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[LOGO]
April 14, 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 April 10, 2000, Corning's closing stock
price was $189.19.
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 May 12, 2000 to vote on this matter. If you were a stockholder of record on
April 10, 2000, 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 3),
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 18 OF THE ENCLOSED PROXY STATEMENT/PROSPECTUS. WE
URGE YOU TO REVIEW CAREFULLY THE ENTIRE PROXY STATEMENT/PROSPECTUS.
Sincerely,
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<S> <C>
[LOGO] [LOGO]
Ralf T. Faber Gerhard R. Andlinger
President Chairman and Chief Executive Officer
NetOptix Corporation NetOptix Corporation
</TABLE>
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 APRIL 14, 2000,
AND IS FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT APRIL 14, 2000.
<PAGE>
NETOPTIX CORPORATION
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 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 the offices of Edwards & Angell, LLP, 101 Federal Street, Boston,
Massachusetts on Friday, May 12, 2000, at 10:00 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 April 10, 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,
[LOGO]
Stephen A. Magida
SECRETARY
Sturbridge, Massachusetts
April 14, 2000
<PAGE>
TABLE OF CONTENTS
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY..................................................... 3
RISK FACTORS RELATING TO THE MERGER......................... 18
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS................................................ 19
THE SPECIAL MEETING......................................... 20
DATE, TIME AND PLACE...................................... 20
PURPOSES OF THE SPECIAL MEETING........................... 20
RECORD DATE............................................... 20
REQUIRED VOTES............................................ 20
PROXIES, VOTING AND REVOCATION............................ 21
SOLICITATION OF PROXIES................................... 21
THE MERGER.................................................. 22
BACKGROUND OF THE MERGER.................................. 22
REASONS FOR THE MERGER; RECOMMENDATION OF THE NETOPTIX
BOARD OF DIRECTORS...................................... 23
OPINION OF SALOMON SMITH BARNEY INC......................... 25
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER........... 32
CERTAIN COMPENSATION ARRANGEMENTS........................... 34
SEVERANCE AGREEMENTS...................................... 34
EMPLOYMENT AGREEMENT...................................... 34
EQUITY BASED AWARDS......................................... 34
OPTIONS................................................... 34
DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION OF
NETOPTIX DIRECTORS AND OFFICERS........................... 36
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.................... 36
ACCOUNTING TREATMENT........................................ 37
REGULATORY APPROVALS........................................ 38
RESTRICTIONS ON SALES OF CORNING COMMON STOCK............... 38
STOCK EXCHANGE LISTING...................................... 38
NO APPRAISAL RIGHTS......................................... 38
THE MERGER AGREEMENT........................................ 39
CONVERSION OF SECURITIES.................................. 39
EXCHANGE OF CERTIFICATES.................................. 39
STOCK OPTIONS............................................. 39
ANDLINGER CAPITAL WARRANT................................. 39
CONDITIONS TO CLOSING..................................... 40
REPRESENTATIONS AND WARRANTIES OF CORNING AND NETOPTIX.... 40
CONDUCT OF BUSINESS PRIOR TO THE CLOSING.................. 41
</TABLE>
i
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<TABLE>
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NO SOLICITATION PROVISION................................. 42
MUTUAL COVENANTS OF CORNING AND NETOPTIX.................. 43
TERMINATION AND TERMINATION FEES.......................... 44
EXPENSES.................................................. 45
UNAUDITED PRO FORMA CONDENSED COMBINED SUPPLEMENTAL
FINANCIAL INFORMATION..................................... 46
UNAUDITED PRO FORMA COMBINED BALANCE SHEET................ 47
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME......... 48
THE COMPANIES............................................... 50
CORNING................................................... 50
BUSINESS.................................................. 50
MANAGEMENT AND ADDITIONAL INFORMATION..................... 51
RECENT DEVELOPMENTS....................................... 51
NETOPTIX.................................................. 52
BUSINESS.................................................. 52
MANAGEMENT AND ADDITIONAL INFORMATION..................... 52
DESCRIPTION OF CORNING CAPITAL STOCK........................ 53
AUTHORIZED CAPITAL STOCK.................................. 53
COMMON STOCK.............................................. 53
PREFERRED STOCK........................................... 53
RIGHTS AGREEMENT.......................................... 54
INDEMNIFICATION AND LIABILITY OF DIRECTORS AND OFFICERS... 54
TRANSFER AGENT AND REGISTRAR.............................. 54
COMPARISON OF STOCKHOLDER RIGHTS............................ 55
NUMBER, CLASSIFICATION AND REMOVAL OF DIRECTORS........... 55
ADVANCE NOTICE OF STOCKHOLDER PROPOSALS................... 55
RIGHT TO CALL SPECIAL MEETINGS............................ 56
SHAREHOLDER ACTION BY WRITTEN CONSENT..................... 56
TRANSACTIONS WITH INTERESTED SHAREHOLDERS................. 56
AMENDMENT OF CHARTER AND BYLAWS........................... 56
LEGAL MATTERS............................................... 57
EXPERTS..................................................... 57
WHERE YOU CAN FIND MORE INFORMATION......................... 58
</TABLE>
ANNEXES
Annex A--Agreement and Plan of Merger
Annex B--Opinion of Salomon Smith Barney Inc.
Annex C--Stockholder Voting Agreement and Irrevocable Proxy
ii
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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 May 12, 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 April 10, 2000 the closing price per share of Corning common stock on the
NYSE was $189.19 and of NetOptix common stock on the NASDAQ was $167.38.
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.
THE NETOPTIX BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING IN FAVOR OF THE
PROPOSED MERGER.
1
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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 36 and 37 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
2
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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 58.
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 (PAGES 50 THROUGH 52)
NETOPTIX CORPORATION
Sturbridge Business Park
Sturbridge, Massachusetts 01566
Attention: Secretary
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:
- 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
3
<PAGE>
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 23 AND 24)
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;
- 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;
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- 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 23 and 24.
RECOMMENDATION OF THE NETOPTIX BOARD OF DIRECTORS (PAGES 23 AND 24)
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 20)
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 20)
The special meeting of the NetOptix stockholders will be held on Friday,
May 12, 2000 at 10:00 a.m. Eastern Standard Time at the offices of Edwards &
Angell, LLP, 101 Federal Street, Boston, Massachusetts.
RECORD DATE; REQUIRED VOTES (PAGES 20 AND 21)
The close of business on April 10, 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
12,483,346 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 5,011,617 shares of NetOptix common stock or
approximately 40.15% of the outstanding common stock. In addition, a total of
4,978,117 shares of NetOptix common stock (5,003,117 shares if 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.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER (PAGES 32 THROUGH 34)
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
5
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prior to the effective time of the merger. As of April 10, 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 4,978,117 shares (5,003,117 shares if 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 39.88% of the total number of shares of NetOptix common stock
outstanding as of April 10, 2000. 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 held a warrant issued January 26, 1999, to
purchase 1,000,000 shares of NetOptix common stock for a price of $1.50
per share which has been exercised.
- 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.
6
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OPINION OF SALOMON SMITH BARNEY INC. (PAGES 25 THROUGH 32)
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 39)
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 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 40)
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
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- 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 (PAGES 42 AND 43)
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.
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 44 AND 45)
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;
8
<PAGE>
- 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
- 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 45)
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 (PAGE 38)
On April 2, 2000, the required waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act relating to the merger terminated. 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 38)
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 36 AND 37)
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.
9
<PAGE>
ACCOUNTING TREATMENT (PAGE 37)
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.
RISK FACTORS RELATING TO THE MERGER (PAGE 18)
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 39)
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.
RECENT DEVELOPMENTS (PAGE 51)
Corning announced on March 16, 2000, that based on its strong results
through February, Corning expects to report first-quarter earnings before
special items in the range of $0.53 to $0.55 per share, approximately 50% ahead
of 1999 first-quarter earnings of $0.36. Corning also announced that it expects
to report full-year 2000 earnings before special items and before consideration
of the acquisition of NetOptix of approximately $2.45.
Special charges related to the acquisition of Oak Industries and British
Telecommunications' Photonics Technology Research Center will be included in
Corning's first-quarter results. These items will reduce reported first-quarter
and full year results by approximately $70 million after tax, or $0.25 per
share.
The NetOptix acquisition will be accounted for as a purchase and will not
impact Corning's results until the transaction is completed in the second
quarter. Excluding the amortization of goodwill and other acquired intangible
assets, the effect of the NetOptix acquisition is expected to be mildly dilutive
to Corning's earnings per share in 2000 and accretive in 2001 and thereafter.
Corning is currently studying the impact of purchase accounting for the NetOptix
acquisition and expects the useful life of goodwill and other acquired
intangibles to range from seven to ten years. Any acquired in-process research
and development will be expensed in the period the transaction is completed. On
an annual basis amortization of goodwill and purchased intangibles could reduce
Corning's earnings by up to $200 to $300 million after tax.
10
<PAGE>
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 58 through 60.
<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 tax
on income................................... 674.9 482.3 665.8 519.1 421.9
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.
11
<PAGE>
(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 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. 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.
12
<PAGE>
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
58 through 60.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
DECEMBER 31 YEAR ENDED SEPTEMBER 30,
------------------- ----------------------------------------------------
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.
13
<PAGE>
\
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" 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.
SELECTED UNAUDITED PRO FORMA COMBINED
SUPPLEMENTAL STATEMENT OF INCOME INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
--------------------
(IN MILLIONS, EXCEPT
PER SHARE AMOUNTS)
<S> <C>
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
</TABLE>
SELECTED UNAUDITED PRO FORMA COMBINED
SUPPLEMENTAL BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31, 1999
------------------
(IN MILLIONS)
<S> <C>
Working capital............................................. $ 436.2
Total assets................................................ $8,630.9
Loans payable beyond one year............................... $1,491.0
Convertible preferred stock................................. $ 13.5
</TABLE>
14
<PAGE>
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.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
------------------
<S> <C>
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................................................ 0.00
Equivalent pro forma...................................... 0.65
</TABLE>
15
<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>
<CAPTION>
CORNING(A) NETOPTIX(A)
------------------------------- -------------------------------
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.......................... 226.44 90.75 0.18 71.50 19.00 0
Second Quarter (for Corning through
April 10, 2000)...................... 196.25 141.00 N/A(b) 198.69 57.50 0
Third Quarter (for NetOptix through
April 10, 2000)...................... N/A N/A N/A 175.00 140.00 0
</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.
(b) The dividend for the second quarter for Corning has not yet been declared.
<TABLE>
<CAPTION>
CORNING NETOPTIX
-------- --------
<S> <C> <C>
February 11, 2000 per share closing price(a).............. $165.75 $136.00
April 10, 2000 per share closing price.................... $189.19 $167.38
</TABLE>
- ------------------------
(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 20.
NETOPTIX STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
CORNING COMMON STOCK AND THE NETOPTIX COMMON STOCK.
16
<PAGE>
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:
<TABLE>
<S> <C>
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
</TABLE>
See also "Where You Can Find More Information" beginning on page 58. IF YOU
WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY MAY 5, 2000 IN ORDER TO RECEIVE
THEM BEFORE THE NETOPTIX SPECIAL MEETING.
17
<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.
18
<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.
19
<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 Friday, May 12, 2000 at 10:00 a.m. Eastern
Standard Time at the offices of Edwards & Angell, LLP, 101 Federal Street,
Boston Massachusetts. 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 April 14, 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
April 10, 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,
12,483,346 shares of NetOptix common stock were outstanding and entitled to vote
held by approximately 297 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 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 5,011,617 shares of NetOptix common stock or
approximately 40.15% of the outstanding common
20
<PAGE>
stock. In addition, a total of 4,978,117 shares of NetOptix common stock
(5,003,117 shares if 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.
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.
21
<PAGE>
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 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 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
22
<PAGE>
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 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.
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 36.
- 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.
23
<PAGE>
- 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.
- 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 18. 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.
24
<PAGE>
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 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
25
<PAGE>
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 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:
<TABLE>
<S> <C>
Last 12 Months.............................................. 0.26
Last 9 Months............................................... 0.31
Last 6 Months............................................... 0.40
Last 3 Months............................................... 0.52
</TABLE>
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.
26
<PAGE>
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 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.
27
<PAGE>
The following table sets forth the results of these analyses.
<TABLE>
<CAPTION>
COMPARABLE COMPANIES AT
FEBRUARY 11, 2000
CLOSING PRICE NETOPTIX AT
-------------------------------------- FEBRUARY 11, 2000
RANGE MEDIAN MEAN CLOSING PRICE
------------- -------- -------- ------------------
<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.
<TABLE>
<CAPTION>
COMPARABLE COMPANIES AT
FEBRUARY 11, 2000
CLOSING PRICE CORNING AT
-------------------------------------- FEBRUARY 11, 2000
RANGE MEDIAN MEAN CLOSING PRICE
------------- -------- -------- ------------------
<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>
28
<PAGE>
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;
- 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.
29
<PAGE>
The following table sets forth the results of these analyses:
<TABLE>
<CAPTION>
COMPARABLE COMPANIES NETOPTIX AT
------------------------------------- IMPLIED
RANGE MEDIAN MEAN MERGER PRICE
------------ -------- -------- -------------
<S> <C> <C> <C> <C> <C>
RATIO OF FIRM VALUE TO:
(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% 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.
30
<PAGE>
The following table shows the accretion or dilution to the EPS of Corning
expected to result from the merger.
<TABLE>
<CAPTION>
ACCRETION /
CORNING NETOPTIX COMBINED ENTITY (DILUTION) TO
STAND-ALONE STAND-ALONE PRO FORMA CORNING
----------- ----------- --------------- -------------
<S> <C> <C> <C> <C>
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)
</TABLE>
The following table shows the accretion or dilution to the EPS of Corning
expected to result from the merger after eliminating all goodwill charges.
<TABLE>
<CAPTION>
ACCRETION /
CORNING NETOPTIX COMBINED ENTITY (DILUTION) TO
STAND-ALONE STAND-ALONE PRO FORMA CORNING
----------- ----------- --------------- -------------
<S> <C> <C> <C> <C>
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
</TABLE>
RELATIVE CONTRIBUTION ANALYSIS.
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.
<TABLE>
<CAPTION>
CORNING NETOPTIX
-------- --------
<S> <C> <C>
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%
</TABLE>
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
31
<PAGE>
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 merger
agreement and the merger. See "Reasons for the Merger; Recommendation of the
NetOptix Board of Directors" on pages 23 and 24.
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,
32
<PAGE>
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.
- 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 4,978,117 shares (5,003,117 shares if 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 39.88% 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.
- On February 13, 2000 Andlinger Capital XIII LLC held a warrant issued
January 26, 1999, to purchase 1,000,000 shares of NetOptix common stock
for a price of $1.50 per share which has been exercised.
- Under a letter agreement dated February 13, 2000, Ralf 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
33
<PAGE>
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.
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.
34
<PAGE>
EMPLOYEE OPTIONS.
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.
35
<PAGE>
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 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
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<PAGE>
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;
- 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
- 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.
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.
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<PAGE>
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 2, 2000, the waiting period terminated.
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. 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.
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
"Interests of Directors and Officers in the Merger" 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, issued
January 26, 1999, has been exercised.
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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;
- 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;
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- 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
- 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.
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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 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; or
- 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.
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.
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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;
- 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;
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- 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:
- 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
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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 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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UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
CORNING(1) NETOPTIX(2) ADJUSTMENTS PRO FORMA
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
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.
47
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
COMBINED
CORNING(1) NETOPTIX(2) ADJUSTMENTS PRO FORMA
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
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.
48
<PAGE>
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.
49
<PAGE>
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.
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.
50
<PAGE>
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 as amended by Forms 10-K/A 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".
RECENT DEVELOPMENTS
Corning announced on March 16, 2000, that based on its strong results
through February, Corning expects to report first-quarter earnings before
special items in the range of $0.53 to $0.55 per share, approximately 50% ahead
of 1999 first-quarter earnings of $0.36. Corning also announced that it expects
to report full-year 2000 earnings before special items and before consideration
of the acquisition of NetOptix of approximately $2.45.
Special charges related to the acquisition of Oak Industries and British
Telecommunications' Photonics Technology Research Center will be included in
Corning's first-quarter results. These items will reduce reported first-quarter
and full year results by approximately $70 million after tax, or $0.25 per
share.
The NetOptix acquisition will be accounted for as a purchase and will not
impact Corning's results until the transaction is completed in the second
quarter. Excluding the amortization of goodwill and other acquired intangible
assets, the effect of the NetOptix acquisition is expected to be mildly dilutive
to Corning's earnings per share in 2000 and accretive in 2001 and thereafter.
Corning is currently studying the impact of purchase accounting for the NetOptix
acquisition and expects the useful life of goodwill and other acquired
intangibles to range from seven to ten years. Any acquired in-process research
and development will be expensed in the period the transaction is completed. On
an annual basis amortization of goodwill and purchased intangibles could reduce
Corning's earnings by up to $200 to $300 million after tax.
51
<PAGE>
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 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.
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."
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."
52
<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.
53
<PAGE>
RIGHTS AGREEMENT
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.
54
<PAGE>
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 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 53 and 54 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.
55
<PAGE>
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.
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
56
<PAGE>
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 Forms 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.
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.
57
<PAGE>
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
58
<PAGE>
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.
<TABLE>
<CAPTION>
CORNING SEC FILINGS (FILE NO. 001-03247) PERIOD
- ---------------------------------------- -----------------------------
<S> <C>
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
Amended Annual Report on Form 10-K/A................. Year ended December 31, 1999,
as filed on April 7, 2000.
Registration Statement on Form 8-A................... Filed on July 11, 1996
Current Reports on From 8-K.......................... Filed on January 11, 2000
Filed on January 24, 2000
Filed on January 26, 2000
Filed on February 15, 2000
Filed on February 17, 2000
Filed on February 22, 2000
Filed on March 29, 2000
<CAPTION>
NETOPTIX SEC FILINGS (FILE NO. 000-11309) PERIOD
- ----------------------------------------- -----------------------------
<S> <C>
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
December 10, 1999
February 4, 2000
February 14, 2000
February 23, 2000
Items 10-13 of NetOptix's Definitive Proxy Statement Filed on December 30, 1999
to NetOptix's stockholders for the 2000 Annual
Meeting of NetOptix's stockholders.................
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.
</TABLE>
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
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<PAGE>
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 April 25, 2000.
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]
Stephen A. Magida
SECRETARY
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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 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
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<PAGE>
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 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
A-3
<PAGE>
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,
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 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
A-4
<PAGE>
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.
(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
A-5
<PAGE>
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 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
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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 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
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consents, approvals, authorizations or permits, or to make such filings or
notifications, would not 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 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,
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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 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
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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 ("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,
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would cause the loss of such qualification or the imposition of any material
liability, penalty or tax under ERISA or the Code.
(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.
(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
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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 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,
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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, 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
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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 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 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
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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.
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;
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(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 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.
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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 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 SectionSection52.249-8,
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
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203 of the Delaware Law (which has been rendered inapplicable), no state
takeover statute is applicable to the Merger or the
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
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
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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 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.
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(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 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
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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 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
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
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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 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;
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(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.
(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 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
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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 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,
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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 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."
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(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 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.
(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
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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 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
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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.
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.
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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 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
(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
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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.
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;
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(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.
(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.
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(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).
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),
(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 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
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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 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
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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 10.10 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations and warranties in this Agreement shall not
survive the Merger.
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
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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 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.
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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).
"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).
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"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).
"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.
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"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.
"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, 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).
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"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.
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.
<TABLE>
<S> <C> <C>
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
</TABLE>
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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
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
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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 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.
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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, 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
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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.
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
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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.
(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 consummation of the transactions
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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 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,
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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 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
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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 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).
If to NetOptix, to:
NetOptix Corporation
Attention: Gerhard R. Andlinger
Sturbridge Business Park
Sturbridge, Massachuesetts 01566
Telephone: (508) 347-9191
Fax:
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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 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.
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(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
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.
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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.
<TABLE>
<S> <C> <C>
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
</TABLE>
C-9
<PAGE>
SIGNATURE PAGE TO STOCKHOLDER AGREEMENT
<TABLE>
<S> <C> <C>
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
</TABLE>
C-10
<PAGE>
SIGNATURE PAGE TO STOCKHOLDER AGREEMENT
<TABLE>
<S> <C> <C>
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
</TABLE>
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<PAGE>
SIGNATURE PAGE TO STOCKHOLDER AGREEMENT
<TABLE>
<S> <C> <C>
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
</TABLE>
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<PAGE>
SIGNATURE PAGE TO STOCKHOLDER AGREEMENT
<TABLE>
<S> <C> <C>
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:
</TABLE>
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