as the results of its due diligence investigation of
Corning. At both meetings, the NetOptix board of directors discussed with
counsel to NetOptix the terms of the merger agreement and the stockholder voting
agreement and irrevocable proxy, and the legal standards applicable to its
decision to approve the merger agreement and the transactions contemplated by
the merger agreement. Salomon Smith Barney Inc. and the senior management of
NetOptix presented to the NetOptix board of directors financial information with
respect to Corning and the proposed transaction. At the February 13, 2000
meeting Salomon Smith Barney Inc., rendered its oral opinion (which was
subsequently confirmed in writing) that, as of February 13, 2000, the exchange
ratio contemplated in the merger agreement was fair to holders of NetOptix
common stock from a financial point of view. After questions by and discussion
among the members of the NetOptix board of directors, and after consideration of
the factors described under "--Reasons for the Merger; Recommendation of the
NetOptix Board of Directors," the NetOptix board of directors voted unanimously,
on February 13, 2000, to approve the merger agreement and the transactions
contemplated by the merger agreement.
The merger documents were executed during the evening of
February 13, 2000 and arrangements were made by Corning and NetOptix to release
announcements of the merger transaction simultaneously at 7:00 a.m. EST on
February 14, 2000.
-25-
<PAGE>
REASONS FOR THE MERGER; RECOMMENDATION OF THE NETOPTIX BOARD OF DIRECTORS
In reaching its conclusion to approve the merger agreement, the
NetOptix board of directors consulted with management of NetOptix, as well as
its financial and legal advisors and considered a number of factors, as
described below.
- - The NetOptix board of directors considered the effect of the merger on
implementing and accelerating NetOptix's basic long-term growth strategy in
light of the current economic, financial and business environment, the
limited size of NetOptix, its limited financial resources and customer base
and its dependence on a single line of business.
- - The NetOptix board of directors analyzed NetOptix's financial condition,
results of operations, business and prospects, and compared them to those
of the combined companies. In considering this financial information, the
NetOptix board of directors took into account NetOptix's and Corning's
recent and historic stock prices and earnings performances, as well as its
own analysis of the business opportunities presented by the merger and
current market trends relating to NetOptix's products and Corning's recent
moves to expand its telecommunications business and reposition its business
mix. The NetOptix board of directors considered the financial analyses
and pro forma and other financial data presented by Salomon Smith Barney,
information concerning Corning and its business strategy presented by
Corning, analyses performed by NetOptix management, as well as the NetOptix
board of directors' own knowledge of the industry and of NetOptix and
Corning and their respective businesses.
- - The NetOptix board of directors considered the price and other terms of the
merger agreement, as well as other information concerning the merger,
including the structure of the merger. Among other things, the board of
directors considered the expectation that the merger will be treated as a
tax-free transaction for U.S. federal income tax purposes to NetOptix
stockholders. See "The Merger--Material Federal Income Tax Consequences" on
page [ ].
- - The NetOptix board of directors considered Corning's strong research and
development capabilities, and its existing commitment to the optical filter
market, which would significantly strengthen NetOptix's existing technology
and product development efforts, Corning's financial resources, customer
relationships and commitment to drive NetOptix's business forward.
- - The NetOptix board of directors considered the alternatives available to
NetOptix in lieu of the transaction, including acquisitions or joint
ventures and remaining as a stand-alone entity.
- - The NetOptix board of directors considered the benefits of the merger,
including its view that the combined company might be able to capitalize on
operational and competitive elements that may not be available otherwise to
NetOptix on a stand-alone basis.
- - The NetOptix board of directors considered the opportunity for you to
become holders of Corning common stock, which the NetOptix board of
directors believed would perform at least as well as NetOptix common stock
over the long term and would have greater liquidity and lower volatility
than NetOptix common stock.
- - The NetOptix board of directors considered the opinion of Salomon Smith
Barney Inc. that as of the date of that opinion the exchange ratio under
the merger agreement was fair from a financial point of view to holders of
NetOptix common stock.
-26-
<PAGE>
- - The NetOptix board of directors considered Corning's reputation and
policies with respect to its employees, and the impact on NetOptix's
employees of becoming employees of Corning.
- - The NetOptix board of directors considered economies of scale because the
telecommunications industry, particularly the fiberoptics transmission
materials industry, is currently characterized by intense competition and
large-scale consolidation.
- - The NetOptix board of directors considered the effect on NetOptix
stockholders of NetOptix continuing as a stand-alone entity compared to the
effect of NetOptix combining with Corning, in light of the factors
summarized above.
The NetOptix board of directors also considered a number of potential
risks relating to the merger, including risks relating to a fixed exchange ratio
despite potential changes in relative stock prices, the difficulty and
management distraction inherent in integrating two businesses, and the risk that
the merger would not be consummated. See "Risk Factors Relating to the Merger"
on page _____. The NetOptix board of directors believed that these risks were
outweighed by the potential benefits to be realized from the merger.
The foregoing discussion of the information and factors considered by
the NetOptix board of directors is not intended to be exhaustive, but is
believed to include all material factors considered by the NetOptix board of
directors in approving the merger. In view of the wide variety of information
and factors considered, the NetOptix board of directors did not find it
practical to, and did not, assign any relative or specific weights to the
foregoing factors and individual directors may have given differing weights to
different factors.
For a discussion of the interests of members of NetOptix's management
and Board in the merger, see "Interests of Directors and Officers in the Merger"
below. The NetOptix board of directors recognized these interests and determined
that these interests neither supported nor detracted from the fairness of the
merger to NetOptix's stockholders.
THE NETOPTIX BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
OPINION OF SALOMON SMITH BARNEY INC.
Salomon Smith Barney was retained to act as financial advisor to
NetOptix in connection with the merger. Pursuant to Salomon Smith Barney's
engagement letter with NetOptix, dated February 8, 2000, Salomon Smith Barney
rendered an opinion to the NetOptix board of directors on February 13, 2000 to
the effect that, based upon and subject to the considerations and limitations
set forth in the opinion, its work described below and other factors it deemed
relevant, as of that date, the exchange ratio was fair, from a financial point
of view, to the holders of NetOptix common stock.
The full text of Salomon Smith Barney's opinion, which sets forth the
assumptions made, general procedures followed, matters considered and limits on
the review undertaken, is included as Annex B to this document. The summary of
Salomon Smith Barney's opinion set forth below is qualified in its entirety by
reference to the full text of the opinion. STOCKHOLDERS ARE URGED TO READ
SALOMON SMITH BARNEY'S OPINION CAREFULLY AND IN ITS ENTIRETY.
In arriving at its opinion, Salomon Smith Barney reviewed a draft of
the merger agreement, dated February 11, 2000, and held discussions with certain
senior officers, directors and other representatives and advisors of NetOptix
and Corning concerning the businesses, operations and prospects of NetOptix and
Corning. Salomon Smith Barney examined publicly available business and financial
information
-27-
<PAGE>
relating to NetOptix and Corning as well as financial forecasts and other
information and data for NetOptix and Corning which were provided to or
otherwise discussed with Salomon Smith Barney by the managements of NetOptix and
Corning, including certain strategic implications and operational benefits
anticipated to result from the merger. Salomon Smith Barney reviewed the
financial terms of the merger as set forth in the merger agreement in relation
to, among other things:
- current and historical market prices and trading volumes of
NetOptix common stock and Corning common stock;
- the historical and estimated earnings and other operating data of
NetOptix and Corning; and
- the historical and estimated capitalization and financial
condition of NetOptix and Corning.
Salomon Smith Barney also considered, to the extent publicly available,
the financial terms of other similar transactions recently effected that Salomon
Smith Barney considered relevant in evaluating the exchange ratio and analyzed
financial, stock market and other publicly available information relating to the
businesses of other companies whose operations Salomon Smith Barney considered
relevant in evaluating those of NetOptix and Corning. Salomon Smith Barney also
evaluated the pro forma financial impact of the merger on Corning. In addition,
Salomon Smith Barney conducted such other analyses and examinations and
considered such other information and financial, economic and market criteria as
it deemed appropriate in arriving at its opinion.
In rendering its opinion, Salomon Smith Barney assumed and relied,
without independent verification, upon the accuracy and completeness of all
financial and other information and data publicly available or furnished to or
otherwise reviewed by or discussed with Salomon Smith Barney and further relied
on the assurances of management of NetOptix and Corning that they were not aware
of any facts that would make any of such information inaccurate or misleading.
With respect to financial forecasts and other information and data provided to
or otherwise reviewed by or discussed with it, Salomon Smith Barney was advised
by the management of NetOptix and Corning that such forecasts and other
information and data had been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the management of NetOptix and
Corning as to the future financial performance of NetOptix and Corning and the
strategic implications and operational benefits anticipated to result from the
merger. Salomon Smith Barney expressed no view with respect to such forecasts
and other information and data or the assumptions on which they were based.
Salomon Smith Barney assumed, with the consent of NetOptix's board of directors,
that the merger will be treated as a tax-free reorganization for U.S. federal
income tax purposes. Salomon Smith Barney did not make and was not provided with
an independent evaluation or appraisal of the assets or liabilities (contingent
or otherwise) of NetOptix or Corning nor did Salomon Smith Barney make any
physical inspection of the properties or assets of NetOptix or Corning. Salomon
Smith Barney assumed that the final terms of the merger agreement would not vary
materially from those set forth in the draft reviewed by Salomon Smith Barney.
Salomon Smith Barney further assumed that the merger will be consummated in a
timely fashion in accordance with the terms of the merger agreement, without
waiver of any of the conditions to the merger contained in the merger agreement.
Salomon Smith Barney did not express any opinion as to what the value
of Corning common stock actually will be when issued in the merger or the price
at which Corning common stock will trade subsequent to the merger. Salomon Smith
Barney was not asked to consider, and its opinion does not address, the relative
merits of the merger as compared to any alternative business strategies that
might exist for NetOptix or the effect of any other transaction in which
NetOptix might engage. Salomon Smith Barney's opinion necessarily was based on
information available to it, and financial, stock market and
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<PAGE>
other conditions and circumstances existing and disclosed to Salomon Smith
Barney as of the date of the opinion.
SALOMON SMITH BARNEY'S ADVISORY SERVICES AND OPINION WERE PROVIDED FOR
THE INFORMATION OF NETOPTIX'S BOARD OF DIRECTORS IN ITS EVALUATION OF THE
PROPOSED MERGER AND DID NOT CONSTITUTE A RECOMMENDATION OF THE MERGER TO
NETOPTIX OR A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW THAT STOCKHOLDER
SHOULD VOTE ON ANY MATTERS RELATING TO THE PROPOSED MERGER.
In connection with rendering its opinion, Salomon Smith Barney made a
presentation to the NetOptix board of directors on February 13, 2000, with
respect to the material analyses performed by Salomon Smith Barney in evaluating
the fairness of the exchange ratio. The following is a summary of this
presentation. The summary includes information presented in tabular format. IN
ORDER TO UNDERSTAND FULLY THE FINANCIAL ANALYSES USED BY SALOMON SMITH BARNEY,
THESE TABLES MUST BE READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES
ALONE DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. The
following quantitative information, to the extent it is based on market data,
is, except as otherwise indicated, based on market data as it existed at or
prior to February 11, 2000, and is not necessarily indicative of current or
future market conditions.
Implied Historical Exchange Ratio.
Salomon Smith Barney derived implied historical exchange ratios by
dividing the closing price per share of NetOptix common stock by the closing
price per share of Corning common stock for each trading day in the period from
February 11, 1999 though February 11, 2000. Salomon Smith Barney calculated that
the implied exchange ratio as of February 11, 2000 was 0.82, the highest implied
exchange ratio during the period was 0.84, and the lowest implied exchange ratio
during the period was 0.06. Salomon Smith Barney also calculated the average
implied exchange ratio for each of the following calendar periods ending
February 11, 2000:
Last 12 Months 0.26
Last 9 Months 0.31
Last 6 Months 0.40
Last 3 Months 0.52
Salomon Smith Barney noted that in each case described above, the
implied exchange ratio or the average implied exchange ratio derived by Salomon
Smith Barney was lower than the exchange ratio in the merger.
Comparable Companies Analyses.
Salomon Smith Barney compared financial, operating and stock market
information, and forecasted financial information, for each of NetOptix and
Corning, with the same information for selected publicly traded companies that
operate in the fiber optical component manufacturing industry. The forecasted
financial information used by Salomon Smith Barney for the selected comparable
companies in the course of these analyses was based on information published by
certain investment banking firms as well as information published by First Call
Corporation. First Call Corporation compiles summaries of financial forecasts
published by various investment banking firms. With respect to NetOptix, the
forecasted financial information used by Salomon Smith Barney was based on
information provided by management, and with respect to Corning, the forecasted
financial information
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<PAGE>
used by Salomon Smith Barney was based on estimates published by certain
investment banking firms. Calculations were made based on the closing price per
common share of each company on February 11, 2000, which was $136.00 for
NetOptix and $165.75 for Corning.
For NetOptix, the selected comparable companies considered by Salomon
Smith Barney were:
- Corning
- JDS Uniphase Corporation
- E-Tek Dynamics, Inc.
- SDL, Inc.
For NetOptix and each of the selected comparable companies considered
in the NetOptix analysis, Salomon Smith Barney derived and compared, among other
things:
- the ratio of the closing price per common share of each
company on February 11, 2000, to (a) its estimated
earnings per share (EPS) for 2000, and (b) its estimated
EPS for 2001;
- the ratio of each company's firm value as of February 11,
2000, to (a) its estimated revenue for 2000, (b) its
estimated revenue for 2000 from sales of fiber optical
products, and (c) its estimated earnings before taking
into account interest expense, taxes, depreciation and
amortization (EBITDA) for 2000;
- the estimated growth rate in its revenue for 2000; and
- the implied percentage volatility in the closing price per
common share of each company over the twelve-month period
ended February 11, 2000, based on publicly available
trading information.
Firm value was calculated as the sum of the value of:
- all shares of common stock assuming the exercise of all
in-the-money options, warrants and convertible securities,
less the proceeds from such exercise; plus
- non-convertible indebtedness; plus
- non-convertible preferred stock; plus
- minority interests; plus
- out-of-the-money convertible securities; minus
- investments in unconsolidated affiliates and cash.
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The following table sets forth the results of these analyses.
<TABLE>
<CAPTION>
NETOPTIX AT
COMPARABLE COMPANIES AT FEBRUARY 11, 2000 FEBRUARY 11, 2000
CLOSING PRICE CLOSING PRICE
RANGE MEDIAN MEAN
<S> <C> <C> <C> <C>
RATIO OF CLOSING COMMON
SHARE PRICE TO:
(a) Estimated EPS for 2000 69.9x-223.1x 221.9x 184.1x 66.1x
(b) Estimated EPS for 2001 57.4x-176.5x 155.2x 136.0x 54.2x
RATIO OF FIRM VALUE TO:
(a) Estimated Revenue for 2000 9.5x-44.8x 42.3x 34.7x 28.7x
(b) Estimated Revenue from
fiber optical sales for 2000 16.1x-55.4x 42.3x 39.0x 35.4x
(c) Estimated EBITDA for 2000 35.7x-172.3x 119.3x 111.7x 54.9x
ESTIMATED REVENUE
GROWTH FOR 2000 14.6%-63.1% 48.4% 43.6% 333.4%
IMPLIED VOLATILITY OF
COMMON SHARE PRICE FOR
LAST TWELVE-MONTH PERIOD 51.2%-97.4% 74.8% 74.5% 119.0%
</TABLE>
Salomon Smith Barney noted that for each ratio derived, the result for
NetOptix was below the mean for the selected comparable companies. In addition,
Salomon Smith Barney noted that the implied common share price volatility for
the last twelve-month period derived for NetOptix was in excess of the upper
limit of the range derived for the selected comparable companies and was
substantially in excess of that derived for Corning (51.2%) which constituted
the lower limit of the range for the selected comparable companies.
For Corning, the selected comparable companies considered by Salomon
Smith Barney were:
- NetOptix
- JDS Uniphase Corporation
- E-Tek Dynamics, Inc.
- SDL, Inc.
For Corning and each of the selected comparable companies used in the
Corning analysis, Salomon Smith Barney derived and compared the same ratios and
other information as was used in the NetOptix analysis. The following table sets
forth the results of these analyses.
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<PAGE>
<TABLE>
<CAPTION>
CORNING AT
COMPARABLE COMPANIES AT FEBRUARY 11, 2000 FEBRUARY 11, 2000
CLOSING PRICE CLOSING PRICE
RANGE MEDIAN MEAN
<S> <C> <C> <C> <C>
RATIO OF CLOSING COMMON
SHARE PRICE TO:
(a) Estimated EPS for 2000 66.1x-223.1x 221.9x 183.3x 69.9x
(b) Estimated EPS for 2001 54.2x-176.5x 155.2x 135.3x 57.4x
RATIO OF FIRM VALUE TO:
(a) Estimated revenue for 2000 28.7x-44.8x 42.3x 39.5x 9.5x
(b) Estimated revenue from
fiber optical sales for 2000 35.4x-55.4x 42.3x 43.8x 16.1x
(c) Estimated EBITDA for 2000 54.9x-172.3x 119.3x 116.5x 35.7x
ESTIMATED REVENUE
GROWTH FOR 2000 44.6%-333.4% 57.7% 123.3% 14.6%
</TABLE>
Salomon Smith Barney noted that for each ratio derived, the result for
Corning was below the mean for the selected comparable companies, and in the
case of the ratios of estimated revenue for 2000 to firm value, estimated
revenue from fiber optical sales for 2000 to firm value and estimated EBITDA for
2000 to firm value, the results for Corning were below the lower end of the
range for the selected comparable companies. Salomon Smith Barney also noted,
however, that the businesses of each of the selected comparable companies used
in the Corning comparable company analysis were more heavily concentrated in
fiber optics than that of Corning, and that the acquisition of NetOptix would
add further fiber optical manufacturing operations to Corning's business.
Precedent Transaction Analysis.
Salomon Smith Barney reviewed publicly available information for six
completed merger or acquisition transactions in the fiber optical components
manufacturing sector announced since January 28, 1999, involving at least one
publicly traded company. The precedent transactions considered by Salomon Smith
Barney were the following (in each case, the acquiror's name is listed first and
the acquired company's name is listed second): (i) Uniphase Corporation/JDS
Fitel Inc.; (ii) JDS Uniphase Corporation/Epitaxx, Inc.; (iii) JDS Uniphase
Corporation/Optical Coating Laboratory, Inc.; (iv) Corning/Oak Industries Inc.;
(v) JDS Uniphase Corporation/E-Tek Dynamics, Inc.; and (vi) Lucent Technologies
Inc./Ortel Corporation.
For each precedent transaction and for the proposed acquisition of
NetOptix in the merger, Salomon Smith Barney derived the ratio of the firm value
of the acquired company based on the consideration paid in the transaction to:
- the revenue of the acquired company for the last
twelve-month period prior to the announcement of the
transaction for which financial results were available;
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- the revenue from sales of fiber optical products of the
acquired company for the last twelve-month period prior to
the announcement of the transaction for which financial
results were available;
- the estimated revenue of the acquired company for the
twelve-month period following the announcement of the
transaction;
- the estimated revenue of the acquired company from sales
of fiber optical products for the twelve-month period
following announcement of the transaction; and
- the estimated earnings of the acquired company before
interest expense and taxes (EBIT) for the twelve-month
period following the announcement of the transaction.
With respect to the proposed acquisition of NetOptix in the merger, Salomon
Smith Barney used an implied price per share of NetOptix common stock of
$149.18, based upon the exchange ratio and the closing price per share of
Corning common stock on February 11, 2000 ($165.75). With respect to the
financial information for the companies involved in the precedent transactions,
Salomon Smith Barney relied on information available in public documents, equity
research reports published by certain investment banks and First Call
Corporation estimates.
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The following table sets forth the results of these analyses:
<TABLE>
<CAPTION>
COMPARABLE COMPANIES
RANGE MEAN MEDIAN NETOPTIX AT IMPLIED
MERGER PRICE
RATIO OF FIRM VALUE TO:
<S> <C> <C> <C> <C>
(a) Acquired company's
revenue for last twelve-
month period 4.6x - 64.2x 23.4x 12.0x 136.4x
(b) Acquired company's
revenue from sales of
fiber optical products for
last twelve-month period 14.0x - 64.2x 31.8x 24.6x 335.6x
(c) Acquired company's
estimated revenue for
next twelve-month period 3.6x - 42.2x 17.5x 6.3x 31.5x
(d) Acquired company's
estimated revenue from
sales of fiber optical
products for next twelve-
month period 5.9x - 42.2x 21.9x 19.8x 38.8x
(e) Acquired company's
estimated EBIT for next
twelve-month period 19.8x - 529.0x 152.6x 48.7x 63.3x
</TABLE>
With respect to the calculation for NetOptix of the ratio of firm value
to revenue from sales of fiber optical products for the twelve-month period
preceding announcement of the transaction, Salomon Smith Barney annualized
NetOptix's actual revenue from sales of fiber optical products for the first
quarter of NetOptix 2000 fiscal year. Salomon Smith Barney believed that this
provided a more meaningful ratio than that would have been obtained using
revenue from sales of fiber optical products for NetOptix's 1999 fiscal year
given the relatively low amount of such revenue realized by NetOptix in that
year.
Salomon Smith Barney noted that in each case shown above, the ratio
derived for NetOptix based on the implied price per share to be paid in the
merger, exceeded the median ratio derived for the precedent transactions, and in
each case (other than the ratio of firm value to the acquired company's
estimated revenue for the twelve-month period following announcement of the
transaction) the ratio derived for NetOptix exceeded the upper limit of the
range derived for the precedent transactions.
Salomon Smith Barney also derived the implied premium paid per common
share in each precedent transaction based on the closing price per common share
of the acquired company one week prior to the announcement of the transaction.
These premiums ranged from 13.5% to 72.7%, with a median of 59.7%. Based on the
exchange ratio and the closing price per share of Corning common stock on
February 11, 2000, Salomon Smith Barney noted that the implied premium in the
merger was 127.3%
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of the average per share closing price of NetOptix common stock over the 90-day
period prior to announcement of the merger and 49.5% of the average per share
closing price of NetOptix common stock over the 30-day period prior to
announcement of the merger.
Accretion/Dilution Analysis.
Salomon Smith Barney performed an analysis of the impact of the merger
on the future EPS of Corning and on the future EPS of Corning after eliminating
all goodwill charges to Corning's earnings resulting from the merger and other
transactions previously completed by Corning. Salomon Smith Barney made pro
forma adjustments to the estimated combined operating earnings of the merged
entity but did not take into account any anticipated cost savings, revenue
enhancements or other similar potential effects of the merger. Estimates for EPS
for NetOptix on a stand-alone basis were based on estimates published by certain
investment banking firms and NetOptix management estimates. Estimates for EPS
for Corning were based on estimates published by certain investment banking
firms.
The following table shows the accretion or dilution to the EPS of
Corning expected to result from the merger.
COMBINED ACCRETION /
CORNING NETOPTIX ENTITY PRO (DILUTION) TO
STAND-ALONE STAND-ALONE FORMA CORNING
Using investment
bank estimates for
NetOptix $2.37 $0.86 $1.61 $(0.76)
Using management
estimates for
NetOptix $2.37 $2.06 $1.67 $(0.70)
The following table shows the accretion or dilution to the EPS of
Corning expected to result from the merger after eliminating all goodwill
charges.
COMBINED CCRETION /
CORNING NETOPTIX ENTITY PRO DILUTION) TO
STAND-ALONE STAND-ALONE FORMA ORNING
Using investment
bank estimates for
NetOptix $2.44 $0.98 $2.38 $(0.07)
Using management
estimates for
NetOptix $2.44 $2.18 $2.45 $0.00
Relative Contribution Analysis.
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Salomon Smith Barney analyzed the relative contribution of each of
NetOptix and Corning to the pro forma merged entity with respect to certain
market and financial data. In performing this analysis, Salomon Smith Barney did
not take into account any anticipated cost savings, revenue enhancements or
other similar potential effects of the merger. Estimated financial data for
Corning were based on estimates published by various investment banks. Estimated
financial data for NetOptix were based on management estimates. In calculating
market capitalization, Salomon Smith Barney assumed that no premium will be paid
to NetOptix shareholders in the merger. The following table sets forth the
results of Salomon Smith Barney's relative contribution analysis.
CORNING NETOPTIX
Estimated Revenue for 2000 98.7% 1.3%
Estimated EBITDA for 2000 97.4% 2.6%
Estimated EBIT for 2000 96.4% 3.6%
Estimated Net Income for 2000 95.9% 4.1%
Market Capitalization 96.0% 4.0%
Salomon Smith Barney compared the results set forth above to the
implied 4.2% pro forma fully diluted ownership interest in the merged entity
that the former shareholders of NetOptix will have immediately following the
completion of the merger.
The preceding discussion is a summary of the material financial
analyses furnished by Salomon Smith Barney to the NetOptix board of directors,
but it does not purport to be a complete description of the analyses performed
by Salomon Smith Barney or of its presentations to the NetOptix board of
directors. The preparation of financial analyses and fairness opinions is a
complex process involving subjective judgments and is not necessarily
susceptible to partial analysis or summary description. Salomon Smith Barney
made no attempt to assign specific weights to particular analyses or factors
considered, but rather made qualitative judgments as to the significance and
relevance of all the analyses and factors considered and determined to give its
fairness opinion as described above. Accordingly, Salomon Smith Barney believes
that its analyses, and the summary set forth above, must be considered as a
whole, and that selecting portions of the analyses and of the factors considered
by Salomon Smith Barney, without considering all of the analyses and factors,
could create a misleading or incomplete view of the processes underlying the
analyses conducted by Salomon Smith Barney and its opinion. With regard to the
comparable companies analyses summarized above, Salomon Smith Barney selected
comparable public companies on the basis of various factors, including the size
and similarity of the line of business; however, no company utilized as a
comparison in these analyses, and no transaction utilized as a comparison in the
comparable transaction analyses summarized above, is identical to NetOptix or
Corning or the merger. As a result, these analyses are not purely mathematical,
but also take into account differences in financial and operating
characteristics of the subject companies and other factors that could affect the
transaction or public trading value of the subject companies and transactions to
which NetOptix and Corning and the merger are being compared. In its analyses,
Salomon Smith Barney made numerous assumptions with respect to NetOptix,
Corning, industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of NetOptix
and Corning. Any estimates contained in Salomon Smith Barney's analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by these analyses. Estimates of values of companies do not purport to be
appraisals or necessarily to reflect the prices at which companies may actually
be sold. Because these estimates are inherently subject to uncertainty, none of
NetOptix, Corning, the NetOptix board of directors, Salomon Smith Barney or any
other person assumes responsibility if future results or actual values differ
materially from the estimates. Salomon Smith Barney's analyses were prepared
solely as part of Salomon Smith Barney's analysis of the fairness of the
exchange ratio in the merger and were provided to the NetOptix board of
directors in that connection. The opinion of Salomon Smith Barney was only one
of the factors taken into consideration by the NetOptix board of directors in
making its determination to approve the
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<PAGE>
merger agreement and the merger. See "Reasons for the Merger; Recommendation of
the NetOptix Board of Directors" on pages (__) through (__).
Salomon Smith Barney is an internationally recognized investment
banking firm engaged in, among other things, the valuation of businesses and
their securities in connection with mergers and acquisitions, restructurings,
leveraged buyouts, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. NetOptix selected Salomon
Smith Barney to act as its financial advisor on the basis of Salomon Smith
Barney's international reputation and Salomon Smith Barney's familiarity with
NetOptix. Salomon Smith Barney and its predecessors and affiliates have
previously provided and currently are providing investment banking services to
Corning unrelated to the merger, for which Salomon Smith Barney has received and
will receive customary compensation. In the ordinary course of its business,
Salomon Smith Barney and its affiliates may actively trade or hold the
securities of both NetOptix and Corning for its own account and for the account
of customers and, accordingly, may at any time hold a long or short position in
those securities. Salomon Smith Barney and its affiliates, including Citigroup
Inc. and its affiliates, may maintain relationships with NetOptix and Corning
and their respective affiliates.
Pursuant to Salomon Smith Barney's engagement letter, NetOptix agreed
to pay Salomon Smith Barney the following fees for its services rendered in
connection with the merger: (i) $100,000, that became payable promptly upon
execution of the engagement letter, and (ii) 0.45% of the aggregate value of the
transaction (less the amount described in clause (i) above), that will become
payable promptly upon consummation of the merger. NetOptix has also agreed to
reimburse Salomon Smith Barney for its reasonable travel and other out-of-pocket
expenses incurred in connection with its engagement, including the reasonable
fees and disbursements of its counsel, and to indemnify Salomon Smith Barney
against specific liabilities and expenses relating to or arising out of its
engagement, including liabilities under the federal securities laws.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER
Certain members of NetOptix's management and the NetOptix board of
directors may be deemed to have certain interests in the merger that are in
addition to their interests as stockholders of NetOptix generally. The NetOptix
board of directors was aware of these interests and considered them, among other
matters, in approving and adopting the merger agreement and the transactions
contemplated by that agreement.
- A portion of the outstanding unvested stock options held by
NetOptix officers and directors may, at NetOptix's option and with
the holder's consent, become fully vested and exercisable prior to
the effective time of the merger. As of March 16, 2000, options to
purchase 122,500 shares of NetOptix common stock held by executive
officers of NetOptix had become fully vested and exercisable.
- Options to purchase 100,000 shares of NetOptix common stock held
by ANC Management Corp., a corporation 100% of which is owned by
Mr. Andlinger, will be amended to remove conditions to the vesting
of such options, other than the passage of time, and to eliminate
their acceleration as of the effective time of the merger.
- NetOptix may, prior to the closing, amend options to purchase an
aggregate of 150,000 shares of NetOptix common stock granted to
members of the NetOptix board of directors in order to continue to
permit exercise and vesting following the effective time of the
merger and to permit their transfer for tax or estate planning
purposes.
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- NetOptix may, prior to the closing, amend options to purchase an
aggregate of 381,450 shares of NetOptix common stock granted to
employees of NetOptix (of which 140,000 were granted to NetOptix
executive officers) in order to immediately vest these options if
the employee is terminated without cause or resigns for good
reason, in each case prior to January 27, 2003.
- NetOptix may, prior to the closing, amend the terms of the
Non-Qualified Stock Option Agreement in connection with the ANC
Management Options to permit the transfer of these options for tax
or estate planning purposes.
- Andlinger Capital XIII LLC, Mr. Andlinger, Mr. Magida, a director
of NetOptix, acting in his capacity as manager of Andlinger
Capital XIII LLC and as trustee of the Gerhard R. Andlinger
Intangible Asset Management Trust dated as of December 29, 1997,
and Mr. Blais have entered into a stockholder voting agreement and
irrevocable proxy, dated as of February 13, 2000. A total of
3,978,117 shares (5,003,117 shares if the Andlinger Capital XIII
LLC warrants and the vested portion of the ANC Management options
are exercised prior to the special meeting) of NetOptix common
stock is subject to this agreement representing 34.70 percent of
the total number of shares of NetOptix common stock outstanding as
of the record date. The stockholder voting agreement and
irrevocable proxy is attached as Annex C. Under this agreement
each stockholder:
- agreed to vote the shares of NetOptix beneficially owned by him
or it in favor of the merger and to approve the
merger agreement;
- granted Corning an irrevocable proxy to vote his or its shares
for the merger and against any proposal in conflict with the
merger; and
- agreed not to solicit any proposal from any third person which
would interfere with the merger with Corning.
- Andlinger Capital XIII LLC holds a warrant to purchase 1,000,000
shares of NetOptix common stock for a price of $1.50 per share
which will, as a result of the merger, and unless exercised prior
thereto, be converted into a warrant to acquire 900,000 shares of
Corning common stock at an exercise price equal to $1.66 ($1.50
divided by the exchange ratio of 0.90).
- Under a letter agreement dated February 13, 2000, Raft T. Faber
has agreed to serve as the President and CEO of Corning NetOptix,
for a term of three years beginning at the effective time of the
merger. The letter agreement provides that Mr. Faber shall be
eligible to receive a bonus each year in an amount of up to one
hundred percent of his base salary. At the closing date of the
merger, Mr. Faber will be granted Corning restricted stock having
a market value on the date of grant of $4,000,000 pursuant to
Corning's Incentive Stock Plan and he will receive options to
purchase 10,000 shares of Corning common stock. A definitive
agreement with Mr. Faber will be reviewed and executed at a later
date.
- Corning will indemnify and maintain directors and officers
liability insurance for NetOptix's directors and officers for six
years after the effective time of the merger.
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CERTAIN COMPENSATION ARRANGEMENTS
SEVERANCE AGREEMENTS
NetOptix intends to enter into severance agreements with Thomas
Mathews, NetOptix's chief financial officer, and certain other employees of
NetOptix. These severance agreements will provide for retention of these
employees for a period, no longer than one year, as shall be satisfactory to
Corning. In addition, the agreements will provide for severance benefits equal
to twelve months of base salary for Mr. Mathews and six months for the remaining
employees, if the employee is terminated without cause or resigns for good cause
at any time prior to the end of the retention period specified by Corning and
provided for in the severance agreement.
EMPLOYMENT AGREEMENT
On February 13, 2000, Corning entered into a letter agreement with Mr.
Faber to clarify the terms of his continued employment after the closing date of
the merger. Under his existing employment agreement with NetOptix, Mr. Faber
serves as President of NetOptix and President and Chief Executive Officer of
Optical Filter Corporation, a subsidiary of NetOptix, at an annual salary of
$225,000, with the opportunity to receive an annual bonus not to exceed 30% of
his annual salary. The existing employment agreement also provides for the grant
of options to buy a total of 35,000 shares of common stock pursuant to the
provisions of the 1991 Stock Option Plan, none of which have been exercised. Mr.
Faber also holds options to purchase an additional 135,000 shares of NetOptix
common stock. Under the letter agreement, Mr. Faber has agreed to serve as the
President and CEO of Corning NetOptix for a term of three years beginning at the
effective time of the merger. The letter agreement provides that Mr. Faber shall
be eligible to receive a bonus each year in an amount of up to one hundred
percent of his base salary. At the closing date of the merger, Mr. Faber will be
granted Corning restricted stock having a market value on the date of grant of
$4,000,000 pursuant to Corning's Incentive Stock Plan and he will receive
options to purchase 10,000 shares of Corning common stock. A definitive
agreement with Mr. Faber will be reviewed and executed at a later date.
EQUITY BASED AWARDS
OPTIONS
Director Options. In January 2000, NetOptix granted to each of the
non-employee directors of NetOptix under the NetOptix 1999 Stock Option Plan for
Non-Employee Directors options to acquire an aggregate of 25,000 shares of
NetOptix common stock at an exercise price of $100 per share. Corning and
NetOptix have agreed that these options will remain in effect after the closing
of the merger and will be converted into options to purchase Corning common
stock at the exchange ratio of 0.90 shares of Corning common stock for each
share of NetOptix common stock in accordance with applicable income tax
guidelines. NetOptix may, prior to the closing:
- waive as a condition of exercising these options that the holder
continue to be serving as a director of NetOptix at the time the
options vest or are exercised;
- waive all provisions relating to termination of the option or
restriction on exercise after termination of the optionee; and
- provide that the vesting of the options shall accelerate upon the
death of the optionee.
Except as described, unvested options will continue to vest over the
three-year period described in the applicable option agreements.
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Employee Options.
1999 Stock Option Plan Grants
General. In January 2000, NetOptix granted options to approximately 118
employees of NetOptix to purchase an aggregate of 371,450 shares of NetOptix
common stock at an exercise price of $100 per share. Of these options, 140,000
were granted to NetOptix executive officers. Corning and NetOptix have agreed
that these options will be converted into options to purchase Corning common
stock at the exchange ratio of 0.90 shares of Corning common stock for each
share of NetOptix common stock and otherwise in accordance with applicable
income tax guidelines. These options will continue in effect with the same
vesting schedule, subject to the terms and conditions set forth in the grant,
modified as described below.
Incentive Stock Options. With respect to certain NetOptix employee
options granted as incentive stock options in January 2000, NetOptix may, prior
to the closing of the merger, modify the applicable options so that, if Corning
terminates an employee without cause or an employee resigns for good reason, in
each case prior to January 27, 2003, that employee's unvested options will
become immediately exercisable, effective at the time of termination or
resignation, and will remain exercisable after termination or resignation for
the period following the date of termination or resignation as specified in the
applicable option agreement.
Non-qualified Stock Options. With respect to non-qualified options
granted in January 2000 to certain employees, NetOptix may, prior to the closing
of the merger, modify the applicable options so that, if Corning terminates an
employee without cause or an employee resigns for good reason, in each case
prior to January 27, 2003, that employee's unvested options will become
immediately exercisable, effective immediately prior to the time of such
termination or resignation, and will remain exercisable for the period following
the date of termination or resignation as specified in the applicable option
agreement.
Other Employee/Director Options. With respect to other outstanding
options held by employees and directors, NetOptix may, prior to the closing of
the merger, modify the vesting provisions of any outstanding option, if
consented to by the holder of the option, so that those options will not vest
automatically upon the closing, but rather will continue to vest in accordance
with the vesting schedule set forth in the applicable option agreements as if no
"change of control" transaction had occurred. For those options granted to
directors and certain employees, NetOptix may remove all other conditions to
vesting or exercise, including the requirement that the option holder continue
to serve as a director or employee of NetOptix.
ANC Management Corp. Option. With respect to the option to purchase
100,000 shares of NetOptix common stock held by ANC Management Corp. granted
pursuant to the Management Advisory and Consulting Agreement between NetOptix
and ANC, NetOptix may, prior to the closing of the merger, modify the terms of
this option to eliminate the automatic acceleration of the vesting of the option
upon the consummation of the merger. In addition, NetOptix may eliminate any
conditions to vesting, including the requirement that the ANC Management
Agreement remain in effect or that Mr. Andlinger remain as CEO, so that the only
condition to vesting will be the passage of time. In consideration of this
change, NetOptix will cause the ANC Management Agreement to be terminated at
closing without penalty or additional cost to NetOptix. ANC Management Corp. is
a corporation 100% owned by Mr. Andlinger.
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DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION OF NETOPTIX
DIRECTORS AND OFFICERS
The merger agreement provides that for not less than six years after
the closing, all rights to indemnification in favor of any director, officer,
employee and agent of NetOptix and its subsidiaries as provided in their
respective charter documents or in indemnification agreements with NetOptix or
any of its subsidiaries, will continue to the extent permitted under Delaware
law. The merger agreement also provides that Corning shall cause the surviving
corporation to pay all legal fees and other expenses in the event any director,
officer employee and agent of NetOptix and its subsidiaries become involved in
any action proceeding or investigation in connection with any matter occurring
before or at the closing of the merger.
Furthermore, the merger agreement also provides that, for a period of
six years after the merger, Corning will provide, or will cause NetOptix to
provide, officers' and directors' liability insurance in respect of acts or
omissions occurring on or prior to the merger covering each present and former
officer and director of NetOptix currently covered by NetOptix's officers' and
directors' liability insurance policy. The terms and amount of such coverage
will be no less favorable than those of the policy in effect on February 13,
2000. Corning, however, will not be obligated to pay in any one year an amount
in excess of 200% of the annual premiums currently paid by NetOptix for such
insurance. If the premium for the above coverage would exceed this amount, then
the surviving corporation would be obligated only to purchase a policy with the
greatest coverage available for that amount.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of material U.S. federal income tax
consequences of the merger to holders or other beneficial owners of NetOptix
common stock that are U.S. persons and that hold such stock as a capital asset
as defined in Section 1221 of the Internal Revenue Code of 1986, as amended
(generally, property held for investment is a capital asset). For these
purposes, you are a U.S. person if you are either (1) a citizen or resident of
the United States for U.S. federal income tax purposes, (2) a corporation or
partnership created or organized in or under the laws of the United States or
any political subdivision thereof, (3) an estate, the income of which is subject
to U.S. federal income tax regardless of the source or (4) a trust with respect
to which a court within the United States is able to exercise primary
supervision over your administration and one or more U.S. persons have the
authority to control all your substantial decisions. This summary is based on
the Internal Revenue Code, Treasury regulations, administrative rulings and
court decisions, all as in effect as of the date hereof and all of which are
subject to change at any time (possibly with retroactive effect). This summary
is not a complete description of all tax consequences of the merger and, in
particular, may not address U.S. federal income tax considerations applicable to
stockholders subject to special treatment under U.S. federal income tax law
(including, for example, stockholders who are not U.S. persons, financial
institutions, dealers in securities, insurance companies, tax-exempt entities,
holders who acquired NetOptix common stock pursuant to the exercise of an
employee stock option or right or otherwise as compensation, and holders who
hold NetOptix common stock as part of a hedge, straddle or conversion
transaction). In addition, no information is provided herein with respect to the
tax consequences of the merger under applicable foreign, state or local laws.
The material U.S. federal income tax consequences of the merger are as
follows:
- the merger will constitute a reorganization within the meaning of
Section 368 of the U.S. Internal Revenue Code;
- no gain or loss will be recognized by the holders of NetOptix
common stock who exchange their NetOptix common stock for
Corning common stock pursuant to the
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merger, except with respect to any cash received in lieu of a
fractional share of Corning common stock;
- the aggregate tax basis of the Corning common stock received
in the merger by each holder of NetOptix common stock will be
the same as the aggregate tax basis of the NetOptix common
stock surrendered in exchange therefor, reduced by any amount
of tax basis allocable to a fractional share interest in
Corning common stock for which cash is received;
- the holding period of a holder of NetOptix common stock for
Corning common stock received in the merger will include the
holding period for the NetOptix common stock surrendered in
exchange therefor;
- an NetOptix stockholder who receives cash in lieu of a
fractional share interest in Corning common stock pursuant to
the merger will be treated as having received such cash in
exchange for such fractional share interest and generally will
recognize capital gain or loss on such deemed exchange in an
amount equal to the difference between the amount of cash
received and the tax basis of the NetOptix common stock
allocable to such fractional share interest; and
- no gain or loss will be recognized by Corning, Corning
shareholders, CI Subsidiary, Inc. or NetOptix as a result of the
merger.
Nixon Peabody LLP and Edwards & Angell, LLP have provided opinions,
filed as exhibits to the registration statement related to this Proxy
Statement/Prospectus, to Corning and NetOptix, respectively, to the effect that,
subject to limitations set forth herein, this summary describes the material
U.S. federal income tax consequences of the merger to holders of NetOptix common
stock. In addition, the obligations of the parties to consummate the merger are
conditioned upon the receipt by Corning of a further opinion from Nixon Peabody
LLP, or alternatively in the case of NetOptix, Edwards & Angell, LLP, in each
case subject to the qualifications discussed herein, confirming the
characterization of the merger as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code. Stockholders should be aware that
an opinion of counsel is not binding on the Internal Revenue Service or the
courts. Stockholders should also be aware that the opinions of Nixon Peabody LLP
and Edwards & Angell, LLP, filed as exhibits to the registration statement and
delivered at the time of the merger, are and will be based on current law and on
representations and assumptions regarding current and future factual matters and
covenants as to future actions made by Corning and NetOptix. If any of the
representations or assumptions is inaccurate or incorrect or any of the
covenants is not complied with, the conclusions stated in these opinions could
be affected.
Under the U.S. backup withholding rules, you as a holder of NetOptix
common stock may be subject to backup withholding at the rate of 31% on any cash
received in lieu of fractional shares of Corning common stock, unless you (1)
are a corporation or come within other exempt categories and, when required,
demonstrate this fact or (2) provide a correct taxpayer identification number,
certify that you are not subject to backup withholding and otherwise comply with
applicable requirements of the backup withholding rules. Any amount withheld
under these rules will be credited against your federal income tax liability
provided you furnish the required information to the IRS. If you do not comply
with the backup withholding rules, you may be subject to penalties imposed by
the IRS.
The preceding summary does not purport to be a complete analysis or
discussion of a potential tax effect relevant to the merger. You are urged to
consult with your own tax advisors regarding the U.S. federal income and other
tax consequences of the merger to you, under state, local and foreign tax laws.
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ACCOUNTING TREATMENT
Corning will account for the merger under the purchase method of
accounting in accordance with generally accepted accounting principles. The
purchase price will be allocated based on the fair value of the assets acquired
and the liabilities assumed. Any excess of the purchase price will be allocated
to goodwill and any acquired in-process research and development will be charged
to expense in the period in which the transaction closes.
REGULATORY APPROVALS
HART-SCOTT-RODINO. The Federal Trade Commission and the Antitrust
Division of the Department of Justice frequently scrutinize the legality under
the antitrust laws of transactions such as the merger. At any time before or
after the merger, the Department of Justice or the Federal Trade Commission
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the merger or
seeking divestiture of substantial assets of Corning or NetOptix or their
subsidiaries. Private parties and state attorneys general may also bring an
action under the antitrust laws under certain circumstances. There can be no
assurance that a challenge to the merger on antitrust grounds will not be made
or, if such a challenge is made, of the result.
On March 3, 2000, Corning and NetOptix filed Pre-Merger Notification
and Report forms with the Federal Trade Commission and the Department of Justice
under the Hart-Scott-Rodino Act and requested early termination of the
applicable waiting period. On April __, 2000, the waiting period will terminate.
OTHER. Corning and NetOptix must obtain and keep in effect as a
condition to the consummation of the merger all material governmental consents,
approvals and authorizations legally required for the consummation of the merger
and the transactions contemplated by the merger. In addition, certain foreign
governmental filings are required to be made in connection with the merger.
Corning and NetOptix expect that none of them would prohibit consummation of the
merger. However, no assurance can be given that the required consents, approvals
or authorizations will be obtained.
RESTRICTIONS ON SALES OF CORNING COMMON STOCK
All shares of Corning common stock received by NetOptix stockholders in
the merger will be freely transferable, except that shares of Corning common
stock received by persons who are affiliates of NetOptix at the effective time
of the merger or on the date of the special meeting may be resold by them only
in transactions:
- permitted by the resale provisions of Rule 145 promulgated under
the Securities Act;
- permitted by Rule 144 promulgated under the Securities Act in the
case of those persons who become affiliates of Corning after the
effective time; or
- as otherwise permitted under the Securities Act.
Affiliates of NetOptix are those individuals or entities that control,
are controlled by, or are under common control with NetOptix. Affiliates
generally include executive officers and directors of NetOptix as well as
certain principal stockholders of NetOptix. This proxy statement/prospectus does
not cover any resales of Corning common stock received by affiliates of NetOptix
in the merger.
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STOCK EXCHANGE LISTING
It is a condition to the merger that the shares of Corning common stock
to be issued pursuant to the merger agreement be authorized for listing on the
New York Stock Exchange, subject to official notice of issuance. An application
will be filed to list on the New York Stock Exchange the shares of Corning
common stock to be issued in the merger. Following the merger, NetOptix common
stock will no longer be registered under the Securities Exchange Act or traded
on the NASDAQ.
NO APPRAISAL RIGHTS
Holders of NetOptix common stock are not entitled to appraisal rights
under Section 262 of the Delaware General Corporation Law in connection with the
merger.
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THE MERGER AGREEMENT
The following summary of the material terms and provisions of the
merger agreement is qualified in its entirety by reference to the merger
agreement, dated as of February 13, 2000, between Corning, CI Subsidiary, Inc.
and NetOptix. The merger agreement is attached as Appendix A to this proxy
statement/prospectus and is incorporated by reference herein.
CONVERSION OF SECURITIES
At the effective time of the merger, each share of NetOptix common
stock issued and outstanding immediately prior to the effective time of the
merger will be converted into the right to receive 0.90 of a share of Corning
common stock. After the effective time of the merger, each certificate that
previously represented shares of NetOptix common stock will represent only the
right to receive the number of whole shares of Corning common stock into which
the shares of NetOptix common stock are converted in the merger and a payment of
cash instead of any fractional shares of Corning common stock.
EXCHANGE OF CERTIFICATES
As soon as practicable after the effective time of the merger (but in
any event within five business days), Harris Trust and Savings Bank or another
bank or trust company designated by Corning and acceptable to NetOptix, in its
capacity as exchange agent, will send a transmittal letter to each former
NetOptix shareholder. The transmittal letter will contain instructions on how to
obtain shares of Corning common stock in exchange for shares of NetOptix common
stock. NETOPTIX STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL
THEY RECEIVE THE TRANSMITTAL MATERIALS FROM THE EXCHANGE AGENT.
STOCK OPTIONS
All NetOptix's stock options will remain outstanding to the extent not
exercised prior to the effective date of the merger and will be assumed by
Corning following the effective time. Each option assumed by Corning will be
exercisable upon the same terms and conditions as under the NetOptix plans,
except as may be modified prior to closing as described above under the heading
" " and except that each option will represent the right to acquire the number
of Corning shares obtained by multiplying 0.90 by the number of underlying
NetOptix common shares subject to the NetOptix options. In addition, the option
exercise price per share of Corning common stock will be equal to the option
exercise price per share of NetOptix common stock immediately prior to the
merger divided by 0.90.
Corning will issue to each NetOptix option holder a document evidencing
its assumption of the options. Corning has agreed to file with the SEC a Form
S-8 or other appropriate registration statement covering the shares of Corning
common stock underlying the assumed options no later than five business days
after the effective time of the merger and to keep the registration statement
current.
ANDLINGER CAPITAL WARRANT
The warrant to purchase 1,000,000 shares of NetOptix's common stock for
$1.50 per share held by Andlinger Capital XIII LLC, an affiliate of Mr.
Andlinger, Chairman and Chief Executive Officer of NetOptix, will remain
outstanding to the extent not exercised prior to the effective date of the
merger and will be assumed by Corning following the effective time. The warrant
will be exercisable in accordance with its terms and conditions and except that
the warrant will represent the right to acquire the number of Corning shares
obtained by multiplying 0.90 by the number of underlying NetOptix common shares
subject to the warrant (900,000 shares of Corning common stock). In addition,
the warrant exercise price per share of Corning common stock will be equal to
the warrant exercise price per share of NetOptix common stock immediately prior
to the merger divided by 0.90 ($1.66 per share).
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CONDITIONS TO CLOSING
The obligations of each of Corning and NetOptix to consummate the
merger are subject to the satisfaction or waiver of the following conditions:
- the holders of a majority of the outstanding shares of
NetOptix common stock having approved the adoption of the
merger agreement;
- the waiting period under the Hart Scott Rodino Act having
expired or terminated and receipt by NetOptix of all required
material consents from governmental entities and other third
parties;
- authorization for listing on the New York Stock Exchange of
the shares of Corning common stock to be issued to NetOptix
shareholders, subject to official notice of issuance;
- the SEC having declared the Corning registration statement, of
which this proxy statement/prospectus forms a part, effective
and there existing no stop order or other action to suspend
the effectiveness of the registration statement;
- no court having entered an order making the merger illegal or
otherwise prohibiting its consummation, the parties having
used their best effort to lift any injunction, order,
judgment, decree or ruling that would make the merger illegal
or otherwise impossible;
- the continued truthfulness and accuracy in all material
respects of the representations and warranties made by the
other company, and the performance or compliance in all
material respects by the other company with all material
agreements and covenants required by the merger agreement, and
receipt from the other party of a certificate of an officer
certifying to the foregoing;
- Corning having received an opinion from Nixon Peabody LLP, and
NetOptix, having received an opinion from Edwards & Angell,
LLP, that the merger will qualify as a tax-free reorganization
under Section 368 of the Internal Revenue Code; and
- each company having received a comfort letter from the other
company's independent accountants.
REPRESENTATIONS AND WARRANTIES OF CORNING AND NETOPTIX
Corning and NetOptix made mutual customary representations and
warranties in the merger agreement regarding the following:
- corporate organization and qualification to do business of each of
the companies and their subsidiaries;
- availability of charters and bylaws;
- capitalization of the companies;
- authority to enter into the merger agreement and consummate the
merger;
- absence of conflicts between the merger agreement and the merger,
on the one hand, and other contractual and legal obligations of
the companies, on the other hand;
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- requirement of consents, approvals, filings or other
authorizations to enter into the merger agreement and consummate
the merger;
- compliance with all applicable SEC filing requirements and
accuracy and completeness of SEC filings;
- compliance with generally accepted accounting principles of
financial statements contained in SEC filings;
- absence of certain changes or events since December 31, 1999,
in the case of NetOptix, and September 30, 1999, in the case
of Corning, in each case that would have a material adverse
effect on the respective company;
- accuracy of the information included in this proxy statement/
prospectus;
- absence of material litigation;
- absence of actions that would prevent the merger from qualifying
as a tax-free reorganization;
- possession and effectiveness of permits and licenses and contracts
necessary to carry on business as currently conducted;
- operation of business in material compliance with permits,
licenses and applicable laws;
- board approval of the merger and the stockholder vote required to
approve the merger and adopt the merger agreement;
and
- use of brokers.
In addition to the mutual representations, NetOptix also made
representations and warranties in the merger agreement regarding the following:
- compliance of employee benefit plans with applicable law;
- labor matters;
- insurance matters;
- environmental matters;
- material contracts and commitments, including government
contracts;
- intellectual property matters;
- interested party transactions;
- tax matters;
- title to properties and absence of encumbrances;
- opinion of financial advisor;
- absence of undisclosed liabilities; and
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- absence of certain unlawful business practices and restrictions on
business activities.
None of the representations and warranties made in the merger agreement
survive the closing of the merger.
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
NetOptix has agreed that, subject to exceptions, between the execution
of the merger agreement and the effective time of the merger, NetOptix and its
subsidiaries will:
- conduct its businesses in the ordinary course of business and in a
manner consistent with past practice; and
- use its reasonable best efforts to preserve substantially
intact its business organizations and to keep available the
services of its employees and consultants and to preserve its
current relationships with customers, suppliers, licensors,
licensees and other persons that have significant business
relations with NetOptix.
NetOptix has also agreed that, subject to exceptions, prior to the
effective time of the merger, without the prior written agreement of Corning,
NetOptix and its subsidiaries will not:
- declare, set aside or make any dividend payment or distribution in
respect of any stock.
- purchase, redeem or otherwise acquire any of its equity
securities, except pursuant to:
- the exercise of outstanding options;
- NetOptix's Employee Stock Purchase Plan; or
- the exercise of the Andlinger Capital Warrant;
- grant, award or enter into any compensation or change of
control arrangement with any employee of NetOptix or any
subsidiary without the prior written consent of Corning;
- issue any shares of its capital stock including any options,
any other voting securities of NetOptix or any securities
convertible into, or rights to acquire, any voting securities,
other than the issuance of NetOptix common stock upon the
exercise of outstanding NetOptix options or the Andlinger
Capital Warrant, or amend the terms of any such securities,
rights, warrants or options;
- amend or otherwise change its charter or bylaws;
- acquire or agree to acquire any business or entity, or any assets
that are material, individually or in the aggregate, to NetOptix
except in the ordinary course of business;
- subject to a lien or dispose of or transfer any of its
properties or assets or any intellectual property, except in
the ordinary course of business and except for the sale of
optical filters and custom diamond machined optics and systems
in the ordinary course of business;
- incur or modify any indebtedness for borrowed money or
guarantee any such indebtedness of another person, except for
borrowings or other transactions incurred in the ordinary
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course of business under the existing credit facility or, except
in the ordinary course of business, make any loans, advances or
capital contributions to, or investments in, any other person, or
settle or compromise any material claims or litigation;
- alter, amend or delay in any material respect the
implementation of its plans for capital expenditures and
completion/expansion of plant and production facilities
previously delivered to Corning;
- take any action or omit to take any action that would cause
any of its representations and warranties in the merger
agreement to become untrue in any material respect; or
NO SOLICITATION PROVISION
NetOptix has agreed not to, directly or indirectly, solicit any
inquiries for any proposal or offer with respect to a business combination or
similar transaction or sale of assets which would compete with or interfere with
the merger, including any dissolution or similar transaction or any purchase or
sale of all or any significant portion of the assets or more than 10% of its
common stock or the assets or capital stock of any of its subsidiaries. NetOptix
has also agreed to cease and cause its agents and representatives to terminate
any discussions or negotiations with respect to any offer or proposal with
respect to an acquisition proposal. NetOptix has agreed to notify Corning
promptly, but in any event within two days, of all inquiries and proposals that
NetOptix may receive relating to any of the foregoing matters, such notice to
set out the terms and conditions of such inquiry or proposal and the identity of
the person making it.
Notwithstanding the foregoing, prior to the adoption of the merger
agreement by the stockholders of NetOptix, the NetOptix board of directors is
not prohibited from:
- furnishing information to, or entering into and engaging in
discussions or negotiations with, any person in response to an
unsolicited written proposal or offer regarding an acquisition
transaction; or
- recommending an acquisition proposal to the stockholders if
the NetOptix board of directors determines in good faith that
the acquisition proposal constitutes a superior proposal which
would be materially more favorable to the holders of NetOptix
common stock than the merger and is reasonably capable of
being completed, in which case, the NetOptix board of
directors may cause NetOptix to enter into an acquisition
agreement as to the superior proposal so long as, among other
conditions, NetOptix has terminated the merger agreement in
accordance with its terms and paid the termination fee
referenced under "Termination and Termination Fees".
In addition, pursuant to the stockholder voting agreement and
irrevocable proxy, the principal stockholders of NetOptix, Andlinger Capital
XIII LLC, Mr. Andlinger, Mr. Magida, acting in his capacity as manager of
Andlinger Capital and as trustee of a trust for Mr. Andlinger, and Mr. Blais,
have agreed to vote their shares in favor of the merger and not to solicit other
offers, among other things. This agreement also has the effect of discouraging
other persons who may be interested in acquiring NetOptix.
MUTUAL COVENANTS OF CORNING AND NETOPTIX
Corning and NetOptix have agreed as follows:
- each company will cooperate to file the SEC documents necessary to
complete the merger;
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- each company will provide the other with access to its
properties, books, contracts, commitments, records and
personnel upon reasonable notice;
- each company will use its reasonable best efforts to make all
governmental filings necessary to consummate the merger, and
to obtain all required consents, licenses, permits, waivers,
approvals, authorizations or orders;
- each company will cooperate on the design and implementation of
retention agreements and non-competition agreements to retain key
employees;
- subject to dollar limitations, for six years following the
merger, Corning will maintain directors' and officers'
liability insurance covering those persons who are currently
covered by NetOptix's directors' and officers' liability
insurance policy on terms comparable to NetOptix's existing
coverage;
- each company will give prompt notice to the other of any
breach of any representation and warranty or of the failure to
comply with any covenant in the merger agreement;
- neither company will take any action that would prevent the
qualification of the merger as a tax-free reorganization under
Section 368 of the Internal Revenue Code;
- Corning will promptly prepare and submit an application to the New
York Stock Exchange for the listing of the new shares of Corning
common stock;
- each company will consult with the other regarding any public
announcements it makes concerning the merger;
- each company will use its reasonable best efforts to obtain
customary "comfort" letters from PricewaterhouseCoopers LLP
and Ernst & Young LLP in connection with the merger;
- each company will use reasonable best efforts to cause the
conditions to the merger to be fulfilled; and
- Corning will file and maintain the effectiveness of a
registration statement on Form S-8 covering the Corning stock
options to be issued in the merger.
TERMINATION AND TERMINATION FEES
The merger agreement may be terminated and the merger abandoned at any
time prior to the effective time:
- by mutual consent of Corning and NetOptix;
- by either company if the transaction is not completed on or
prior to July 31, 2000, so long as the terminating party is
not otherwise in material breach of its representations,
warranties or obligations under the merger agreement;
- by NetOptix at any time prior to the special meeting, upon
five business days' notice to Corning, if the NetOptix board
of directors approves a superior proposal, but only so long
as:
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- NetOptix has complied with its no solicitation obligations
and other agreements as to competing proposals described
above under "No Solicitation Provision";
- prior to termination, NetOptix has negotiated with Corning
to make adjustments in the terms and conditions of the
merger agreement as would enable NetOptix to proceed with
the merger rather than the competing proposal;
- the NetOptix board of directors shall have concluded in
good faith, after giving effect to the adjustments which
may be offered by Corning, that the competing proposal is
a superior proposal; and
- NetOptix shall have paid the termination fee to Corning as
provided in the merger agreement;
- by Corning if:
- the NetOptix board of directors withdraws or modifies its
approval of the merger in a manner adverse to Corning;
- the NetOptix board of directors recommends to the
shareholders of NetOptix a superior proposal; or
- NetOptix enters into negotiations with any person
concerning a competing proposal in violation of the
no solicitation of transactions provision in the
merger agreement;
- by either company if NetOptix does not receive the required
shareholder approval;
- by either company upon the other company's breach which has
not been cured, subject to any materiality thresholds, of a
representation, warranty, covenant or agreement, or if any
representation or warranty becomes untrue; or
- by either company if a court of competent jurisdiction has
taken any final and non-appealable action prohibiting the
consummation of the merger.
NetOptix will be required to pay a termination fee of $50 million under
the following circumstances:
- Corning terminates the merger agreement because the NetOptix
board of directors recommends to the NetOptix shareholders a
superior proposal or NetOptix enters into negotiations with any
person concerning a competing proposal in violation of the no
solicitation of transactions provision in the merger agreement.
- NetOptix terminates the merger agreement based on a superior
proposal.
NetOptix is also required to pay Corning $50 million if:
- either company terminates the merger agreement as a result of the
NetOptix stockholders failing to adopt the merger agreement;
- a competing proposal for the acquisition of any of the
outstanding shares of NetOptix or a substantial part of its
business or properties had been made public or known to
NetOptix
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stockholders generally at or prior to the time of the failure to
adopt the merger agreement; and
- within 12 months after termination, NetOptix consummates or enters
into an agreement with respect to an acquisition proposal.
NetOptix is also required to pay Corning $50 million if:
- Corning terminates the merger agreement in accordance with the
provisions set forth above providing for termination solely at
its election at any time;
- at any time after the date of the merger agreement and prior to
the date of termination, there exists a competing proposal;
- following the existence of a competing proposal and prior to
the date of termination, NetOptix shall have intentionally
breached and not cured any of its material covenants or
agreements set forth in the merger agreement in any material
respect; and
- within 12 months of the termination of the merger agreement,
NetOptix consummates or enters into an agreement with respect
to an acquisition proposal.
NetOptix will not be required to pay the termination fee if it has not
engaged in discussions or negotiations with, or provided confidential
information to, any person in respect of an acquisition proposal and the
NetOptix board of directors changes or withholds its recommendation of the
merger solely because it is required to do so by its fiduciary duties based on
other matters.
EXPENSES
In the event of termination of the merger agreement by either Corning
or NetOptix, there shall be no liability on the part of NetOptix, Corning or CI
Subsidiary, Inc. except to the extent NetOptix is required to pay the
Termination Fee and except to the extent of any breach of the merger agreement.
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UNAUDITED PRO FORMA CONDENSED COMBINED
SUPPLEMENTAL FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated supplemental
financial information give effect to the merger using the purchase method of
accounting. The following unaudited pro forma combined supplemental financial
information and the accompanying notes should be read in conjunction with the
historical financial statements and related notes of Corning and NetOptix,
incorporated by reference in this proxy statement/prospectus.
The unaudited pro forma combined supplemental financial information is
provided for informational purposes only and does not purport to represent what
the combined financial position and results of operations would actually have
been had the merger in fact occurred at the dates indicated. The following
unaudited pro forma combined supplemental statement of income and unaudited pro
forma combined supplemental balance sheet illustrate the estimated effects of
the merger as if that transaction had occurred on January 1, 1999, for the
statements of income and at December 31, 1999, for the balance sheet. The
unaudited pro forma combined supplemental statement of income does not include
the impact of any non-recurring charges directly attributable to the
transaction. The following unaudited pro forma supplemental information was
derived using Corning's December 31, 1999, fiscal year end supplemental
information and NetOptix September 30, 1999, fiscal year end financial
information.
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<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(IN MILLIONS)
DECEMBER 31, 1999
CORNING (1) NETOPTIX (2) ADJUSTMENTS PRO FORMA
-------- -------- ----------- ---------
Assets
CURRENT ASSETS
<S> <C> <C> <C> <C>
Cash $ 121.8 $ 2.1 $ 123.9
Short-term investments, at cost which
approximates market value 158.6 158.6
Accounts receivable, net of doubtful accounts
and allowances 872.4 2.8 875.2
Inventories 602.2 1.6 603.8
Deferred taxes on income and other current assets 229.2 3.7 232.9
Net assets of discontinued operations 9.0 9.0
---------- ------- --------- --------
Total current assets 1,984.2 19.2 2,003.4
---------- ------- --------- --------
Investments
Associated companies, at equity 421.9 421.9
Others, at cost 82.5 82.5
---------- ------ --------- --------
504.4 504.4
---------- ------ --------- --------
Plant and equipment
net of accumulated depreciation 3,201.7 10.5 3,212.2
Goodwill and intangible assets,
net of accumulated amortization 506.7 11.8 2,061.5 (a) 2,580.0
Other assets 329.0 1.9 330.9
-------- ------- --------
$ 6,526.0 $ 43.4 $2,061.5 $8,630.9
========== ======= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Loans payable $ 420.7 $ 6.5 $ 427.2
Accounts payable 418.0 3.1 421.1
Other accrued liabilities 715.3 3.6 718.9
---------- ------- --------- --------
Total current liabilities 1,554.0 13.2 1,567.2
---------- ------- --------- --------
Other liabilities 720.6 0.7 721.3
Loans payable beyond one year 1,490.4 0.6 1,491.0
Minority interest in subsidiary companies 284.8 - - 284.8
Convertible preferred stock 13.5 - - 13.5
Common shareholders' equity
Common stock, including excess over par
value and other capital 1,359.3 61.5 2,028.9 (b) 3,449.7
Retained earnings 1,790.0 (32.4) 32.4 1,790.0
Less cost of common stock in treasury (656.0) (656.0)
Accumulated other comprehensive income (30.6) (0.2) 0.2 (30.6)
---------- ------- --------- --------
COMMON SHAREHOLDERS' EQUITY 2,462.7 28.9 2,061.5 4,553.1
---------- ------- --------- --------
$ 6,526.0 $ 43.4 $2,061.5 $8,630.9
========== ======= ======== ========
</TABLE>
(1) Represents the financial position of Corning at December 31, 1999, giving
effect to the pooling of interests with Oak Industries, Inc. on January 28,
2000. Also, the balance sheet at December 31, 1999, does not include any
pro forma information related to the acquisition of Siemans assets.
(2) Represents the historical financial position of NetOptix for the year ended
September 30, 1999.
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<TABLE>
<CAPTION>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN MILLIONS, EXCEPT PER SHARE DATA)
PRO FORMA COMBINED
CORNING (1) NETOPTIX (2) ADJUSTMENTS PRO FORMA
------- -------- ----------- ---------
REVENUES
<S> <C> <C> <C> <C>
Net sales $ 4,741.1 $ 14.4 $ 4,755.5
Royalty, interest and dividend income 41.4 -- 41.4
Non-operating gain 30.0 -- 30.0
----------- ----------- -------- ------------
4,812.5 14.4 4,826.9
DEDUCTIONS
Cost of sales 2,930.3 9.5 2,939.8
Selling, general and administrative expenses 667.4 8.8 676.2
Research, development and engineering expenses 378.2 0.2 378.4
Provision for restructuring and impairment 1.4 6.4 7.8
Amortization of purchased intangibles
including goodwill 27.8 0.7 (0.7) (a) 324.0
296.2 (a)
Interest expense 93.2 0.9 94.1
Other, net 39.3 (0.8) 38.5
----------- --------- -------- --------
Income (loss) from continuing operations before taxes
on income 674.9 (11.3) (295.5) 368.1
Taxes on income (loss) from continuing operations 207.1 207.1
----------- --------- -------- --------
Income (loss) before minority interest
and equity earnings 467.8 (11.3) (295.5) 161.0
Minority interest in earnings of subsidiaries (66.8) -- (66.8)
Dividends on convertible preferred
securities of subsidiary (2.3) -- (2.3)
Equity in earnings of associated
companies 112.3 -- 112.3
----------- --------- -------- --------
Income (loss) from continuing operations $ 511.0 $ (11.3) $ (295.5) $ 204.2
=========== ========= ======== ========
Basic earnings (loss) per share from
continuing operations $ 2.00 $ (1.19) $ 0.77
Diluted earnings (loss) per share
from continuing operations $ 1.95 $ (1.19) $ 0.75
Weighted average shares outstanding-basic (b) 255.1 9.5 263.7
Weighted average shares outstanding-diluted (b) 265.1 9.5 268.9
</TABLE>
(1) Represents the result of operations of Corning for the year ended December
31, 1999, retroactively restated for the pooling of interests with Oak
Industries, Inc. on January 28, 2000. Also, the results of operations at
December 31, 1999, does not include any pro forma information related to
the acquisition of Siemens assets.
(2) Represents the historical results of operations of NetOptix for the year
ended September 30, 1999.
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NOTES TO UNAUDITED PRO FORMA COMBINED SUPPLEMENTAL FINANCIAL INFORMATION
(a) On February 13, 2000, NetOptix agreed to be acquired by Corning in a
merger transaction to be accounted for under the purchase method of
accounting. The merger will be effected by Corning issuing shares and
options at an exchange ratio of 0.90 for each share or right to
aacquire shares of NetOptix common stock outstanding on the closing
date. The actual number of shares of Corning common stock to be issued
will depend on the actual number of shares of NetOptix common stock
outstanding on the date the merger closes. This transaction is valued
at approximately $2.1 billion based on the average closing price for a
range of trading days (February 10 through February 16, 2000) around
the announcement date (February 14, 2000) of the merger.
The purchase price will be allocated based on the fair value of the
assets acquired and the liabilities assumed. The excess of the purchase
price over the assets acquired have been allocated to goodwill and
other intangibles in this presentation. Corning currently expects the
useful life of goodwill and other intangibles to range from seven to
ten years. This pro forma presentation assumes a useful life of seven
years. Any acquired in-process research and development will be
expensed in the period the transaction is completed. This presentation
assumes no charge for in-process research and development.
(b) Adjustments reflect the issuance of 12 million shares of Corning common
stock to effect the exchange of NetOptix common stock , and options to
acquire NetOptix common stock, at the exchange ratio of 0.90 of a share
of Corning common stock for each share and option to acquire shares of
NetOptix common stock.
The pro forma combined per share amounts and weighted average common
shares outstanding reflect the combined weighted average of Corning and
NetOptix common shares outstanding for the period presented, after
adjusting the number of NetOptix common shares to reflect the exchange
ratio of 0.90 of a share of Corning common stock for each share of
NetOptix common stock. The diluted unaudited pro forma per share
information for Corning is based on the weighted average number of
outstanding shares of Corning common stock adjusted to include (1) the
dilutive effect of Corning employee stock options and (2) the number of
shares of Corning common stock that would be issued in the merger. The
effect of NetOptix employee stock options was not dilutive.
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THE COMPANIES
CORNING
BUSINESS
Corning traces its origins to a glass business established in 1851.
Corning 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.
Today, Corning is an international corporation competing in three broadly
defined business operating segments: Telecommunications, Advanced Materials and
Information Display. Corning's business strategy is to focus on attractive
global markets where its leadership in materials and process technology will
allow it to achieve and sustain competitive advantage and superior growth over
time. Corning's principal executive offices are located at One Riverfront Plaza,
Corning, NY 14831 and its telephone number is (607) 974-9000.
TELECOMMUNICATIONS. Corning's Telecommunications segment produces
optical fiber and cable, optical hardware and equipment and photonics components
for the worldwide telecommunications industry. Corning offers a wide selection
of fibers for use in long-haul, utility, submarine, local exchange, cable TV and
premises applications. Corning provides a substantial portion of the world's
optical fiber, including LEAF-Registered Trademark- optical fiber, a
technologically advanced high speed, high-data-rate fiber.
Siecor Corporation and Corning Cables, Corning's European optical fiber
cabling division, manufactures fiber-optic cable and network hardware that is
deployed throughout the world.
Corning's Photonics Technologies Division provides products that
maximize the capacity, flexibility, performance and reliability of
communications networks worldwide. Corning's photonics products boost, combine,
separate and connect optical signals transmitted over fiber-optic
telecommunications networks. Corning is a leading supplier of optical amplifiers
and was among the first to offer an innovative multiplexer module that allows
optical signals to be added or dropped as they travel through a communications
network.
Photonics products, primarily intended to enable the use of dense
wavelength division multiplexing technology, include cutting-edge PureGain-TM-
EDFA modules, PureGain DCM-Registered Trademark- modules and PurePass-TM-
optical routing modules. Corning also offers MultiClad-Registered Trademark-
couplers, variable optical attenuators, micro-optic filters and PureMode-TM-
engineered fibers. Corning's optical networking products operate in terrestrial
and submarine networks worldwide, and are designed to withstand a wide array of
mechanical and environmental conditions. Corning is recognized as an industry
leader, providing low-cost, innovative fiber and photonic network solutions.
Corning's test facilities assure the performance and reliability of its
photonics products at both the component and system levels.
ADVANCED MATERIALS. Corning's Advanced Materials segment, which
manufactures environmental products, science products, semiconductor materials,
optical and lighting products and glass ceramic cooktops, has been a mainstay of
Corning's growth for decades.
Corning's cellular ceramic products are component parts of catalytic
converters on cars, trucks and buses worldwide. Virtually every vehicle
manufacturer around the world demands new products that reduce emissions as
mandated by global, clean-air legislation. Recently introduced advanced cellular
ceramic products are expected to enable vehicle manufacturers to achieve
substantially reduced emissions over the next decade. Similar technologies are
used to reduce emissions from stationary power plants.
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New products from Corning's Science Products Division, which include
polymer microplates and which stem from its expertise in complex polymers,
surface chemistry and molecular biology, are useful in pharmaceutical and
genomic research. Corning's advanced microplates allow for more efficient drug
testing.
Corning's fused silica products enable semiconductor manufacturers to
use microlithography techniques to achieve miniaturization required for the
manufacture and processing of chips for computer applications.
INFORMATION DISPLAY. The Information Display segment manufactures glass
panels and funnels for televisions and cathode-ray tubes; projection video lens
assemblies; and liquid crystal display glass for flat panel displays. Corning is
a leading supplier of flat glass used in active matrix liquid crystal displays
for notebook computer screens, desktop monitors, digital cameras, personal
digital assistants and automotive displays. Ultra-thin, precision-surface glass
enables customers to create faster, larger and less expensive liquid crystal
displays that have higher resolution.
Corning's lenses, which are used widely in projection television
systems, are being adapted to meet emerging requirements in digital and
high-definition systems for entertainment as well as commercial applications.
Corning's traditional, more mature television glass business concentrates on
glass face plates, panels, and funnels used to make color picture tubes.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various
benefit plans (including stock option plans), voting securities, including the
principal holders of those securities, certain relationships and related
transactions and other matters as to Corning is incorporated by reference from
or set forth in Corning's Annual Report on Form 10-K for the year ended December
31, 1999, incorporated herein by reference. Stockholders desiring copies of this
document and other documents may contact Corning at its address or telephone
number indicated under "Where You Can Find More Information."
Additional information concerning Corning is included in Corning's
reports filed under the Securities Exchange Act that are incorporated by
reference in this proxy statement/prospectus. See "Where You Can Find More
Information".
NETOPTIX
BUSINESS
NetOptix was incorporated in Delaware in 1973 as the successor to a
business which was founded in 1959. NetOptix was named Galileo Corporation until
September, 1999, and as Galileo Electro-Optics Corporation from its
incorporation to September 1996. Since its incorporation, NetOptix has been
engaged in developing, manufacturing and marketing optical and fiberoptic and
electro-optic components which transmit, sense or intensify light or images and
a variety of components for office copiers.
During 1999, NetOptix substantially restructured and reorganized its
business operations. NetOptix sold the businesses relating to medical products,
scientific detector and spectroscopy products and telecommunications products.
These businesses generated a majority of NetOptix's revenues and are treated as
discontinued operations in its financial statements. Currently, NetOptix along
with its wholly-owned subsidiaries, Optical Filter Corporation and Optical
Filter Corporation, GmbH, a German company
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<PAGE>
formed in 1999, develops, manufactures and markets systems that incorporate
recent advances in photonic technology and optical coating.
NetOptix's business consists principally of the design, manufacture and
marketing of a broad range of optical components and systems, including optical
filters, optical lens coatings for medical devices, laser systems, infrared
thermal imaging devices and optical analytic instruments, as well as one of the
world's largest and most technically advanced diamond point turning facilities,
which manufactures highly sophisticated optical components and systems for
industrial lasers and semiconductor instrumentation. Beginning in 1999, NetOptix
developed and readied for commercial production optical filters for use in Dense
Wavelength Division Multiplexing (DWDM) components of fiberoptic networks
serving the telecommunications industry.
The DWDM filters produced by NetOptix are capable, within certain
portions of the light wave spectrum, of dividing a light wave traveling through
a fiberoptic network into many separate beams of light, each capable of carrying
traffic over the network. NetOptix believes that there is a large and growing
marketplace for DWDM filters. Commercial production of DWDM filters began in
Fall 1999 and has continued in 2000, with commercial shipments commencing in
2000. Commencing in the second half of 1999, NetOptix added and has continued to
add substantial production capacity for its DWDM filter business at its facility
in Natick, Massachusetts, and organized Optical Filter Corporation, GmbH in
Germany, which is in the process of completing a facility in Waechtersbach,
Germany for optical filter technology research and development as well as
commercial production of DWDM filters. The German facility began commercial
production and shipments in 2000. NetOptix expects to continue to expand its
production capacity at its facilities in Natick, Massachusetts and in Germany
during 2000.
NetOptix's operations also include a facility in Keene, New Hampshire,
which provides products and services for diamond point turning for highly
sophisticated optical components and systems for industrial lasers and for
semiconductor instrumentation.
Additional information concerning NetOptix is included in NetOptix's
reports filed under the Securities Exchange Act that are incorporated by
reference in this proxy statement/prospectus. See "Where You Can Find More
Information" on pages __.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to the executive compensation, various
benefit plans (including stock option plans), voting securities, including the
principal holders of those securities, certain relationships and related
transactions and other matters as to NetOptix is incorporated by reference from
or set forth in NetOptix's Annual Report on Form 10-K for the year ended
September 30, 1999, incorporated herein by reference. Stockholders desiring
copies of this document and other documents may contact NetOptix at its address
or telephone number indicated under "Where You Can Find More Information."
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<PAGE>
DESCRIPTION OF CORNING CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Corning's authorized capital stock consists of 500,000,000 shares of
common stock, $.50 par value, and 10,000,000 shares of preferred stock, $100 par
value. The board of directors of Corning is recommending approval by Corning
shareholders at their April 27, 2000 annual meeting of an amendment to Corning's
Restated Certificate of Incorporation to increase the number of authorized
shares of common stock from 500,000,000 to 1,200,000,000.
COMMON STOCK
As of March 6, 2000, there were 277,077,201 outstanding shares of
Corning common stock held by approximately 17,500 holders of record. The holders
of Corning common stock are entitled to one vote for each share on all matters
submitted to a vote of stockholders and do not have cumulative voting rights.
The Corning board of directors is classified into three classes of approximately
equal size, one of which is elected each year. Accordingly, holders of a
majority of the Corning common stock entitled to vote in any election of
directors may elect all of the directors standing for election. The holders of
Corning common stock are entitled to share ratably in all assets of Corning
which are legally available for distribution, after payment of all debts and
other liabilities and subject to the prior rights of any holders of Corning
preferred stock then outstanding. The current quarterly cash dividend of Corning
common stock is $0.18 per share of common stock. The continued declaration of
dividends by the Corning board of directors is subject to the current and
prospective earnings, financial condition and capital requirements of Corning
and any other factors that the Corning board of directors deems relevant. The
holders of Corning common stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Corning common stock are fully paid
and nonassessable. The rights, preferences and privileges of holders of Corning
common stock are subject to the rights of the holders of shares of any series of
Corning preferred stock which Corning may issue in the future.
PREFERRED STOCK
Corning has designated 2,400,000 shares of its preferred stock as
Series A junior participated preferred stock, 316,822 shares as Series B
convertible preferred stock and 4,683,710 shares as Series C 6% cumulative
convertible preferred stock. As of March 6, 2000, there were 104,825 outstanding
shares of Series B preferred stock, held exclusively by the trustee of Corning's
existing employee investment plans. No other Corning preferred stock is
outstanding. Series A preferred stock is reserved for issuance upon exercise of
the rights distributed to the holders of Corning common stock pursuant to the
Corning rights agreement referred to below.
The Corning board of directors has the authority, without further
shareholder approval, to create other series of preferred stock, to issue shares
of preferred stock in such series up to the maximum number of shares of the
relevant class of preferred stock authorized, and to fix the dividend rights and
terms, conversion rights and terms, voting rights, redemption rights and terms,
liquidation preferences, sinking funds and any other rights, preferences and
limitations applicable to each such series of Corning preferred stock. The
purpose of authorizing the Corning board of directors to determine such rights
and preferences is to eliminate delays associated with a stockholder vote on
specific issuances. The issuance of Corning preferred stock, while providing
flexibility in connection with possible acquisitions and other corporate
purposes, could, among other things, adversely affect the voting power of
holders of Corning common stock and, under certain circumstances, make it more
difficult for a third party to gain control of Corning.
RIGHTS AGREEMENT
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Corning has adopted a Rights Agreement, dated as of June 5, 1996, which
provides for the issuance of one right to the holder of each share of Corning
common stock. Ten days after any person or group acquires or announces its
intention to acquire 20% or more of the outstanding Corning stock, each Corning
right will entitle the holder, other than the acquiring person or group, to
purchase one one-hundredth of a share of Series A preferred stock, at an
exercise price of $125 subject to certain antidilution adjustments.
If a person or group announces its intention to acquire 20% or more of
the outstanding Corning common stock or if Corning is acquired in a merger or
other business combination or sells 50% or more of its assets or earning power,
each Corning right, other than a Corning right beneficially owned by the
acquiring person or group, which will be void, will entitle the holder to
purchase, at the exercise price, common stock of the acquiring person or group
having a current market value of two times the exercise price of the right.
Prior to a person or group acquiring 50% or more of the outstanding Corning
common stock, the Corning board of directors may also elect to issue a share of
Corning common stock in exchange for each Corning right, other than Corning
rights held by the acquiring person or group.
The Corning rights expire on July 15, 2006, unless this expiration date
is extended or the Corning rights are exchanged or redeemed by Corning before
such date. Prior to an announcement by a person or group of its intent to
acquire 20% or more of the outstanding Corning common stock, Corning may redeem
the Corning rights in whole, but not in part, for $0.01 per Corning right, or it
may amend the Corning rights agreement in any way without the consent of the
holders of the Corning rights.
INDEMNIFICATION AND LIABILITY OF DIRECTORS AND OFFICERS
Sections 722 and 723 of the Business Corporation Law of the State of
New York provide that a corporation may indemnify its current and former
directors and officers under certain circumstances. Corning's bylaws provide
that it shall indemnify each director and officer against all costs and expenses
actually and reasonably incurred by him in connection with the defense of any
action or proceeding against him or related appeal by reason of his being or
having been a director or officer of Corning to the full extent permitted by the
Business Corporation Law.
Section 402(b) of the Business Corporation Law provides that a
corporation may include a provision in its certificate of incorporation limiting
the liability of its directors to the corporation or its shareholders for
damages for the breach of any duty, except for a breach involving intentional
misconduct, bad faith, a knowing violation of law or receipt of an improper
personal benefit or for certain illegal dividends, loans or stock repurchases.
Corning's restated certificate of incorporation provides that its directors'
liability is limited to the extent permitted by the Business Corporation Law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Corning common stock is Harris
Trust and Savings Bank in Chicago, Illinois. Harris Trust has advised Corning
that it is selling its shareholder services business to Computershare Limited.
COMPARISON OF STOCKHOLDER RIGHTS
As a result of the merger, holders of NetOptix common stock will become
holders of Corning common stock. The following is a summary of certain of the
material differences between the rights of holders of NetOptix common stock and
the rights of holders of Corning common stock. Corning is organized under the
laws of the State of New York, and NetOptix is organized under the laws of the
State of Delaware. These differences arise from differences between the New York
and Delaware state laws, as
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well as under the various provisions of the Corning restated certificate of
incorporation and bylaws and the NetOptix restated certificate of incorporation,
as amended, and bylaws.
The following summary does not purport to be a complete statement of
the rights of holders of Corning common stock and NetOptix common stock under,
and is qualified by its entirety by reference to, New York law, Delaware law and
the charters and bylaws of Corning and NetOptix. See "Description of Corning
Capital Stock" on pages __ through ___ for a summary of certain other rights
relating to the Corning common stock.
NUMBER, CLASSIFICATION AND REMOVAL OF DIRECTORS
The number of directors of Corning is fixed by the Corning board of
directors and, unless approved by at least two-thirds of the Corning board of
directors, or 80% of the holders of shares then entitled to vote in the election
of directors, shall be not less than nine nor more than twenty-four. The Corning
board of directors is divided into three classes serving staggered three-year
terms and any one or more of the directors of Corning may be removed from office
at any time, but only for cause, and only by the holders of at least a majority
of the shares then entitled to vote in an election of directors or a majority of
the Corning board of directors.
The number of directors of NetOptix is fixed by the NetOptix board of
directors and shall not be fewer than three nor more than nine. Directors serve
until the next annual meeting of stockholders or until their successors are
elected and qualified. Delaware law provides that, except with respect to
corporations with classified boards or cumulative voting, a director may be
removed, with or without cause, by the holders of the majority in voting power
of the shares entitled to vote at an election of directors. NetOptix's board of
directors is not classified and there is no cumulative voting.
ADVANCE NOTICE OF STOCKHOLDER PROPOSALS
The bylaws of Corning provide that a stockholder must give advance
written notice if the stockholder intends to make nominations for the Corning
board of directors. They do not provide for other stockholder proposals. For a
director nomination to be properly brought by a stockholder before an annual
meeting, notice must be delivered to or mailed by the stockholder and received
at the principal executive offices of Corning not less than 90 days, nor more
than 120 days prior to the anniversary of the prior year's annual meeting;
provided, however, that if the date of the annual meeting has been advanced by
more than 30 days or delayed by more than 60 days from such anniversary date,
the stockholder's notice must be received no earlier than 120 days prior to such
meeting and at least 90 days prior to the annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made.
To be timely with respect to a director nomination at a special meeting
of Corning's stockholders, a stockholder's notice must be delivered to or mailed
by the stockholder and received by Corning at least 90 days prior to the date of
the meeting or the tenth day following the day on which public announcement of
the date of such meeting is first made, and no earlier than 120 days prior to
the date of the meeting.
NetOptix's bylaws do not provide for advanced notice with respect to
stockholder proposals.
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RIGHT TO CALL SPECIAL MEETINGS
The bylaws of Corning provide that special meetings of stockholders may
be called at any time by the Chairman, the Chairman of the Executive Committee,
a Vice-Chairman or the President.
Special meetings of the stockholders of a Delaware corporation may be
called by the board of directors or by the persons authorized in the
corporation's certificate of incorporation or bylaws. NetOptix's bylaws provide
that a special meeting of the stockholders may be called at any time by the
President, and shall be called by the President or Secretary at the request of a
majority of the board of directors or at the request of stockholders owning a
majority of the outstanding capital stock of NetOptix.
SHAREHOLDER ACTION BY WRITTEN CONSENT
Under New York law, any action which may be taken at a meeting of
shareholders of Corning may also be taken by the written consent of all the
holders entitled to vote thereon.
NetOptix's bylaws provide that any action required to be taken or which
may be taken at any annual or special meeting of stockholders may be taken
without a meeting, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote were present and voted.
TRANSACTIONS WITH INTERESTED SHAREHOLDERS
Corning is subject to Section 912 of the New York Business Corporation
Law. Under Section 912, an interested shareholder, defined generally as a person
owning 20% or more of a corporation's outstanding voting stock, is prevented
from engaging in a business combination with the corporation for five years
after becoming an interested shareholder unless:
- the board approved the transaction in which the interested
shareholder became an interested shareholder; or
- the board approves the business combination before the shareholder
becomes an interested shareholder.
NetOptix is subject to Section 203 of the Delaware General Corporation
Law. Under Section 203, an interested stockholder, defined generally as a person
owning 15% or more of a corporation's outstanding voting stock, is prevented
from engaging in a business combination with the corporation for three years
after becoming an interested stockholder unless:
- the board approved the transaction in which the interested
stockholder became an interested stockholder;
- the interested stockholder owns at least 85% of the voting stock
upon consummation of the transaction in which the stockholder
became interested; or
- the board approves the business combination and 2/3 of the
outstanding voting stock of the corporation not owned by the
interested stockholder approves the business combination.
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AMENDMENT OF CHARTER AND BYLAWS
In general, the Corning certificate of incorporation may be amended by
an affirmative vote of the Corning board of directors and the holders of a
majority of Corning's shares. Any amendment to the article of the Corning
certificate of incorporation which relates to approval of a business
combination, however, requires the affirmative vote of 80% of the outstanding
voting stock of Corning unless it has been approved by a vote of 66 2/3% of the
full Corning board of directors and an affirmative vote of a majority of
continuing members of the Corning board of directors. In addition, any amendment
to the article which relates to the Corning board of directors, requires the
affirmative vote of 80% of the outstanding voting stock of Corning unless it had
been approved by a vote of 66 2/3% of the full Corning board of directors. Under
New York law, a corporation's bylaws may be amended by a majority of the votes
of shares then entitled to vote in the election of directors or, when so
provided in the corporation's certificate of incorporation or bylaws, by the
board of directors. Under the Corning bylaws, a bylaw may be amended by the
affirmative vote of a majority of the full Corning board of directors or the
holders of a majority of Corning's voting stock, other than the article relating
to the Corning board of directors which requires the affirmative vote of 80% of
the outstanding shares of Corning unless they have been approved by a vote of 66
2/3% of the full Corning board of directors.
A Delaware corporation's certificate of incorporation generally may be
amended by a majority in voting power of the outstanding stock entitled to vote,
unless the corporation's certificate of incorporation provides for a greater
vote. The NetOptix certificate of incorporation does not provide for a greater
vote.
Delaware vests the power to amend a company's bylaws in the
stockholders unless a company's certificate of incorporation confers such power
upon the directors. The NetOptix certificate of incorporation authorizes the
board of directors to amend the bylaws provided that such amendment is
consistent with Delaware law. The NetOptix bylaws permit either the stockholders
or the board of directors to amend the bylaws or adopt new bylaws. Conferring
such power on the directors, however, will not divest the stockholders of such
power.
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities
offered hereby will be passed upon for Corning by William D. Eggers, its Senior
Vice President and General Counsel, and the federal income tax consequences of
the merger will be passed upon for Corning by Nixon Peabody LLP. Certain legal
matters in connection with the federal income tax consequences of the merger
will be passed upon for NetOptix by Edwards & Angell, LLP.
EXPERTS
The financial statements of Corning incorporated in this proxy
statement/prospectus by reference to Corning's Annual Report on Form 10-K, as
amended by Form 10-K/A, for the year ended December 31, 1999, have been so
incorporated in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
The consolidated financial statements of NetOptix appearing in
NetOptix's Annual Report on Form 10-K for the year ended September 30, 1999,
have been audited by Ernst & Young LLP, independent accountants, as set forth in
their report hereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
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<PAGE>
Representatives of Ernst & Young LLP expect to be present at the
special meeting and, while they do not plan to make a statement at the meeting,
they will be available to respond to appropriate questions from stockholders in
attendance.
WHERE YOU CAN FIND MORE INFORMATION
Corning and NetOptix are each subject to the informational requirements
of the Securities Exchange Act and, in accordance therewith file reports, proxy
statements and other information with the SEC. The reports, proxy statements and
other information filed by Corning and NetOptix with the SEC can be viewed
electronically through the SEC's Electronic Data Gathering, Analysis and
Retrieval (EDGAR) system. The SEC maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
Copies can be inspected and copied at the public reference facilities maintained
by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's Regional Offices located at 7 World Trade Center, 13th floor, New
York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials also can be obtained at prescribed rates from
the Public Reference Section of the SEC at 450 Fifth Street, Washington, D.C.
20549. Information regarding the Public Reference Room may be obtained by
calling the Commission at (800) 732-0330. Corning common stock and NetOptix
common stock are listed on the New York Stock Exchange and the NASDAQ
respectively and reports and other information concerning Corning can also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
Corning has filed with the SEC a registration statement on Form S-4
under the Securities Exchange Act with respect to the shares of Corning common
stock to be issued in the merger. This proxy statement/prospectus does not
contain all the information set forth in the registration statement, selected
portions of which are omitted in accordance with the rules and regulations of
the SEC. For further information with respect to Corning, NetOptix and the
Corning common stock, reference is hereby made to the registration statement
(including its exhibits and schedules).
The SEC allows us to "incorporate by reference" information into this
Proxy Statement/Prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. Statements contained in this proxy statement/prospectus or in any
document incorporated by reference in this proxy statement/prospectus as to the
contents of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document (if any) filed as an exhibit to the registration
statement or such other document, each such statement being qualified in all
respects by such reference. The information incorporated by reference is deemed
to be part of this proxy statement/prospectus. This proxy statement/prospectus
incorporates by reference the documents set forth below that Corning and
NetOptix have previously filed with the SEC. These documents contain important
information about Corning and NetOptix and their finances.
CORNING SEC FILINGS (FILE NO. 001-03247) PERIOD
Annual Report on Form 10-K......................Year ended December 31, 1999, as
filed on March 7, 2000
Amended Annual Report on Form 10-K/A............Year ended December 31, 1999, as
filed on March 8, 2000
Registration Statement on Form 8-A...................Filed on July 11, 1996
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<PAGE>
NETOPTIX SEC FILINGS (FILE NO. 000-11309) PERIOD
Annual Report on Form 10-K.....................Year ended September 30, 1999, as
filed on December 27, 1999
Quarterly Report on Form 10-Q................Quarter ended December 31, 1999, as
filed on February 11, 2000
Current Reports on Form 8-K.....................Filed:
October 21, 1999
November 22, 1999
December 16, 1999
February 4, 2000
February 14, 2000
February 23, 2000
Items 10-13 of NetOptix's Definitive Proxy Statement
to NetOptix's stockholders for the 2000 Annual
Meeting of NetOptix's stockholders...........Filed on December 30, 1999
The description of NetOptix common stock set forth in
the registration statement filed on Form 8-A filed on November 16,
1983, and any amendment or report filed for the purpose of updating
such description
All documents and reports subsequently filed by Corning or NetOptix
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
after the date of this proxy statement/prospectus and prior to the date of the
special meeting shall be deemed to be incorporated by reference in this proxy
statement/prospectus and to be part hereof from the date of filing of such
documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this proxy statement/prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
proxy statement/prospectus.
This proxy statement/prospectus incorporates important business and
financial information about Corning and NetOptix that is not included in or
delivered with this proxy statement/prospectus. Documents incorporated by
reference which are not presented herein or delivered herewith (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference) are available to any person, including any beneficial owner, to whom
this proxy statement/prospectus is delivered, on written or oral request,
without charge, in the case of documents relating to Corning directed to Corning
Inc., One Riverfront Plaza, Corning, New York 14831 (telephone number (607)
974-9001), Attention: Secretary, or, in the case of documents relating to
NetOptix, directed to NetOptix Corporation, Sturbridge Business Park,
Sturbridge, Massachusetts 01566 (telephone number (508) 341-4226), Attention:
Secretary. In order to ensure timely delivery of any of such documents, any
request should be made by __________, 2000.
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<PAGE>
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IN
CONNECTION WITH THE CORNING COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE
MERGER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES IN ANY JURISDICTION IN WHICH, OR ANY PERSON TO WHOM, IT WOULD BE
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF CORNING OR NETOPTIX SINCE THE DATE OF THIS PROXY
STATEMENT/PROSPECTUS OR THAT THE INFORMATION IN THIS DOCUMENT IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
By Order of the Board of Directors of NetOptix
Corporation
[LOGO]
By:
Title:
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<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 13, 2000
AMONG
CORNING INCORPORATED,
CI SUBSIDIARY, INC.
AND
NETOPTIX CORPORATION
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of February
13, 2000, by and among CORNING INCORPORATED ("Buyer"), a New York corporation,
CI SUBSIDIARY, INC. ("Merger Subsidiary"), a Delaware corporation and a
wholly-owned subsidiary of Buyer, and NETOPTIX CORPORATION (the "Company"), a
Delaware corporation.
WHEREAS, the respective Boards of Directors of Buyer, Merger Subsidiary
and the Company have approved the merger of the Merger Subsidiary with and into
the Company, with the Company being the surviving corporation as a wholly-owned
subsidiary of Buyer (the "Merger"), upon the terms and subject to the conditions
set forth herein;
WHEREAS, it is intended that, for federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code"); and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and inducement to Buyer's and Merger Sub's willingness
to enter into this Agreement, certain stockholders of the Company are entering
into a stockholders' agreement (the "Related Agreement") pursuant to which,
among other things, such stockholders will vote in favor of the Company Proposal
(as defined below) under the terms and conditions set forth in the Related
Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
of, at the Effective Time (as defined below), Merger Subsidiary shall be merged
with and into the Company and the separate existence of Merger Subsidiary shall
thereupon cease, and the Company shall continue as the surviving corporation in
the Merger (the "Surviving Corporation") under the laws of the State of Delaware
under the name "Corning NetOptix, Inc." as a wholly-owned subsidiary of Buyer
and the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. Throughout this Agreement, the term the "Company" shall refer to the
Company prior to the Merger and the term "Surviving Corporation" shall refer to
the Company in its status as the surviving corporation in the
<PAGE>
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Merger. Capitalized terms used in this Agreement and not otherwise defined are
used with the meaning ascribed thereto in Section 10.8 hereof.
Section 1.2 Closing. The closing of the Merger will take place as
promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article VIII (the "Closing
Date"). The Closing shall be held at the offices of Nixon Peabody LLP, Boston,
Massachusetts, unless another date, time or place is agreed to in writing by the
parties hereto.
Section 1.3 Effective Time of the Merger. The Merger shall become
effective upon the filing of a certificate of merger ("Certificate of Merger")
pursuant to and in compliance with this Agreement and Section 251 of the General
Corporation Law of the State of Delaware (the "Delaware Law") with the Secretary
of State of the State of Delaware. When used in this Agreement, the term
"Effective Time" shall mean the time at which the Certificate of Merger has been
filed and become effective in accordance with Delaware Law.
Section 1.4 Effect of the Merger. The Merger shall, from and after the
Effective Time, have all the effects provided by applicable law. If at any time
after the Effective Time the Surviving Corporation shall consider or be advised
that any further deeds, conveyances, assignments or assurances in law or any
other acts are necessary, desirable or proper to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, the title to any property or
rights of the Company, by reason of, or as a result of, the Merger, or otherwise
to carry out the purposes of this Agreement, the Company agrees that the
Surviving Corporation and its proper officers and directors shall execute and
deliver all such deeds, conveyances, assignments and assurances in law and do
all things necessary, desirable or proper to vest, perfect or confirm title to
such property or rights in the Surviving Corporation and otherwise to carry out
the purposes of this Agreement, and that the proper officers and directors of
the Surviving Corporation are fully authorized in the name of each of the
Company and the Merger Subsidiary or otherwise to take any and all such action.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The certificate of
incorporation of the Company shall be amended as of the Effective Time to be
identical with the certificate of incorporation of the Merger Subsidiary which
shall be the certificate of incorporation of the Surviving Corporation until
thereafter duly amended.
Section 2.2 By-Laws. The By-laws of the Company shall be amended as of
the Effective Time to be identical with the by-laws of the Merger Subsidiary
until thereafter duly amended.
Section 2.3 Board of Directors; Officers. The members of the Board of
Directors and the officers of the Surviving Corporation immediately after the
Effective Time shall be the directors and officers of the Merger Subsidiary
immediately prior to the Effective
<PAGE>
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Time, until the earlier of their respective deaths, resignations, and the time
that their respective successors are duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Merger Consideration. As of the Effective Time, by virtue
of the Merger and without any action on the part of any stockholder of the
Company or Merger Subsidiary:
(a) Each share of common stock, par value $.01 per share, of
Merger Subsidiary (the "Merger Subsidiary Common Stock") that is issued and
outstanding immediately prior to the Effective Time shall be converted into one
fully paid and nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation.
(b) Each share of the common stock of the Company, par value
$.01 ("Company Common Stock") that is owned by the Company as treasury stock and
any shares of the Company Common Stock that are owned by Buyer or by its
subsidiaries shall be canceled and shall cease to exist, and no stock of Buyer
or other consideration shall be delivered in exchange therefor.
(c) Subject to the provisions of this Section 3.1, each share
of the Company Common Stock, other than Dissenting Shares (as defined below) and
shares canceled pursuant to Section 3.1(b), issued and outstanding immediately
prior to the Effective Time shall by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive a
number of validly issued, fully paid and nonassessable shares of Common Stock,
par value $.50 per share, of Buyer ("Buyer Common Stock") equal to 0.9 share of
Buyer Common Stock (the "Merger Consideration"). The "Exchange Ratio" shall be
equal to 0.9.
(d) If at any time during the period between the date of this
Agreement and the Effective Time, the Company changes the number of shares of
the Company Common Stock outstanding, or Buyer changes the number of shares of
Buyer Common Stock, issued and outstanding as a result of a stock split, reverse
stock split, stock dividend, recapitalization, redenomination of share capital
or other similar transactions, the Exchange Ratio and any other items dependent
thereon shall be appropriately adjusted.
(e) Each outstanding share of the Company Common Stock the
holder of which has perfected his right to dissent under applicable law and has
not effectively withdrawn or lost such right as of the Effective Time (the
"Dissenting Shares") shall not be converted into or represent a right to receive
the Merger Consideration, and the holder thereof shall be entitled only to such
rights as are granted by applicable law; provided, however, that any Dissenting
Share held by a person at the Effective Time who shall,
<PAGE>
-4-
after the Effective Time, withdraw the demand for payment for shares or lose the
right to payment for shares, in either case pursuant to the Delaware Law, shall
be deemed to be converted into, as of the Effective Time the Merger
Consideration. The Company shall give Buyer prompt notice upon receipt by the
Company of any such written demands for payment of the fair value of such shares
of the Company Common Stock and of withdrawals of such notice and any other
instruments provided pursuant to applicable law. Any payments made in respect of
Dissenting Shares shall be made by the Surviving Corporation.
(f) Pursuant to the terms of the plans pursuant to which the
Company Stock Options and ESPP Options (each as defined below) were issued and
this Agreement, the outstanding and unexercised Company Stock Options and ESPP
Options and the Andlinger Capital Warrant shall, at the Effective Time, become
rights to acquire shares of Buyer Common Stock in accordance with their terms
except that the number of shares of Buyer Common Stock subject to such Options
or Warrant shall be equal to the product of the (i) number of shares of the
Company Common Stock subject to the original Option or Warrant, and (ii) the
Exchange Ratio, and the exercise price per share of Buyer Common Stock under
such Option or Warrant shall be equal to: (iii) the exercise price under the
Option as written divided by (iv) the Exchange Ratio. The adjustments provided
herein with respect to any Options which are "incentive stock options" (as
defined in Section 422 of the Code) shall be effected in a manner consistent
with Section 424(a) of the Code.
3.2 Stockholders' Rights at the Effective Time. On and after the
Effective Time, the certificates that immediately prior to the Effective Time
represented shares of the Company Common Stock (the "Certificates") shall cease
to represent any rights with respect to the Company and shall only represent the
right to receive the Merger Consideration, together with the amount of cash, if
any, payable in lieu of fractional shares of Buyer Common Stock into which any
shares of the Company Common Stock have been converted, provided, however, that
no dividends or other distributions, if any, in respect of the shares of Buyer
Common Stock, declared after the Effective Time and payable to holders of record
after the Effective Time, shall be paid to the holders of any unsurrendered
Certificates until such Certificates and transmittal letters are surrendered and
delivered as provided in Section 3.3 of this Agreement. Subject to applicable
Delaware Law, after the surrender and exchange of Certificates, the record
holders thereof will be entitled to receive any such dividends or other
distributions declared after the Effective Time without interest thereon, which
theretofore have become payable with respect to the number of shares of Buyer
Common Stock for which such Certificates were exchangeable. Notwithstanding
anything herein to the contrary, holders of any unsurrendered Certificates shall
not be entitled to exercise any rights as a holder of Buyer Common Stock,
including, without limitation, the right to vote the Buyer Common Stock, until
such Certificates are surrendered and exchanged pursuant to this Agreement.
3.3 Surrender and Exchange of Share Certificates.
(a) Promptly after the Effective Time, Buyer shall make
available to Harris Trust, (the "Paying Agent") such certificates evidencing
such number of shares of
<PAGE>
-5-
Buyer Common Stock to enable the Paying Agent to effect the conversion of the
Company Common Stock into shares of Buyer Common Stock as provided in Section
3.3(b) and an amount of cash as shall be reasonably estimated as needed to make
payments in lieu of fractional shares. Notwithstanding any other provision of
this Agreement, no fractional shares of Buyer Common Stock will be issued, and
any holder of Company Common Stock entitled to receive a fractional share of
Buyer Common Stock but for this Section 3.3(a) shall be entitled to receive a
cash payment in lieu thereof, which payment shall represent such holder's
proportionate interest in a share of Buyer Common Stock.
(b) On the Closing Date, Buyer shall instruct the Paying Agent
to mail to each person who was a holder of record of shares of the Company
Common Stock immediately prior to the Effective Time: (i) a letter of
transmittal, and (ii) instructions for use in effecting the surrender of the
Certificates nominally representing the Company Common Stock in exchange for
certificates representing the Buyer Common Stock determined in accordance with
the Exchange Ratio and/or cash in lieu of fractional shares.
(c) After the Effective Time, each holder of a Certificate
shall surrender and deliver such Certificate to the Paying Agent together with a
duly completed and executed transmittal letter. Upon such surrender and
delivery, the holder shall receive a certificate representing the number of
whole shares of Buyer Common Stock for which such holder's shares of the Company
Common Stock have been converted, together with a check for any cash in lieu of
any fractional share of Buyer Common Stock. Until so surrendered and exchanged,
each Certificate formerly representing an outstanding share of the Company
Common Stock shall after the Effective Time be deemed for all purposes to
evidence only the right to receive the Merger Consideration as provided in
Section 3.1, together with cash in lieu of any fractional share of Buyer Common
Stock.
(d) At the Effective Time, the stock transfer books of the
Company shall be closed and no transfer of shares of the Company Common Stock
shall be made thereafter, other than transfers of shares of the Company Common
Stock that have occurred prior to the Effective Time. In the event that, after
the Effective Time, certificates are presented for transfer to the transfer
agent for the Company, the Merger Subsidiary or Buyer, they shall be delivered
to the Paying Agent and exchanged for shares of Buyer Common Stock and any cash
payable in lieu of fractional shares thereof all as provided for in this Section
3.3.
(e) Any shares of Buyer Common Stock that remain undistributed
to the stockholders of the Company as of the Effective Time for a period of four
months after the Effective Time shall be delivered to Buyer by the Paying Agent,
upon demand, and any former stockholders of the Company who have not previously
complied with this Section 3.3 shall thereafter look only to Buyer for payment
of their claim for Buyer Common Stock and any dividends or distributions with
respect to Buyer Common Stock or cash in lieu of fractional shares.
<PAGE>
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(f) Neither the Paying Agent, nor any of the Company, Merger
Subsidiary or Buyer shall be liable to any holder of shares of the Company
Common Stock with respect to any shares of Buyer Common Stock (or dividends or
distributions with respect to Buyer Common Stock) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law, rule,
regulation, statute, order, judgment or decree.
(g) In the event any Certificates shall have been lost, stolen
or destroyed, the Paying Agent shall issue such shares of Buyer Common Stock and
any dividends or other distributions with respect to Buyer Common Stock to which
such holder is entitled in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder thereof
and the delivery of such bond as the Paying Agent may reasonably require.
(h) No transfer taxes shall be payable by any stockholder of
the Company in respect of the issuance of the Buyer Common Stock under this
Section 3.3, except that if any Buyer Common Stock is to be issued in a name
other than that in which the Certificate surrendered has been registered, it
shall be a condition of such issuance that the person requesting such issuance
shall pay to Buyer any transfer taxes payable by reason thereof, or of any prior
transfer of such surrendered certificate, or establish to the satisfaction of
Buyer that such taxes have been paid or are not payable.
Section 3.4 No Further Rights. From and after the Effective Time,
holders of certificates theretofore evidencing shares of the Company Common
Stock shall cease to have any rights as stockholders of the Company, except as
provided herein or by law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer and Merger Subsidiary
that, except as disclosed in the Company Disclosure Schedule which has been
delivered to Buyer prior to the execution of this Agreement (the "Company
Disclosure Schedule"):
Section 4.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of the Subsidiaries (as defined below) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation. Each of the Company and its Subsidiaries
has the requisite corporate power and authority to carry on its business as it
is now being conducted and is duly qualified or licensed to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so organized, qualified
or in good standing, or have such power or authority when taken together with
all other such failures, is not reasonably likely to have a Company Material
Adverse Effect (as defined below). The Company has heretofore made available to
Buyer and Merger Subsidiary a
<PAGE>
-7-
complete and correct copy of the certificate of incorporation and by-laws, each
as amended to the date hereof, of the Company and each of its Subsidiaries.
Section 4.2 Capitalization. The authorized capital stock of the Company
consists of 100,000,000 shares of the Company Common Stock and 2,000,000 shares
of preferred stock, par value $0.01 per share (the "Company Preferred Stock").
As of February 9, 2000: (a) 11,452,596 shares of the Company Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
non-assessable, (b) no shares of the Company Common Stock were held in the
treasury of the Company, (c) an aggregate of 1,054,300 shares of Company Common
Stock were reserved for issuance under stock options (the "Company Stock
Options") issued pursuant to the Company's employee and director stock option
plans (the "Company Stock Option Plans") and a Non-Qualified Option Agreement
between the Company and ANC Management Corp., approximately 41,277 shares of the
Company Common Stock were reserved for issuance under options issued pursuant to
the Company's employee stock purchase plan ("ESPP"), and 1,000,000 shares of the
Company Common Stock were reserved for future issuance pursuant to an
outstanding unexercised warrant ("Andlinger Capital Warrant"), and (d) no shares
of the Company Preferred Stock were outstanding. As of the date of this
Agreement, no shares of capital stock of the Company or any of its subsidiaries
have been issued since January 31, 2000 except pursuant to Company Stock Options
and under the ESPP. Except as set forth in this Section 4.2, there are no
preemptive or other outstanding rights, options, warrants, conversion rights,
stock appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind relating to the issued or
unissued capital stock of the Company or any of its subsidiaries or obligating
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock of, or other equity interests in, the Company or any of its Subsidiaries.
All shares of capital stock of the Company and its Subsidiaries subject to
issuance pursuant to the Company Stock Option Plans, the ESPP and the Andlinger
Capital Warrant, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable. As of the date of this Agreement,
there are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its subsidiaries or to provide material funds to,
or make any material investment (in the form of a loan, capital contribution or
otherwise) in, any person.
Section 4.3 Authority Relative to this Agreement. The Company has all
necessary power and authority to execute and deliver this Agreement and the
Related Agreement, to perform its obligations hereunder and to consummate the
Merger and the other transactions contemplated by such agreements (the
"Transactions"). The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Merger and the other Transactions have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement and the Related Agreement or to
consummate the Merger and the other Transactions other than, with respect to the
Merger, the adoption of this Agreement by the affirmative vote of a majority of
the issued and outstanding Company Common Stock at the Company Special
<PAGE>
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Meeting (as defined below) and the filing and recordation of appropriate merger
documents as required by Delaware Law. This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Buyer and Merger Subsidiary, this Agreement and the
Related Agreement each constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
Section 4.4 No Conflicts, Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement or the Related Agreement
by the Company will not: (i) conflict with or violate the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries, (ii)
assuming the consents, approvals, authorizations and waivers specified in
Section 4.4(b) have been received and the waiting periods referred to therein
have expired, and any condition precedent to such consent, approval,
authorization, or waiver has been satisfied, conflict with or violate any
domestic (federal, state or local) or foreign law, rule, regulation, order,
judgment or decree (collectively, "Laws") applicable to the Company or any of
its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, or (iii) except as set forth in the Company
Disclosure Schedule, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any right of termination, amendment, acceleration, or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company or any of its Subsidiaries pursuant to, any
note, bond, mortgage, indenture or credit agreement, or, to the Company's
knowledge as of the date of this Agreement, any other contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any property or asset of the Company or any of its
Subsidiaries is bound or affected, except in the case of clause (iii) for any
such conflicts, violations, breaches, defaults or other occurrences of the type
referred to above which would not have a Company Material Adverse Effect or
would not prevent or materially delay the consummation of the Merger.
(b) The execution and delivery of this Agreement or the
Related Agreement by the Company does not, and the performance of this Agreement
by the Company will not, require any consent, approval, authorization, waiver or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic, foreign or supranational ("Governmental"), except for
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Securities Act of 1933, as amended (the "Securities Act"),
state securities or "blue sky" laws ("Blue Sky Laws"), the pre-merger
notification arrangements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act"), such
filings, approvals, consents and waivers as may be required under the Merger
Control Laws, filing and recordation of the Certificate of Merger as required by
Delaware Law and applications for listing and other filings required by the
rules of the NASDAQ National Market System and except where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not
<PAGE>
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have a Company Material Adverse Effect or would not prevent or materially delay
the consummation of the Merger.
Section 4.5 Reports and Financial Statements.
(a) The Company has filed with the U.S. Securities and
Exchange Commission ("SEC") all forms, reports, schedules, registration
statements, definitive proxy statements and information statement or other
filings (the "Company SEC Reports") required to be filed by it with the SEC
since September 30, 1997. As of their respective dates, the Company SEC Reports
complied as to form in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to the Company SEC Reports. As of
their respective dates and as of the date any information from the Company SEC
Reports has been incorporated by reference, the Company SEC Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company has filed all material contracts and agreements and other documents or
instruments required to be filed as exhibits to the Company SEC Reports.
(b) The consolidated balance sheets of the Company as of
September 30, 1999 and 1998 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended September 30, 1999 (including the related notes and schedules
thereto) contained in the Company's Form 10-K for the year ended September 30,
1999 (the "Company Financial Statements") present fairly, in all material
respects, the consolidated financial position and the consolidated results of
operations, retained earnings and cash flows of the Company and its consolidated
Subsidiaries as of the dates or for the periods presented therein in conformity
with United States generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved except as otherwise noted
therein, including in the related notes.
(c) The consolidated balance sheets and the related statements
of operations and cash flows (including, in each case, the related notes
thereto) of the Company contained in the Form 10-Q for the quarterly period
ended December 31, 1999 (the "Company Quarterly Financial Statements") have been
prepared in accordance with the requirements for interim financial statements
contained in Regulation S-X, which do not require all the information and
footnotes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with GAAP. The Company Quarterly
Financial Statements reflect all adjustments necessary to present fairly in
accordance with GAAP (except as indicated), in all material respects, the
consolidated financial position, results of operations and cash flows of the
Company for all periods presented therein.
(d) Except for those liabilities that are fully reflected or
reserved against on the Company Financial Statements, the Company Quarterly
Financial Statements or as set forth in the Company Disclosure Schedule, neither
the Company nor
<PAGE>
-10-
any Subsidiary has outstanding any liability of any nature whatsoever (whether
absolute, accrued, contingent (including any contingent liabilities or
obligations arising out of or relating to any sale of assets outside the
ordinary course of business, stock of any subsidiary, business or of any line of
business, or otherwise and whether due or to become due), except for liabilities
and obligations, which have been incurred since the date of the most recent
balance sheet contained in the Company Quarterly Financial Statements in the
ordinary course of business and which would not reasonably be likely,
individually or in the aggregate, to have a Company Material Adverse Effect or
which are described in the Company Disclosure Schedule.
(e) From the date of the most recent balance sheet contained
in the Company Financial Statements through the date hereof, except as set forth
in the Company Disclosure Schedule: (i) each of the Company and its Subsidiaries
has conducted its business only in the ordinary course and in a manner
consistent with past practice and (ii) there has, not been any circumstance,
event, occurrence, change or effect that has had or would reasonably be likely
to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 4.6 Information.
(a) None of the written information supplied or to be supplied
by the Company for inclusion or incorporation by reference in the definitive
Prospectus/Proxy Statement will, at the time of filing with the SEC, at the time
of the mailing of the Prospectus/Proxy Statement or any amendments or
supplements thereto to the Company's stockholders or at the time of the Company
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The portion of the Prospectus/Proxy Statement based on
information supplied by the Company for inclusion or incorporation by reference
therein will comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act and the rules and
regulations thereunder.
(b) As of the date of this Agreement, the Company does not
know of any reason (i) for which it would not be able to deliver to both of
counsel to Buyer and the Company, at the date of the legal opinions referred to
below, certificates substantially in compliance with IRS published advance
ruling guidelines, with customary exceptions and modifications thereto, to
enable such firms to deliver the legal opinions contemplated by Section 8.2(c),
and the Company hereby agrees to deliver such certificates effective as of the
date of such opinions so long as the statements therein are true as of such time
or (ii) for which counsel to Buyer and the Company would not be able to deliver
the opinions required by Section 8.2(c).
Section 4.7 Litigation. Except as disclosed in the Company SEC Reports
or on the Company Disclosure Schedule, as of the date hereof, there is no civil,
criminal or administrative suit, action or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries that is reasonably
<PAGE>
-11-
expected to have a Company Material Adverse Effect, nor is there any judgment,
decree, injunction or order of any Governmental Entity or arbitrator outstanding
against the Company or any of its Subsidiaries having, or which is reasonably
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 4.8 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports or as contemplated by this Agreement, since December
31, 1999, the Company has conducted its business only in the ordinary course,
and there has not been: (i) any change in the financial condition, properties,
business or results of operations of the Company and its Subsidiaries or any
development or combination of developments of which management of the Company
has knowledge that, individually or in the aggregate, has had or is reasonably
likely to have a Company Material Adverse Effect, (ii) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of the Company's capital stock, or, any
redemption, purchase or other acquisition of any of its capital stock, (iii) any
split, combination or reclassification of any of the Company's capital stock or,
except with respect to the Company Stock Options, the ESPP Options, and the
Andlinger Capital Warrants, any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
the Company's capital stock, (iv) except as set forth in the Company Disclosure
Schedule, any granting by the Company or any of its Subsidiaries to any officer
of the Company of any increase in compensation or any rights with respect to
compensation in the event of a "change in control" (however defined) of the
Company, except in the ordinary course of business consistent with prior
practice or as required under employment agreements in effect as of December 31,
1999, (v) except as set forth in the Company Disclosure Schedule, any granting
by the Company or any of its Subsidiaries to any officer or any group or class
of employees of the Company of any increase in severance or termination pay,
except as required under employment, severance or termination agreements or
plans in effect as of December 31, 1999, (vi) except as set forth in the Company
Disclosure Schedule, any entry by the Company or any of its Subsidiaries into
any employment, severance or termination agreement with any officer of the
Company, or any increase in benefits available under or establishment of any the
Company Benefit Plan (as defined below) except in the ordinary course of
business consistent with past practice, or (vii) any material change in
accounting methods, principles or practices by the Company, except insofar as
may have been required by a change in GAAP.
Section 4.9 Employee Benefit Plans.
(a) Schedule 4.9 sets forth a complete and correct list of all
"employee benefit plans", as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and any other pension plans
or employee benefit arrangements or payroll practices (including, without
limitation, severance pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, stock option or stock purchase arrangements or policies)
maintained, or contributed to, by the Company, its Subsidiaries or any trade or
business (whether or not incorporated) which is treated with the Company or its
Subsidiaries as a single employer under Section 414(b), (c), (m) or (o) of the
Code
<PAGE>
-12-
("ERISA Affiliate") with respect to employees of the Company, its Subsidiaries
or their ERISA Affiliates (the "Company Benefit Plans"). Each Plan is in writing
and the Company has furnished or will furnish Buyer with a true and complete
copy of each Plan document, including all amendments thereto, and a true and
complete copy of each material document prepared in connection with each such
Plan, including, without limitation, (i) a copy of each trust or other funding
arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the three most recently filed Form 5500's, including all
attachments thereto, (iv) the most recently received Internal Revenue Service
("IRS") determination letter for each such Plan, and (v) the most recently
prepared actuarial report and financial statement in connection with each such
Plan. Neither the Company nor its Subsidiaries have any express or implied
commitment (x) to create or incur liability with respect to or cause to exist
any other employee benefit plan, program or arrangement, (y) to enter into any
contract or agreement to provide compensation or benefits to any individual or
(z) to modify, change or terminate any Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
(b) No "accumulated funding deficiency" as defined in Section
412 of the Code exits with respect to any such Plan, whether or not waived. No
"reportable event" within the meaning of Section 4043 of ERISA, and no event
described in Section 4062 or 4063 of ERISA has occurred with respect to any
Plan. Neither the Company nor any ERISA Affiliate of the Company has: (i)
engaged in, or is a successor corporation or parent corporation to an entity
that has engaged in, a transaction described in sections 4069 or 4212(c) of
ERISA or (ii) incurred or reasonably expects to incur (A) any liability under
Title IV of ERISA arising in connection with the termination of, or a complete
or partial withdrawal from, any plan covered or previously covered by Title IV
of ERISA, or (B) any liability under Section 4971 of the Code that in either
case could become a liability of Surviving Corporation or Buyer or any of its
Affiliates after the Effective Time. As of September 30, 1999, the fair market
value of the assets of the Company's pension plan, excluding any accrued but
unpaid contributions, exceeded the present value of all benefits accrued under
such pension plan determined on a termination basis using the assumptions
established by the PBGC as in effect on such date. As of September 30, 1999,
there was no unfunded liability under any of the Plans, computed using
reasonable actuarial assumptions and determined as if all benefits under such
Plans were vested and payable as of such date. No event has occurred since
September 30, 1999 which would cause the Company to believe that as of the date
of this Agreement there is any such unfunded liability.
(c) Each of the Company Benefit Plans intended to qualify
under Section 401(a) of the Code ("Qualified Plans") has received a favorable
determination letter from the Internal Revenue Service that such Plan is so
qualified, and, except as disclosed on Company Disclosure Schedule, nothing has
occurred with respect to the operation of any such Plan which, either
individually or in the aggregate, would cause the loss of such qualification or
the imposition of any material liability, penalty or tax under ERISA or the
Code.
<PAGE>
-13-
(d) Except as set forth in the Company Disclosure Schedule,
there has been no prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) with respect to any Company Benefit Plan.
Neither the Company nor any Subsidiary is currently liable or has previously
incurred any liability for any tax or penalty arising under Section 4971, 4972,
4975, 4979, 4980 or 4980B of the Code or Section 502 of ERISA, and no fact or
event exists which could give rise to any such liability which would have a
Company Material Adverse Effect.
(e) All contributions and premiums required by law or by the
terms of any Company Benefit Plan or any agreement relating thereto have been
timely made (without regard to any waivers granted with respect thereto) in all
material respects.
(f) The liabilities of each Company Benefit Plan that has been
terminated or otherwise wound up, have been fully discharged in material
compliance with applicable law.
(g) There has been no violation of ERISA with respect to the
filing of applicable returns, reports, documents and notices regarding any of
Company Benefit Plans with the Secretary of Labor or the Secretary of the
Treasury or the furnishing of such notices or documents to the participants or
beneficiaries of the Company Benefit Plans which, either individually or in the
aggregate, could result in a Company Material Adverse Effect.
(h) There are no pending legal proceedings which have been
asserted or instituted against any of the Company Benefit Plans, the assets of
any such Plans or the Company or any ERISA Affiliate or the plan administrator
or any fiduciary of the Company Benefit Plans with respect to the operation of
such plans (other than routine, uncontested benefits claims).
(i) Each of the Company Benefit Plans has been maintained, in
all material respects, in accordance with its terms and all provisions of
applicable laws and regulations. All amendments and actions required to bring
each of the Company Benefit Plans into conformity in all material respects with
all of the applicable provisions of ERISA and other applicable laws and
regulations have been made or taken except to the extent that such amendments or
actions are not required by law to be made or taken until a date after the
Closing Date.
(j) Except as set forth on the Company Disclosure Schedule,
the Company and its Subsidiaries have never maintained a welfare benefit plan
providing continuing benefits after the termination of employment (other than as
required by applicable Law and at the former employee's own expense), and the
Company, its Subsidiaries and each of their ERISA Affiliates have complied in
all material respects with the notice and continuation requirements of Section
4980B of the Code and the regulations thereunder. The Company's Financial
Statements and Quarterly Financial Statements reflect reserves adequate to
provide the benefits accrued under such retiree welfare benefit plans.
<PAGE>
-14-
(k) Except as set forth in the Company Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the
Transactions will (i) result in any material payment (including, without
limitation, severance, unemployment compensation or golden parachute) becoming
due to any director or employee of the Company or it Subsidiaries, (ii)
materially increase any benefits otherwise payable under any the Company Benefit
Plan or (iii) result in the acceleration of the time of payment or vesting of
any such benefits to any material extent other than vesting of the Company Stock
Options in accordance with their terms.
(l) The Company and its Subsidiaries are in compliance in all
material respects with applicable laws and collective bargaining agreements with
respect to all benefit plans, contracts and arrangements covering non-U.S.
Business Employees ("Non-U.S. Benefit Plans"). The Company and its Subsidiaries
have no unfunded liabilities in violation of local law which violation would,
either individually or in the aggregate result in a Company Material Adverse
Effect. All benefits payable under each of the Non-U.S. Benefit Plans are
provided in accordance with the terms of the governing provisions of the
relevant Non-U.S. Benefit Plan. The Company and the Subsidiaries are not aware
of any failure to comply with any applicable law which would or might result in
the loss of tax approval or qualification of any Non-U.S. Benefit Plans.
Section 4.10 Labor Relations. There are no labor controversies pending
or threatened with respect to the Company and neither the Company nor any U.S.
Subsidiary is a party to any collective bargaining agreements with any labor
union or other representative of employees. No non-U.S. subsidiary is a party to
any collective bargaining agreement with any labor union or other representative
of employees or any works' council or similar entity under applicable laws
except as customary for employees in such country. To the knowledge of the
Company, there is no pending or threatened union organization activity by or
among any of its or its Subsidiaries' employees.
Section 4.11 Taxes. The Company and its Subsidiaries have duly filed
all material foreign, federal, state and local income, franchise, excise, real
and personal property and other Tax (as defined below) returns and reports
(including, but not limited to, those filed on a consolidated, combined or
unitary basis) required to have been filed by the Company and its Subsidiaries
prior to the date hereof, or requests for extensions to file such returns and
reports have been timely filed; All of the foregoing returns and reports are
true and correct in all material respects, and the Company and its Subsidiaries
have paid or, prior to the Effective Time will pay, all Taxes, whether or not
shown on such returns or reports, as being due or claimed to be due to any
Governmental Entity and the Company has paid and will pay all installments of
estimated taxes due on or before the Effective Time. The Company and its
Subsidiaries have paid or made adequate provision in accordance with GAAP in the
SEC Reports and the Company Financial Statements for all Taxes payable in
respect of all periods ending on or prior to the date of this Agreement and will
have made or provided for all Taxes payable in respect of all periods ended on
or prior to the Closing Date. As of the date hereof, all deficiencies proposed
as a result of any audits have been paid or settled. The Company and each
Subsidiary has paid, collected or withheld, or caused to be paid, collected or
withheld, all amounts of Taxes required to be paid, collected or withheld, other
than such Taxes for
<PAGE>
-15-
which adequate reserves in the Company SEC Reports or the Company Financial
Statements have been established or which are being contested in good faith or
which would not have a Company Material Adverse Effect. There are no claims or
assessments pending against the Company or any Subsidiary for any alleged
deficiency in any Tax, and the Company has not been notified in writing of any
proposed Tax claims or assessments against the Company or any Subsidiary. Except
as set forth in the Company Disclosure Schedule, there is no contract,
agreement, plan or arrangement covering any Person that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible by the Buyer, the Company, or any of the Subsidiaries of the Company
by reason of Section 280G of the Code.
Section 4.12 Compliance with Applicable Laws. Except as set forth in
the Company SEC Reports filed prior to the date hereof, as of the date of this
Agreement, and, except as set forth in the Company SEC Reports filed after the
date hereof but prior to the Effective Time, as of the Effective Time, the
businesses of each of the Company and its Subsidiaries have not been, and are
not being, conducted in violation of any federal, state, local or foreign law,
statute, ordinance, rule, regulation, judgment, order, injunction, decree,
arbitration award, agency requirement, license or permit of any Governmental
Entity (collectively, "Company Permits"), except for violations or possible
violations that, individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect or prevent or materially burden or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement. Except as set forth in the Company SEC Reports
filed prior to the date hereof, no investigation or review by any Governmental
Entity with respect to the Company or any of its Subsidiaries is pending or, to
the Company's knowledge, threatened, nor has any Governmental Entity indicated
an intention to conduct the same. To the knowledge of the Company, no material
change is required in the Company's or any of its Subsidiaries' processes,
properties or procedures in connection with any such Company Permits, and the
Company has not received any notice or communication of any material
noncompliance with any such Company Permits that has not been cured as of the
date hereof. The Company and its Subsidiaries each has all permits, licenses,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct its business as presently conducted
except those the absence of which are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent or
materially burden or materially impair the ability of the Company to consummate
the Merger and the other transactions contemplated by this Agreement.
Section 4.13 Voting Requirements. The affirmative vote of the holders
of at least a majority of the total number of votes entitled to be cast by the
holders of the Company Common Stock outstanding as of the record date for the
Company Special Meeting is the only vote of the holders of any class or series
of the Company's capital stock or other securities necessary to approve this
Agreement and the transactions contemplated by this Agreement.
Section 4.14 Material Contracts. Neither the Company nor any subsidiary
is a party or is subject to any note, bond, mortgage, indenture, contract,
lease, license,
<PAGE>
-16-
agreement, understanding, instrument, bid or proposal, and any amendment or
modification thereto, that is required to be described in or filed as an exhibit
to any Company SEC Report that is not so described in or filed as required by
the Securities Act or the Exchange Act, as the case may be, and each such
contract or agreement and all amendments and modifications thereto, and each
note, bond, mortgage, indenture, contract, lease, license, agreement,
understanding, instrument, bid or proposal, and any amendment or modification
thereto, with respect to (a) any Company Intellectual Property Rights (as
defined below) contained in any current marketed product, product under
development or product as to which the Company or any of its Subsidiaries has
ongoing warranty or service obligations (collectively, the "Products"), (b) any
product or service provided to or supplied by the Company or any of its
Subsidiaries where the obligation of the Company is in excess of $250,000 in the
aggregate in any year, (c) agreements or commitments with respect to capital
expenditures in excess of $100,000, (d) employment or compensation arrangements
or agreements with officers and directors of the Company and any employee
earning in excess of $50,000 per year, and (e) all agreements and instruments
evidencing obligations for borrowed money or agreements between the Company and
its Affiliates, are listed in the Company Disclosure Schedule (collectively, the
"Material Contracts"). The Company has delivered to Buyer true and accurate
copies of the Company Material Contracts. All such Company Material Contracts
are valid and binding and are in full force and effect and enforceable against
the Company or its Subsidiaries in accordance with their respective terms. Other
than contracts included in the Company Material Contracts, none of the Company's
contracts which are material individually or in the aggregate provide for
consideration to be paid or received other than cash on the one hand and goods
and services customarily provided by the Company or used by the Company in its
business in the ordinary course on the other hand. No Consent of any person is
needed in order that each such Company Material Contract shall continue in full
force and effect in accordance with its terms without penalty, acceleration or
rights of early termination by reason of the consummation of the transactions
contemplated by this Agreement, except for Consents the absence of which would
not, in the aggregate, have a Company Material Adverse Effect, and neither the
Company nor any of its Subsidiaries is in violation or breach of or default
under any such Company Material Contract; nor to the Company's knowledge is any
other party to any such Company Material Contract in violation or breach of or
default under any such Company Material Contract.
Section 4.15 Title to Property. Except as described in the Company
Disclosure Schedule, each of the Company and its Subsidiaries has good and valid
title to, or, in the case of leased properties and assets, valid leasehold
interests in, all of its material tangible properties and assets, real, personal
and mixed, used or held for use in its business, free and clear of any Liens
except (i) for liens imposed by Law in respect of obligations not yet due which
are owed in respect of Taxes or which otherwise are owed to materialmen,
workmen, carriers, warehousemen or laborers not in excess of $100,000 in the
aggregate, (ii) as reflected in the financial statements contained in the
Company SEC Reports and (iii) for such Liens or other imperfections of title and
encumbrances, if any, which would not reasonably be likely, individually or in
the aggregate, to have a Company Material Adverse Effect. Neither the Company
nor any of its Subsidiaries is in violation or breach of or default under the
leases with respect to any real property leased by the Company or
<PAGE>
-17-
its Subsidiaries, nor to the Company's knowledge is any other party to any such
leases in violation or breach of or default under any such leases, any of which
breaches or defaults, with the giving of notice or the passage of time, or both,
would permit the termination of such lease with respect to the facility of the
Company or its Subsidiaries in Natick, Massachusetts, or with respect to the
Company's other real property leases which would, individually or in the
aggregate, have a Company Material Adverse Effect.
Section 4.16 Intellectual Property.
(a) To the Company's knowledge, the Company and its
Subsidiaries, directly or indirectly, own, or are licensed or otherwise possess
legally enforceable rights to use, all patents, trademarks, trade names, service
marks, copyrights and any applications therefor, technology, know-how, computer
software and applications and tangible or intangible proprietary information or
materials that are material to the business of the Company and its Subsidiaries
(the "Company Intellectual Property Rights").
(b) Either the Company or one of its Subsidiaries is the owner
of, or the exclusive or non-exclusive licensee of, with all right, title and
interest in and to (free and clear of any liens or encumbrances), the Company
Intellectual Property Rights, and, in the case of the Company Intellectual
Property Rights owned by the Company or one of its Subsidiaries, has rights (and
is not contractually obligated to pay any compensation to any third party in
respect thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the Company
Intellectual Property Rights are being used. The Company or one of its
Subsidiaries has all necessary rights, and has not transferred any such rights,
with respect to its thin film technology and manufacturing processes. With
respect to the Company Intellectual Property Rights: (i) the manufacture, sale,
licensing, or use of any of the services or products of the Company or any of
its Subsidiaries as now manufactured, sold or licensed or used or proposed for
manufacture, use, sale or licensing by the Company or any of its Subsidiaries
does not infringe on any copyright, patent, trade mark, service mark or trade
secret of a third party except for an infringement which would not result in a
Company Material Adverse Effect, (ii) the use by the Company or any of its
Subsidiaries of any trademarks, service marks, trade names, trade secrets,
copyrights, patents, technology or know-how and applications used in the
business of the Company and any of its Subsidiaries as currently conducted or as
proposed to be conducted does not infringe on any copyright, patent, trade mark,
service mark or trade secret of a third party except for an infringement which
would not result in a Company Material Adverse Effect, or (iii) as of the date
of this Agreement, the Company has not received any information challenging the
ownership by the Company or any of its Subsidiaries or the validity of any of
the Company Intellectual Property Rights. All registered trademarks, service
marks and copyrights held by the Company and its Subsidiaries are valid and
subsisting, except to the extent any failure does not constitute a Company
Material Adverse Effect. To the knowledge of the Company, there is no
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, including any employee or
former employee of the Company or any of its Subsidiaries. No Intellectual
Property Right is subject to any outstanding decree, order, judgment, or
stipulation restricting in
<PAGE>
-18-
any manner the licensing thereof by the Company or any Subsidiary, except to the
extent any such restriction does not constitute a Company Material Adverse
Effect. Neither the Company nor any of the Subsidiaries has entered into any
agreement under which the Company or any of the Subsidiaries is restricted from
selling, licensing or otherwise distributing any of its products to any class of
customers, in any geographic area, during any period of time or in any segment
of the market.
(c) The Company and its Subsidiaries have integrated certain
Company Intellectual Property Rights into their equipment and processes which
have provided the technical functionality and efficiencies which have been
disclosed to Buyer. The Company has not experienced any material deterioration
in such functionality and efficiencies, including production rates and yields
shown thereon, or any materially increased costs in operations since
[January/February] 1, 2000 to maintain such functionality. Such modifications
have not violated any rights of the equipment manufacturer which would result in
a Company Material Adverse Effect.
(d) To the knowledge of Company, the computer systems,
software, hardware, firmware, middleware and other information technology
(collectively, "Information Technology") of the Company and its Subsidiaries are
Year 2000 Ready (as defined below); and none of the Company or any of its
Subsidiaries has experienced any disruption in their Information Technology or
in the services and products provided to the Company or any of the Subsidiaries
by their vendors and suppliers. "Year 2000 Ready" means that Information
Technology is designed to be used prior to, during and after the calendar year
2000 A.D. and such Information Technology will accurately receive, provide and
process date/time data (including, without limitation, calculating, comparing
and sequencing) from, into and between the twentieth and twenty-first centuries
A.D., and leap year calculations and will not malfunction, cease to function or
provide invalid or incorrect results as a result of date/time data (including,
without limitation, to the extent that other Information Technology used in
combination with such Information Technology properly exchanges date/time data
with it).
Section 4.17 Interested Party Transactions. Since September 30, 1999,
or as described in the Company SEC Reports, no event has occurred that would be
required to be reported by the Company pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
Section 4.18 Undisclosed Liabilities. Except as disclosed in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1999 (or in any subsequently filed Company SEC Reports), as of the date hereof,
neither the Company nor any of its Subsidiaries has any liabilities or any
obligations of any nature whether or not accrued, contingent or otherwise,
except for liabilities or obligations incurred in the ordinary course of
business since December 31, 1999 or which individually or in the aggregate are
not material in nature or amount. As of the date of this Agreement, except as
set forth on the Company Disclosure Schedule, no investigation or review by any
Governmental Entity with respect to the Company or any of its Subsidiaries is
pending or threatened, nor has any such Governmental Entity indicated an
intention to conduct any such investigation or review.
<PAGE>
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Section 4.19 Environmental Matters.
Except as disclosed in the Company Disclosure Schedule or in the
Company SEC Reports:
(a) To the knowledge of the Company, the Company and its
Subsidiaries (i) are in material compliance with all, and are not subject to any
asserted liability or, to the Company's knowledge, any liability (including
liability with respect to current or former subsidiaries or operations), in each
case with respect to any, Environmental Laws (as defined below), (ii) hold or
have applied for all Environmental Permits (as defined below) applicable to
their businesses and properties except for any Permits, the failure to hold does
not have a Company Material Adverse Effect and (iii) are in material compliance
with their respective Environmental Permits;
(b) none of the Company nor any Subsidiary has received any
written notice, demand, letter, claim or request for information alleging that
the Company or any of its Subsidiaries is or may be in violation of, or liable
under, any Environmental Law;
(c) none of the Company nor any of its Subsidiaries (i) has
entered into or agreed to any consent decree or order or is subject to any
judgment, decree or judicial order relating to compliance with Environmental
Laws, Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials (as defined
below) and, to the knowledge of the Company and the Subsidiaries, no
investigation, litigation or other proceeding is pending or threatened in
writing with respect thereto, or (ii) is an indemnitor in connection with any
threatened or asserted claim by any third-party indemnitee for any liability
under any Environmental Law or relating to any Hazardous Materials; and
(d) none of the real property owned or leased by the Company
or any of its Subsidiaries is listed or, to the knowledge of the Company,
proposed for listing on the "National Priorities List" under CERCLA, as updated
through the date hereof, or any similar state or foreign list of sites requiring
investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any applicable federal, state, local or
foreign statute, law, ordinance, regulation, rule, code, treaty, writ or order
and any enforceable judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree, judgment, stipulation,
injunction, permit, authorization, policy, opinion, or agency requirement, in
each case having the force and effect of law, relating to the pollution,
protection, investigation or restoration of the environment, health and safety
or natural resources, including those relating to the use, handling, presence,
transportation, treatment, storage, disposal, release, threatened release or
discharge of Hazardous Materials or noise, odor, wetlands, pollution,
contamination or any injury or
<PAGE>
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threat of injury to persons or property or to the siting, construction,
operation, closure and post-closure care of waste disposal, handling and
transfer facilities.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any Environmental Law.
"Hazardous Materials" means (i) any petroleum, petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any Environmental Law.
Section 4.20 Restrictions on Business Activities. Except as set forth
in the Company Disclosure Schedule, there is no agreement, judgment, injunction,
order or decree binding upon the Company or any of its Subsidiaries or any of
their properties which has had or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of the
Company or any of its Subsidiaries or Buyer or its Affiliates or the conduct of
business by the Company or any of its Subsidiaries or Buyer or its Affiliates as
currently conducted or as proposed to be conducted. Except as set forth on the
Company Disclosure Schedule, the Company has more than one source of supply for
all of raw materials and other supplies necessary for the manufacturer of its
Products and, to the Company's knowledge no such materials or supplies are now
or are likely to be in scarce supply, given the intended volume of the Company's
business as heretofore disclosed to Buyer. The Company has good business
relations with each such supplier and with the supplier of all of its major
manufacturing and processing equipment and reasonably believes that such
equipment will be delivered as scheduled pursuant to the Company's outstanding
purchase orders. The Company has no reason to believe that, as a result of the
Transactions, there will be any adverse change in the Company's relationships
with suppliers.
Section 4.21 Certain Business Practices. Neither the Company nor any of
its Subsidiaries nor any director, officer, employee or agent of the Company or
any of its Subsidiaries has in any material respect (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful payments relating
to political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party or
campaign or violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, (iii) consummated any transaction, made any payment, entered into
any agreement or arrangement or taken any other action in violation of Section
1128B(b) of the Social Security Act, as amended, or (iv) made any other unlawful
payment.
Section 4.22 Government Contracts. To the extent permitted under
applicable Law, the Company has provided Buyer access to all contracts,
agreements, orders and other relationships, and all amendments and modifications
thereof and any consents and waivers thereunder with Governmental Entities.
Assuming government approval of the novation of all contracts with such
Governmental Entities, the Company and its Subsidiaries are not, and the
execution and delivery of this Agreement by the Company
<PAGE>
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and the consummation of the Transactions will not result, in any violation,
breach or default of any material term or provision of (a) any contract with
such a Governmental Entity, (b) any subcontract issued at any tier under a prime
contract with such a Governmental Entity, (c) any bid, proposal or quotation
made in connection with a contract with such a Governmental Entity or a
subcontract issued under a contract with a Governmental Entity (collectively,
"Government Contracts"), or (d) any order, statute, rule or regulation governing
any Government Contract. Except as set forth on the Company Disclosure Schedule,
none of the Company nor any Subsidiary has been suspended or debarred from
bidding on contracts with Governmental Entities. Except as set forth on the
Company Disclosure Schedule, none of Sellers or the Acquired Subsidiaries have
received notice of Default or Termination for Default (as provided in 48 C.F.R.
Ch. 1 ss.ss. 52.249-8, 52.249-9 or similar sections) with respect to any
Government Contract or has taken any action which could result in the delivery
of such notice.
Section 4.23 Insurance. The Company has insurance covering all of the
customarily insurable liabilities, including product liability, director and
officer liability, general and casualty and other coverages with financially
secure insurers and such coverages are sufficient for all known exposures.
Section 4.24 Tax-Free Exchange. To the knowledge of the Company,
neither the Company nor any of its Affiliates has taken or agreed to take any
action that would prevent the Merger from constituting a transaction qualifying
under Section 368(a) of the Code. The Company is not aware of any agreement,
plan or other circumstance that would prevent the Merger from qualifying under
Section 368(a) of the Code.
Section 4.25 Brokers. Except for Salomon Smith Barney Inc. (the
"Company's Financial Advisor") whose fees shall be paid by the Company, no
agent, broker, finder, investment banker or other firm or Person is or will be
entitled to any broker's or finder's fee or other similar commission or fee in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company.
Section 4.26 Board Approval. The Board of Directors of the Company by
resolutions duly adopted by unanimous vote of those voting at a meeting duly
called and held and not subsequently rescinded or modified in any way (the
"Company Board Approval"), has duly (i) determined that this Agreement and the
Merger are fair to and in the best interests of the Company and its
stockholders, (ii) approved this Agreement and the Merger and (iii) recommended
that the stockholders of the Company adopt this Agreement and approve the Merger
and directed that this Agreement and the Transactions be submitted for
consideration by the Company's stockholders at the Stockholders Meeting. The
Company Board Approval constitutes approval of this Agreement and the Merger for
purposes of Section 203 of the Delaware Law. To the knowledge of the Company,
except for Section 203 of the Delaware Law (which has been rendered
inapplicable), no state takeover statute is applicable to the Merger or the
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Section 4.27 Opinion of the Company's Financial Advisor. The Company
has received the opinion of the Company's Financial Advisor, dated the date of
this Agreement, to the effect that, as of such date, the Exchange Ratio is fair,
from a financial point of view, to the holders of Company Common Stock, a copy
of which opinion has been made available to Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUBSIDIARY
Buyer represents and warrants to the Company, and Merger Subsidiary
represents to the Company solely as to those representations specifically
referring to it, that, except as disclosed in the Buyer Disclosure Schedule
which has been delivered to the Company prior to the execution of this Agreement
(the "Buyer Disclosure Schedule"):
Section 5.1 Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York. Each of Buyer's Significant Subsidiaries (as defined below) is duly
organized, validly existing and in good standing (to the extent such concept is
applicable) in the jurisdiction of its formation or organization. Each of Buyer
and its Significant Subsidiaries has the requisite corporate power and authority
to carry on its business as it is now being conducted and is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified will not have a Buyer Material Adverse Effect (as defined below).
Buyer has heretofore made available to the Company a complete and correct copy
of the organizational documents, each as amended to the date hereof, of Buyer
and Merger Subsidiary.
Section 5.2 Capitalization. The authorized capital stock of Buyer
consists of 500,000,000 shares of the Buyer Common Stock and 10,000,000 shares
of preferred stock, par value $100.00 per share (the "Buyer Preferred Stock").
As of September 30, 1999: (a) 268.9 million shares of Buyer Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
non-assessable, (b) 24.7 million shares of Buyer Common Stock were held in the
treasury of Buyer, (c) an aggregate of 5.6 million shares of Buyer Common Stock
were reserved for issuance under stock options issued pursuant to the Company's
employee and director stock option plans (the "Buyer Stock Options"), and (d)
51,000 shares of Buyer Preferred Stock were outstanding. Except as set forth in
this Section 5.2 and the Buyer Disclosure Schedule, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of Buyer or
obligating Buyer to issue or sell any shares of capital stock of, or other
equity interests in, Buyer. All shares of capital stock of Buyer subject to
issuance pursuant to the Buyer Stock Option Plans, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and non-assessable. All of
the shares of Buyer Common Stock issuable upon consummation of the Transactions
at
<PAGE>
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the Effective Time will be duly authorized, validly issued, fully paid and
non-assessable and, when issued, be registered under the Securities Act, and the
issuance thereof will not be subject to any preemptive or similar right.
Section 5.3 Authority Relative to this Agreement. Each of Buyer and
Merger Subsidiary has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Merger and the other Transactions. The execution and delivery of this Agreement
by Buyer and Merger Subsidiary and the consummation by Buyer and Merger
Subsidiary of the Merger and the other Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Buyer or Merger Subsidiary are necessary to authorize the
execution and delivery of this Agreement or to consummate the Merger and the
other Transactions other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by Delaware Law. This
Agreement has been duly and validly executed and delivered by Buyer and Merger
Subsidiary and, assuming the due authorization, execution and delivery by the
Company, this Agreement constitutes a legal, valid and binding obligation of
Buyer and Merger Subsidiary, enforceable against Buyer and Merger Subsidiary in
accordance with its terms.
Section 5.4 No Conflicts, Required Filings and Consents.
(a) The execution and delivery of this Agreement by Buyer and
Merger Subsidiary does not, and the performance of this Agreement by Buyer and
Merger Subsidiary will not: (i) conflict with or violate the certificate of
incorporation or by-laws of Buyer and Merger Subsidiary, (ii) assuming the
consents, approvals, authorizations and waivers specified in Section 5.4(b) have
been received and the waiting periods referred to therein have expired, and any
condition precedent to such consent, approval, authorization, or waiver has been
satisfied, conflict with or violate any Laws applicable to Buyer or its
Significant Subsidiaries or by which any property or asset of Buyer or any of
its Significant Subsidiaries is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any right of termination,
amendment, acceleration, or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Buyer or any of its Significant
Subsidiaries pursuant to, any note, bond, mortgage, indenture or credit
agreement, or, to the Buyer's knowledge as of the date of this Agreement, any
other contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which Buyer or any of its Significant Subsidiaries is a party
or by which Buyer or any of its Significant Subsidiaries or any property or
asset of the Buyer or any of its Significant Subsidiaries is bound or affected,
except in the case of clause (iii) for any such conflicts, violations, breaches,
defaults or other occurrences of the type referred to above which would not have
a Buyer Material Adverse Effect or would not prevent or materially delay the
consummation of the Merger.
(b) The execution and delivery of this Agreement by Buyer and
Merger Subsidiary does not, and the performance of this Agreement by Buyer and
Merger Subsidiary will not, require any consent, approval, authorization, waiver
or
<PAGE>
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permit of, or filing with or notification to, any Governmental Entity, except
for applicable requirements of the Exchange Act, the Securities Act, Blue Sky
Laws, the HSR Act, such notifications, filings, approvals, consents and waivers
as may be required under the Merger Control Laws, filing and recordation of the
Certificate of Merger as required by Delaware Law and applications for listing
and other filings required by the rules of the NYSE and except where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not have a Buyer Material Adverse Effect or
would not prevent or materially delay the consummation of the Merger.
Section 5.5 Reports and Financial Statements.
(a) Buyer has filed with the SEC all forms, reports,
schedules, registration statements and definitive proxy statements (the "Buyer
SEC Reports") required to be filed by it with the SEC since December 31, 1997.
As of their respective dates, Buyer SEC Reports complied as to form in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to which the Buyer SEC Reports. As of their respective dates and as
of the date any information from such the Buyer SEC Reports has been
incorporated by reference, the Buyer SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Buyer has filed all
material contracts and agreements and other documents or instruments required to
be filed as exhibits to the Buyer SEC Reports.
(b) The consolidated balance sheets of Buyer as of September
30, 1999 and 1998 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three months and nine month
periods then ended (including the related notes and schedules thereto) contained
in Buyer's Form 10-Q for the quarter ended September 30, 1999 (the "Buyer
Quarterly Financial Statements") present fairly, in all material respects, the
consolidated financial position and the consolidated results of operations and
cash flows of Buyer and its consolidated Subsidiaries as of the dates or for the
periods presented therein in conformity with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved except as otherwise noted therein, including in the related notes.
Section 5.6 Information.
(a) None of the written information supplied or to be supplied
by Buyer or Merger Subsidiary for inclusion or incorporation by reference in the
definitive Prospectus/Proxy Statement will, at the time of filing with the SEC,
at the time of the mailing of the Prospectus/Proxy Statement or any amendments
or supplements thereto to the Company's stockholders or at the time of the
Company Special Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances
<PAGE>
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under which they are made, not misleading. The portion of the Prospectus/Proxy
Statement based on information supplied by Buyer and Merger Subsidiary for
inclusion or incorporation by reference therein will comply as to form in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder.
(b) As of the date of this Agreement, Buyer does not know of
any reason (i) for which it would not be able to deliver to the respective
counsel to Buyer and the Company, at the date of the legal opinions referred to
below, certificates substantially in compliance with published IRS advance
ruling guidelines, with customary exceptions and modifications thereto, to
enable such firms to deliver the legal opinions contemplated by Section 8.2, and
Buyer hereby agrees to deliver such certificates effective as of the date of
such opinions so long as the statements therein are true as of such time or (ii)
for which counsel to Buyer and the Company would not be able to deliver the
opinions required by Section 8.2.
Section 5.7 Litigation. Except as disclosed in the Buyer SEC Reports,
as of the date hereof, there is no suit, action or proceeding pending or, to the
knowledge of Buyer, threatened against or affecting Buyer or any of its
Significant Subsidiaries that is reasonably expected to have a Buyer Material
Adverse Effect, nor is there any judgment, decree, injunction or order of any
Governmental Entity or arbitrator outstanding against Buyer or its Significant
Subsidiaries having, or which is reasonably expected to have, individually or in
the aggregate, a Buyer Material Adverse Effect.
Section 5.8 Absence of Certain Changes or Events. Except as disclosed
in the Buyer SEC Reports or as contemplated by this Agreement, since September
30, 1999, Buyer has conducted its business only in the ordinary course, and
there has not been any change that would have a Buyer Material Adverse Effect;
or any material change in accounting methods, principles or practices by the
Company, except insofar as may have been required by a change in GAAP.
Section 5.9 Compliance with Applicable Laws. Except as set forth in the
Buyer SEC Reports filed prior to the date hereof, as of the date of this
Agreement, and, except as set forth in the Buyer SEC Reports filed after the
date hereof but prior to the Effective Time, as of the Effective Time,, the
businesses of each of the Buyer and its Significant Subsidiaries have not been,
and are not being, conducted in violation of any federal, state, local or
foreign law, statute, ordinance, rule, regulation, judgment, order, injunction,
decree, arbitration award, agency requirement, license or permit of any
Governmental Entity (collectively, "Buyer Permits"), except for violations or
possible violations that, individually or in the aggregate, are not reasonably
likely to have a Buyer Material Adverse Effect or prevent or materially burden
or materially impair the ability of the Buyer to consummate the transactions
contemplated by this Agreement. Except as set forth in the Buyer SEC Reports
filed prior to the date of the Company Special Meeting, no investigation or
review by any Governmental Entity with respect to Buyer or any of its
Subsidiaries is pending or, to the Buyer's knowledge, threatened, nor has any
Governmental Entity indicated an intention to conduct the same. To the knowledge
of Buyer, no material change is required in the Buyer's or any of its
Significant
<PAGE>
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Subsidiaries' processes, properties or procedures in connection with any such
Buyer Permits, and Buyer has not received any notice or communication of any
material noncompliance with any such Buyer Permits that has not been cured as of
the date hereof. Buyer and its Significant Subsidiaries each has all permits,
licenses, franchises, variances, exemption, orders and other governmental
authorizations, consents and approvals necessary to conduct its business as
presently conducted except those the absence of which are not, individually or
in the aggregate, reasonably likely to have a Buyer Material Adverse Effect or
prevent or materially burden or materially impair the ability of Buyer or Merger
Subsidiary to consummate the Merger and the other transactions contemplated by
this Agreement.
Section 5.10 Voting Requirements. No vote of the holders of the Buyer's
capital stock or other securities is necessary to approve this Agreement or the
Transactions.
Section 5.11 Tax-Free Exchange. To the knowledge of Buyer, neither
Buyer nor any of its Affiliates has taken or agreed to take any action that
would prevent the Merger from constituting a transaction qualifying under
Section 368(a) of the Code. Buyer is not aware of any agreement, plan or other
circumstance that would prevent the Merger from qualifying under Section 368(a)
of the Code.
Section 5.12 Brokers. Except for Goldman, Sachs & Co. (the "Buyer's
Financial Advisor") whose fees shall be paid by Buyer, no agent, broker, finder,
investment banker or other firm or Person is or will be entitled to any broker's
or finder's fee or other similar commission or fee in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Buyer.
Section 5.13 Board Approval. The Board of Directors of Buyer by
resolutions duly adopted at a meeting duly called and held and not subsequently
rescinded or modified in any way (the "Buyer Board Approval") has duly approved
the Merger and the Transactions.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of the Business Pending the Merger
(a) From and after the date hereof, prior to the Effective Time, except
as contemplated by this Agreement or required by Law or regulation, or unless
Buyer shall otherwise agree in writing, the Company covenants and agrees that it
shall, and shall cause its Subsidiaries to, carry on their respective businesses
in the usual, regular and ordinary course in substantially the same manner as
heretofore conducted and to use reasonable efforts to conduct their business in
a manner consistent with the budgets and plans heretofore made available to
Buyer, including all capital expenditure and plant expansion plans, and shall
cause its Subsidiaries to, use all reasonable efforts to preserve intact their
present business organizations, keep available the services of their employees
<PAGE>
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and consultants and preserve their relationships and goodwill with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them and to protect their Intellectual Property to the end that
their goodwill and on-going businesses shall not be impaired in any material
respect at the Effective Time. Unless Buyer shall otherwise agree in writing,
prior to the Effective Time, the Company shall not and shall not permit its
Subsidiaries to:
(i) declare, set aside, or pay any dividends on, or
make any other distributions in respect of, any of
its capital stock, other than dividends and
distributions by any direct or indirect subsidiary of
the Company to its parent, split, combine or
reclassify any of its capital stock or issue or
authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares
of its capital stock, purchase, redeem or otherwise
acquire, other than pursuant to the exercise of the
Andlinger Capital Warrant or Company Stock Options
outstanding on the date of this Agreement, or any
ESPP Options, any shares of capital stock of the
Company or any of its Subsidiaries or any other
equity securities thereof or any rights, warrants, or
options to acquire any such shares or other
securities other than purchases, redemptions or
acquisitions of equity securities of wholly-owned
subsidiaries of the Company or rights, warrants or
options to acquire such securities;
(ii) grant, award or enter into any compensation or
change of control arrangement with any employee of
the Company or any Subsidiary without the prior
written consent of Buyer;
(iii) except for issuances of capital stock of the
Company's Subsidiaries to the Company or a
wholly-owned Subsidiary of the Company, issue,
deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock including
any Company Options or any ESPP Options, any other
voting securities of the Company or any securities
convertible into, or any rights, warrants or options
to acquire, any such shares or voting securities
(other than the issuance of Company Common Stock upon
the exercise of Company Stock Options or the
Andlinger Capital Warrant outstanding on the date of
this Agreement or any ESPP Options) or amend the
terms of any such securities, rights, warrants or
options or, except as set forth on the Company
Disclosure Schedule take any action to accelerate the
vesting thereof;
(iv) amend the certificate of incorporation or
by-laws of the Company or any Subsidiary;
(v) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial
portion of the assets of, or by
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any other manner, any business or any corporation,
partnership, joint venture, association or other
business organization or division thereof, or any
assets that are material, individually or in the
aggregate, to the Company or any of its Subsidiaries,
except, in any such case, in the ordinary course of
business, and except transactions between a
wholly-owned subsidiary of the Company and the
Company or another wholly-owned subsidiary of the
Company;
(vi) subject to a Lien or sell, lease, license or
otherwise dispose of or transfer any of its
properties or assets or any Intellectual Property,
except in the ordinary course of business and except
for the sale of optical filters and custom diamond
machined optics and systems in the ordinary course of
business or transactions between a wholly-owned
subsidiary of the Company and the Company or another
wholly-owned subsidiary of the Company;
(vii) incur or modify any indebtedness for borrowed
money or guarantee any such indebtedness of another
person, issue or sell any debt securities of the
Company or any of its Subsidiaries, guarantee any
debt securities of another person (other than
indebtedness to, guarantees of, or issuances or sales
to the Company or a wholly-owned subsidiary of the
Company), or enter into any "keep well" or other
agreement to maintain any financial condition of
another person, except, in any such case, for
borrowings or other transactions incurred in the
ordinary course of business under the existing credit
facility included as a Material Contract including to
repay existing indebtedness pursuant to the terms
thereof, or except in the ordinary course of
business, make any loans, advances or capital
contributions to, or investments in, any other
person, other than to the Company or any direct or
indirect subsidiary of the Company or settle or
compromise any material claims or litigation;
(vii) alter, amend or delay in any material respect
the implementation of its plans for capital
expenditures and completion/expansion of plant and
production facilities previously delivered to Buyer;
(viii) take any action or omit to take any action
that would cause any of its representations and
warranties herein to become untrue in any material
respect; and
(ix) authorize any of, or commit or agree to take any
of, the foregoing actions.
<PAGE>
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(b) The Company shall promptly provide the Buyer copies of all
filings made by the Company with any Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
(c) The Company shall, before settling or compromising any
material litigation, claim, income tax or other liability of the Company or any
of its Subsidiaries, consult with Buyer and its advisors as to the positions and
elections that will be taken or made with respect to such matter and shall not
enter into any such settlement or compromise without the consent of Buyer, which
will not be unreasonably withheld or delayed.
Section 6.2. Company Special Meeting. The Company shall take all action
reasonably necessary, in accordance with applicable Law and its certificate of
incorporation and by-laws, to convene the Company Special Meeting as promptly as
reasonably practicable after the date on which the definitive Prospectus/Proxy
Statement has been mailed to the Company's stockholders for the purpose of
considering and taking action upon the Merger and this Agreement. The Company
will hold the Company Special Meeting within thirty business days after the
effective date of Registration Statement/Prospectus (as defined below). Subject
to fiduciary obligations under applicable law, the Company's board of directors
shall recommend such approval and shall take all lawful action to solicit such
approval.
Section 6.3. Further Action; Consents; Filings.
(a) Upon the terms and subject to the conditions hereof, each
of the parties hereto shall use its reasonable best efforts to (i) take, or
cause to be taken, all appropriate action and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement, (ii) obtain from Governmental Entities any consents,
licenses, permits, waivers, approvals, authorizations or orders required to be
obtained or made by Buyer or the Company or any of their subsidiaries in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the Merger and the other transactions contemplated by this
Agreement and (iii) make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement, the Merger and the other
transactions contemplated by this Agreement that are required under (A) the
Exchange Act and the Securities Act and the rules and regulations thereunder and
any other applicable federal or state securities laws, (B) the HSR Act, and any
other Merger Control Laws, and (C) any other applicable Law. The parties hereto
shall cooperate with each other in connection with the making of all such
filings, including by providing copies of all such documents to the nonfiling
party and its advisors prior to filing and, if requested, by accepting all
reasonable additions, deletions or changes suggested in connection therewith.
(b) Buyer and the Company shall, and the Company shall cause
its Affiliates which are required to do so to, file as soon as practicable after
the date of this Agreement but in no event more than fifteen business days after
the date of this Agreement, notifications under the HSR Act and any other
applications or notices
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required under other Merger Control Laws and shall respond as promptly as
practicable to all inquiries or requests that may be made pursuant to any Merger
Control Laws for additional information or documentation and shall respond as
promptly as practicable to all inquiries and requests received from any
Governmental Entity in connection with antitrust matters. The parties shall
cooperate with each other in connection with the making of all such filings or
responses, including providing copies of all such documents to the other party
and its advisors prior to filing or responding. Each of Buyer, Merger Subsidiary
and the Company, to the extent applicable, further agrees to file
contemporaneously with the filing of the applications any requests for waivers
of applicable Governmental Entities as may be required to expeditiously
prosecute such waiver requests and to diligently submit any additional
information or amendments for which the Governmental Entity may ask with respect
to such waiver requests.
Section 6.4. Plan of Reorganization. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code. From and after the
date of this Agreement and until the Effective Time, each party hereto shall use
its reasonable best efforts to cause the Merger to qualify, and will not
knowingly take any action, cause any action to be taken, fail to take any action
or cause any action to fail to be taken which action or failure to act could
prevent the Merger from qualifying as a reorganization under the provisions of
Section 368(a) of the Code. Following the Effective Time, neither the Surviving
Corporation, Buyer nor any of their affiliates shall knowingly take any action,
cause any action to be taken, fail to take any action or cause any action to
fail to be taken, which action or failure to act could cause the Merger to fail
to qualify as a reorganization under Section 368(a) of the Code.
Section 6.5. Letters of Accountants.
(a) Buyer shall use its reasonable best efforts to cause to be
delivered to the Company "comfort" letters of PricewaterhouseCoopers LLP,
Buyer's independent auditors, dated and delivered the date on which the
Registration Statement shall be filed, shall become effective and as of the
Effective Time, and addressed to the Company, in form and substance reasonably
satisfactory to the Company and reasonably customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
(b) The Company shall use its reasonable best efforts to cause
to be delivered to Buyer "comfort" letters of Ernst & Young LLP, the Company's
independent accountants, dated and delivered the date on which the Registration
Statement shall be filed, shall become effective and as of the Effective Time,
and addressed to Buyer, in form and substance reasonably satisfactory to Buyer
and reasonably customary in scope and substance for letters delivered by
independent public accountants in connection with transactions such as those
contemplated by this Agreement.
Section 6.6 Registration of Options. As soon as practicable (but in any
event, within five business days) after the Effective Time, the Buyer Common
Shares subject to Company Stock Options will be covered by an effective
registration statement on Form
<PAGE>
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S-8 (or any successor form) or another appropriate form, and Buyer shall use its
reasonable best efforts to maintain the effectiveness of such registration
statement or registration statements for as long as substitute Options remain
outstanding. In addition, Buyer shall use all reasonable efforts to cause the
Buyer Common Shares subject to Company Stock Options to be listed on the NYSE
and such other exchanges as Buyer shall determine.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information.
(a) From the date hereof through the Effective Time or earlier
termination of this Agreement in accordance with its terms, the Company and its
Subsidiaries shall afford to Buyer and Buyer's accountants, counsel and other
representatives upon reasonable notice and at reasonable times, full and
reasonable access to its properties, books, contracts, commitments, records and
personnel and, during such period, shall furnish promptly to Buyer (i) a copy of
each report, schedule and other document filed or received by it pursuant to the
requirements of federal securities laws, and (ii) all other information
concerning its business, properties and personnel as Buyer may reasonably
request, including information regarding customers, suppliers and personnel and
the opportunity to meet with such persons to discuss the business and relations
with the Company. From the date of this Agreement, the Company will provide
Buyer with manufacturing reports not less frequently than weekly and will permit
a designated representative of Buyer to have supervised access to the Company's
manufacturing operations for reasonable periods not to exceed eight hours per
week. The Company and the Buyer will cooperate in order to provide for an
orderly transition of the manufacturing operations as of the Effective Time as
agreed to between the parties. From the date of the mailing of the Proxy
Statement/Prospectus, the Company will permit Buyer to have full access to the
Company's manufacturing operation, provided, however, Buyer shall use reasonable
best efforts not to disrupt the Company's business and operations, and the
Company shall cooperate fully in technical exchanges with Buyer with respect to
those manufacturing operations. Buyer shall hold, and shall cause its employees,
agents and representatives to hold, in confidence all "Confidential Information"
in accordance with the terms of the Nondisclosure Agreement, dated January 28,
2000 between Buyer and the Company ("Confidentiality Agreement"), which shall
remain in full force and effect in accordance with the terms thereof, including,
without limitation, in the event of termination of this Agreement. No
investigation pursuant to this Section 7.1(a) shall limit any representation or
warranty of the Company.
(b) From the date hereof through the Effective Time or earlier
termination of this Agreement in accordance with its terms, Buyer shall afford
to the Company and the Company's accountants, counsel and other representatives
full and reasonable access during normal business hours (and at such other times
as the parties may mutually agree) to its properties, books, contracts,
commitments, records and
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personnel and, during such period, shall furnish promptly to the Company a copy
of each report, schedule and other document filed or received by it pursuant to
the requirements of federal securities laws, and (ii) such books as records and
are customarily available to stockholders of Buyer and as the Company may
reasonably request. The Company shall hold, and shall cause its employees,
agents and representatives to hold, in confidence all "Confidential Information"
in accordance with the terms of the Confidentiality Agreement, which shall
remain in full force and effect in accordance with the terms thereof, including,
without limitation, in the event of termination of this Agreement. No
investigation pursuant to this Section 7.1(b) shall limit any representation or
warranty of Buyer.
(c) As soon as practicable after the date hereof, the Company
shall use its reasonable best efforts to cooperate and assist Buyer and Buyer's
independent public accountants in the compilation and preparation of all
financial statements and financial statement schedules of the Company prepared
in accordance with GAAP and reports and consents of the Company's independent
public accountants as may be necessary or deemed advisable by Buyer to comply
with SEC reporting and disclosure requirements. The Company shall deliver to
Buyer's independent public accountants and/or the Company's independent public
accountants all engagement letters and management representation letters as may
be reasonably requested by Buyer or such accountants. The Company shall use its
reasonable best efforts to cause its independent public accountants to cooperate
with and assist Buyer and its independent public accountants in the preparation
of the financial statements contemplated by this Section 7.1(c).
Section 7.2 Registration Statement; Prospectus/Proxy Statement.
(a) For the purposes of (i) registering the issuance of Buyer
Common Stock to holders of the shares of the Company Common Stock in connection
with the Merger with the SEC under the Securities Act and complying with
applicable state securities laws and (ii) holding the meeting of the Company
stockholders (the "Company Special Meeting") to approve the Merger (the "Company
Proposal"), Buyer and the Company will cooperate in the preparation of a
registration statement on Form S-4 (such registration statement, together with
any and all amendments and supplements thereto, being herein referred to as the
"Registration Statement"), including a prospectus/proxy statement satisfying all
requirements of applicable state securities laws, the Securities Act and the
Exchange Act. Such prospectus/proxy statement in the form mailed by the Company
and, if required, Buyer to their respective stockholders, together with any and
all amendments or supplements thereto, is herein referred to as the
"Prospectus/Proxy Statement."
(b) The Company will furnish Buyer with such information
concerning the Company and its subsidiaries as is necessary in order to cause
the Prospectus/Proxy Statement, insofar as it relates to the Company and its
subsidiaries, to comply with applicable Law. None of the information relating to
the Company and its subsidiaries supplied by the Company for inclusion in the
Prospectus/Proxy Statement in writing for this purpose will be false or
misleading with respect to any material fact or will omit to state any material
fact required to be stated therein or necessary in order to
<PAGE>
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make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company agrees promptly to advise Buyer if, at any
time prior to the respective meetings of the stockholders of the Company
referenced herein, any information provided by it in the Prospectus/Proxy
Statement is or becomes incorrect or incomplete in any material respect and to
provide Buyer with the information needed to correct such inaccuracy or
omission. The Company will furnish Buyer with such supplemental information as
may be necessary in order to cause the Prospectus/Proxy Statement, insofar as it
relates to the Company and its subsidiaries, to comply with applicable Law after
the mailing thereof to the stockholders of the Company.
(c) Buyer will include in the Prospectus/Proxy Statement such
information concerning Buyer and its subsidiaries as is necessary in order to
cause the Prospectus/Proxy Statement, insofar as it relates to Buyer and its
subsidiaries, to comply with applicable Law. None of the information relating to
Buyer and its subsidiaries included in the Prospectus/Proxy Statement will be
false or misleading with respect to any material fact or will omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If, at any time prior to the meeting of the stockholders of the
Company referenced herein, any information included by Buyer in the
Prospectus/Proxy Statement is or becomes incorrect or incomplete in any material
respect, Buyer shall correct such inaccuracy or omission. Buyer will furnish
such supplemental information as may be necessary in order to cause the
Prospectus/Proxy Statement, insofar as it relates to Buyer and its subsidiaries,
to comply with applicable Law after the mailing thereof to the stockholders of
the Company.
(d) The Company and Buyer agree to cooperate in making any
preliminary filings of the Prospectus/Proxy Statement with the SEC, as promptly
as practicable, pursuant to Rule 14a-6 under the Securities Exchange Act, and
shall cooperate in responding to any comments with respect thereto received from
the SEC.
(e) Buyer will file the Registration Statement with the SEC
and appropriate materials with applicable state securities agencies as promptly
as practicable and will use all reasonable efforts to cause the Registration
Statement to become effective under the Securities Act at the earliest
practicable date and all such state filed materials to comply with applicable
state securities Laws. The Company authorizes Buyer to utilize in the
Registration Statement and in all such state filed materials, the information
concerning the Company and its subsidiaries provided to Buyer in writing for
this purpose in connection with, or contained in, the Prospectus/Proxy
Statement. Buyer promptly will advise the Company when the Registration
Statement has become effective and of any supplements or amendments thereto, and
Buyer will furnish the Company with copies of all such documents. Except for the
Prospectus/ Proxy Statement or the preliminary prospectus/proxy statement,
neither Buyer nor the Company shall distribute any written material that might
constitute a "prospectus" relating to the Merger or the Company Proposal within
the meaning of the Securities Act or any applicable state securities Law without
the prior written consent of the other party.
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(f) The Company shall mail the Prospectus/Proxy Statement to
its stockholders as promptly as practicable after the date the Registration
Statement is declared effective under the Securities Act.
Section 7.3 Employee Retention. The Company and Buyer shall consult
with each other promptly after the date of this Agreement on the design and
implementation of retention arrangements and non-competition agreements to
retain key employees of the business. Each of the Company and Buyer will act in
good faith to implement the arrangements agreed upon and to encourage the
retention of such key employees and the Company hereby waives any claim that it
may have with respect to any negotiations which Buyer may have with the key
employees of the Company in connection therewith.
Section 7.4 Public Announcements. On or before the Closing Date, Buyer
and the Company shall not (nor shall they permit any of their respective
Affiliates to), without prior consultation with the other party and such other
party's review of and consent to any public announcement concerning the
transactions contemplated by this Agreement, issue any press release or make any
public announcement with respect to such transactions during such period, and
Buyer and the Company shall, to the extent practicable, allow the other party
reasonable time to review and comment on such release or announcement in advance
of its issuance and use reasonable efforts in good faith to reflect the
reasonable and good faith comments of such other party, provided, however, no
party shall be prevented from making any disclosure required by law at the time
so required because of any delay on the part of the other party. The parties
intend that the initial announcement of the terms of the transactions
contemplated by this Agreement shall be made by joint press release of Buyer and
the Company.
Section 7.5 Indemnification of the Company's Directors and Officers and
Insurance. Buyer agrees that all rights to indemnification existing as of the
date of this Agreement in favor of any director, officer, employee or agent of
the Company and its subsidiaries (the "Indemnified Parties") as provided in
their respective Certificate of Incorporation, By-laws or comparable
organizational documents or in indemnification agreements with the Company or
any of its Subsidiaries, or otherwise in effect as of the date hereof, shall to
the extent permitted under Delaware Law survive the Merger and shall continue in
full force and effect for a period of not less than six years from and after the
Effective Time, provided that, in the event any claim or claims are asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims, shall continue until final disposition of any and all
such claims. Without limiting the generality of the foregoing, in the event any
such Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including, without
limitation, the transactions contemplated by this Agreement, occurring prior to
or at the Effective Time, Buyer shall cause the Surviving Corporation to pay as
incurred such Indemnified Party's legal and other expenses (including the cost
of any investigation and preparation) incurred in connection therewith. The
Surviving Corporation shall cause to be maintained in effect for a period of six
years, the current policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by the Company (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms
<PAGE>
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and conditions which are, in the aggregate, no less advantageous to the insured)
with respect to claims arising from facts or events that occurred on or before
the Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend in any one year an amount in excess of 200% of
the annual premiums currently paid by the Company for such insurance; and,
provided, further, that if the annual premiums of such insurance coverage exceed
such amount, the Surviving Corporation shall be obligated to obtain a policy
with the greatest coverage available for a cost not exceeding such amount. In
the event Buyer or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each case, proper provision
shall be made so that the successors and assigns of Buyer or the Surviving
Corporation, as the case may be, honor the indemnification obligations set forth
in this Section 7.4.
Section 7.6 Efforts; Consents.
(a) Subject to the terms and conditions of this Agreement,
each of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and the Merger and
to cooperate with each other in connection with the foregoing. Without limiting
the generality of the foregoing, each of the Company, Merger Subsidiary and
Buyer shall make or cause to be made all required filings with or applications
to Governmental Entities (including under the Securities Act, the Exchange Act
and the Merger Control Laws and to state and local Governmental Entities with
respect to any transfers of Company Permits), and use its reasonable best
efforts to (i) obtain all necessary consents of all Governmental Entities and
other third parties, necessary for such parties to consummate the Transactions,
(ii) oppose, lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the Transactions,
and (iii) fulfill all conditions to this Agreement.
(b) Prior to the Effective Date, the Company shall use its
reasonable best efforts to assist Buyer in its integration of the acquisition of
the Company, including the prompt and orderly transition of employees, customers
and suppliers of the Company's business and providing assistance to Buyer in
connection with the integration of the Company's lines of business and services
with those of Buyer.
Section 7.7 Notice of Breaches. The Company shall give prompt notice to
Buyer, and Buyer or Merger Subsidiary shall give prompt notice to the Company,
of (i) any representation or warranty made by it contained in this Agreement
which has become untrue or inaccurate in any material respect, or (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition, or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that such notification shall not excuse or
otherwise affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
<PAGE>
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Section 7.8 Transfer and Gains Taxes and Certain Other Taxes and
Expenses. Buyer and Merger Subsidiary agree that the Surviving Corporation will
pay all real property transfer, gains and other similar taxes and all
documentary stamps, filing fees, recording fees and sales and use taxes, if any,
and any penalties or interest with respect thereto, payable in connection with
consummation of the Merger without any offset, deduction, counterclaim or
deferment of the payment of the Merger Consideration. The Company has provided
to Buyer a good faith estimate and description of the expenses of the Company
and its Subsidiaries that the Company expects to incur or has incurred in
connection with the transactions contemplated by the Agreement and shall update
such estimate not fewer than five days prior to the Effective Time and at such
other times as may be reasonably requested by Buyer.
Section 7.9 Acquisition Proposals.
(a) The Company agrees that it shall not nor shall any of its
Subsidiaries or any of the officers and directors of the Company or its
Subsidiaries nor any of its or its Subsidiaries' agents and representatives
(including any investment banker, attorney or accountant retained by it or any
of its Subsidiaries),and it shall use its reasonable best efforts to cause the
non-officer employees of the Company and its Subsidiaries not to, directly or
indirectly, initiate, solicit, encourage or knowingly facilitate (including by
way of furnishing information) any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase or sale of all or any significant portion
of the assets or more than 10% of the Company Common Stock or the assets or
capital stock of any of its subsidiaries (any such proposal or offer (other than
a proposal or offer made by Buyer or an affiliate thereof) being hereinafter
referred to as an "Acquisition Proposal"). The Company further agrees that
neither it nor any of its Subsidiaries nor any of the officers and directors of
it or its Subsidiaries shall, and that it shall direct and use its reasonable
best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly, have
any discussion with or provide any confidential information or data to any
Person relating to an Acquisition Proposal, or engage in any negotiations
concerning an Acquisition Proposal, or knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal or accept an Acquisition
Proposal. Notwithstanding the foregoing, the Company or its Board of Directors
shall be permitted to comply with (i) Rule 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal, and (ii) in response to an
unsolicited bona fide written Acquisition Proposal by any Person, to engage in
any discussions or negotiations with, or provide any information to, any Person
in response to an unsolicited bona fide written Acquisition Proposal by any such
Person, if and only to the extent that: (w) the Company Special Meeting shall
not have occurred; (x) the Board of Directors of the Company, upon the advice of
the Company's Financial Advisors, concludes in good faith that such Acquisition
Proposal could reasonably be expected to constitute a Superior Proposal (as
defined in Section 10.8(a) below); (y) prior to providing any information or
data to any Person in connection with an Acquisition Proposal by any such
Person, the Company Board of Directors receives from such Person
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an executed confidentiality agreement on terms substantially similar to those
contained in the Confidentiality Agreement; and (z) at least two days prior to
providing any information or data to any Person or entering into discussions or
negotiations with any Person, the Board of Directors of the Company notifies
Buyer promptly of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with, any of its representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any proposals or offers. The Company agrees that it will keep
Buyer informed, on a current basis, of the status and terms of any such
proposals or offers and the status of any such discussions or negotiations. The
Company agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
prior to the date of this Agreement with respect to any Acquisition Proposal.
The Company agrees that it will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence of this Section 7.9(a)
of the obligations undertaken in this Section 7.9(a) and that any breach of the
provisions of this Section 7.9(a) by any officer or director of the Company or
its subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative of the Company or its subsidiaries will be
deemed a breach by the Company.
(b) Except as permitted in this Section 7.9(b), neither the
Board of Directors of the Company nor any committee thereof shall:
(i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Buyer, or
take any action not explicitly permitted by this
Agreement that would be inconsistent with, the
approval or recommendation by such Board of Directors
or such committee of the transactions contemplated by
this Agreement,
(ii) approve or recommend, or propose publicly to
approve or recommend, any
Acquisition Proposal, or
(iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement
or other similar agreement (each, an "Acquisition
Agreement") related to any Acquisition Proposal.
Notwithstanding the foregoing, in the event that prior to the
vote on the transactions at the Company Special Meeting, the Board of Directors
of the Company determines in good faith, that an Acquisition Proposal
constitutes a Superior Proposal, the Board of Directors of the Company may:
(x) withdraw or modify its approval or recommendation
of the Transactions in connection with the Company
Special Meeting,
(y) approve or recommend a Superior Proposal and
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(z) if it so chooses, cause the Company to enter into
an Acquisition Agreement with respect to such
Superior Proposal but, in each case, only at a time
that is after: (A) the later of Company Special
Meeting or the fifth (5th) day following Buyer's
receipt of written notice from the Company advising
Buyer that the Board of Directors of the Company has
received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal,
and advising Buyer that the Board of Directors of the
Company has determined that it will no longer
recommend approval of the Transactions; (B) the
Company has paid the Termination Fee (as defined in
Section 9.3(b) to Buyer; and (C) the Company has
terminated this Agreement in accordance with its
terms.
Section 7.10 Related Agreement. Simultaneously with the execution and
delivery of this Agreement, or as otherwise provided in this Section 7.10, and
as material consideration for the execution and delivery of this Agreement by
Buyer and Merger Subsidiary, each of the Persons listed on Exhibit 7.10(a) to
this Agreement is entering into a stockholders' agreement pursuant to which such
Persons agree to vote the shares of the Company Common Stock owned by them in
favor of the Company Proposal at the Company Special Meeting and provide the
proxies named therein with such Person's irrevocable proxy with respect to such
vote (the "Related Agreement"). The Company shall, prior to the Effective Time,
negotiate the termination of the consulting agreement, dated August 31, 1999,
between the Company and ANC Management Corp. prior to the Closing Date without
any payment or liability of the Company with respect to such termination, except
as set forth on the Company Disclosure Schedule.
Section 7.11 Employee Benefits. Nothing herein shall require: (A) the
continuation of any Company Benefit Plan or prevent the amendment or termination
thereof (subject to the maintenance, in the aggregate, of the benefits as
provided in the preceding sentence); or (B) require Buyer or the Surviving
Corporation to continue or maintain any stock purchase or other equity plan
related to the equity of the Company or the Surviving Corporation or to change
the eligibility requirements of any stock or other equity plan of Buyer; or (C)
constitute any obligation on the part of Buyer, the Surviving Corporation or any
of their Affiliates to change the employment status of any of the Company
Employees to other than "at will."
Section 7.12 NYSE Listing and NASDAQ Delisting. Buyer shall promptly
prepare and submit to the NYSE a listing application covering the Buyer Common
Shares to be issued in the Merger and pursuant to substitute Options and the
Andlinger Capital Warrant, and shall use its reasonable efforts to obtain, prior
to the Effective Time, approval for the listing of such Buyer Common Shares,
subject to official notice of issuance, and the Company shall cooperate with
Buyer with respect to such listing, which cooperation shall include, but not be
limited to, taking all necessary actions to delist the Company's Common Stock
from the NASDAQ.
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ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement and the transactions contemplated hereby
shall have been approved and adopted by the holders of a majority of the
outstanding shares of the Company Common Stock at the Company Special Meeting;
(b) The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated and any other
material Consents from Governmental Entities and other third parties which in
any case are required to be received prior to the Effective Time with respect to
the transactions contemplated hereby shall have been received;
(c) The shares of Buyer Common Stock to be issued in the
Merger and such other shares to be reserved for issuance in connection with the
Merger shall have been approved for listing on the NYSE upon official notice of
issuance;
(d) The Registration Statement shall have been declared
effective by the SEC under the Securities Act, no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the SEC,
and no proceedings for that purpose shall have been initiated or threatened by
the SEC; and
(e) The consummation of the Merger shall not be restrained,
enjoined or prohibited by any order, judgment, decree, injunction or ruling of a
court of competent jurisdiction; provided, however, that the parties shall
comply with the provisions of Section 7.6 and shall further use their reasonable
best efforts to cause any such order, judgment, decree, injunction or ruling to
be vacated or lifted.
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions, unless waived by the Company, that:
(a) The representations and warranties of Buyer and Merger
Subsidiary contained in this Agreement shall be true and correct in all
respects, on the date hereof and as of the Effective Time as if made at the
Effective Time, except for such inaccuracies, without regard to any material
qualifications contained therein, which individually or in the aggregate, would
not result in a Buyer Material Adverse Effect, provided, however, that such
representations and warranties made as of a specific date need only be true as
written as of such date. The Company shall have received a certificate of an
authorized officer of Buyer and Merger Subsidiary, on behalf of Buyer and Merger
Subsidiary, to such effect.
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(b) Buyer and Merger Subsidiary shall have performed or
complied with all agreements and covenants required to be performed by each of
them under this Agreement at or prior to the Effective Time in all material
respects, and the Company shall have received a certificate of an authorized
officer of Buyer and Merger Subsidiary, on behalf of Buyer and Merger
Subsidiary, to such effect.
(c) The Company shall have received from Edwards & Angell,
counsel to the Company, or counsel to Buyer, on the Closing Date, a written
opinion dated as of such date that the Merger qualifies as a reorganization
within the meaning of Section 368(a) of the Code.
(d) The Company shall have received from Ernst & Young LLP the
"comfort" letters described in Section 6.7(a).
Section 8.3 Conditions to Obligations of Buyer and Merger Subsidiary to
Effect the Merger. The obligations of Buyer and Merger Subsidiary to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the following additional conditions, unless waived by Buyer:
(a) The representations and warranties of the Company
contained in this Agreement shall be true and correct in all respects, on the
date hereof and as of the Effective Time as if made at the Effective Time,
except for such inaccuracies, without regard to any material qualifications
contained therein, which individually or in the aggregate, would not result in a
Company Material Adverse Effect, provided, however, that such representations
and warranties made as of a specific date need only be true as written as of
such date, and further provided that the representations set forth in Section
4.2 shall be true and correct in all respects. Buyer shall have received a
certificate of an authorized officer of the Company, on behalf of the Company,
to such effect.
(b) The Company shall have performed or complied with all
agreements and covenants required to be performed by it under this Agreement at
or prior to the Effective Time in all material respects, other than the
covenants with respect to issuance of shares of Company capital stock, the
Company Options, ESPP Options and the Andlinger CapitalWarrants which shall be
complied with as set forth in Section 6.1(a)(i) and (ii), and Buyer shall have
received a certificate of an authorized officer of the Company, on behalf of the
Company, to such effect.
(c) The Related Agreement has been executed and delivered by
the respective parties thereto and continues in full force and effect.
(d) Buyer shall have received from Nixon Peabody LLP, counsel
to Buyer, on the Closing Date, a written opinion dated as of such date that the
Merger qualifies as a reorganization within the meaning of Section 368(a) of the
Code.
(e) Buyer shall have received from PricewaterhouseCoopers LLP
the "comfort" letters described in Section 6.7(b).
<PAGE>
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company:
(a) by mutual written consent of Buyer and the Company;
(b) by the Company, upon a material breach of this Agreement
on the part of Buyer or Merger Subsidiary which has not been cured and which
would cause the conditions set forth in Section 8.2 to be incapable of being
satisfied by July 31, 2000;
(c) by Buyer, upon a material breach of this Agreement on the
part of the Company set forth in this Agreement which has not been cured and
which would cause the conditions set forth in Section 8.3 to be incapable of
being satisfied by July 31, 2000;
(d) by Buyer or the Company if any court of competent
jurisdiction shall have issued, enacted, entered, promulgated or enforced any
order, judgment, decree, injunction or ruling, after reasonable efforts on the
part of Buyer and the Company to resist, resolve or lift, which permanently
restrains, enjoins or otherwise prohibits the Merger and such order, judgment,
decree, injunction or ruling shall have become final and nonappealable;
(e) by either Buyer or the Company if the Merger shall not
have been consummated on or before July 31, 2000 (the "Upset Date") provided the
terminating party is not otherwise in material breach of its representations,
warranties or obligations under this Agreement;
(f) by either Buyer or the Company if the Company Special
Meeting (including as it may be adjourned from time to time) shall have
concluded without the Company having obtained the required stockholder approval
of this Agreement and the transactions contemplated hereby;
(g) by Buyer if the Board of Directors of the Company, prior
to the Company Special Meeting (i) shall withdraw or modify in any adverse
manner the Company Board Approval, or (ii) shall enter into negotiations with
any Person concerning an Acquisition Proposal in violation of Section 7.9(a), or
(iii) shall approve or recommend a Superior Proposal pursuant to Section 7.9(b),
or
(h) by the Company at any time prior to the Company Special
Meeting, upon five business days' prior notice to Buyer, if the Board of
Directors of the Company shall approve a Superior Proposal; provided, however,
that (x) the Company shall have complied with Section 7.9, (y) the Board of
Directors of the Company shall have concluded in good faith, after giving effect
to all concessions which may be offered by Buyer pursuant to clause (z) below,
on the basis of the advice of its financial advisors
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and outside counsel, that such proposal is a Superior Proposal, and (z) prior to
any such termination, the Company shall, and shall cause its financial and legal
advisors to, negotiate with Buyer to make such adjustments in the terms and
conditions of this Agreement as would enable Buyer to proceed with the
transactions contemplated hereby; provided, however, that it shall be a
condition to termination by the Company pursuant to this Section 9.l(h) that the
Company shall have made the payment of the Termination Fee to Buyer as required
by Section 9.3(b).
Section 9.2 Effect of Termination. In the event of termination of this
Agreement by either Buyer or the Company, as provided in Section 9.1, this
Agreement shall forthwith terminate and there shall be no liability hereunder on
the part of any of the Company, Buyer or Merger Subsidiary or their respective
officers or directors; provided that Sections 4.24 (Brokers); 5.9 (Brokers); the
second sentence of 7.1(a) (Confidentiality), the second sentence of 7.1(b)
(Confidentiality); Section 7.9 to the extent the Company is required to pay the
Termination Fee until such Fee is paid; this Section 9.2, 9.3 (Fees and
Expenses); and 11(h) (Governing Law) shall survive the termination and remain in
full force and effect and; provided, further, that (i) each party shall remain
liable for any willful breaches of such party's covenants hereunder or
intentional or willful breaches of such party's representations and warranties
hereunder prior to its termination, and (ii) Buyer shall be responsible for the
fees and expenses incurred in connection with the filing and printing of the
Proxy Statement/Prospectus (including any preliminary proxy statement/
prospectus) and the filing fees under the Merger Control Laws.
Section 9.3 Fees and Expenses.
(a) Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, except as otherwise provided in Section 7.8 and Section 9.2.
(b) Buyer and the Company agree that the Company shall pay to
Buyer the sum of $50,000,000 (the "Termination Fee") solely as follows: (i) if
Buyer shall terminate this Agreement pursuant to Sections 9.1(g)(ii) or (iii) or
if the Company shall terminate this Agreement pursuant to Section 9.1(h), (ii)
if (A) the Company or Buyer shall terminate this Agreement pursuant to Section
9.1(f) due to the failure of the Company's stockholders to approve and adopt
this Agreement, (B) at any time after the date of this Agreement and at or
before the time of the event giving rise to such termination there shall exist
an Acquisition Proposal with respect to the Company and (C) within 12 months of
the termination of this Agreement, the Company enters into a definitive
agreement with any third party with respect to an Acquisition Proposal or an
Acquisition Proposal is consummated, or (iii) if (A) Buyer shall terminate this
Agreement pursuant to Section 9.1(c) or Section 9.1(g), (B) at any time after
the date of this Agreement and at or before the time of the event giving rise to
such termination there shall exist an Acquisition Proposal, (C) following the
existence of such Acquisition Proposal and prior to any such termination, the
Company shall have intentionally breached (and not cured after notice thereof)
any of its material covenants or agreements
<PAGE>
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set forth in this Agreement in any material respect, and (D) within 12 months of
any such termination of this Agreement, the Company shall enter into a
definitive agreement with any third party with respect to an Acquisition
Proposal or an Acquisition Proposal is consummated.
(c) The Termination Fee required to be paid pursuant to
Section 9.3(b) shall be made as
follows:
(i) one-half of the Termination Fee shall be paid by
wire transfer of immediately available funds within
two business days after notice of termination of this
Agreement is given: by Buyer or the Company under
Section 9.1(c), by Buyer under Section 9.1(f), and by
Buyer under Section 9.1(g); and
(ii) the remaining one-half of the Termination Fee
shall be paid by wire transfer of immediately
available funds within two business days after the
closing of the transactions contemplated by any
Acquisition Proposal which results in the Company
entering into an Acquisition Agreement with a third
party within twelve months of any termination of this
Agreement.
Section 9.4 Amendment. This Agreement may be amended by the parties
hereto at any time before or after approval hereof by the stockholders of the
Company, but, after such approval, no amendment shall be made which (i) changes
the form or decreases the amount of the Merger Consideration, (ii) in any way
materially adversely affects the rights of the Company's stockholders, or (iii)
under applicable law would require approval of the Company's stockholders, in
any such case referred to in clauses (i), (ii) and (iii), without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Effective Time, the
parties hereto may, to the extent permitted by applicable law, (i) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (ii) waive any inaccuracies in the representations and warranties
by any other party contained herein or in any documents delivered by any other
party pursuant hereto and (iii) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and
Agreements. The representations and warranties in this Agreement shall not
survive the Merger.
<PAGE>
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Section 10.2 Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to the Company:
NetOptix Corporation
Sturbridge Business Park
Sturbridge, MA 01566
Attention: Gerhard R. Andlinger
Telephone: 508-347-9191
Telecopy No.:
With a required copy to:
Edwards & Angell LLP
250 Royal Palm Way, Suite 300
Palm Beach, FL 33480
Attention: Jonathan E. Cole, Esq.
Telephone: 561-833-7700
Telecopy: 561-655-8719
If to Buyer or Merger Subsidiary:
Corning Incorporation
One Riverfront Plaza
Corning, NY 14831
Attention: William D. Eggers, General Counsel
Telephone: 607-974-9000
Telecopy: 607974-8150
With a required copy to:
Nixon Peabody LLP
Clinton Square, Suite 1300
Rochester, NY 14604
Attention: Deborah McLean Quinn, Esq.
Telephone: 716-263-1307
Telecopy: 716-263-1600
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
Section 10.3 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not
<PAGE>
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performed in accordance with their specific terms or were otherwise breached.
Accordingly, the parties further agree that each party shall be entitled to an
injunction or restraining order to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
right or remedy to which such party may be entitled under this Agreement, at law
or in equity.
Section 10.4 Entire Agreement. This Agreement (including the documents
and instruments referred to herein) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
Section 10.5 Assignments; Parties in Interest. Neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
not a party hereto any right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, including to confer third party beneficiary
rights, except for the provisions of Article III and Section 7.5.
Section 10.6 Governing Law. This Agreement, except to the extent that
provisions of Delaware Law (with respect to the Merger only) are mandatorily
applicable to the Merger and the rights of the stockholders of the Company,
shall be governed in all respects by the laws of the State of New York (without
giving effect to the provisions thereof relating to conflicts of law).
Section 10.7 Headings; Disclosure. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement. Any disclosure by the
Company or Buyer in any portion of its respective Disclosure Schedule shall be
deemed disclosure in each other portion of such Disclosure Schedule.
Section 10.8 Certain Definitions and Rules of Construction.
(a) As used in this Agreement:
"Acquisition Agreement" has the meaning set forth in Section
7.9(b).
"Acquisition Proposal" has the meaning set forth in Section
7.9(a).
"Affiliate" as applied to any person, shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that person; for purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise.
<PAGE>
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"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Buyer" has the meaning set forth in the preamble to this
Agreement.
"Buyer Benefit Plans" has the meaning set forth in Section
7.11.
"Buyer Common Stock" has the meaning set forth in Section
3.1(c).
"Buyer Disclosure Schedule" has the meaning set forth in
Article V, Introduction.
"Buyer Material Adverse Effect" shall be an event or
occurrence or series of events or occurrences which individually or in the
aggregate with all other events or occurrences would be reasonably likely to
have a material adverse effect on the business, operations, financial condition
or results of operations of Buyer and its subsidiaries taken as a whole, other
than any change, circumstances or effect relating to (i) change in law, rule, or
regulation or generally accepted accounting principles or interpretations
thereof that applies to both Buyer and the Company (ii) the economy or
securities markets in general or (iii) the industries in which Buyer operates in
general and not specifically relating to Buyer.
"Buyer Quarterly Financial Statements" has the meaning set
forth in Section 5.5(b).
"Buyer SEC Reports" has the meaning set forth in Section
5.5(a).
"Certificate of Merger" has the meaning set forth in Section
1.3.
"Certificates" has the meaning set forth in Section 3.2.
"Closing Date" has the meaning set forth in Section 1.2.
"Code" has the meaning set forth in the preamble to this
Agreement.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Benefit Plans" has the meaning set forth in Section
4.9.
"Company Board Approval" has the meaning set forth in Section
4.24.
"Company Common Stock" has the meaning set forth in Section
3.1(b).
"Company Disclosure Schedule" has the meaning set forth in
Article IV, Introduction.
"Company Employees" has the meaning set forth in Section 7.11.
"Company Financial Statements" has the meaning set forth in
Section 4.5(b).
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"Company Intellectual Property Rights" has the meaning set
forth in Section 4.16(a).
"Company Material Adverse Effect" shall be an event or
occurrence or series of events or occurrences which individually or in the
aggregate with all other events or occurrences would be reasonably likely to
have a material adverse effect on the business, assets, operations, financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole, other than any change, circumstances or effect relating to (i) change
in law, rule, or regulation or generally accepted accounting principles or
interpretations thereof that applies to both Buyer and the Company, (ii) the
economy or securities markets in general or (iii) the industries in which the
Company operates in general and not specifically relating to the Company.
"Company Stock Option Plans" has the meaning set forth in
Section 4.2.
"Company Permits" has the meaning set forth in Section 4.12.
"Company Proposal" has the meaning set forth in Section
7.2(a).
"Company Quarterly Financial Statements" has the meaning set
forth in Section 4.5(c).
"Company SEC Reports" has the meaning set forth in Section
4.5(a).
"Company Special Meeting" has the meaning set forth in Section
7.2(a).
"Company Stock Options" has the meaning set forth in Section
4.2(a).
"Company's Financial Advisor" has the meaning set forth in
Section 4.24.
"Confidentiality Agreement" has the meaning set forth in
Section 7.1(a).
"Delaware Law" has the meaning set forth in Section 1.3.
"Dissenting Shares" has the meaning set forth in Section
3.1(e).
"Effective Time" has the meaning set forth in Section 1.3.
"Election" has the meaning set forth in Section 3.1(h).
"Election Deadline" has the meaning set forth in Section
3.1(k).
"Environmental Law" has the meaning set forth in Section 4.19.
"ERISA" shall have the meaning set forth in Section 4.9(a).
"ERISA Affiliate" has the meaning set forth in Section 4.9(a).
"ESPP" has the meaning set forth in Section 4.2(a).
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"ESPP Options" has the meaning set forth in Section 4.2(a).
"Exchange Act" has the meaning set forth in Section 4.4(b).
"Exchange Ratio" has the meaning set forth in Section 3.1(c).
"GAAP" has the meaning set forth in Section 4.5(b).
"Government Contracts" has the meaning set forth in Section
4.22.
"Governmental Entity" has the meaning set forth in Section
4.4(b).
"HSR Act" has the meaning set forth in Section 4.4(b).
"Hazardous Materials" has the meaning set forth in Section
4.19.
"Indemnified Parties" has the meaning set forth in Section
7.5.
"Information Technology" has the meaning set forth in Section
4.16(c).
"IRS" has the meaning set forth in Section 4.9.
"knowledge of the Company" or a similar phase means that any
director or officer of the Company, Optical Filter Corporation or ANC Management
Corp. has actual knowledge of such factor or event.
"Laws" has the meaning set forth in Section 4.4.
"Lien" has the meaning set forth in Section 4.4(a).
"Material Contract" has the meaning set forth in Section 4.14.
"Merger" has the meaning set forth in the preamble to this
Agreement.
"Merger Consideration" has the meaning set forth in Section
3.1(c).
"Merger Control Laws" means HSR and the Laws of any other
applicable jurisdiction with respect to competition, merger or other business
combinations.
"Merger Subsidiary" has the meaning set forth in the preamble
to this Agreement.
"Merger Subsidiary Common Stock" has the meaning set forth in
Section 3.1(a).
"Paying Agent" has the meaning set forth in Section 3.3.
<PAGE>
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"Person" shall include individuals, corporations,
partnerships, limited liability companies, trusts, other entities and groups
(which term shall include a "group" as such term is defined in Section 13(d)(3)
of the Exchange Act).
"Products" has the meaning set forth in Section 4.14.
"Prospectus/Proxy Statement" has the meaning set forth in
Section 7.2(a).
"Qualified Plans" has the meaning set forth in Section 4.9.
"Registration Statement" has the meaning set forth in Section
7.2(a).
"Related Agreement" has the meaning set forth in Section 7.10.
"SEC" has meaning set forth in Section 4.5(a).
"Securities Act" has the meaning set forth in Section 4.4(b).
"Significant Subsidiaries" means subsidiaries within the
meaning of Regulation S-X under the Exchange Act, which in the case of
references to the Significant Subsidiaries of Buyer, shall include Merger
Subsidiary.
"Subsidiary" or "Subsidiaries" means, with respect to Buyer,
the Company or any other person, any corporation, partnership, joint venture or
other legal entity of which Buyer, the Company or such other person, as the case
may be (either alone or through or together with any other subsidiary), owns,
directly or indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
"Superior Proposal" means a bona fide unsolicited written
Acquisition Proposal to acquire all of the voting power of the shares of the
Company Common Stock then outstanding or all or substantially all the assets of
the Company for consideration consisting of cash and/or securities which the
Board of Directors of the Company concludes in good faith (after consultation
with its financial advisors and legal counsel), taking into account all legal,
financial, regulatory and other aspects of the proposal and the Person making
the proposal, (i) would, if consummated, result in a transaction that is
materially more favorable to the Company's stockholders (in their capacities as
stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and (ii) is reasonably capable of being
completed, including, without limitation, a conclusion that its financing, to
the extent required, is then committed or is in the good faith judgment of the
Board of Directors of the Company, reasonably capable of being financed by such
third party.
"Surviving Corporation" has the meaning set forth in Section
1.1.
"Tax" shall mean any federal, state, local, foreign or
provincial income, gross receipts, property, sales, service, use, license,
lease, excise, franchise, employment,
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payroll, withholding, employment, unemployment insurance, workers' compensation,
social security, alternative or added minimum, ad valorem, value added, stamp,
business license, occupation, premium, environmental, windfall profit, customs,
duties, estimated, transfer or excise tax, or any other tax, custom, duty,
premium, governmental fee or other assessment or charge of any kind whatsoever,
together with any interest, penalty or additional tax imposed by any
Governmental Entity.
"Termination Fee" has the meaning set forth in Section 9.3(b).
"Upset Date" has the meaning set forth in Section 9.1(e).
"Year 2000 Ready" has the meaning set forth in Section
4.16(c).
(b) Other Rules of Construction.
(i) References in this Agreement to any gender shall
include references to all genders. Unless the context
otherwise requires, references in the singular
include references in the plural and vice versa.
References to a party to this Agreement or to other
agreements described herein means those Persons
executing such agreements.
(ii) The words "include", "including" or "includes"
shall be deemed to be followed by the phrase "without
limitation" or the phrase "but not limited to" in all
places where such words appear in this Agreement.
(iii) This Agreement is the joint drafting product of
Buyer and the Company and each provision has been
subject to negotiation and agreement and shall not be
construed for or against either party as drafter
thereof.
(iv) Each case in this Agreement where a contract or
agreement is represented or warranted to be
enforceable will be deemed to include as a limitation
to the extent that enforceability may be subject to
applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar Laws
affecting the enforcement of creditors' rights
generally and to general equitable principles,
whether applied in equity or at law.
(v) All references in the Agreement to financial
terms shall be deemed to refer to such terms as they
are defined under GAAP, consistently applied.
Section 10.9 Counterparts. This Agreement may be executed in two or
more counterparts which together shall constitute a single agreement.
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Section 10.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economics or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon determination that any term or other
provision hereof is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Buyer, Merger Subsidiary and the Company have
caused this Agreement to be signed by their respective officers thereunder duly
authorized all as of the date first written above.
CORNING CORPORATION
By/s/James B. Flaws
-------------------------------
James B. Flaws,
Executive Vice President and
Chief Financial Officer
CI SUBSIDIARY, INC.
By:/s/William D. Eggers
-------------------------------
William D. Eggers,
President
NETOPTIX CORPORATION
By/s/Gerhard R. Andlinger
-------------------------------
Gerhard R. Andlinger,
Chairman and Chief Executive Officer
<PAGE>
ANNEX B
[LOGO]
February 13, 2000
Board of Directors
NetOptix Corporation
Sturbridge Business Park
P.O. Box 550
Sturbridge, Massachusetts 01566
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a
financial point of view, to the holders of shares of the common stock, par value
$0.01 per share (the "Company Common Stock"), of NetOptix Corporation ("the
Company") of the Exchange Ratio (as defined below) in connection with the Merger
(as defined below) contemplated by the Agreement and Plan of Merger (the
"Agreement") to be entered into among the Company, Corning Incorporated
("Parent") and CI Subsidiary Inc., a direct wholly owned subsidiary of Parent
("Merger Sub").
As more specifically set forth in the Agreement, and subject
to the terms and conditions thereof, Merger Sub will merge with and into the
Company (the "Merger"), and each issued and outstanding share of Company Common
Stock, other than certain shares to be cancelled pursuant to the Agreement, will
be converted into the right to receive 0.90 (the "Exchange Ratio") of a share of
the common stock, par value $0.50 per share (the "Parent Common Stock"), of
Parent.
In arriving at our opinion, we reviewed a draft of the
Agreement, dated February 11, 2000, and held discussions with certain senior
officers, directors and other representatives and advisors of each of the
Company and Parent concerning the businesses, operations and prospects of the
Company and Parent. We examined certain publicly available business and
financial information relating to the Company and Parent as well as certain
financial forecasts and other information and data for the Company and Parent
which were provided to or otherwise discussed with us by the managements of the
Company and Parent, including certain strategic implications and operational
benefits anticipated to result from the Merger. We reviewed the financial terms
of the Merger as set forth in the Agreement in relation to, among other things:
current and historical market prices and trading volumes of Company Common Stock
and Parent Common Stock; the historical and projected earnings and other
operating data of the Company and Parent; and the historical and projected
capitalization and financial condition of the Company and Parent. We considered,
to the extent publicly available, the financial terms of certain other similar
transactions recently effected that we considered relevant in evaluating the
Exchange Ratio and analyzed certain financial, stock market and other publicly
available
<PAGE>
[LOGO]
information relating to the businesses of other companies whose operations we
considered relevant in evaluating those of the Company and Parent. We also
evaluated the pro forma financial impact of the Merger on Parent. In addition to
the foregoing, we conducted such other analyses and examinations and considered
such other information and financial, economic and market criteria as we deemed
appropriate in arriving at our opinion.
In rendering our opinion, we have assumed and relied, without
independent verification, upon the accuracy and completeness of all financial
and other information and data publicly available or furnished to or otherwise
reviewed by or discussed with us and have further relied upon the assurances of
the managements of the Company and Parent that they are not aware of any facts
that would make any of such information inaccurate or misleading. With respect
to financial forecasts and other information and data provided to or otherwise
reviewed by or discussed with us, we have been advised by the managements of the
Company and Parent that such forecasts and other information and data were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the managements of the Company and Parent as to the future
financial performance of the Company and Parent and the strategic implications
and operational benefits anticipated to result from the Merger. We express no
view with respect to such forecasts and other information and data or the
assumptions on which they were based. We have assumed, with your consent, that
the Merger will be treated as a tax-free reorganization for U.S. federal income
tax purposes. We have not made or been provided with an independent evaluation
or appraisal of the assets or liabilities (contingent or otherwise) of the
Company or Parent nor have we made any physical inspection of the properties or
assets of the Company or Parent. You have advised us, and we have assumed, that
the final terms of the Agreement will not vary materially from those set forth
in the draft reviewed by us. We have further assumed that the Merger will be
consummated in a timely fashion in accordance with the terms of the Agreement
without waiver of any of the conditions precedent to the Merger contained in the
Agreement.
Our opinion, as set forth herein, relates to the relative
values of the Company and Parent. We are not expressing any opinion as to what
the value of the Parent Common Stock actually will be when issued in the Merger
or the price at which the Parent Common Stock will trade subsequent to the
Merger. We were not requested to consider, and our opinion does not address, the
relative merits of the Merger as compared to any alternative business strategies
that might exist for the Company or the effect of any other transaction in which
the Company might engage. Our opinion necessarily is based upon information
available to us and financial, stock market and other conditions and
circumstances existing and disclosed to us as of the date hereof.
Salomon Smith Barney Inc. is acting as financial advisor to
the Company in connection with the Merger and will receive a fee for our
services, a portion of which is payable only upon the consummation of the
Merger. We have in the past provided and currently are providing investment
banking services to the Company and Parent unrelated to the Merger, for which we
have received and will receive compensation. In the ordinary course of our
business, we and our affiliates may actively trade or hold the securities of the
Company and Parent for our own account or for the account of our customers and,
accordingly, may at any time hold a long
2
<PAGE>
[LOGO]
or short position in such securities. Salomon Smith Barney Inc. and its
affiliates (including Citigroup Inc. and its affiliates) may maintain
relationships with the Company and Parent and their respective affiliates.
Our advisory services and the opinion expressed herein are
provided for the information of the Board of Directors of the Company in its
evaluation of the Merger and our opinion is not intended to be and does not
constitute a recommendation of the Merger to the Company or a recommendation to
any stockholder as to how such stockholder should vote on any matters relating
to the Merger.
Based upon and subject to the foregoing, our experience as
investment bankers, our work as described above and other factors we deemed
relevant, we are of the opinion that, as of the date hereof, the Exchange Ratio
is fair, from a financial point of view, to the holders of shares of Company
Common Stock.
Very truly yours,
/s/Salomon Smith Barney Inc.
SALOMON SMITH BARNEY INC.
3
<PAGE>
ANNEX C
STOCKHOLDER VOTING AGREEMENT
AND IRREVOCABLE PROXY
STOCKHOLDER AGREEMENT, dated as of February 13, 2000, among CORNING
INCORPORATED ("Buyer"), a New York corporation, NETOPTIX CORPORATION
("NetOptix"), a Delaware corporation, and CI SUBSIDIARY, INC., ("Merger
Subsidiary"), a Delaware corporation and a wholly-owned subsidiary of Buyer, and
ANDLINGER CAPITAL XIII LLC ("Capital"), GERHARD R. ANDLINGER ("GRA"), JOHN F.
BLAIS, JR. ("JFB") and STEPHEN A. MAGIDA ("SAM") in his capacity as manager of
Capital and as trustee of the Gerhard R. Andlinger Intangible Asset Management
Trust, dated as of December 29, 1997 (the "Trust") and not in his individual
capacity.
RECITALS
WHEREAS, each of Capital, GRA, JFB and SAM (in his capacity as manager
of Capital and as trustee of the Trust) (Capital, GRA, JFB and SAM, in each of
such capacities, being individually referred to as a "Stockholder" and
collectively as the "Stockholders") is the record and beneficial owner of the
number of shares of capital stock of NetOptix set forth under each such
Stockholder's signature to this Agreement (such shares, together with any other
shares of capital stock of NetOptix acquired by such Stockholder or the Trust
after the date hereof (including through the exercise of stock options, warrants
or similar rights or the conversion or exchange of securities) being
collectively referred to herein as the "Shares" of such Stockholder);
WHEREAS, the respective Boards of Directors of Buyer and NetOptix have
approved the execution of an Agreement and Plan of Merger, dated as of the date
hereof (as the same may be amended, supplemented or otherwise modified in
accordance with its terms, the "Merger Agreement"), with respect to the merger
of Merger Subsidiary with or into NetOptix (the "Merger");
WHEREAS, pursuant to Section 7.10 of the Merger Agreement as a
condition to the obligations of Buyer to consummate the Merger, the Stockholders
are required to execute and deliver this Agreement to Buyer and Merger
Subsidiary;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Buyer, NetOptix and Merger Subsidiary have entered into the
Merger Agreement, setting forth certain representations, warranties, covenants
and agreements of the parties thereto in connection with the Merger; and
WHEREAS, as an inducement and an essential condition to Buyer and
Merger Subsidiary entering into the Merger Agreement, NetOptix and the
Stockholders have agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, the parties,
intending to be legally bound,
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and on his or its behalf severally and not jointly, agree as follows (certain
capitalized terms are used herein with the meanings set forth in Section 11):
1. Voting Agreement.
(a) Each Stockholder hereby agrees with Buyer and Merger
Subsidiary that, at any meeting of NetOptix's shareholders, however called and
any postponement or adjournment thereof, or in connection with any written
consent of NetOptix's shareholders (collectively, the "NetOptix Stockholders
Meeting"), subject to paragraph 2 hereof, such Stockholder shall vote (or, if
applicable, execute consents and approvals in respect of) the Shares
Beneficially Owned by such Stockholder as of the date of such meeting or written
consent, whether heretofore owned or hereafter acquired: (A) in favor of
approval of the Merger Agreement and the transactions contemplated thereby
(including the Merger) and by any of the agreements referred to therein and such
other matters, if any, as requested by Buyer or Merger Subsidiary (the
"Transactions"); (b) against any action or agreement that would result in a
breach in any respect of any representation, warranty, agreement or covenant or
any other obligation or agreement of NetOptix under the Merger Agreement or in
connection with the Transactions and against any other Acquisition Proposal; (c)
cause the Shares Beneficially Owned to be present at any such meeting for
purposes of establishing and maintaining a quorum; and (d) except as otherwise
agreed to in writing in advance by Buyer, against: (i) any Other Acquisition,
(ii) any change in a majority of the individuals who, as of the date hereof,
constitute the Board of Directors of NetOptix, (iii) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving NetOptix and any Third Party (as defined below), (iv) a sale, lease,
transfer or disposition of any assets of NetOptix's or any of its subsidiaries'
business outside the ordinary course of business, or any assets which are
material to its business whether or not in the ordinary course of business, or a
reorganization, recapitalization, dissolution or liquidation of NetOptix, (v)
any change in the present capitalization of NetOptix or any amendment of
NetOptix's Certificate of Incorporation or Bylaws, (vi) any other material
change in NetOptix's corporate structure or affecting its business, or (vii) any
other action which is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone or materially adversely affect the Merger or any
of the other transactions contemplated by the Merger Agreement (including the
agreements referred to therein), or any of the transactions contemplated by this
Agreement or change any of the voting rights of any voting securities of
NetOptix. Any such vote, consent or approval shall be given in accordance with
such procedures as shall ensure that it is duly counted for purposes of
recording the results of such vote, consent or approval. None of the
Stockholders shall take any action or enter into any agreement or understanding
with any Person the effect of which would be inconsistent or violative of the
provisions and agreements contained herein.
(b) Each Stockholder hereby consents to and authorizes and
approves the actions taken by the Board of Directors of NetOptix in approving
the Merger, the Merger Agreement, this Agreement and the transactions
contemplated hereby and thereby. Each Stockholder hereby waives, and agrees not
to exercise, any appraisal rights under the Delaware General Corporation Law in
connection with the Merger.
<PAGE>
-3-
2. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Each Stockholder hereby irrevocably and severally grants
to, and appoints, Buyer and any person designated by Buyer to act in its place,
a proxy and attorney-in-fact (with full power of substitution and
resubstitution), for and in the name, place and stead of such Stockholder, to
vote such Stockholder's Shares Beneficially Owned, or grant a consent or
approval in respect of such Shares Beneficially Owned, in a manner consistent
with Section 1 hereof. Each Stockholder agrees to execute such other instruments
as may reasonably be necessary or advisable to effect the intent of each proxy
granted hereby and not to give any subsequent proxies with respect to the Shares
Beneficially Owned (and if given shall not be effective).
(b) Each Stockholder represents and warrants that any proxies
(other than the proxies contained in Section 2(a) hereof) heretofore given in
respect of such Stockholder's Shares Beneficially Owned are not irrevocable or
if irrevocable, that, upon execution and delivery of this Agreement, the valid
consent to the revocation of such proxies from the party or parties to whom such
proxies were heretofore granted will be obtained, and that any such other
proxies are hereby revoked to the extent necessary to effect the transactions
contemplated by Section 1 hereof. Each Stockholder understands and acknowledges
that Buyer is entering into the Merger Agreement in reliance upon the execution,
delivery and performance of this Agreement by such Stockholder.
(c) Each Stockholder hereby affirms that the irrevocable proxy
set forth in this Section 2 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of such Stockholder in accordance with this Agreement.
Each Stockholder hereby further affirms that his or its irrevocable proxy is
coupled with an interest and may under no circumstances be revoked. This
irrevocable proxy is executed and intended to be irrevocable in accordance with
the applicable provisions of the Delaware General Corporation Law. This
irrevocable proxy shall be valid until termination of this Agreement pursuant to
Section 7 hereof.
3. Restrictions on Transfer.
(a) Each Stockholder covenants and agrees with Buyer that,
prior to the time the NetOptix Stockholders Meeting shall have been completed,
neither such Stockholder nor any of his or its Affiliates, shall, directly or
indirectly, (i) give, offer, sell, transfer, assign, pledge, hypothecate or
otherwise dispose of the record or beneficial ownership of (any such act, a
"Transfer"), or consent to any Transfer of, any or all of the Shares
Beneficially Owned or any interest therein; (ii) enter into any contract,
option, commitment or other arrangement (including any profit sharing
arrangement) with respect to the Transfer of, the Shares Beneficially Owned; or
(iii) enter into any other voting arrangement, whether by proxy, voting
agreement, voting trust, power-of-attorney or other grant (each, a "Voting
Arrangement"), with respect to the Shares Beneficially Owned.
<PAGE>
-4-
(b) No Transfer of any Shares Beneficially Owned in violation
of Section 3(a) shall be made or recorded on the books of NetOptix or Buyer and
any such Transfer shall be void and of no effect.
(c) Upon issuance thereof and until such time as the same is
no longer required hereunder, any certificate issued representing any of the
Shares Beneficially Owned by any Stockholder, including all certificates issued
upon transfer or in exchange thereof or in substitution therefor, shall, in
addition to any legend(s) required by law, bear the following legend:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO CERTAIN VOTING
LIMITATIONS AND MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF A STOCKHOLDERS AGREEMENT, DATED
AS OF FEBRUARY 13, 2000. ANY TRANSFEREE OF THESE
SECURITIES TAKES SUBJECT TO THE TERMS OF SUCH
AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE
COMPANY."
(d) The certificates representing the Shares Beneficially
Owned by each Stockholder (including any certificate issued upon transfer or in
exchange thereof or in substitution therefor) shall also bear any legend
required under any applicable state securities or blue sky laws.
(e) Within three business days of the date of this Agreement,
NetOptix shall make a notation on its records or give instructions to any
transfer agents or registrars for the Shares Beneficially Owned by the
Stockholders in order to implement the restrictions on transfer set forth in
this Section 3.
(f) As soon as practicable after the execution and delivery of
this Agreement, the Stockholders shall submit any and all certificates
representing the Shares Beneficially Owned by any Stockholder or any of their
respective affiliates to NetOptix so that the legend or legends required by this
Section 3 may be placed thereon and shall cause each permitted transferee to do
the same with respect to the Shares Beneficially Owned by such permitted
transferee.
4. Representations and Warranties of the Stockholders. Each
Stockholder, including SAM on behalf of Capital and the Trust, with respect to
himself or itself and the Shares Beneficially Owned by him or it respectively,
hereby represents and warrants, severally and not jointly, to Buyer and Merger
Subsidiary as of the date hereof as follows:
(a) Authority. Each Stockholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by such Stockholder, and the
<PAGE>
-5-
consummation of the transactions contemplated hereby, have been duly authorized
and approved by all necessary action on the part of such Stockholder and the
entities, if any, on whose behalf such Stockholder acts in his non-individual
capacity (the "Entities"). This Agreement has been duly executed and delivered
by the Stockholders and constitutes a valid and binding obligation of such
Stockholder and the Entities enforceable against them in accordance with its
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium, or similar law affecting creditors' rights generally and
subject, as to enforceability, to the effect of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(b) No Conflicts. Except for (i) compliance with and filings
under the pre-merger notifications and (ii) the applicable requirements of the
Exchange Act, the execution and delivery of this Agreement do not, and the
consummation by each Stockholder of the Transactions and compliance with the
terms hereof will not, (A) conflict with, or result in any violation of, or
default (with or without notice or lapse of time or both) under, or give rise to
a right of termination, amendment, cancellation or acceleration of any
obligation or to loss of a material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any person under, or result
in the creation of any lien upon any of the properties or assets of such
Stockholder under any provision of, any trust agreement, loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement, or
instrument, applicable to such Stockholder or to the property or assets of such
Stockholder, or (B) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Stockholders or any of the properties or assets of
any Stockholder, including the Shares Beneficially Owned, except for such
conflicts, violations, breaches, defaults or other occurrences which,
individually or the aggregate, have not had and would not reasonably be expected
to prevent or materially delay the ability of the Stockholders to perform their
respective obligations under this Agreement (a "Stockholder Material Adverse
Effect").
(c) No Consents. The execution, delivery and performance of
this Agreement by such Stockholder does not, and neither the performance of this
Agreement by such Stockholder nor the consummation of the Transactions by such
person will, require any consent, approval, authorization, order or permit of,
or filing with or notification to any Governmental Entity, except for (i)
applicable requirements of the Exchange Act and the Securities Act, (ii)
compliance with and filings under the legally required pre-merger notifications,
and (iii) the applicable requirements of state securities laws, takeover laws or
Blue Sky laws. If any such Stockholder is married and the Shares Beneficially
Owned by such Stockholder constitute community property or otherwise need
spousal or other approval to be valid and binding, this Agreement has been duly
authorized, executed and delivered by, and, constitutes a valid and binding
agreement of, such Stockholder's spouse enforceable against such spouse in
accordance with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium, or similar law affecting creditors'
rights generally and subject, as to enforceability, to the effect of general
principles of equity. No trust of which such Stockholder is a trustee (including
the Trust) requires the consent of any beneficiary for
<PAGE>
-6-
the execution and delivery of this Agreement or for the consummation of the
transactions contemplated hereby.
(d) The Shares Beneficially Owned. Each Stockholder is the
record and beneficial owner of, is the sole manager of the record owner of or is
the trustee that is the record holder of, and whose beneficiaries are the
beneficial owners of, and has good and valid title to and sole voting and
dispositive power to, the Shares set forth under its or his name on the
signature pages attached hereto, free and clear of any claims, liens,
encumbrances, security interests, options, charges and restrictions of any kind.
Except as otherwise set forth on the signature pages attached hereto, such
person does not own, of record or beneficially, any shares of capital stock or
other voting securities of NetOptix. Such person has the sole right to dispose
of and vote such Shares, and none of the Shares are subject to any Voting
Arrangement or other voting trust or other agreement, arrangement or restriction
with respect to the voting of such Shares, except as set forth in this
Agreement.
(e) No Brokers. Except for Salomon Smith Barney Inc., whose
fees are payable by NetOptix, no broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with this Agreement based upon
arrangements made by or on behalf of NetOptix, such Stockholder or the Entities.
5. Acquisition Proposals. Each Stockholder agrees that neither
such Stockholder nor any of its Affiliates or any of the managers or members of
Capital nor any of its employees, agents and representatives (including any
investment banker, attorney or accountant retained by such person or any of its
Affiliates), shall, directly or indirectly, initiate, solicit, encourage or
knowingly facilitate (including by way of furnishing information) any inquiries
or the making of any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase or
sale of all or any significant portion of the assets or more than 10% of the
Common Stock of NetOptix or the assets or capital stock of any of its
subsidiaries (any such proposal or offer (other than a proposal or offer made by
Buyer or an affiliate thereof) being hereinafter referred to as an "Acquisition
Proposal"). Except as may be permitted under Section 8 hereof each Stockholder
further agrees that neither such Stockholder nor any of his or its Affiliates
nor any of the managers or members of Capital or its Affiliates shall, and that
each of the Stockholders shall direct and use his or its reasonable best efforts
to cause their respective' employees, agents and representatives (including any
investment banker, attorney or accountant retained by any of such persons or any
of its Affiliates) not to, directly or indirectly, have any discussion with or
provide any confidential information or data to any Stockholder relating to an
Acquisition Proposal, or engage in any negotiations concerning an Acquisition
Proposal, or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal or accept an Acquisition Proposal. Each Stockholder agrees
that such Stockholder will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Capital agrees that it will
take the necessary steps to promptly inform the individuals or entities
<PAGE>
-7-
referred to in the first sentence of this Section 5 of the obligations
undertaken in this Section 5 and that any breach of the provisions of this
Section 5 by any officer or director of Capital or its Affiliates or any
investment banker, financial advisor, attorney, accountant or other
representatives will be deemed a breach by Capital.
6. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties (other than the
rights of substitution and resubstitution with respect to the proxies granted
herein) and any purported assignment in violation of this Section 6 shall be
void and of no effect. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective administrators, heirs, legal representatives, successors and
permitted assignees.
7. Termination. This Agreement shall terminate immediately
upon the earlier of: (i) the termination of the Merger Agreement by mutual
agreement of NetOptix and Buyer or, in accordance with the terms of the Merger
Agreement, by NetOptix as a result of breaches or non-performance by Buyer, (ii)
the Effective Time, and (iii) the first (1st) anniversary of the date of this
Agreement.
8. Stockholder Capacity. By executing and delivering this
Agreement, each of the Stockholders makes no agreement or understanding herein
as to his capacity as a director or officer of NetOptix of any subsidiary of
NetOptix. Each of the Stockholders signs solely in his or its capacity as the
beneficial owner of NetOptix's Shares and nothing herein shall limit or affect
any actions taken by each Stockholder, or his or its Affiliates, in his or its
capacity as an officer or director of NetOptix or any subsidiary of NetOptix to
the extent specifically permitted by the Merger Agreement including without
limitation Section 7.9 thereof.
9. Binding Obligations. Upon execution hereof by Buyer, and
any Stockholder, this Agreement shall be binding upon and inure to the benefit
of Buyer, Merger Subsidiary, and each such Stockholder, regardless of the
failure of any other party listed on the signature page hereto to execute this
Agreement.
10. General Provisions.
(a) Certain Definitions. Capitalized terms used herein and not
otherwise defined are used with the meaning ascribed thereto in the Merger
Agreement.
"Beneficially Owned" with respect to any securities of
NetOptix shall mean a Stockholder's having such ownership,
control or power to direct the voting or investment with
respect to, or otherwise enabling such Stockholder to legally
act with respect to, such securities as contemplated hereby,
including pursuant to any agreement, arrangement or
understanding, whether or not in writing. Securities
Beneficially Owned by such Stockholder shall include
securities Beneficially Owned by all
<PAGE>
-8-
other persons with whom such Stockholder would constitute a
"group" within the meaning of Section 13(d)(3) of the Exchange
Act.
"Voting Securities" means any capital stock or other
security convertible for or exchangeable into securities
entitled to vote generally in the election of directors.
(b) Amendments. This Agreement may not be amended,
supplemented, modified or waived except by an instrument in writing signed by
Buyer and the Stockholder or Stockholders to whom such amendment, modification
or waiver relates.
(c) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other right or remedy to which such party may be
entitled under this Agreement, at law or in equity.
(d) Notice. All notices, requests and other communications to
any party hereunder shall be in writing, including facsimile, telex or similar
writing, and shall be deemed given if delivered to Buyer or NetOptix at their
respective addresses or telecopier numbers set forth below and to the
Stockholders at its or his address or telecopier number set forth on the
signature pages hereto (or at such other address or telecopier number for a
party as shall be specified by like notice). Each such notice, request or other
communication shall be effective (i) if given by facsimile and received at or
prior to 5:00 p.m. local time on a business day, upon confirmation of receipt,
and if given by facsimile and received at any other time, upon the next business
day or (ii) if given by any other means, when delivered at the address specified
in this Section 11(d).
<PAGE>
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If to NetOptix, to:
NetOptix Corporation
Attention: Gerhard R. Andlinger
Sturbridge Business Park
Sturbridge, Massachuesetts 01566
Telephone: (508) 347-9191
Fax:
With a required copy to:
Edwards & Angell, LLP
Attention: Jonathan E. Cole
250 Royal Palm Way
Palm Beach, Florida 33480-4356
Telephone: (561) 833-7700
Fax: (561) 655-8719
If to Buyer, to:
Corning Incorporated
Attention: William D. Eggers
One Riverfront Plaza
Corning, New York 14831
Telephone: (607) 974-9000
Fax: (607) 974-8150
With a copy to:
Nixon Peabody, LLP
Attention: Deborah McLean Quinn
Clinton Square
Rochester, New York 14604
Telephone: (716) 263-1307
Fax: (716) 263-1600
(e) Interpretation.
When a reference is made in this Agreement to Sections, such reference
shall be to a Section to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Wherever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation."
The parties acknowledge and agree that: (A) each party to this
Agreement and his or its counsel reviewed and negotiated the terms and
provisions of this Agreement and
<PAGE>
-10-
have contributed to its revision; (B) the rule of construction to the effect
that any ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement; and (C) the terms and
provisions of this Agreement shall be construed fairly as to both parties
hereto, regardless of which party was generally responsible for the preparation
of this Agreement or any provision hereof.
(f) Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when two or more of the counterparts have been signed
by each of the parties and delivered to the other party, it being understood
that each party need not sign the same counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and is not intended to and does not confer upon any Person
other than the parties hereto any rights or remedies hereunder.
(h) Governing Law. This Agreement shall be construed in
accordance with and governed in all respects, including validity, interpretation
and effect, by the law of the State of Delaware without giving effect to the
principles of conflicts of laws thereof.
(i) Consent to Jurisdiction; Consent to Service. IN THE EVENT
OF ANY LITIGATION, CLAIM OR OTHER LEGAL PROCEEDING WITH RESPECT TO ANY MATTER
PERTAINING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, THE
PARTIES HERETO HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. THE PARTIES HERETO
HEREBY READILY CONSENT TO THE NON-EXCLUSIVE JURISDICTION AND VENUE OF THE COURTS
OF THE STATE OF DELAWARE AND ANY FEDERAL COURT LOCATED IN DELAWARE IN CONNECTION
WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE PARTIES HERETO HEREBY WAIVE PERSONAL
SERVICE OF ANY PROCESS IN CONNECTION WITH ANY SUCH LITIGATION AND AGREE THAT
SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL ADDRESSED TO OR BY
PERSONAL DELIVERY TO ANOTHER PARTY TO THIS AGREEMENT AT SUCH OTHER PARTIES'
ADDRESS SPECIFIED IN SECTION 10 (d).
(j) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
<PAGE>
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transactions contemplated hereby are fulfilled to the extent possible. If no
such agreement is reached between the parties, the term or provision which is
determined to be invalid, illegal or incapable of being enforced shall
nonetheless be enforced to fulfill the intent of the parties to the extent
legally permissible.
11. Confidentiality; Public Announcements. Each of the
Stockholders and his or its Affiliates recognizes that successful consummation
of the Transactions may be dependent upon confidentiality with respect to the
matters referred to herein. In this connection, pending public disclosure of the
Transactions by Buyer, NetOptix and Merger Subsidiary, each Stockholder (and
Entities represented by any Stockholder) hereby agrees not to issue any press
release or make any other public statement or disclose or discuss such matters
with anyone not a party to this Agreement (other than such person's counsel and
advisors, if any) without the prior written consent of Buyer and NetOptix,
except for filings required pursuant to the Exchange Act and the rules and
regulations thereunder or as required by law.
IN WITNESS WHEREOF, Buyer, NetOptix, Merger Subsidiary and the
Stockholders have executed or caused this Agreement to be duly executed and
delivered as of the date first written above.
CORNING INCORPORATED
By:/s/James B. Flaws
------------------------------------
Name: James B. Flaws
Title:Executive Vice President and
Chief Financial Officer
CI SUBSIDIARY, INC.
By:/s/William D. Eggers
------------------------------------
Name: William D. Eggers
Title:President
NETOPTIX CORPORATION
By:/s/G. R. Andlinger
------------------------------
Name: G. R. Andlinger
Title: Chairman
<PAGE>
-12-
SIGNATURE PAGE TO STOCKHOLDER AGREEMENT
CAPITAL
By:/s/Stephen A. Magida
-----------------------------
Name: Stephen A. Magida
Title: Managing Member
Number of Shares Beneficially Owned as of
February 13, 2000
4,000,000 shares of Common Stock
Notice Address:
c/o Andlinger & Company
303 South Broadway
Suite 229
Tarrytown, New York 10591
Telephone: (914) 332-4900
Fax: (914) 332-4977
<PAGE>
-13-
SIGNATURE PAGE TO STOCKHOLDER AGREEMENT
SAM
By:/s/Stephen A. Magida
---------------------------
Name: Stephen A. Magida, as
Title: Manager of Andlinger
Capital XIII LLC
Trustee of the Gerhard R. Andlinger
Intangible Asset Management Trust dated as
of December 29, 1997
Number of Shares Beneficially Owned as of
February 13, 2000
Andlinger Capital XIII LLC
--------------------------
3,000,000 shares of Common Stock
Warrant to acquire 1,000,000 shares of
Common Stock
Intangible Asset Management Trust
---------------------------------
171,465 shares of Common Stock
Notice Address:
Stephen A. Magida
105 Harbor Drive
Suite 125
Stamford, Connecticut
Telephone: (203) 348-6690
Fax: (203) 348-6790
<PAGE>
-14-
SIGNATURE PAGE TO STOCKHOLDER AGREEMENT
GRA
By:/s/Gerhard R. Andlinger
---------------------------
Name: Gerhard R. Andlinger
Number of Shares Beneficially Owned as of
February 13, 2000
4,100,000 shares of Stock
Notice Address:
Gerhard R. Andlinger
c/o Andlinger & Company
303 South Broadway
Suite 229
Tarrytown, New York 10591
Telephone: (914) 332-4900
Fax: (914) 332-4977
<PAGE>
-15-
SIGNATURE PAGE TO STOCKHOLDER AGREEMENT
JFB
By:/s/John F. Blais, Jr.
------------------------
Name: John F. Blais, Jr.
Title:
Number of Shares Beneficially Owned as of
February 13, 2000
806,652 shares of Common Stock
Notice Address:
John F. Blais, Jr.
363 Singletary Lane
Framingham, Massachusetts 01701
Telephone:
Fax:
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Sections 722 and 723 of the Business Corporation Law of the State of New
York provide that a corporation may indemnify its current and former directors
and officers under certain circumstances. Article VIII of the Company's Bylaws
provides that the Company 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 Company to the full extent
permitted by, and consistent with, the Business Corporation Law.
Section 402(b) of the Business Corporation Law provides that a corporation
may include a provision in its certificate of incorporation limiting the
liability of its directors to the corporation or its shareholders for damages
for the breach of any duty, except for a breach involving intentional
misconduct, bad faith, a knowing violation of law or receipt of an improper
personal benefit or for certain illegal dividends, loans or stock repurchases.
Paragraph 7 of the Company's Restated Certificate of Incorporation contains such
a provision.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are exhibits to the Registration Statement.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------------------- -----------------------
2.1 Agreement and Plan of Merger, dated as of
February 13, 2000, among Corning
Incorporated, CI Subsidiary, Inc. and
NetOptix Corporation (attached as Annex A
to the Proxy Statement/Prospectus).
5.1 Opinion of William D. Eggers, Senior Vice
President and General Counsel of Corning
Incorporated, as to the legality of the
securities being registered.
8.1 Opinion of Nixon Peabody LLP as to the
material United States federal income tax
consequences of the Merger.
8.2 Opinion of Edwards & Angell, LLP as to the
material United States federal income tax
consequences of the Merger.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Ernst & Young LLP.
-II-1-
<PAGE>
23.3 Consent of Nixon Peabody LLP (included in
Exhibit 8.1 to this Registration
Statement).
23.4 Consent of Edwards & Angell, LLP (included
in Exhibit 8.2 to this Registration
Statement).
23.5 Consent of Salomon Smith Barney Inc.
24.1 Powers of Attorney.
99.1 Form of Proxy Card for the Special
Meeting of Stockholders of NetOptix
Corporation.
99.2 Form of Chairman Letter to the
Stockholders of NetOptix Corporation.
99.3 Form of Notice of Special Meeting of
Stockholders of NetOptix Corporation.
99.4 Opinion of Salomon Smith Barney Inc.
(attached as Annex B to the Proxy
Statement/Prospectus).
99.5 Stockholder Voting Agreement and
Irrevocable Proxy (attached as Annex C
To the Proxy Statement/Prospectus).
-II-2-
<PAGE>
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) (1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(b) (2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Proxy
Statement/Prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form S-4,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(e) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
-II-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Corning Incorporated, a New York corporation 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 15th day of March,
2000.
Corning Incorporated
(Registrant)
By: /s/ WILLIAM D. EGGERS
---------------------------------------
William D. Eggers,
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on March 15, 2000 by the following
persons in the capacities indicated.
SIGNATURE CAPACITY
---------- ---------
Chairman of the Board,
/s/Roger G. Ackerman Principal Executive
------------------------------------ Officer and Director
(Roger G. Ackerman)
Senior Vice President
/s/James B. Flaws and Principal
------------------------------------ Financial Officer
(James B. Flaws)
Vice President, Controller
/s/Katherine A. Asbeck and Principal
------------------------------------ Accounting Officer
(Katherine A. Asbeck)
*
------------------------------------ Director
(Robert Barker)
*
------------------------------------ Director
(John Seely Brown)
-II-4-
<PAGE>
*
------------------------------------ Director
(John H. Foster)
*
------------------------------------ Director
(Norman E. Garrity)
*
------------------------------------ Director
(Gordon Gund)
*
------------------------------------ Director
(John M. Henessy)
*
------------------------------------ Director
(James R. Houghton)
------------------------------------ Director
(James W. Kinnear)
*
------------------------------------ Director
(John W. Loose)
*
------------------------------------ Director
(James J. O'Connor)
*
------------------------------------ Director
(Catherine A. Rein)
*
------------------------------------ Director
(Deborah D. Rieman)
-II-5-
<PAGE>
*
------------------------------------ Director
(H. Onno Ruding)
*
------------------------------------ Director
(William D. Smithburg)
*By:/s/William D. Eggers
------------------------------------ Director
(William D. Eggers)
Attorney-in-fact
-II-6-
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------------------- -----------------------
2.1 Agreement and Plan of Merger, dated as of
February 13, 2000, among Corning
Incorporated, CI Subsidiary, Inc. and
NetOptix Corporation(attached as Annex A
to the Proxy Statement/Prospectus)
5.1 Opinion of William D. Eggers, Senior Vice
President and General Counsel of Corning
Incorporated, as to the legality of the
securities being registered.
8.1 Opinion of Nixon Peabody LLP as to the
material United States federal income tax
consequences of the Merger.
8.2 Opinion of Edwards & Angell, LLP as to the
material United States federal income tax
consequences of the Merger.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Nixon Peabody LLP (included in
Exhibit 8.1 to this Registration
Statement).
23.4 Consent of Edwards & Angell, LLP (included
in Exhibit 8.2 to this Registration
Statement).
23.5 Consent of Salomon Smith Barney Inc.
24.1 Powers of Attorney.
99.1 Form of Proxy Card for the Special Meeting
of Stockholders of NetOptix Corporation
99.2 Form of Chairman Letter to the Stockholders
of NetOptix Corporation
99.3 Form of Notice of Special Meeting of
Stockholders of NetOptix Corporation
99.4 Opinion of Salomon Smith Barney Inc.
-II-7-
<PAGE>
(attached as Annex B to the Proxy
Statement/Prospectus).
99.5 Stockholder Voting Agreement and
Irrevocable Proxy (attached as Annex C
To the Proxy Statement/Proxpectus)
-II-8-
Exhibit 2.1
Agreement and Plan of Merger, dated as of February 13, 2000
among Corning Incorporated,
CI Subsidiary, Inc. and NetOptix Coporation
(attached as Annex A to the Proxy Statement/Prospectus)
-II-9-
Exhibit 5.1
Opinion of William D. Eggers, Senior Vice President and General Counsel of
Corning Incorporated, as to the Legality of the
Securities Being Registered
March 16, 2000
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Ladies and Gentlemen:
I refer to the registration statement on Form S-4 (the "Registration
Statement") being filed by Corning Incorporated, a New York corporation
("Corning"), with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the registration of
up to 12,080,607 shares of common stock, par value $0.50 per share, of Corning
(the "Shares"). The Shares are to be issued pursuant to the terms of the
Agreement and Plan of Merger, (the "Merger Agreement") dated as of February 13,
2000, among Corning, CI Subsidiary, Inc., a Delaware corporation and
wholly-owned subsidiary of Corning ("CI Subsidiary") and NetOptix Corporation, a
Delaware corporation ("NetOptix"). The Merger Agreement provides for the merger
of CI Subsidiary with and into NetOptix, with NetOptix surviving the merger as a
wholly-owned subsidiary of Corning.
I am familiar with the terms of the Merger Agreement, and the proposed
issuance of the Shares thereunder, and have examined such records, documents and
questions of law, and satisfied myself as to such matters of fact, as I have
considered relevant and necessary as a basis for this opinion.
Based on the foregoing, I am of the opinion that:
1. Corning is duly incorporated and validly existing under the laws of
the State of New York; and
2. The Shares will be legally issued, fully paid and nonassessable when
(i) the Registration Statement, as finally amended, shall have become effective
under the Securities Act; and (ii) certificates representing the Shares have
been duly executed, countersigned and registered and duly delivered in
accordance with the terms of the Merger Agreement.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to me under the heading "LEGAL
MATTERS" contained in the Proxy Statement/ Prospectus forming a part of the
Registration Statement.
Very truly yours,
/s/ William D. Eggers
--------------------------
William D. Eggers
Senior Vice President and
General Counsel
-II-10-
Exhibit 8.1
Opinion of Nixon Peabody LLP
March 16, 2000
Corning Incorporated
One Riverfront Plaza
Corning, NY 14831
Ladies and Gentlemen:
We are acting as counsel to Corning Incorporated ("Corning"), a New
York corporation in connection with the proposed merger (the "Merger") of CI
Subsidiary, Inc. ("Merger Sub"), a Delaware corporation and direct wholly-owned
subsidiary of Corning, with and into NetOptix Corporation ("NetOptix"), a
Delaware corporation, pursuant to an Agreement and Plan of Merger (the
"Agreement"), dated as of February 13, 2000, by and among Corning, Merger Sub,
and NetOptix. Corning is filing with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, a registration
statement on Form S-4 (the "Registration Statement") with respect to the common
stock of Corning (the "Corning Common Stock") to be issued to holders of shares
of common stock of NetOptix (the "NetOptix Common Stock") in connection with the
Merger. At your request in connection with the filing of the Registration
Statement, we are rendering our opinion concerning certain federal income tax
consequences of the Merger.
For purposes of the opinion set forth below, we have, with the consent
of Corning and the consent of NetOptix, relied upon the accuracy and
completeness of the statements and representations (which statements and
representations we have neither investigated nor verified) and relied upon
convenants contained in the certificates of Corning, Merger Sub and NetOptix
(copies of which are attached hereto and which are incorporated herein by
reference). We have assumed that the statements and representation in those
certificates will be complete and accurate as of the Effective Time and the
covenants set forth in these certificates will be complied with in all material
respects. We have also relied upon the accuracy of the factual information set
forth in the Registration Statement and the Proxy Statement-Prospectus
(together, the "Proxy Statement") filed with the Commission, as amended through
the date hereof, in connection with the Merger. Any capitalized term used and
not defined herein has the meaning given to it in the Agreement.
We have also assumed that the transactions contemplated by the
Agreement will be consummated in accordance with the terms of the Agreement in
all material respects and as described in the Proxy Statement and that the
Merger will qualify as a statutory merger under applicable state laws. We are of
the opinion that, subject to the limitations set forth therein, the discussion
contained in the Proxy Statement under the caption "The Merger--Material Federal
Income Tax Consequences" is an accurate summary of the material federal income
tax consequences of the Merger to holder of NetOptix Common Stock under
currently applicable law.
-II-11-
<PAGE>
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement and to the reference to us under the
caption "The Merger--Material Income Tax Consequences" and elsewhere in the
Proxy Statement. In giving such consent, we do not hereby admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder.
Very truly yours,
/s/ NIXON PEABODY LLP
-II-12-
Exhibit 8.2
Opinion of Edwards & Angell, LLP
March 16, 2000
NetOptix Corporation
Sturbridge Business Park
Sturbridge, MA 01566
Ladies and Gentlemen:
We have acted as counsel to NetOptix Corporation, a Delaware
corporation ("NetOptix"), in connection with the proposed merger (the "Merger"),
in which CI Subsidiary, a Delaware corporation ("Sub"), a wholly-owned
subsidiary of Corning Incorporated, a New York corporation ("Corning"), will be
merged into NetOptix pursuant to the Agreement and Plan of Merger ("Agreement")
dated as of February 13, 2000, among NetOptix, Corning and Sub.
At your request, in connection with the filing of the
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission in connection with the Merger (the "Registration Statement"), we are
rendering our opinion pursuant to Item 601(b)(8) of Regulation S-K.
For purposes of the opinion set forth below, we have relied,
with the consent of NetOptix and the consent of Corning, upon the accuracy and
completeness of the statements and representations (which statements and
representations we have neither investigated nor verified) contained,
respectively, in the certificates of the officers of NetOptix and Corning dated
the date hereof, and have assumed that such statements and representations will
be complete and accurate as of the Effective Time. With respect to the
certificates described in the immediately preceding sentence, we have relied
only on factual statements and representations contained therein and, to the
extent that such certificates also contain legal conclusions, we have not relied
upon such conclusions. We have also relied upon the accuracy of the Registration
Statement and the Proxy Statement-Prospectus of NetOptix and Corning (the "Proxy
Statement-Prospectus") included therein. Any capitalized term used and not
defined herein has the meaning given to it in the Proxy Statement-Prospectus or
the appendices thereto (including the Merger Agreement).
We have also assumed that the transactions contemplated by the
Merger Agreement will be consummated in accordance therewith and as described in
the Proxy Statement-Prospectus.
Based upon and subject to the foregoing, it is our opinion
that, under currently applicable United States federal income tax law, the
Merger will be treated as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended and, accordingly:
1. No gain or loss will be recognized by the holders of NetOptix
common stock who exchange their NetOptix common stock for Corning
common stock pursuant to the merger, except with respect to any
cash received in lieu of a fractional share of Corning common
stock;
2. The aggregate tax basis of the Corning common stock received in
the merger by each holder of NetOptix common stock will be the
same as the aggregate tax basis of the NetOptix common stock
surrendered in exchange therefor, reduced by any
-II-13-
<PAGE>
amount of tax basis allocable to a fractional share interest in
Corning common stock for which cash is received;
3. The holding period of a holder of NetOptix common stock for
Corning common stock received in the merger will include the
holding period for the NetOptix common stock surrendered in
exchange therefor;
4. A NetOptix stockholder who receives cash in lieu of a fractional
share interest in Corning common stock pursuant to the merger will
be treated as having received such cash in exchange for such
fractional share interest and generally will recognize capital
gain or loss on such deemed exchange in an amount equal to the
difference between the amount of cash received and the tax basis
of the NetOptix common stock allocable to such fractional share
interest; and
5. No gain or loss will be recognized by Corning, Corning
shareholders, Sub, or NetOptix as a result of the merger.
Very truly yours,
/s/Edwards & Angell, LLP
Edwards & Angell, LLP
-II-14-
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Corning Incorporated of our report dated February 2,
2000, except for Note 18, as to which the date is February 14, 2000, relating to
the supplemental financial statements and the supplemental financial statement
schedule appearing in Corning Incorporated's Annual Report on Form 10-K/A for
the year ended December 31, 1999. We also consent to the reference to us under
the heading "Experts" in such Registration Statement.
/s/PricewaterhouseCoopers LLP
- --------------------------------
PricewaterhouseCoopers LLP
1301 Avenue of the Americas
New York, New York 10019
March 16, 2000
-II-15-
Exhibit 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 of Corning Incorporated and Related
Prospectus and to the incorporation by reference therein of our report dated
December 21, 1999, with respect to the consolidated financial statements and
schedule of NetOptix Corporation included in its Annual Report on Form 10-K for
the year ended September 30, 1999, filed with the Securities and Exchange
Commission.
/s/Ernst & Young LLP
------------------------
ERNST & YOUNG LLP
Providence, Rhode Island
March 14, 2000
-II-16-
Exhibit 23.5
CONSENT OF SALOMON SMITH BARNEY INC.
We hereby consent to the use of our name and to the
description of our opinion letter, dated February 13, 2000, under the captions
"Summary -- Reasons for the Merger", "-- Opinion of Salomon Smith Barney Inc.",
"The Merger -- Background of the Merger", "--Reasons For the Merger;
Recommendation of the NetOptix Board of Directors" and "-- Opinion of Salomon
Smith Barney Inc." in, and to the inclusion of such opinion letter as Annex B
to, the Joint Proxy Statement/Prospectus, which Joint Proxy Statement/Prospectus
is part of the Registration Statement on Form S-4 of Corning Incorporated. By
giving such consent we do not thereby admit that we are experts with respect to
any part of such Registration Statement within the meaning of the term "expert"
as used in, or that we come within the category of persons whose consent is
required under, the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
Dated: March 17, 2000
SALOMON SMITH BARNEY INC.
By: /s/ Salomon Smith Barney
-II-17-
Exhibit 24.1
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer
of Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this 15th
day of February, 2000.
/s/ Roger G Ackerman
------------------------
Roger G. Ackerman
-II-18-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer of
Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this 15th
day of February, 2000.
/s/ Robert Barker
----------------------
Robert Barker
-II-19-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer of
Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this 17th
day of February, 2000.
/s/ John Seely Brown
-----------------------
John Seely Brown
-II-20-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer of
Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this 17th
day of February, 2000.
/s/ John H. Foster
----------------------
John H. Foster
-II-21-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer of
Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this 14th
day of February, 2000.
/s/ Norman E. Garrity
------------------------
Norman E. Garrity
-II-22-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer of
Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this 15th
day of February, 2000.
/s/ Gordon Gund
-------------------
Gordon Gund
-II-23-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer of
Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this 17th
day of February, 2000.
/s/ John M. Hennessy
------------------------
John M. Hennessy
-II-24-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer of
Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this 16th
day of February, 2000.
/s/ James R. Houghton
------------------------
James R. Houghton
-II-25-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer of
Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this 27th
day of February, 2000.
/s/ John W. Loose
---------------------
John W. Loose
-II-26-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer of
Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this 12th
day of February, 2000.
/s/ James J. O'Connor
-----------------------
James J. O'Connor
-II-27-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer of
Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has subscribed these presents this 16th
day of February, 2000.
/s/ Catherine A. Rein
------------------------
Catherine A. Rein
-II-28-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer
of Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has subscribed these presents this 15th
day of February, 2000.
/s/ Deborah D. Rieman
------------------------
Deborah D. Rieman
-II-29-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer
of Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has subscribed these presents this 22nd
day of February, 2000.
/s/ H. Onno Ruding
----------------------
H. Onno Ruding
-II-30-
<PAGE>
CORNING INCORPORATED
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned Director and/or Officer
of Corning Incorporated, a New York corporation, hereby constitutes and appoints
Katherine A. Asbeck, William D. Eggers and James B. Flaws, or any one of them,
his true and lawful attorneys and agents, in the name and on behalf of the
undersigned, to do any and all acts and things and execute any and all
instruments which the said attorneys and agents, or any one of them, may deem
necessary or advisable to enable Corning Incorporated to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in respect thereof, in connection with
the registration under the Securities Act of 1933 of up to 14,000,000 shares of
its Common Stock offered, issued, exchanged or sold by Corning Incorporated in
connection with its acquisition of the capital stock of NetOptix Corporation, a
Delaware corporation; the exercise of options to purchase shares of the Common
Stock of Corning Incorporated (which options may be offered in substitution for
options held by certain employees of NetOptix Corporation to purchase shares of
the capital stock of NetOptix Corporation), and the conversion of any
convertible securities of NetOptix Corporation, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign the name of the undersigned in his capacity as Director and/or Officer of
Corning Incorporated to one or more Registration Statements (on whatever form or
forms may be determined to be appropriate) to be filed with the Securities and
Exchange Commission in respect of said shares of Common Stock, to any and all
amendments to the said Registration Statements, including Post-Effective
Amendments, and to any and all instruments and documents filed as a part of or
in connection with the said Registrations Statements or amendments thereto;
HEREBY RATIFYING AND CONFIRMING all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof.
IN WITNESS HEREOF, the undersigned has subscribed these presents this 15th
day of February, 2000.
/s/ William D. Smithburg
-------------------------
William D. Smithburg
-II-31-
Exhibit 99.1
Form of Proxy Card for the Special Meeting of Stockholders of
NetOptix Corporation
DETACH HERE
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NETOPTIX CORPORATION
SPECIAL MEETING OF STOCKHOLDERS ________________, 2000
The undersigned hereby appoints Gerhard R. Andlinger and Charles E. Ball, or
either of them, with power of substitution in each, proxies to vote all shares
of Common Stock of the undersigned in NetOptix Corporation at the Special
Meeting of Stockholders to be held _______________, 2000 and at all adjournments
thereof, hereby revoking any proxy heretofore given with respect to the voting
of such shares at the Special Meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
-II-32-
<PAGE>
DETACH HERE
[X] Please mark votes as in this example.
Shares will be voted as specified by the shareholder. IF NO SPECIFICATION IS
MADE, THE PROXY WILL BE VOTED FOR THE PROPOSAL BELOW. If other matters come
before the meeting, the proxies or substitutes may vote upon such matters
according to their best judgment.
1. Proposal to approve a merger of FOR AGAINST ABSTAIN
CI Subsidiary, Inc. with and into
NetOptix and to adopt the Agreement and
Plan of Merger dated as of February 13, 2000 [ ] [ ] [ ]
among Corning Incorporated, CI Subsidiary, Inc.,
and NetOptix Corporation.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name(s) appear(s) at left. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
more than one name is shown, including the case of joint tenants, each party
should sign. Thank you.
Signature: ____________________ Date: ________
Signature: ____________________ Date: ________
-II-33-
Exhibit 99.2
Form of Chaiman Letter to the Stockholders of NetOptix Corporation
NETOPTIX CORPORATION LOGO
________ __, 2000
Dear Stockholder of NetOptix Corporation:
The Board of Directors of NetOptix Corporation has unanimously approved
a merger in which Corning Incorporated will acquire NetOptix. In the merger,
each share of NetOptix common stock will be converted into the right to receive
0.90 of a share of Corning common stock, and NetOptix will become a wholly-owned
subsidiary of Corning. Corning common stock is listed on the New York Stock
Exchange under the symbol "GLW". As of ________, Corning's closing stock price
was $________.
The merger cannot be completed unless the holders of a majority of the
outstanding shares of NetOptix's common stock approve the merger and adopt the
merger agreement. NetOptix has scheduled a special meeting of its stockholders
for _________, 2000 to vote on this matter. If you were a stockholder of record
on _________, you may vote at this meeting. Your vote is very important.
Whether or not you plan to attend the meeting, please take the time to
vote by completing and mailing the enclosed proxy card to us. If you sign, date
and mail your proxy card without indicating how you want to vote, your proxy
will be counted as a vote in favor of the merger.
THIS PROXY STATEMENT/PROSPECTUS CONTAINS ANSWERS TO FREQUENTLY ASKED
QUESTIONS AND A SUMMARY DESCRIPTION OF THE MERGER (BEGINNING ON PAGE 1),
FOLLOWED BY A MORE DETAILED DISCUSSION OF THE MERGER AND OTHER RELATED MATTERS.
YOU SHOULD ALSO CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS RELATING TO
THE MERGER" COMMENCING ON PAGE __ OF THE ENCLOSED PROXY STATEMENT/PROSPECTUS. WE
URGE YOU TO REVIEW CAREFULLY THE ENTIRE PROXY STATEMENT/PROSPECTUS.
Sincerely,
Ralf T. Faber Gerhard R. Andlinger
President Chairman and Chief Executive Officer
NetOptix Corporation NetOptix Corporation
YOUR VOTE IS IMPORTANT.
PLEASE CAST YOUR VOTE BY
COMPLETING, SIGNING, DATING AND RETURNING YOUR
PROXY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved the merger described in the proxy
statement/prospectus or the Corning common stock to be issued in connection with
the merger, or determined if the proxy statement/prospectus is accurate or
adequate. Any representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------
THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS IS DATED ________ ___, 2000,
AND IS FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT ________ __, 2000.
-II-34-
Exhibit 99.3
Form of Notice of Special Meeting of Stockholders of NetOptix Corporation
NETOPTIX CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ____________ __, 2000
To the Stockholders of NetOptix Corporation:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of
NetOptix Corporation has been called by the Board of Directors of NetOptix and
will be held at ______________________ on ___________, ________ __, 2000, at
[9:00 a.m.], local time for the following purposes:
1. To consider and vote upon a proposal to approve a merger of CI
Subsidiary, Inc., a wholly-owned subsidiary of Corning, with and into
NetOptix and to adopt the Agreement and Plan of Merger, dated as of
February 13, 2000, among Corning Incorporated, CI Subsidiary, Inc. and
NetOptix Corporation. The merger agreement provides, among other
things, for the merger of CI Subsidiary, Inc. with and into NetOptix,
with NetOptix surviving the merger as a wholly-owned subsidiary of
Corning.
2. To vote upon other matters as may properly come before the special
meeting or any adjournment or postponement of such special meeting.
NetOptix has fixed the close of business on ___________ ___, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the special meeting or any adjournment or postponement of such
meeting. Only holders of record of shares of NetOptix common stock at the close
of business on the record date are entitled to vote at the special meeting. A
list of stockholders entitled to vote will be available for inspection at the
offices of NetOptix, located at Sturbridge Business Park, Sturbridge,
Massachusetts 01566, for a period of ten days prior to the special meeting.
Your Board of Directors recommends that you vote to approve the merger
and adopt the merger agreement, which is described in detail in the accompanying
Proxy Statement/Prospectus.
You can ensure that your shares of NetOptix common stock are voted at
the special meeting by signing and dating the enclosed proxy and returning it in
the postage pre-paid envelope provided. Sending in a signed proxy will not
affect your right to attend the special meeting and vote in person. You may
revoke your proxy at any time before it is voted by (1) giving written notice to
the secretary of NetOptix at Sturbridge Business Park, Sturbridge, Massachusetts
01566, (2) signing and returning a later dated proxy, or (3) voting in person at
the special meeting. All stockholders are cordially invited to attend the
special meeting in person.
WHETHER OR NOT YOU EXPECT TO ATTEND, WE URGE YOU TO SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE POSTAGE PRE-PAID ENVELOPE PROVIDED.
By Order of the Board of Directors,
Stephen A. Magida
Secretary
Sturbridge, Massachusetts
________ __, 2000
-II-35-
Exhibit 99.4
Opinion of Salomon Smith Barney Inc.
(attached as Annex B to the Proxy Statement/Prospectus)
-II-36-
Exhibit 99.5
Stockholder Voting Agreement and Irrevocable Proxy
(attached as Annex C to the Proxy Statement/Prospectus)
