<PAGE>
Shearman & Sterling
599 Lexington Avenue
New York, New York 10028
June 29, 1994
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street
Washington, D.C. 20549
Attention: Document Control--EDGAR
SUBJECT: Corning Incorporated and Corning Delaware, L.P.-- Amendment No. 2 to
Registration Statement on Form S-3 (Registration No. 33-53821)
Ladies and Gentlemen:
On behalf of Corning Incorporated ("Corning") and Corning Delaware, L.P.
("Corning Delaware"), we are hereby filing under the Securities Act
of 1933, as amended, Amendment No. 2 to the Corning and Corning Delaware
Registration Statement on Form S-3 (Registration No. 33-53821).
If you should have any questions or comments concerning this filing,
please call me at (212) 848-8983 or Cornelius J. Dwyer, Jr. at (212) 848-7019.
Very truly yours,
VIRGINIA A. MELVIN
Virginia A. Melvin
Enclosure
<PAGE>
As filed with the Securities and Exchange Commission on June 28, 1994
Registration No 33-53821
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CORNING
DELAWARE, L.P.
(Exact name of registrant as specified in charter)
CORNING INCORPORATED
(Exact name of registrant as specified in charter)
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<CAPTION>
<S> <C>
DELAWARE NEW YORK
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
16-1460072 16-0393470
(IRS Employer Identification No.) (IRS Employer Identification No.)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
c/o William C. Ughetta William C. Ughetta
Corning Incorporated Corning Incorporated
One Riverfront Plaza One Riverfront Plaza
Corning, New York 14831 Corning, New York 14831
(607) 974-9000 (607) 974-9000
(Name, address, including zip code, and (Name, address, including zip code, and
telephone number, including area code, of agent telephone number, including area code, of agent
for service) for service)
</TABLE>
COPIES TO:
<TABLE>
<CAPTION>
<S> <C>
Cornelius J. Dwyer, Jr. Robert W. Reeder, III
Shearman & Sterling Sullivan & Cromwell
599 Lexington Avenue 250 Park Avenue
New York, NY 10022 New York, NY 10177
(212) 848-4000 (212) 558-4000
</TABLE>
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.[x]
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine. <PAGE>
Information contained herein is
subject to completion or amendment. A registration statement
relating to these securities has been filed with the Securities
and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION, DATED JUNE 28, 1994
5,500,000
Corning Delaware
% Convertible Monthly Income Preferred Securities
("Convertible MIPS"*)
(liquidation preference $50 per security)
guaranteed to the extent set forth herein by, and convertible into Common
Stock of, Corning Incorporated
The 5,500,000 % Convertible Monthly Income Preferred Securities (the
"Preferred Securities") are being issued by Corning Delaware, L.P. ("Corning
Delaware"), a Delaware limited partnership. All of the partnership interests
in Corning Delaware, other than the limited partnership interests represented
by the Preferred Securities, are owned by Corning Incorporated, a New York
corporation ("Corning" or the "Company"), which is the general partner in
Corning Delaware. The Preferred Securities will have a preference over all
other partnership interests of Corning Delaware with respect to cash
distributions and amounts payable on liquidation.
Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions from Corning Delaware, at an annual rate of % of the
liquidation preference of $50 per Preferred Security, accruing from ,
1994 and payable monthly in arrears on the last day of each calendar month of
each year, commencing , 1994 ("dividends"). See "Description of
Securities Offered--Preferred Securities--Dividends."
In the event of the liquidation of Corning Delaware, holders of Preferred
Securities will be entitled to receive for each Preferred Security a
liquidation preference of $50 plus accumulated and unpaid dividends to the
date of payment, subject to certain limitations. See "Description of
Securities Offered--Preferred Securities--Liquidation Rights."
(continued on next page)
See "Investment Considerations" for a discussion of certain factors to be
considered in connection with an investment in the Preferred Securities,
including circumstances under which interest payments on the Subordinated
Debentures (as defined) in which Corning Delaware will invest the proceeds
from the sale of the Preferred Securities may be deferred for up to 60
months.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<CAPTION>
Initial Public Underwriting Proceeds to
Offering Price Commission (1) Corning Delaware (2) (3)
<S> <C> <C> <C>
Per Corning Delaware Preferred Security $ (2) $
Total (4) $ (2) $
</TABLE>
(1) Corning Delaware and Corning have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used by Corning Delaware to purchase
convertible subordinated debentures of Corning, the Underwriting Agreement
provides that Corning will pay to the Underwriters, as compensation
("Underwriters' Compensation"), $ per Preferred Security (or $ in the
aggregate). See "Underwriting."
(3) Expenses of the offering which are payable by Corning are estimated to be
$ .
(4) Corning Delaware and Corning have granted the Underwriters an option for
30 days to purchase up to an additional 825,000 Preferred Securities at the
initial public offering price per share, solely to cover over-allotments.
Corning will pay to the Underwriters, as Underwriters' Compensation, $
per Preferred Security purchased pursuant to this option. If such option is
exercised in full, the total initial public offering price, underwriting
commission and proceeds to Corning Delaware will be $, $and $, respectively.
See "Underwriting."
<PAGE>
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in
book-entry form through the facilities of The Depository Trust Company on or
about , 1994.
Goldman, Sachs & Co. Lazard Freres & Co.
The date of this Prospectus is , 1994.
<PAGE>
(continued from previous page)
Each Preferred Security is convertible through Corning Delaware at the option
of the holder, at any time, unless previously redeemed or exchanged, into
shares of Corning Common Stock, par value $.50 per share ("Corning Common
Stock"), at the rate of shares of Corning Common Stock for each Preferred
Security (equivalent to a conversion price of $ per share of Corning Common
Stock), subject to adjustment in certain circumstances. See "Description of
Securities Offered--Preferred Securities--Conversion Rights." The last
reported sale price of Corning Common Stock, which is listed under the symbol
"GLW" on the New York Stock Exchange, on June 24, 1994 was $31.25 per share.
The Preferred Securities are also subject to exchange through Corning
Delaware, in whole but not in part, into shares of Series C Cumulative
Convertible Preferred Stock, par value $100 per share ("Corning Series C
Preferred Stock"), upon a vote of the holders of a majority of the aggregate
liquidation preference of all outstanding Preferred Securities upon the
failure of holders of Preferred Securities to receive dividends in full for
15 consecutive months and/or upon the occurrence of a Tax Event (as defined
herein). The Corning Series C Preferred Stock will have dividend, conversion
and optional redemption features substantially similar to those of the
Preferred Securities but will not be subject to mandatory redemption. See
"Description of Securities Offered--Preferred Securities--Optional Exchange
for Corning Series C Preferred Stock" and "--Description of Corning Series C
Preferred Stock."
The Preferred Securities are redeemable, at the option of Corning Delaware,
in whole or in part, on or after June , 1998, at the redemption prices set
forth herein, together with accumulated and unpaid dividends to the date
fixed for redemption. The Preferred Securities are subject to mandatory
redemption on the 30th anniversary of the date of original issuance. See
"Description of Securities Offered--Preferred Securities--Optional
Redemption" and "--Mandatory Redemption."
Corning will irrevocably and unconditionally guarantee, on a subordinated
basis and to the extent set forth herein, to pay in full the dividends by
Corning Delaware on the Preferred Securities (if and to the extent
declared from funds legally available therefor), the redemption price
(including all accumulated and unpaid dividends) payable with respect
to the Preferred Securities to the extent of funds legally available
therefor and payments on liquidation with respect to the Preferred
Securities (to the extent of the assets of Corning Delaware available
for distribution to holders of the Preferred Securities). The guarantee
will be unsecured and will be subordinate to all liabilities of Corning.
The proceeds from the offering of the Preferred Securities will be
invested by Corning Delaware in convertible subordinated debentures of
Corning (the "Subordinated Debentures") having the terms described herein.
If Corning fails to make interest payments on the Subordinated
Debentures, Corning Delaware will have insufficient funds to pay
dividends on the Preferred Securities. The guarantee does not
cover payment of dividends when Corning Delaware does not have
sufficient funds to pay such dividends. In such event (other than as a
result of an extended interest period discussed below), holders of the
Preferred Securities will be entitled to elect a Special General
Partner to enforce Corning Delaware's rights under the Subordinated
Debentures. See "Description of Securities Offered--Preferred
Securities--Voting Rights." Interest payment periods on the Subordinated
Debentures are monthly but may be extended by Corning for up to 60 months,
in which event Corning Delaware would be unable to make monthly dividend
payments on the Preferred Securities. If Corning selects an interest
period longer than one month, it will be prohibited from paying any
dividends on Junior Stock (as defined under "Description of Securities
Offered--Description of the Guarantee--Subordination"). The failure
of holders to receive dividends in full for 15 consecutive months
would trigger the right of the holders of the Preferred Securities to
cause Corning Delaware to exchange the Subordinated Debentures
for shares of Corning Series C Preferred Stock and distribute such shares to
the holders of the Preferred Securities in exchange for the Preferred
Securities. For a discussion of the United States federal income tax
consequences of such an extended interest payment period, including the fact
that holders will be required to include interest accruing on the
Subordinated Debentures in their gross income for United States federal
income tax purposes in advance of the receipt of cash dividend payments from
Corning Delaware, see "Certain Federal Income Tax Considerations--
Original Issue Discount."
The Subordinated Debentures are subordinated in right of payment to all
Senior Indebtedness (as defined under "Description of Securities
Offered--Description of the Subordinated Debentures--Subordination") of
Corning. As of June 19, 1994, Corning had approximately $1.9 billion of
Senior Indebtedness outstanding.
Application will be made to list the Preferred Securities on the New York
Stock Exchange under the symbol "GLW pfM."
The Preferred Securities will be represented by a global certificate or
certificates registered in the name of The Depository Trust Company ("DTC")
or its nominee. Beneficial interests in the Preferred Securities will be
shown on, and transfers thereof will be effected only through, records
maintained by the participants in DTC. Except as described herein, Preferred
Securities in certificated form will not be issued in exchange for the global
certificates. See "Description of Securities Offered--Preferred
Securities--Book-Entry-Only Issuance--The Depository Trust Company."
<PAGE>
- ----------
*An application has been filed by Goldman, Sachs & Co. with the United States
Patent and Trademark Office for the registration of the MIPS servicemark.
<PAGE>
AVAILABLE INFORMATION
Corning is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by Corning may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices located at 7 World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, 14th Floor, Chicago, Illinois 60661.
Copies of such materials may be obtained upon written request from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. In addition, such materials may also be
inspected and copied at the offices of the New York Stock Exchange, Inc. (the
"NYSE"), 20 Broad Street, New York, New York 10005.
Corning and Corning Delaware have filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of
1933, as amended. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
No separate financial statements of Corning Delaware have been included
herein. Corning and Corning Delaware do not consider that such financial
statements would be material to holders of Preferred Securities because
Corning Delaware is a newly organized special purpose entity, has no
operating history and no independent operations and is not engaged in, and
does not propose to engage in, any activity other than as described under
"Corning Delaware." Corning beneficially owns directly or indirectly all of
Corning Delaware's partnership interests (other than the Preferred
Securities).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-3247) pursuant
to the Exchange Act are incorporated herein by reference:
1. Corning's Annual Report on Form 10-K for the fiscal year ended January
2, 1994, filed pursuant to Section 13(a) of the Exchange Act.
2. All other reports filed by Corning pursuant to Section 13(a) or 15(d) of
the Exchange Act since January 2, 1994, consisting of Corning's Quarterly
Report on Form 10-Q for the twelve weeks ended March 27, 1994; and Corning's
Current Reports on Form 8-K dated January 24, 1994, April 6, 1994 and June
28, 1994, respectively. Certain historical financial statements of Damon
Corporation ("Damon") which was acquired in 1993 are included in Corning's
Current Reports on Form 8-K dated August 4, 1993 and August 13, 1993.
3. The description of Corning's Preferred Share Purchase Rights Plan
contained in the registration statement on Form 8-A filed by Corning on July
8, 1986, including the amendment thereto on Form 8 filed by Corning on
October 9, 1989.
4. All other documents filed by Corning pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the Offering.
Corning will provide without charge to each person, including any beneficial
owner of Preferred Securities, to whom a copy of this Prospectus is
delivered, upon the written or oral request of any such person, a copy of any
or all of the documents incorporated herein by reference, other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference in such documents). Requests should be directed to Corning
Incorporated, One Riverfront Plaza, Corning, New York 14831, Attention:
Secretary, telephone (607) 974-9000.
IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY AND CORNING COMMON STOCK AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements (including the notes
thereto) appearing elsewhere or incorporated by reference in this Prospectus.
Unless otherwise specified, references herein to the "Company" or "Corning"
refer to Corning Incorporated and its consolidated subsidiaries. Prospective
investors should carefully read the entire Prospectus.
CORNING DELAWARE
Corning Delaware is a special purpose limited partnership formed under the
laws of the State of Delaware. All of its partnership interests (other than
the Preferred Securities) are currently and will be beneficially owned
directly or indirectly by Corning. Corning is the sole general partner (the
"General Partner") in Corning Delaware.
THE COMPANY
Corning traces its origins to a glass business established by the Houghton
family in 1851. The present corporation was incorporated in the State of New
York in December 1936, and its name was changed from Corning Glass Works to
Corning Incorporated on April 28, 1989.
Corning is an international corporation competing in four broadly-based
business segments: Specialty Materials, Communications, Laboratory Services
and Consumer Products. Corning is engaged principally in the manufacture and
sale of products made from specialty glasses and related inorganic materials
having special properties of chemical stability, electrical resistance, heat
resistance, light transmission and mechanical strength. Corning and its
subsidiaries annually produce some 60,000 different products at 44 plants in
eight countries. In addition, Corning, through subsidiaries and affiliates,
engages in laboratory services businesses, including life and environmental
sciences and clinical-laboratory testing, at more than 50 facilities in ten
countries.
Corning has followed and will continue to follow a consistent strategy for
its businesses:
--to provide quality products and services to the four broad market
segments in which it chooses to compete,
--to be a market leader in each of its businesses, and
--to fully utilize the talents and capabilities of all its employees.
Corning utilizes various strategies and tactics appropriate to each business
and its specific markets. However, all strategies incorporate certain key
elements.
In addition to the restructuring programs already under way, Corning is
currently engaged in a comprehensive review of its business and cost
structure. Corning expects this review to be substantially completed by the
end of 1994.
Technology has been at the core of Corning's historical success. Corning's
investment in research and development has been significant at $131 million
in 1991; $151 million in 1992; and $173 million in 1993. Research and
development spending has enabled Corning to remain at the forefront of
technological advances for decades with new and improved products. Included
among Corning's important technological discoveries over the years are
optical fiber for telecommunications, ceramic substrates for automotive and
stationary emission control devices, photosensitive glasses for various
markets and mass produced television bulbs and incandescent light bulbs.
Recent developments include an electrically heated automotive pollution
control substrate, an expanded line of optical communications amplifiers,
dispersion shifted optical fiber, a glass ceramic magnetic memory disk and
active matrix liquid-crystal display glasses.
Alliances and acquisitions are utilized to leverage Corning's technologies
and market position. Corning's extensive experience with alliances spans more
than fifty years and includes jointly owned companies with The Dow Chemical
Company ("Dow Chemical") in silicones, PPG Industries Inc. in glass block and
foam glass, the Samsung Group and Asahi Glass in television bulbs, Siemens AG
in opto-electronics, and Mitsubishi Heavy Industries Ltd. in stationary
emission control devices.
Corning has recently completed several major strategic acquisitions, the most
significant of which was the acquisition of Damon Corporation ("Damon") in
August 1993. The acquisition of Damon has provided significant operating
synergies with MetPath Inc. ("MetPath") and is expected to provide additional
operating synergies upon full integration of Damon. Corning has also
completed acquisitions in the optical-fiber and optical-cable businesses and
the science products business and on June 7, 1994, merged Maryland Medical
Laboratory Inc., a privately owned Baltimore, Maryland firm specializing in
clinical laboratory testing for hospitals and physicians, with its MetPath
clinical laboratory testing operations.
Quality is an important element of all of Corning's business strategies. This
embodies an unwavering focus on satisfying the customer, continuous
improvement of the processes which deliver products and services to the
customer and creating an empowered workforce dedicated to serving the
customer.
<PAGE>
RECENT DEVELOPMENTS
Second Quarter 1994 Results
On June 28, 1994, Corning released its results for the quarter ended June 19,
1994. Corning's second quarter net income totaled $111.4 million, or $0.54
per share, compared to 1993's second quarter net income of $89.8 million, or
$0.47 per share. Corning's first half net income totaled $169.4 million, or
$0.82 per share, compared to 1993's first half net income of $139.6 million,
or $0.73 per share.
Second quarter and first half sales increased approximately 20% to $1.1
billion and $2.1 billion, respectively. Approximately half of the increase in
both periods was due to recent acquisitions, including the 1993 acquisition
of Damon.
Earnings from consolidated operations increased 24% and 16% in the second
quarter and first half, respectively. Sales and consolidated earnings growth
in both the second quarter and first half resulted from strength across all
business segments.
Equity company results for the second quarter and first half increased 24%
and 46%, respectively, over the prior year period primarily due to continued
improvement from operations at Dow Corning Corporation ("Dow Corning") and
the elimination of losses from Vitro Corning, S.A. de C.V. ("Vitro Corning")
which was divested in 1993.
Creation of Environmental Testing Services Company
On June 28, 1994, Corning and International Technology Corporation
("International Technology") created a jointly owned company to which Corning
transferred the net assets of its environmental testing laboratory business
and International Technology transferred the assets of its IT Analytical
Services business. Corning and International Technology each own 50 percent
of the company. Corning will account for its investment in the newly created
company using the equity method of accounting for investments. The impact of
the transaction is not expected to be material to Corning's financial
statements.
Acquisition of Clinical Laboratory Testing Businesses
On June 7, 1994, Corning acquired all of the outstanding shares of Maryland
Medical Laboratory Inc. and several affiliates (collectively, "Maryland
Medical") for approximately 4.5 million shares of Corning Common Stock in a
pooling of interests transaction. In connection with this transaction,
Corning has granted to the stockholders of Maryland Medical registration
rights with respect to the shares of Corning Common Stock they received.
Pursuant to such rights, Corning is required to file a registration statement
covering all 4.5 million shares of Corning Common Stock no later than 90 days
after the written request of the designated representative of such
stockholders. As of June 27, 1994, no such request had been received by
Corning.
On June 1, 1994, Corning signed a definitive agreement to acquire all of the
outstanding shares of the capital stock of Nichols Institute ("Nichols") in a
transaction to be accounted for as a pooling of interests. Under the terms of
the agreement, Corning will exchange newly issued and registered shares of
Corning Common Stock with a value equal to up to $13 for each share of the
capital stock of Nichols. Using an assumed price of $33 per share of Corning
Common Stock and the number of shares of, and options to purchase, the
capital stock of Nichols presently outstanding, approximately 6.7 million
shares of Corning Common Stock and
options to purchase approximately 1 million shares of Corning Common Stock
will be issued in the transaction. Substantially all of the options to
purchase shares of Corning Common Stock will be exercisable immediately
following the closing of the transaction. In no event will more than 9.6
million shares of Corning Common Stock be issued and reserved for the
exercise of options granted in connection with such transaction. The final
exchange ratio of shares of Corning Common Stock for shares of Nichols
capital stock will be determined by the price of Corning Common Stock during
the 10-day trading period ending on the fifth trading day prior to the date
of the Nichols stockholders meeting held to approve the transaction. The
transaction is subject to regulatory approval and is expected to close in the
second half of 1994.
Corning's consolidated financial statements for periods prior to these
transactions will not be restated since the acquisitions are not material to
Corning's financial position or results of operations. Corning will likely
record a one-time charge of up to $10 million after-tax in the third quarter
for transaction costs associated with these acquisitions and may possibly
record an additional one-time charge of up to $25 million after-tax in the
second half of 1994 for the integration of the Nichols and Maryland Medical
operations into MetPath.
For a discussion of the registration rights granted to the stockholders of
Maryland Medical and the registration of the shares of Corning Common Stock
to be issued in the Nichols transaction, see "Description of Corning Capital
Stock--Common Stock Eligible for Future Sale."
Sale of Parkersburg Plant
In May 1994, Corning sold its Parkersburg, W.Va., glass-tubing products plant
to Schott Corporation, a subsidiary of the Schott Group, for $57 million and
decided to exit several minor product lines in the specialty materials
segment. The net gain from these transactions is not material.
Disposition of Clinical Laboratory Testing Operations
On April 4, 1994, MetPath sold the clinical laboratory testing operations of
Damon in California for approximately $51 million in cash. No gain or loss
will be recognized as a result of this transaction. The proceeds from the
transaction were used to retire a portion of the debt incurred in connection
with the acquisition of Damon in August 1993.
See "Investment Considerations" for a discussion of certain factors to be
considered in connection with an investment in the Preferred Securities,
including circumstances under which interest payments on the Subordinated
Debentures (in which Corning Delaware will invest the proceeds from the sale
of the Preferred Securities), may be deferred for up to 60 months.
THE OFFERING
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<CAPTION>
<S> <S>
Securities Offered 5,500,000 of Corning Delaware's % Convertible Monthly Income Preferred
Securities, liquidation preference of $50 per security. Additionally, Corning
Delaware and Corning have granted the Underwriters an option for 30 days to
purchase up to an additional 825,000 Preferred Securities at the initial public
offering price solely to cover over-allotments, if any.
Dividends Dividends on the Preferred Securities will be cumulative from , 1994
and will be payable at the annual rate of % of the liquidation preference
of $50 per Preferred Security. Dividends will be paid monthly in arrears on
the last day of each calendar month, commencing , 1994. The proceeds from
the offering of the Preferred Securities will be invested in the Subordinated
Debentures. Interest payment periods on the Subordinated Debentures are monthly
but may be extended from time to time by Corning for up to 60 months, in which
event Corning Delaware would be unable to make monthly dividend payments on
the Preferred Securities during the period of any such extension. During such
period, interest on the Subordinated Debentures and dividends on the Preferred
Securities will compound monthly. The failure of holders of the Preferred Securities
to receive dividends in full for 15 consecutive months or the occurrence of
a Tax Event would trigger the right of such holders to cause Corning Delaware
to exchange all of the Subordinated Debentures for shares of Corning Series
C Convertible Preferred Stock, par value $100 per share ("Corning Series C Preferred
Stock"), and to distribute such shares to the holders of Preferred Securities
in exchange for the Preferred Securities. If the Preferred Securities remain
outstanding for three months after the date of notice
of a Tax Event or, if occurring earlier than the end of such three-month period,
the date on which a vote is taken at any special partnership meeting (or, in
lieu of such a meeting, the date of a written consent) by the holders of the
Preferred Securities on the matter of whether to cause the exchange of all of
the Subordinated Debentures for shares of Corning Series C Preferred Stock,
then amounts available for distribution to holders may be reduced by Additional
Taxes (as defined under "Description of Securities Offered--Preferred
Securities--Dividends"). See "Description of Securities Offered--Description
of the Subordinated Debentures--Option to Extend Payment Period" and "Description
of Securities Offered--Preferred Securities--Optional Exchange for Corning
Series C Preferred Stock."
Liquidation Preference $50 per Preferred Security, plus an amount equal to any accumulated and unpaid
dividends (whether or not earned or declared).
Conversion into Corning
Common Stock Each Preferred Security is convertible through Corning Delaware at the option
of the holder, at any time, unless previously redeemed or exchanged, into shares
of Corning Common Stock, par value $.50 per share (the "Corning Common Stock"),
at the rate of shares of Corning Common Stock for each Preferred Security
(equivalent to a conversion price of $ per share of Corning Common Stock),
subject to adjustment in certain circumstances. Upon receiving an irrevocable
notice by a holder of a Preferred Security to exercise its conversion right,
Corning Delaware, on behalf of such holder, will exercise its option to convert
a portion of the Subordinated Debentures into Corning Common Stock and will
distribute such shares of Corning Common Stock to such holder in exchange for
the Preferred Securities of such holder that have been so converted. See "Description
of Securities Offered--Preferred Securities--Conversion Rights."
Redemption From time to time on and after , 1998, the Preferred Securities will be
redeemable, at the option of Corning Delaware, in whole or in part, for cash
at the redemption prices set forth herein, together with accumulated and unpaid
dividends (whether or not earned or declared) to the date fixed for redemption.
The Preferred Securities are subject to mandatory redemption on the 30th anniversary
of the date of original issuance at a redemption price of $50 per Preferred
Security together with accumulated and unpaid dividends (whether or not earned
or declared). If Preferred Securities are called for redemption, the conversion
right will terminate two calendar days prior to the redemption date.
Optional Exchange for
Corning Series C Upon the failure of holders of the Preferred Securities to receive, for 15 consecutive
Preferred Stock months, the full amount of dividend payments or the occurrence of a Tax Event,
the holders of a majority of the aggregate liquidation preference of Preferred
Securities then outstanding may, at their option, cause Corning Delaware to
exchange all (but not less than all) of the Subordinated Debentures for shares
of Corning Series C Preferred Stock at the Exchange Price (as defined under
"Description of Securities Offered--Preferred Securities--Dividends") and
distribute such shares to the holders of Preferred Securities in exchange for
such Preferred Securities.
The Corning Series C Preferred Stock will have dividend, conversion, optional
redemption, and other terms substantially similar to the terms of the Preferred
Securities, except that, among other things, the holders of Corning Series C
Preferred Stock will have the right to elect two additional directors of Corning
whenever dividends on the Corning Series C Preferred Stock are in arrears for
18 months (including for this purpose any arrearage with respect to the Preferred
Securities) and the Corning Series C Preferred Stock will not be subject to
mandatory redemption.
Guarantee Pursuant to a Guarantee Agreement (the "Guarantee"), Corning will irrevocably and
unconditionally agree, on a subordinated basis and to the extent set forth therein,
to pay in full (a) the dividends (including any Additional Dividends thereon, as
defined under "Description of Securities Offered--Preferred Securities--Additional
Dividends") by Corning Delaware on the Preferred Securities, if, and
to the extent declared from funds legally available therefor, (b) the redemption
price (including all accumulated and unpaid dividends) of the Preferred Securities,
to the extent of funds legally available therefor and (c) payments on
liquidation with respect to the Preferred Securities, to the extent
of the assets of Corning Delaware available for distribution to holders
of the Preferred Securities. The Guarantee will be unsecured and will be subordinated
to all liabilities of Corning and will rank pari passu with the Series B Preferred
Stock (as defined under "Description of Corning Capital Stock--Series Preferred
Stock"). A holder of Preferred Securities may enforce Corning's obligations
under the Guarantee directly against Corning, and Corning waives any right
or remedy to require that an action be brought against Corning Delaware or any
other person or entity before proceeding against Corning. See "Description
of Securities Offered--Description of the Guarantee."
Voting Rights Generally, holders of the Preferred Securities will not have any voting rights.
However, upon an Event of Default under the Subordinated Debentures (as described
under "Description of Securities Offered--Subordinated Debentures--Events of
Default"), a failure by Corning Delaware to pay dividends in full for 15 consecutive
months (other than as a result of an election by Corning to defer interest payments)
or a default by Corning under the Guarantee, the holders of the Preferred Securities
will be entitled to appoint and authorize a Special General Partner to enforce
Corning Delaware's rights under the Subordinated Debentures, enforce Corning's
obligations under the Guarantee and declare and pay dividends on the Preferred
Securities to the extent funds are legally available therefor. In addition,
upon the occurrence of a Tax Event, holders of the Preferred Securities will
be entitled to call a special partnership meeting for the purpose of deciding
whether to cause Corning Delaware to exchange all of the outstanding Subordinated
Debentures for shares of Corning Series C Preferred Stock at the Exchange Price
and distribute such shares to the holders of Preferred Securities in exchange
for the Preferred Securities. See "Description of Securities Offered--Preferred
Securities--Dividends."
Use of Proceeds The proceeds to be received by Corning Delaware from the sale of the Preferred
Securities will be invested in the Subordinated Debentures of Corning, which,
after paying the expenses associated with this Offering, will use such funds
to retire a significant portion of the Damon acquisition debt. See "Use of Proceeds."
Subordinated The Subordinated Debentures will have a maturity of 30 years and will bear interest
Debentures at the rate of % per annum, payable monthly in arrears. Corning has the right
to select an interest payment period or periods longer than one month (during
which period or periods interest will compound monthly), provided that any extended
interest payment period does not exceed 60 months. If Corning selects an interest
payment period longer than one month, it will be prohibited from paying dividends
on any Junior Stock (as defined under "Description of Securities
Offered--Description of the Guarantee--Subordination") and making certain other
restricted payments until monthly interest payments are resumed and all accumulated
and unpaid interest (including any Additional Interest) on the Subordinated
Debentures is brought current. Corning will have the right to make partial payments
of such interest during the extended interest payment period. The Subordinated
Debentures are convertible into shares of Corning Common Stock at the option
of Corning Delaware and exchangeable for shares of Corning Series C Preferred
Stock as described above under "Optional Exchange for Corning Series C Preferred
Stock." On and after , 1998, Corning may prepay the Subordinated Debentures,
in whole or in part. The payment of the principal and interest on the Subordinated
Debentures will be subordinated in right of payment to all Senior Indebtedness
(as defined under "Description of Securities Offered--Description of the
Subordinated Debentures--Subordination") of Corning. As of June 19, 1994, Corning
had approximately $1.9 billion of Senior Indebtedness outstanding.
</TABLE>
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following is a summary of certain consolidated financial information that
has been derived from the consolidated financial statements of Corning. The
summary financial data set forth below for Corning for the 1989 through 1993
fiscal years are derived from its audited financial statements. The summary
financial data set forth below for the first twelve weeks of 1994 and 1993
are derived from Corning's unaudited financial statements, which in the
opinion of management contain all adjustments (consisting only of normal
recurring items) necessary for the fair presentation of this information. The
financial data should be read in conjunction with the information set forth
in "Selected Consolidated Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and the
historical financial information and related notes incorporated by reference
in this Prospectus.
The unaudited pro forma combined financial information set forth below
reflects the estimated impact on Corning's financial statements of the
acquisition of Damon, the merger with Costar Corporation ("Costar"), the
transaction with Unilab Corporation ("Unilab") and several other completed
1993 transactions, the Vitro transaction completed in January 1994, the
acquisition of the optical-fiber and optical-cable businesses of Northern
Telecom Limited ("NTL") by Corning and Siecor Corporation ("Siecor") in
February 1994, the merger with Maryland Medical completed in June 1994, the
pending acquisition of Nichols and the Offering (collectively, the
"Transactions"). Such pro forma data assume the Transactions had been
completed on January 4, 1993, for income statement data and by March 27,
1994, for balance sheet data. The unaudited pro forma combined financial
information set forth below is derived from, and should be read in
conjunction with, the unaudited pro forma combined financial information
included elsewhere in this Prospectus and the historical financial statements
of Corning and Damon incorporated by reference into this Prospectus. The
unaudited pro forma combined financial information is presented for
informational purposes only, and is not necessarily indicative of the results
of operations or financial position which would have been achieved had the
Transactions been completed on the dates indicated or the results that may be
attained in the future.
See "Selected Consolidated Financial Data", "Corning Unaudited Pro Forma
Combined Financial Information," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Incorporation of Certain
Documents by Reference."
<TABLE>
<CAPTION>
Twelve
Weeks Ended Fiscal Year Ended
Mar. Mar. Dec. Dec.
27, 28, Jan. 2, Jan. 3, 29, 30, Dec. 31,
1994 1993 1994 1993 1991 1990 1989
(dollars in millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL:
Income Statement Data:
Net sales $ 948.9 $ 817.0 $4,004.8 $3,708.7 $3,259.2 $2,940.5 $2,439.2
Income before
extraordinary credit
and cumulative
effect of changes in
accounting
methods(a) 58.0 49.8 (15.2 ) 266.3 311.2 289.1 259.4
Net income (loss)(a) 58.0 49.8 (15.2 ) (12.6 ) 316.8 292.0 261.0
Balance Sheet Data:
Total assets $5,430.2 $4,282.6 $5,231.7 $4,286.3 $3,852.6 $3,512.0 $3,360.7
Working capital 452.5 596.6 451.4 465.2 521.0 458.4 487.3
Loans payable beyond
one year 1,573.6 916.7 1,585.6 815.7 700.0 611.2 624.5
Common stockholders'
equity 1,956.1 1,808.5 1,685.8 1,803.8 2,018.8 1,850.3 1,711.2
Per Common Share Data:
Income before
extraordinary credit
and cumulative
effect of changes in
accounting
methods(a) $ 0.28 $ 0.26 $ (0.09) $ 1.40 $ 1.66 $ 1.53 $ 1.39
Net income (loss)(a) 0.28 0.26 (0.09) (0.08) 1.69 1.55 1.40
Common dividends
declared(b) 0.17 0.17 0.68 0.62 0.68 0.46 0.53
PRO FORMA: (c)
Income Statement Data:
Net sales $1,050.2 $4,798.9
Net income 53.6 8.8
Net income per share 0.25 0.03
Balance Sheet Data:
Total assets $5,721.3
Working capital 434.9
Loans payable beyond
one year 1,357.1
Common stockholders' 2,052.5
equity
</TABLE>
(a) Amounts for all periods other than the first quarter 1994 are
significantly impacted by certain non-recurring gains and losses and the
cumulative effect of changes in accounting methods. See the Notes to Selected
Consolidated Financial Data contained elsewhere in this Prospectus.
(b) Includes special dividends of $0.15 and $0.1125 per common share in 1991
and 1989, respectively.
(c) See the Notes to Corning Unaudited Pro Forma Combined Financial
Information contained elsewhere in this Prospectus.
<PAGE>
USE OF PROCEEDS
Corning Delaware will invest the proceeds from the Offering in the
Subordinated Debentures. Corning, after payment of the Underwriters'
Compensation (as defined under "Underwriting") and other expenses of the
Offering, will use the net proceeds from the sale of the Subordinated
Debentures to Corning Delaware of $ ($ if the Underwriters'
over-allotment option is exercised in full) to retire a significant portion
of the debt incurred in the 1993 acquisition of Damon. The Damon debt bears a
variable interest rate based on the London Interbank Offered Rate and matures
on December 31, 1995. For information concerning the Damon transaction, see
"Business of Corning--Laboratory Services."
INVESTMENT CONSIDERATIONS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters:
Subordinate Obligations Under Guarantee and Subordinated Debentures
Corning's obligations under the Guarantee are subordinate and junior in right
of payment to all liabilities of Corning and the obligations of Corning under
the Subordinated Debentures are subordinate and junior in right of payment to
all Senior Indebtedness of Corning. See "Description of Securities
Offered--Description of the Guarantee" and "Description of Securities
Offered--Description of the Subordinated Debentures--Subordination."
Option to Extend Payment Periods
Corning has the right to extend interest payment periods on the Subordinated
Debentures for up to 60 months, and, as a consequence, monthly dividends on
the Preferred Securities would be deferred (but will continue to compound
monthly) during any such extended interest payment period. In the event that
Corning exercises this right, Corning may not declare dividends on any shares
of Junior Stock (as defined under "Description of Securities Offered--
Description of the Guarantee--Subordination") during any such extended
period and until all dividend arrearages have been paid in full. However, in
the event such a deferral continues for more than 15 months, the holders of a
majority of the aggregate liquidation preference of the Preferred Securities
then outstanding may cause the exchange of all of the Preferred Securities
for Corning Series C Preferred Stock at the Exchange Price. See "Description
of Securities Offered--Description of the Subordinated Debentures--Option to
Extend Interest Payment Period."
For a discussion of the taxation of such an exchange to holders, including
the possibility that holders who exchange their Preferred Securities for
Corning Series C Preferred Stock may be subject to additional income tax to
the extent accrued but unpaid interest on the Subordinated Debentures is
converted into accumulated and unpaid dividends on the Corning Series C
Preferred Stock received in exchange for the Preferred Securities, see
"Certain Federal Income Tax Considerations--Exchange of Preferred Securities
for Corning Series C Preferred Stock."
Should an extended interest payment period occur, Corning Delaware, except in
very limited circumstances, will continue to accrue income for United States
federal income tax purposes which will be allocated, but not distributed, to
holders of record of Preferred Securities. As a result, such holders
would be required to include such interest in gross income for United States
federal income tax purposes in advance of the receipt of cash dividend
payments from Corning Delaware and would not receive the cash related to such
income if such a holder disposes of its Preferred Securities prior to the
record date for payment of dividends. See "Certain Federal Income Tax
Considerations--Original Issue Discount."
Tax Event
In the case of a Tax Event, the holders of a majority of the aggregate
liquidation preference of Preferred Securities then outstanding will have the
right to cause all of the Preferred Securities to be exchanged for Corning
Series C Preferred Stock at the Exchange Price. However, in the event that
the Preferred Securities are not exchanged, the amounts available for
distribution to holders may be reduced by Additional Taxes. Under certain
circumstances giving rise to a Tax Event, the exchange of Preferred
Securities for Corning Series C Preferred Stock would be a taxable
transaction in which exchanging holders recognize gain. For a discussion of
the taxation of such an exchange to holders, including the possibility that
holders who exchange their Preferred Securities for Corning Series C
Preferred Stock may be subject to additional income tax to the extent accrued
but unpaid interest on the Subordinated Debentures is converted into
accumulated and unpaid divi
dends on the Corning Series C Preferred Stock received in exchange for the
Preferred Securities, see "Certain Federal Income Tax
Considerations--Exchange of Preferred Securities for Corning Series C
Preferred Stock."
CAPITALIZATION
The following table sets forth (i) the actual capitalization of Corning at
March 27, 1994, (ii) the pro forma capitalization of Corning as of such date
after giving effect to the completed or pending transactions and (iii) the
pro forma capitalization of the Company as of such date as further adjusted
to reflect the Offering, assuming no exercise of the Underwriters'
over-allotment option. The table should be read in conjunction with the
financial statements of Corning incorporated by reference in this Prospectus.
See "Use of Proceeds," "Selected Consolidated Financial Data," "Unaudited Pro
Forma Combined Financial Information," "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and "Description of
Securities Offered--Preferred Securities."
<TABLE>
<CAPTION>
March 27, 1994
Pro
Actual Forma As Adjusted
(dollars in millions, except per
share data)
<S> <C> <C> <C>
Short-Term Debt:
Total short-term debt $ 232.5 $ 308.5 $ 308.5
Long-Term Debt:
Total long-term debt 1,573.6 1,625.3 1,357.1
Convertible Preferred Securities of
Subsidiary: 268.2
Convertible Preferred Stock:
Par value $100 per share: 10,000,000 shares
authorized; 255,036 shares of 8% Series B
Preferred Stock outstanding 25.5 25.5 25.5
Common Stockholders' Equity:
Common Stock, including excess over par value
and other capital: par value $0.50 per
share;
authorized 500,000,000 shares; 235,988,668
issued 872.9 965.5 965.5
Retained earnings 1,603.9 1,607.7 1,607.7
Less cost of 27,368,018 shares of common
stock in treasury (515.8) (515.8) (515.8)
Cumulative translation adjustment (4.9) (4.9) (4.9)
Total common stockholders' equity 1,956.1 2,052.5 2,052.5
Total capitalization $3,787.7 $4,011.8 $4,011.8
</TABLE>
<PAGE>
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the historical ratio of earnings to combined
fixed charges and preferred stock dividends of Corning for the periods
indicated:
<TABLE>
<CAPTION>
Fiscal Year Ended
Twelve Weeks
Ended Jan. Jan. Dec. Dec.
March 27, 2, 3, 29, 30, Dec. 31,
1994 1994 1993 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends 3.2x 1.1x 3.8x 4.4x 4.6x 5.0x
</TABLE>
For the purposes of computing the ratio of earnings to combined fixed charges
and preferred stock dividends, earnings consist of (1) income before taxes on
income, before equity in earnings and minority interest and before fixed
charges (excluding interest capitalized during the period), (2) Corning's
share of pre-tax earnings of fifty-percent owned companies, (3) Corning's
share of pre-tax earnings of greater than fifty-percent owned unconsolidated
subsidiaries, (4) dividends received from less than fifty-percent owned
companies and Corning's share of losses of such companies, if any, if any
debt of such companies is guaranteed by Corning and (5) previously
capitalized interest amortized during the period; fixed charges consist of
(1) interest on indebtedness, (2) amortization of debt issuance costs, (3) a
portion of rental expenses which represent an appropriate interest factor,
(4) Corning's share of the fixed charges of fifty-percent owned companies and
(5) fixed charges of greater than fifty-percent owned unconsolidated
subsidiaries; and preferred dividends include the amount of pre-tax income
required to pay preferred dividends on an after-tax basis. <PAGE>
MARKET PRICES OF CORNING COMMON STOCK AND DIVIDENDS
Corning Common Stock is traded on the NYSE under the symbol "GLW." At June
23, 1994, there were 20,298 holders of record of Corning Common Stock and
213,575,956 shares outstanding. The following table sets forth the high and
low sale prices for Corning Common Stock, as reported by the NYSE, and the
cash dividends declared per share on Corning Common Stock, for the periods
indicated.
<TABLE>
<CAPTION>
Price Range(a)
Cash Dividends
Declared Per
High Low Share(a)
<S> <C> <C> <C>
1991
First Quarter $31.000 $21.063 $.125
Second Quarter 31.750 28.375 .125
Third Quarter 35.750 31.250 .125
Fourth Quarter 43.125 33.563 .300(b)
1992
First Quarter 40.313 28.750 .15
Second Quarter 38.625 31.500 .15
Third Quarter 38.625 34.375 .15
Fourth Quarter 39.750 34.750 .17
1993
First Quarter 39.000 29.000 .17
Second Quarter 35.875 31.500 .17
Third Quarter 35.125 26.875 .17
Fourth Quarter 28.250 24.000 .17
1994
First Quarter 33.125 27.625 .17
Second Quarter 34.125 30.250 .17
Third Quarter (through June 24,
1994) 33.000 31.250
</TABLE>
(a) Per share amounts have been adjusted for the 2-for-1 stock split
effective January 13, 1992.
(b) Includes a special dividend of $.15 per common share in the fourth
quarter of 1991.
Corning has regularly paid cash dividends since 1881 and expects to continue
to pay cash dividends. Corning's quarterly cash dividend is currently $.17
per share of Corning Common Stock. The payment of dividends is subject to the
preferential dividend rights of any outstanding Series Preferred Stock of
Corning (as defined under "Description of Corning Capital Stock--Series
Preferred Stock"). Corning and its majority-owned subsidiaries would also be
prohibited from paying dividends on Corning Common Stock at any time during
an extended interest payment period with respect to the Subordinated
Debentures, when there is an Event of Default (as defined under "Description
of Securities Offered--Description of the Subordinated Debentures--Events of
Default") under the Subordinated Debentures or when Corning has failed to
make a payment required under the Guarantee. See "Description of Securities
Offered--Description of the Guarantee--Certain Covenants of Corning." Since
the declaration and payment of future dividends on Corning's capital stock
will be based on a number of factors considered by Corning's Board of
Directors, including current and prospective earnings, financial condition
and capital requirements, and such other factors as the Board of Directors
may deem relevant, there can be no assurance that dividends on Corning Common
Stock will be paid in the future. See "Description of Corning Capital
Stock--General--Dividend Rights and Restrictions."
SELECTED CONSOLIDATED FINANCIAL DATA
The following is a summary of certain consolidated financial information that
has been derived from the consolidated financial statements of Corning. The
summary financial data set forth below for Corning for the fiscal years 1989
through 1993 are derived from its audited financial statements. The selected
consolidated financial data set forth below for the first twelve weeks of
1994 and 1993 are derived from Corning's unaudited financial statements,
which in the opinion of management contain all adjustments (consisting only
of normal recurring items) necessary for the fair presentation of this
information. The financial data should be read in conjunction with the
information set forth in "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and the historical financial
information and related notes incorporated by reference in this Prospectus.
See "Incorporation of Certain Documents by Reference."
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Twelve
Weeks Ended Fiscal Year Ended
Mar. Mar. Dec. Dec.
27, 28, Jan. 2, Jan. 3, 29, 30, Dec. 31,
1994 1993 1994 1993 1991 1990 1989
(dollars in millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues
Net sales $ 948.9 $ 817.0 $4,004.8 $3,708.7 $3,259.2 $2,940.5 $2,439.2
Royalty, interest and
dividend income 7.7 6.4 29.9 35.3 27.6 39.9 29.6
Non-operating gains 4.2 4.2 7.0 8.1 69.2 107.1
956.6 827.6 4,038.9 3,751.0 3,294.9 3,049.6 2,575.9
Deductions
Cost of sales 622.1 532.1 2,597.0 2,411.3 2,121.6 1,925.7 1,600.9
Selling, general and
administrative expenses 185.7 168.6 774.0 692.2 622.5 581.8 491.8
Research and development
expenses 38.2 37.7 173.1 151.1 130.7 124.5 109.6
Provision for
restructuring costs and
other special charges 207.0 63.3 54.4
Interest expense 25.8 16.5 88.2 62.6 58.1 54.0 44.5
Other, net 5.8 3.1 42.9 33.9 34.6 35.5 20.9
Income before taxes on
income 79.0 69.6 156.7 336.6 327.4 328.1 253.8
Taxes on income 29.6 23.9 35.3 92.5 110.6 136.1 116.9
Income before minority
interest and equity
earnings 49.4 45.7 121.4 244.1 216.8 192.0 136.9
Minority interest in
earnings of subsidiaries (7.9) (3.1) (16.6) (21.6) (17.3) (10.4) (4.2)
Equity in earnings
(losses) of associated
companies before
cumulative effect of
changes in accounting
methods 16.5 7.2 (120.0) 43.8 111.7 107.5 126.7
Income (Loss) before
Extraordinary Credit and
Cumulative Effect of
Changes in Accounting
Methods 58.0 49.8(a) (15.2)(c) 266.3(d) 311.2(f) 289.1(g) 259.4(h)
Tax benefit of loss
carryforwards 7.7 5.6 2.9 1.6
Cumulative effect of
changes in accounting
methods (286.6)
Net Income (Loss) $ 58.0 $ 49.8(b) $ (15.2)(b) $ (12.6)(e) $316.8 $ 292.0 $ 261.0
Balance Sheet Data:
Total assets $5,430.2 $4,282.6 $5,231.7 $4,286.3 $3,852.6 $3,512.0 $3,360.7
Working capital 452.5 596.6 451.4 465.2 521.0 458.4 487.3
Loans payable beyond one
year 1,573.6 916.7 1,585.6 815.7 700.0 611.2 624.5
Common stockholders'
equity 1,956.1 1,808.5 1,685.8 1,803.8 2,018.8 1,850.3 1,711.2
Per Common Share Data:(i)
Income (loss) before
extraordinary credit
and cumulative effect of
changes in accounting
methods $ 0.28 $ 0.26 $ (0.09) $ 1.40 $ 1.66 $ 1.53 $ 1.39
Net income (loss) 0.28 0.26 (0.09) (0.08) 1.69 1.55 1.40
Common dividends
declared(j) 0.17 0.17 0.68 0.62 0.68 0.46 0.53
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
(a) During the first quarter 1993, Corning recognized a non-operating gain
totaling $4.2 million ($2.6 million after-tax).
(b) Effective January 4, 1993, Corning and its subsidiaries adopted Financial
Accounting Standard No. 109, " Accounting for Income Taxes" ("FAS 109") and
Financial Accounting Standard No. 112, "Employers' Accounting for
Postemployment Benefits" ("FAS 112"). The impact of adopting FAS 109 and FAS
112 was not material to the financial statements.
(c) In 1993, Corning recognized net non-recurring losses from consolidated
operations totaling $202.8 million ($117.9 million after-tax and minority
interest), including a non-operating gain of $4.2 million ($2.6 million
after-tax); a charge of $36.5 million ($22.0 million after tax) to reflect
the settlement and related legal expenses incurred in the compromise
agreement between MetPath and the Civil Division of the Department of
Justice; and a restructuring charge totaling $170.5 million ($98.5 million
after tax and minority interest) as a result of costs to integrate the Damon
and Costar acquisitions and a planned company-wide restructuring program
announced October 6, 1993 to reduce overhead costs during 1994.
Corning also recorded a $203.1 million reduction in equity earnings as a
result of a charge taken by Dow Corning related to breast-implant litigation
and a $9.5 million reduction in equity earnings as a result of a
restructuring charge taken by Vitro Corning.
(d) In 1992, Corning recognized net non-operating gains from consolidated
operations totaling $7.0 million ($21.7 million after- tax), including a gain
of $10.1 million (before- and after-tax) from the sale of an additional
equity interest in Corning Japan K.K. and a pre-tax loss of $7.3 million
($9.0 million after-tax gain) from the formation of the consumer housewares
venture with Vitro S.A. ("Vitro"). Corning also recorded a provision of $63.3
million ($32.1 million after-tax of $22.9 million and minority interest of
$8.3 million) as a result of Corning Vitro Corporation's ("Corning Vitro")
decision to restructure its Brazilian operations.
Corning also recognized a $37.7 million reduction in equity earnings which
included $24.5 million of costs associated with Dow Corning's terminated
breast implant business and $13.2 million of restructuring charges associated
with Dow Corning's exit from its Brazilian operations and other
cost-reduction programs.
(e) Effective December 30, 1991, Corning and its subsidiaries adopted
Financial Accounting Standard No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" ("FAS 106"). The cumulative
effect of adopting FAS 106 resulted in a charge of $294.8 million (after-tax
and minority interest), or $1.56 per share, in 1992. In addition, an $8.2
million gain, or $0.04 per share, from an equity company's adoption of FAS
109 was recognized in 1992.
(f) In 1991, the Company recognized net non-operating gains from consolidated
operations totaling $8.1 million ($14.6 million after-tax) which included a
gain of $5.3 million (before- and after-tax) on the sale of a less than 10%
equity interest in Corning Japan. The Company also recognized an $8.2 million
reduction in equity earnings to reflect a charge recorded by Dow Corning for
costs associated with its breast implant business.
(g) In 1990, the Company recognized non-operating gains totaling $69.2
million ($29.2 million after-tax) on the sales of certain investments,
including a gain on the sale of substantially all the Company's investment in
Iwaki Glass Company Ltd. totaling $51.1 million ($19.4 million after-tax).
(h) In 1989, the Company recognized non-operating gains totaling $107.1
million ($61.9 million after-tax), including a gain on the sale of its 50%
interest in Ciba Corning Diagnostics Corp. of $75.7 million ($41.0 million
after-tax) and a gain of $21.7 million ($13.7 million after-tax) related to
patent infringement matters in the optical-fiber business.
Also in 1989, the Company provided $54.4 million ($45.0 million after-tax)
for the repositioning of certain businesses and facilities. The provision
related primarily to consumer product operations worldwide, and to certain
other operations in Europe.
(i) Per share amounts have been adjusted for the 2-for-1 stock split
effective January 13, 1992.
(j) Includes special dividends of $0.15 and $0.1125 per common share in 1991
and 1989, respectively.
<PAGE>
CORNING UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The Unaudited Pro Forma Combined Financial Information (the "Unaudited Pro
Forma Information") is presented to reflect the estimated impact on Corning's
Financial Statements of the following proposed or completed transactions
(collectively, the "Transactions"):
* The acquisition of Damon in August 1993, at a total purchase price of
approximately $405 million, including acquisition expenses. The transaction
has been accounted for as a purchase.
* The acquisition of Costar in September 1993, the transaction with Unilab in
November 1993, and other acquisitions completed in 1993 (collectively, the
"Other 1993 Transactions") which individually and in the aggregate are not
significant. The Costar merger and the Unilab transaction are described in
Notes 4 and 5, respectively.
* The acquisition of the optical-fiber and optical-cable businesses of
Northern Telecom Limited ("NTL") by Corning and Siecor for $131 million in
February 1994, the Vitro transaction completed in January 1994 and the merger
with Maryland Medical for 4.5 million shares of Corning Common Stock in June
1994 (collectively, the "Completed 1994 Transactions"). The NTL transaction
has been accounted for as a purchase and the Maryland Medical transaction
will be accounted for as a pooling of interests. The Vitro transaction is
described in Note 6.
The NTL and Vitro transactions were financed by the issuance of 8.0 million
shares of Corning Common Stock in February 1994.
* The proposed acquisition of Nichols for an estimated 6.7 million shares of
Corning Common Stock and options to purchase approximately 1 million shares
of Corning Common Stock (the "Pending 1994 Transaction"). This transaction
will be accounted for as a pooling of interests.
* The issuance by Corning Delaware of $275 million of Preferred Securities in
the Offering and the use of the net proceeds thereof by Corning to retire a
significant portion of the indebtedness incurred in connection with the Damon
transaction.
The Unaudited Pro Forma Combined Statements of Income for the year ended
January 2, 1994, and the twelve weeks ended March 27, 1994, assume that the
Transactions had been completed on January 4, 1993. The Unaudited Pro Forma
Combined Balance Sheet at March 27, 1994, assumes that the Transactions had
been completed by that date. Corning's consolidated financial statements for
periods prior to the two pooling of interests transactions will not be
restated since the acquisitions are not material to Corning's financial
position or results of operations.
The Unaudited Pro Forma Information gives effect only to the adjustments set
forth in the accompanying notes and does not reflect any synergies
anticipated by Corning's management as a result of these acquisitions. The
Unaudited Pro Forma Information is not necessarily indicative of the results
of operations or financial position which would have been achieved had the
Transactions been completed as of the beginning of the earliest period
presented, nor is it necessarily indicative of Corning's future results of
operations or financial position.
Corning has completed or has pending several business dispositions in 1994
which individually and in the aggregate are not significant to Corning's
consolidated financial statements. As such, pro forma data on these
transactions are not presented.
The Unaudited Pro Forma Information should be read in conjunction with the
historical financial statements of Corning and Damon incorporated by
reference into this Prospectus.
<PAGE>
CORNING
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED JANUARY 2, 1994
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
---------------Pro Forma-------------
Adjustments
Other Completed Pending to
1993 1994 1994 Reflect
Trans- Trans- Trans- Adjust- the As
actions actions action ments Combined Offering Adjusted
Corning (1) Damon (2) (3) (4) (5) (6) (7) (8) (9)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Net sales $4,004.8 $199.9 $146.1 $168.5 $279.6 $4,798.9 $4,798.9
Royalty,
interest
and
dividend
income 29.9 29.9 29.9
Non-operating
gains 4.2 4.2 4.2
4,038.9 199.9 146.1 168.5 279.6 4,833.0 4.833.0
Deductions
Cost of
sales 2,597.0 129.4 105.4 128.2 175.3 $ 13.5(a)3,148.8 3,148.8
Selling,
general and
administrative
expenses 774.0 58.1 23.1 32.0 75.2 962.4 962.4
Research and
development
expenses 173.1 2.2 1.8 4.2 181.3 181.3
Provision
for
restructuring
and other
special
charges 207.0 16.0 (55.0)(b) 168.0 168.0
Interest
expense 88.2 5.6 3.6 1.5 11.7 14.2(c) 124.8 $(13.1)(h) 111.7
Other, net 42.9 1.0 0.6 (0.2) 2.6 (1.0)(d) 45.9 45.9
Income (loss)
before
taxes on
income 156.7 5.8 11.2 5.2 (5.4) 28.3 201.8 13.1 214.9
Tax provision
(benefit) 35.3 2.1 3.9 1.0 (1.0) 14.5(e) 55.8 4.6(i) 60.4
Income (loss)
before
minority
interest
and equity
earnings 121.4 3.7 7.3 4.2 (4.4) 13.8 146.0 8.5 154.5
Minority
interest in
earnings of
subsidiaries (16.6) (2.2) (15.1) 0.8(f) (33.1) (33.1)
Dividends on
convertible
preferred
securities
of
subsidiary (11.6)(j) (11.6)
Equity in
earnings
(loss) of
associated
companies (120.0) 19.0 (101.0) (101.0)
NET INCOME
(LOSS) $ (15.2) $ 1.5 $ 7.3 $ 8.1 $ (4.4) $ 14.6 $ 11.9 $ (3.1) $8.8
Weighted
Average
Shares
Outstanding 191.963 23.325(g) 215.288 215.288
Earnings Per
Common
Share:
NET INCOME
(LOSS) $ (0.09) $ 0.05 $0.03
</TABLE>
<PAGE>
(1) Represents the historical results of operations of Corning for the year
ended January 2, 1994.
(2) Represents the historical results of operations of Damon for the seven
months ended July 31, 1993.
(3) Represents the historical results of operations of the businesses
involved in the Other 1993 Transactions through the respective acquisition
dates.
(4) Represents the historical results of operations of the businesses
involved in the Completed 1994 Transactions for the year ended January 2,
1994.
(5) Represents the historical results of operations of the business to be
acquired in the Pending 1994 Transaction for the year ended December 31,
1993.
(6) See Note 2 to the Unaudited Pro Forma Information--Statement of Income.
(7) Reflects the results of operations of Corning on a pro forma basis
assuming the Transactions had been completed on January 4, 1993.
(8) See Note 2 to the Unaudited Pro Forma Information--Adjustments to Reflect
the Offering.
(9) Reflects the results of operations of Corning on a pro forma basis
assuming the Transactions and the Offering had been completed on January 4,
1993.
<PAGE>
CORNING
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
TWELVE WEEKS ENDED MARCH 27, 1994
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
-------------------------Pro Forma----------------------
Adjustments
Completed Pending to
1994 1994 Reflect
Corning Trans- Trans- the As
(1) actions(2) action(3)Adjustments(4) Combined(5) Offering(6) Adjusted(7)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
Net sales $ 948.9 $31.7 $69.6 $1,050.2 $1,050.2
Royalty,
interest
and
dividend
income 7.7 7.7 7.7
956.6 31.7 69.6 1,057.9 1,057.9
Deductions
Cost of
sales 622.1 21.8 46.5 $ 1.3(a) 691.7 691.7
Selling,
general and
administrative
expenses 185.7 9.4 18.5 213.6 213.6
Research and
development
expenses 38.2 0.3 0.9 39.4 39.4
Provision
for
restructuring
and other
special
charges 1.8 1.8 1.8
Interest
expense 25.8 0.4 2.6 28.8 $(2.1)(h) 26.7
Other, net 5.8 (0.1) 0.6 6.3 6.3
Income before
taxes on
income 79.0 (0.1) (1.3) (1.3) 76.3 2.1 78.4
Tax provision
(benefit) 29.6 0.2 (0.3)(e) 29.5 0.8(i) 30.3
Income (loss)
before
minority
interest
and equity
earnings 49.4 (0.1) (1.5) (1.0) 46.8 1.3 48.1
Minority
interest in
earnings of
subsidiaries (7.9) (0.3) (0.1)(f) (8.3) (8.3)
Dividends on
convertible
preferred
securities
of
subsidiary (2.7)(j) (2.7)
Equity in
earnings of
associated
companies 16.5 16.5 16.5
NET INCOME
(LOSS) $ 58.0 $(0.4) $(1.5) $ (1.1) $ 55.0 $(1.4) $ 53.6
Weighted
Average
Shares
Outstanding 202.325 13.867(g) 216.192 216.192
Earnings Per
Common
Share:
NET INCOME $ 0.28 $ 0.25 $ 0.25
</TABLE>
(1) Represents the historical results of operations of Corning for the twelve
weeks ended March 27, 1994.
(2) Represents the historical results of operations of the businesses
involved in the Completed 1994 Transactions through the earlier of March 27,
1994 or the respective acquisition dates.
(3) Represents the historical results of operations of the business to be
acquired in the Pending 1994 Transaction for the quarter ended March 31,
1994.
(4) See Note 2 to the Unaudited Pro Forma Information--Statement of Income.
(5) Reflects the results of operations of Corning on a pro forma basis
assuming the Transactions had been completed on January 4, 1993.
(6) See Note 2 to the Unaudited Pro Forma Information--Adjustments to Reflect
the Offering.
(7) Reflects the results of operations of Corning on a pro forma basis
assuming the Transactions and the Offering had been completed on January 4,
1993.
<PAGE>
CORNING
UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET
MARCH 27, 1994
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
------------------------Pro Forma--------------------
Adjustments
to
Completed Pending Reflect
1994 1994 the As
Corning Transaction Transaction Combined Offering Adjusted
(1) (2) (3) Adjustments (4) (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current Assets
Cash and
short-term
investments $ 98.2 $ 0.7 $ 13.5 $ 112.4 $ 112.4
Receivables,
net 752.2 19.0 55.6 826.8 826.8
Inventories 378.1 2.3 11.2 391.6 391.6
Deferred taxes
on income and
other
current assets 264.2 1.6 9.8 275.6 275.6
Total Current
Assets 1,492.7 23.6 90.1 1,606.4 1,606.4
Investments 650.1 650.1 650.1
Plant and
Equipment, net 1,776.2 19.3 88.6 1,884.1 1,884.1
Goodwill and
Intangibles,
net 1,193.1 65.1 1,258.2 1,258.2
Other Assets 318.1 0.8 3.6 322.5 322.5
$5,430.2 $43.7 $247.4 $5,721.3 $5,721.3
Liabilities and
Stockholders'
Equity
Current
Liabilities
Loans payable $ 232.5 $11.1 $ 64.9 $ 308.5 $ 308.5
Accounts
payable 170.6 8.3 20.1 199.0 199.0
Other accrued
liabilities 637.1 4.1 22.8 664.0 664.0
Total Current
Liabilities 1,040.2 23.5 107.8 1,171.5 1,171.5
Other
Liabilities 652.6 0.8 10.9 664.3 664.3
Loans Payable
Beyond One Year 1,573.6 13.7 38.0 1,625.3 $(268.2)(k) 1,357.1
Minority
Interest In
Subsidiary
Companies 182.2 182.2 182.2
Convertible
Preferred Stock
of Subsidiary 268.2(k) 268.2
Convertible
Preferred Stock 25.5 25.5 25.5
Common
Stockholders'
Equity 1,956.1 5.7 90.7 2,052.5 2,052.5
$5,430.2 $43.7 $247.4 $5,721.3 $ $5,721.3
</TABLE>
(1) Represents the historical financial position of Corning at March 27,
1994.
(2) Represents the historical financial position of the business involved in
the Completed 1994 Transaction at March 31, 1994.
(3) Represents the historical financial position of the business to be
acquired in the Pending 1994 Transaction at March 31, 1994.
(4) Reflects the financial position of Corning on a pro forma basis assuming
the Transactions had been completed by March 27, 1994.
(5) See Note 2 to Unaudited Pro Forma Information--Adjustments to Reflect the
Offering.
(6) Reflects the financial position of Corning on a pro forma basis assuming
the Transactions and the Offering had been completed by March 27, 1994.
<PAGE>
CORNING
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Note 1--Basis of Presentation:
The Unaudited Pro Forma Combined Statements of Income reflect Corning's
results of operations for the year ended January 2, 1994, and the twelve
weeks ended March 27, 1994, on a pro forma basis assuming the Transactions
had been completed as of January 4, 1993. The Unaudited Pro Forma Combined
Balance Sheet at March 27, 1994, assumes that the Transactions had been
completed by that date.
Corning's management believes that the assumptions used in preparing the
Unaudited Pro Forma Information provide a reasonable basis for presenting all
of the significant effects of the Transactions, that the pro forma
adjustments give appropriate effect to those assumptions and that the pro
forma adjustments are properly applied in the Unaudited Pro Forma
Information.
Note 2--Pro Forma Adjustments:
Statement of Income
(a) The pro forma adjustment to cost of sales represents the increase in
amortization of the excess of cost over fair value of tangible net assets
acquired in the Damon transaction, the Other 1993 Transactions and the
Completed 1994 Transactions of $5.7 million, $1.8 million, and $6.0 million,
respectively, for the year ended January 2, 1994, and $1.3 million for the
Completed 1994 Transactions, for the twelve weeks ended March 27, 1994.
Including $40 million of anticipated costs to restructure Damon's facilities
as a result of the integration of Corning's and Damon's operations, the
excess of cost over fair value of tangible net assets acquired in the Damon
transaction is $552 million. The excess of cost over fair value of tangible
net assets acquired has been allocated to goodwill with a life of forty
years. Management believes that fair value approximates book value for all
tangible assets acquired in the Damon transaction.
Goodwill totaling $258 million and $190 million resulted from the Other 1993
Transactions and the Completed 1994 Transactions, respectively, and is being
amortized over 25 to 40 years.
(b) The pro forma adjustment represents the elimination of one-time
restructuring costs of $47.1 million related to closing MetPath facilities as
a result of the integration of Damon and MetPath and $7.9 million of Costar
transaction costs recorded in Corning's results for the year ended January 2,
1994.
(c) The pro forma adjustment to interest expense represents the interest on
the debt incurred in connection with the Damon transaction and the Other 1993
Transactions of $11.9 million and $2.3 million, respectively, for the year
ended January 2, 1994. The weighted average interest rate on the debt
incurred in connection with the Damon transaction is 4.9% and on the Other
1993 Transactions ranges from 3.5% to 6.7%.
Corning financed the Damon acquisition and the refinancing of approximately
$167 million of indebtedness of Damon under short-term financing agreements
entered into with certain banks to effect this transaction. During the third
quarter of 1993, Corning refinanced a portion of this short-term financing by
issuing approximately $200 million of longer-term debt. During the fourth
quarter of 1993, Corning extended the terms of the financing agreements to
December 31, 1995. The pro forma adjustment to interest expense related to
the Damon transaction is calculated as the weighted average of short-term and
longer-term interest rates.
(d) The pro forma adjustment represents the elimination of approximately $1
million of one-time costs incurred by Damon in connection with a terminated
merger agreement with National Health Laboratories Incorporated which were
charged to results of operations for the seven months ended July 31, 1993.
(e) The pro forma adjustment to tax expense represents the tax effect of the
adjustments detailed in notes (a), (b), (c) and (d) above. In addition, tax
expense has been adjusted to provide taxes on the income of one of the
Completed 1994 Transactions which was previously a Subchapter S corporation.
These adjustments are calculated at Corning's historical effective tax rate.
(f) The pro forma adjustment to minority interest represents the applicable
minority interest on the historical earnings and pro forma adjustments of the
Other 1993 Transactions and the Completed 1994 Transactions.
(g) The pro forma adjustment to weighted average shares outstanding
represents the issuance of 5.5 million shares to complete the Costar
acquisition in September 1993, 12.5 million shares in conjunction with the
Completed 1994 Transactions and an estimated 6.7 million shares to be issued
in conjunction with the Pending 1994 Transaction.
The number of shares to be issued in the Pending 1994 Transaction is
dependent on the price of Corning Common Stock during the 10-day trading
period ending on the fifth trading day prior to the date of the Nichols
stockholders meeting held to approve the transaction. For purposes of this
pro forma presentation, it is assumed that 6.7 million shares will be issued
(based on a price of $33 per share of Corning Common Stock and the current
number of Nichols common shares and options to purchase Nichols common shares
outstanding). Pursuant to the agreement with Nichols, the maximum number of
shares of Corning Common Stock which could be issued is 9.6 million shares
(assuming the "floor" price of $26.50 per share of Corning Common Stock and
exercise of all outstanding options). An increase in the number of shares to
9.6 million shares would not materially impact the pro forma earnings per
share presented in the Unaudited Pro Forma Combined Statements of Income.
Adjustments to Reflect the Offering
(h) The pro forma adjustment to interest expense reflects the decrease in
interest expense assuming the issuance by Corning Delaware on January 4,
1993, of $275 million of Preferred Securities (net of an estimated $6.8
million of underwriting commissions and expenses), and the use of the net
proceeds thereof by Corning to retire a significant portion of the
indebtedness incurred in connection with the Damon Transaction.
(i) The pro forma adjustment to tax expense reflects the tax effects of the
adjustment detailed in note (h) above.
(j) The pro forma adjustment to dividends on preferred securities of
subsidiaries represents the after-tax dividends payable on the $275 million
of Preferred Securities.
(k) The pro forma adjustment to loans payable beyond one year and preferred
securities of subsidiaries assumes the issuance on March 27, 1994, of $275
million of Preferred Securities (net of an estimated $6.8 million of
underwriting commissions and expenses).
Note 3--Earnings Per Share:
Earnings per common share are computed by dividing net income less preferred
dividends on Corning's Series B Preferred Stock by the weighted average of
common shares outstanding during each period. Preferred dividends amounted to
$2.2 million and $.5 million during the year ended January 2, 1994, and the
twelve weeks ended March 27, 1994, respectively.
Note 4--Costar Merger:
In September 1993, Corning acquired all of the outstanding shares of common
stock and options to purchase common stock of Costar for approximately 5.5
million shares of Corning Common Stock and options to purchase approximately
300,000 shares of Corning Common Stock. This acquisition has been accounted
for as a pooling of interests. Corning's consolidated financial statements
for periods prior to the acquisition have not been restated since the
acquisition is not material to Corning's financial position or results of
operations.
Note 5--Unilab Transaction:
Corning, through a wholly owned subsidiary, owned 43% of Unilab. In November
1993, Corning acquired 100 percent of certain Unilab facilities in exchange
for a majority of the Unilab shares owned by Corning, the assumption of
approximately $70 million of Unilab debt and Corning's investment in J.S.
Pathology PLC ("J.S. Pathology"). Corning retained a 12% equity investment in
Unilab.
Note 6--Vitro Transaction:
On January 2, 1992, Corning entered into an alliance with Vitro, by
transferring 49% of its consumer-housewares businesses to Vitro, in exchange
for 49% of Vitro's consumer-products businesses and approximately $137
million in cash. The alliance consisted of two jointly owned companies.
Corning owned 51% of Corning Vitro and consolidated its financial statements
and 49% of Vitro Corning and accounted for its investment under the equity
method.
In December 1993, Vitro and Corning reached an agreement whereby, in two
separate transactions, Vitro purchased in December 1993, the shares of
capital stock of Vitro Corning owned by Corning and Corning purchased in
February 1994 the shares of capital stock of Corning Vitro held by Vitro. The
net cost to Corning of the two transactions was $131 million. Corning and
Vitro are continuing their consumer products alliance through cross
distribution and supply agreements.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
First Quarter 1994 Performance
Net sales for the first quarter 1994 totaled $948.9 million, up 16 percent
from the same period last year. Approximately half of the sales increase was
due to the 1993 acquisition of Damon. The other 1993 acquisitions also
contributed positively to sales growth. Net income was $58.0 million ($0.28
per share) for the first quarter of 1994 compared to $49.8 million ($0.26 per
share) for the first quarter 1993. Excluding the impact of a non-operating
gain in 1993, net income and earnings per share for the first quarter 1994
were up 23 percent and 15 percent, respectively, when compared to the same
period last year.
Earnings from consolidated operations for the first quarter 1994, excluding
the non-operating gain in 1993, increased 4 percent over the same period last
year.
First quarter 1994 equity in earnings of associated companies was $16.5
million compared with $7.2 million in the same period last year. Increased
earnings were due to strong operating performance at Dow Corning and the
elimination of losses from Vitro Corning, which was divested in late 1993.
Segment Overview
Corning's products and services are grouped into four industry segments:
Specialty Materials, Communications, Laboratory Services and Consumer
Products. Sales and earnings for the first quarter 1994 increased in all
segments except laboratory services which was negatively impacted by severe
winter weather in the eastern half of the United States.
Sales and earnings growth in the specialty materials segment was led by the
environmental products business which experienced increased demand for
ceramic substrates in its North American market. The science products
business, which included results of Corning Costar Corporation which was
acquired in 1993, and the optical products business also contributed to the
earnings growth in this segment.
Increased sales and earnings in the communications segment were primarily due
to strong volume gains in the optical-fiber and optical-cable businesses.
Sales and earnings in the conventional video components and projection video
businesses also contributed to the growth in this segment. Earnings
improvements were offset somewhat by continued development spending in the
advanced display products and ceramic memory disk businesses.
First quarter sales of the laboratory services segment improved significantly
over the prior year primarily as a result of the 1993 acquisition of Damon.
First quarter segment earnings were level with 1993. Sales and earnings of
this segment were negatively impacted by the severe winter weather in the
eastern half of the United States. The Damon acquisition contributed
positively to the operating results of this segment; however, the gain was
offset by increased goodwill amoritization resulting from the acquisition.
Sales and earnings gains in the consumer products segment were driven by
improved domestic volume. Strong manufacturing performance and a continued
focus on cost controls also contributed to the earnings growth in this
segment.
At year end 1993, Corning had restructuring and acquisition integration
reserves totaling $232.5 million, of which $155 million were short-term and
$77.5 million were long-term. Corning's restructuring and integration
programs are proceeding as planned. At the end of April 1994, the activities
associated with the corporate-wide restructuring program were more than half
complete and MetPath and Damon laboratories had been fully integrated in five
of ten primary locations. Of the $199.1 million in restructuring reserves at
the end of the first quarter, $128.4 million were classified as short-term
and $70.7 million were classified as long-term. The majority of these
reserves are expected to be paid in cash for severance-related items and
facility exit expenses. The restructuring program and the integration of
Damon are expected to be substantially complete by the end of the third
quarter 1994.
Taxes on Income
Corning's effective tax rate was 37% in the first quarter 1994 and 34% in the
first quarter 1993. The change in the effective tax rate was primarily due to
the increase in the U.S. corporate statutory tax rate (which was effective in
the third quarter 1993) and an increase in non-deductible amortization of
intangibles and other expenses.
Liquidity and Capital Resources
Corning's working capital of $452.5 million at March 27, 1994 was relatively
unchanged from $451.4 million at the end of 1993. The ratio of current assets
to current liabilities of 1.4 was also unchanged from
year-end 1993. Corning's long-term debt as a percentage of total capital was
42% at the end of the first quarter compared to 45% at year-end 1993. The
improvement in this ratio is due primarily to the issuance of common stock in
February 1994. Corning intends to repay a significant portion of the
remaining $400 million Damon acquisition debt with the proceeds from the sale
of the Damon laboratories in California and the net proceeds from this
Offering.
Cash Flows
Cash and short-term investments declined from year-end 1993 by $62.6 million
due to operating and investing activities which used cash of $63.8 million
and $334.7 million, respectively, offset by financing activities which
provided cash of $335.7 million. Net cash used in operating activities
increased in the first quarter 1994 compared to the same period in 1993 due
primarily to an increase in accounts receivable. Net cash used in investing
activities increased during the same period due to the acquisition of assets
from Northern Telecom Limited and the purchase of Corning Vitro stock from
Vitro. Net cash provided by financing activities increased in the first
quarter 1994 over 1993 primarily as a result of the issuance of common stock
in February 1994 to finance the Northern Telecom and Vitro transactions.
1993 Performance
Corning's consolidated sales of $4,004.8 million in 1993 were up 8% from
1992. Approximately half of this growth was attributable to recent
acquisitions, with the remaining growth led by the Laboratory Services and
Communications segments. Consolidated sales in 1992 increased 14% from 1991
also as a result of strong performance by the Laboratory Services segment,
due in part to acquisitions, and the Communications segment.
As a result of non-recurring charges, Corning incurred a net loss in both
1993 and 1992.
Net losses totaled $15.2 million ($0.09 per common share) in 1993 and
included net non-recurring charges against consolidated operations totaling
$202.8 million ($117.9 million after tax and minority interest). These
charges included $36.5 million for the settlement and related legal expenses
incurred in the compromise agreement between MetPath, Corning's
clinical-testing business, and the Civil Division of the Department of
Justice; a restructuring charge of $170.5 million as a result of costs to
integrate the Damon and Costar acquisitions and a planned company-wide
program to reduce assets and overhead costs during the next year; and a
non-operating gain of $4.2 million. Corning also recorded a $203.1 million
reduction in equity earnings as a result of a charge taken by Dow Corning
related to breast-implant litigation and a $9.5 million reduction in equity
earnings as a result of a restructuring charge taken by Vitro Corning.
As a result of non-recurring charges in 1992, Corning recorded a net loss of
$12.6 million ($0.08 per common share) compared with net income of $316.8
million ($1.69 per common share) in 1991. Non-recurring charges in 1992
included an after-tax charge of $294.8 million ($1.56 per common share) to
reflect the cumulative effect of adoption of Financial Accounting Standard
No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions," (FAS 106) for all consolidated and equity companies and a gain of
$8.2 million ($0.04 per common share) to reflect Corning's equity in the
cumulative effect of adoption of Financial Accounting Standard No. 109,
"Accounting for Income Taxes," by an equity company.
Earnings from consolidated operations, excluding non-recurring gains and
losses, declined 4% in 1993 when compared with 1992. This decline was
principally due to weak performance in the Consumer Products segment and the
cyclical businesses of the Specialty Materials segment, especially those in
Europe. In addition, lower prices reduced the rate of growth in both the
MetPath clinical-testing business and the optical-fiber and optical-cable
businesses. Earnings were also impacted by increased interest expense on debt
incurred to finance the acquisition of Damon and capital expansion programs.
Equity earnings in 1993, excluding non-recurring charges, were up 14% over
1992 primarily as a result of improved performance at Samsung-Corning
Company, Ltd. ("Samsung-Corning") and Dow Corning. These gains were offset
somewhat by a decline in earnings from the optical-fiber equity companies and
continued poor operating performance at Vitro Corning.
In 1992, earnings from consolidated operations increased 12% over 1991 with
the growth led by the Communications and Laboratory Services segments. Equity
earnings in 1992 declined substantially from 1991 levels due to non-recurring
charges and reduced operating earnings at Dow Corning and losses at both
Vitro Corning and Unilab.
Segment Overview
In the following discussion, the sales and earnings of Corning's equity
affiliates are discussed in terms of the Company's four industry segments.
Specialty Materials
(In millions)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Consolidated sales $758.7 $750.1 (1) $704.4
Income before taxes (2) 73.6(3) 93.8 (1) 92.2
</TABLE>
(1) The 1992 results of certain businesses which have been transferred from
the Consumer Products segment to the Specialty Materials segment have been
reclassified to conform to the current year's presentation.(2) Both 1992 and
1993 include the incremental expense due to the adoption of FAS 106 which
totaled $8.5 million in 1992.(3) Includes $26.5 million of restructuring
charges.
Consolidated operations:
Consolidated sales of this segment have increased modestly in each of the
last three years. The increase in 1993 segment sales resulted primarily from
the acquisition of Costar. Excluding the impact of restructuring charges,
earnings have also increased over the past three years. Restructuring charges
in 1993 included $8 million of transaction costs related to the Costar
acquisition and $18.5 million of severance and other costs to restructure
operations both in the United States and in Europe.
Segment performance in 1993 was led by the science-products businesses. Sales
and earnings of the science-products businesses were up significantly over
1992 reflecting improved manufacturing efficiencies in both the plastic and
glass product lines, continued strength in the market for plastic science
products, and the acquisition of Costar. In the third quarter, Corning
acquired Costar, a manufacturer of disposable plastic products, membrane
filters, cartridge and filtration equipment used in life-science laboratories
and industrial plants throughout the world. With this acquisition, Corning
more than doubled the size of its existing plastics business. The modest
sales growth of the science-products businesses in 1992 over 1991 was
attributable to the growth in the market for plastic products. Earnings gains
in 1992 were primarily due to manufacturing efficiencies in the plastics
line.
Sales of the environmental-products business in 1993 were up slightly over
1992 due primarily to strong sales in North America offset by declines in the
European markets. Legislation mandating the use of pollution-control devices
continues to drive the increase in demand for automotive and diesel
substrates. Earnings in 1993 were down when compared with 1992 due to the
weak European economies. Sales and earnings of this business increased in
1992 over 1991 due to volume and manufacturing efficiency gains.
Sales of Corning's other Specialty Materials businesses, consisting of
optical products, lighting, and other advanced materials, declined in 1993
and 1992. Sales of these businesses in 1993 increased in the United States
but were down significantly in Europe due to weak economic conditions. Growth
in the optical products business continues to be negatively impacted by
plastic optical products. Earnings of these businesses in total declined in
1993 and 1992.
In December 1993, Corning sold its process systems business which had annual
sales of approximately $40 million. Both the operating results of this
business and impact of this transaction were not material.
Equity companies:
(In millions)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Net sales $2,322.4 $2,230.6 $2,090.5
Corning's share of net income (loss) (139.2) 20.3(1) 83.5
</TABLE>
(1) Before equity in changes in accounting methods.
Corning is an investor in and receives income from a number of equity
companies in the Specialty Materials segment, including Dow Corning,
Pittsburgh Corning Corporation and Pittsburgh Corning Europe, N.V. Dow
Corning's sales increased in each of the last three years. Corning's equity
in earnings of Dow Corning was reduced by $203.1 million, $24.5 million and
$8.2 million in 1993, 1992 and 1991, respectively, as a result of charges
taken by Dow Corning related to its terminated breast implant business and by
restructuring charges totaling $13.2 million in 1992. Excluding special
charges, earnings were up
in 1993 following a decline in 1992 due to improved operating performance at
Dow Corning. The 1992 decline was caused by weak worldwide economies and the
increase in postretirement benefit expense caused by the adoption of FAS 106
at Dow Corning.
In September 1993, Dow Corning announced that a proposal had been developed
to settle, on a global basis, matters involved in litigation over silicone
breast implant products. In March 1994, Dow Corning, along with other
defendants and representatives of breast implant litigation plaintiffs,
signed a Breast Implant Litigation Settlement Agreement (the "Settlement
Agreement"). Under the Settlement Agreement and related agreements, industry
participants would contribute approximately $4.2 billion over a period of
more than thirty years to establish several special purpose funds. The
Settlement Agreement is subject to court approval and to withdrawal by Dow
Corning and other defendants and plaintiffs in certain events. Corning is not
a party to the Settlement Agreement and will not make any contributions to
the settlement contemplated thereby. See "Business of Corning--Recent
Developments--Breast Implant Litigation."
Dow Corning recorded an accounting charge of $415 million after tax in the
fourth quarter of 1993. As disclosed in Dow Corning's financial statements,
this charge included the net present value of Dow Corning's best estimate of
its potential liability for breast implant litigation based on current
settlement negotiations, and also included provisions for legal,
administrative, and research costs related to breast implants, for a total of
$1.24 billion, less expected insurance recoveries of $600 million. Future
developments, including any failure of the Settlement Agreement to receive
court approval and any withdrawal by Dow Corning and other defendants and
plaintiffs from the Settlement Agreement, may require Dow Corning to revise
its current estimates or record additional provisions.
Corning does not believe that its share of any additional accounting charge
taken by Dow Corning resulting from the breast implant litigation will have a
material adverse effect upon Corning's overall financial condition. However,
it is possible that Corning's share of any such charge taken by Dow Corning
will have a material adverse effect upon Corning's earnings in the quarter in
which any such charge is recognized by Dow Corning. The amount of any such
charge would be written off against Corning's investment in Dow Corning which
totalled $370 million at June 19, 1994.
In early 1993, Dow Corning suspended its dividend payments to Corning and Dow
Chemical. In 1992, Corning received from Dow Corning $43 million in
dividends. Corning does not expect to receive dividends from Dow Corning for
the next several years. Corning believes that it has sufficient liquidity and
access to capital and does not believe that the suspension of these dividends
will have a material impact on its liquidity or financial position.
Outlook:
The modest positive sales trend experienced in this segment over the last
three years is expected to continue in 1994. Sales growth is expected to come
primarily from the continued strength of the plastics science-products
business and from the ceramic substrates business as new and pending
environmental regulations become effective in the United States and foreign
countries. Although performance of this segment will continue to be affected
by the European and Japanese economies, consolidated earnings are expected to
grow modestly due primarily to continued cost control and restructuring
measures and manufacturing efficiencies. Dow Corning's sales and operating
earnings are expected to improve in 1994.
Communications
(In millions)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Consolidated sales $1,192.0 $1,036.6 $901.8
Income before taxes (1) 243.3 (2) 230.1 189.1
</TABLE>
(1) Both 1992 and 1993 include the incremental expense due to the adoption of
FAS 106 which totaled $9.1 million in 1992.
(2) Includes $10.7 million of restructuring charges.
Consolidated operations:
Consolidated sales in this segment have grown during the past three years
driven by continued strong growth in worldwide demand for optical fiber and
optical cable. The conventional-video components and advanced display
products businesses also experienced strong sales increases in 1993.
Excluding restructuring charges, earnings were up in 1993 due to volume
growth and improved manufacturing performance in the advanced display
products and conventional-video components businesses and a modest increase
in earnings of the optical-fiber and optical-cable businesses. Sales and
earnings in the projection-video business reached record levels in 1993.
Restructuring charges of $10.7 million in 1993 included severance and other
costs associated with an overhead reduction program. Segment earnings in 1992
increased over 1991.
Sales of Corning's optical-fiber and optical-cable businesses increased
significantly in both 1993 and 1992. Market growth has been led by the
increased use of fiber-optic cable in the feeder portions of telephone
networks and the rapidly growing use of fiber in cable-television systems.
Despite record volume growth, earnings of the optical-fiber and optical-cable
businesses increased only slightly due to aggressive pricing to secure
long-term optical-cable supply contracts. Earnings in 1992 increased over
1991. Corning continues to invest in the development of several businesses in
this segment which provide a variety of optical components to bring optical
fiber to the home.
In 1993, Corning increased its acquisition activity in this segment to expand
its market for optical-fiber products and related optical components. In the
third quarter of 1993, Siecor acquired the telecommunications business of GTE
Control Devices Incorporated which manufactures single- and multi-line
network interface devices, solid state protection devices for central office
and building entrance terminals, and optical hardware products. In February
1994, Corning and Siecor acquired the assets relating to the optical-fiber
and optical-cable businesses of NTL for $130 million in a transaction
accounted for as a purchase. NTL is a major supplier of optical fiber and
optical cable to Canadian and international markets.
Sales in the conventional-video components and projection-video businesses
increased significantly in 1993. The recovering U.S. television market and a
shift in product mix from medium to larger size video components contributed
to the strong sales increase. Sales in 1992 increased over 1991. Earnings
were up in 1993 and 1992 as a result of higher volume and continuing
manufacturing efficiency improvements.
Sales in the advanced display products business, which produces
liquid-crystal display glass, increased significantly in both 1993 and 1992.
As a result of the growth in sales and solid manufacturing gains, this
business experienced profitability for the first time in 1993 despite
continued significant investment in research and development. In 1993,
Corning began construction of melting units in Japan and in the United States
which will significantly increase production capacity to meet the demands of
this growing market.
In 1993, Corning and Seagate Technology, Inc. ("Seagate") entered into the
first major sales contract for Corning's new MemCor(tm) glass-ceramic memory
disk which is used for high-performance disk drives in computers. This
product significantly increases storage capacity and, because of its
strength, improves reliability. Although the Seagate contract represents an
important milestone in the development of this product, the profitability of
this business will continue to be impacted by significant development
spending.
Sales of Biosym Technologies Inc. ("Biosym"), which was acquired in the third
quarter of 1992, contributed to the sales growth of this segment. Biosym
specializes in the development, marketing, and support of computer-aided
molecular design software. Biosym's profitability was impacted by the weak
economies in Japan and Europe and a slowdown in sales to pharmaceutical
companies caused by uncertainty surrounding the impact of health-care reform.
Equity companies:
(In millions)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Net sales $680.2 $685.8 $609.1
Corning's share of net income 35.4 37.4 25.8
</TABLE>
Samsung-Corning, a South Korean manufacturer, produces glass panels and
funnels for entertainment television and display monitors. Samsung-Corning's
sales and earnings increased in 1993 and 1992. The 1993 increase in sales and
earnings reflected higher volumes and share gains due to the strengthening
yen along with reduced financing costs. The 1992 increase was primarily a
result of increased sales and improved manufacturing performance. In 1993,
Samsung-Corning completed a transaction which will expand its manufacturing
capacity into Eastern Europe.
Sales and earnings of Corning's optical-fiber equity companies declined in
1993 due primarily to a decrease in volume and pricing pressures felt most
heavily in Europe. Earnings were flat in 1992 compared with 1991 primarily as
a result of adverse market conditions in the United Kingdom.
Outlook:
Segment performance is expected to improve in 1994. Sales volumes in the
optical-fiber and optical-cable businesses are expected to continue to grow,
although the rate of growth in earnings will continue to be impacted by
worldwide pricing pressures. Sales and earnings of the advanced display
products business are expected to continue their rapid growth trend. Sales
and earnings in the conventional-video components and projection-video
businesses are expected to continue their upward trend. Equity earnings
in this segment are expected to decline due to the impact of two major glass
furnace repairs on Samsung-Corning sales offset by a slight improvement in
the optical-fiber equity companies.
Laboratory Services
(In millions)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Consolidated sales $1,319.5 $1,149.8 $884.3
Income before taxes 125.3 (1) 203.1 155.5
</TABLE>
(1) Includes a $36.5 million charge for the MetPath settlement and $58.5
million of restructuring charges.
Consolidated operations:
Consolidated sales in this segment achieved record levels in each of the last
three years, reflecting the strong performance trend in existing businesses
and the impact of strategic acquisitions. Earnings were significantly
impacted by non-recurring charges in 1993. Excluding these charges, earnings
increased, but at a slower pace in 1993 than in prior years as a result of
pricing pressures and significant uncertainty in the health care industry.
In August 1993, MetPath completed the acquisition of Damon, a
clinical-testing business. In addition, in November 1993, MetPath completed a
transaction with Unilab which resulted in the acquisition of Unilab's
laboratories in Denver, Dallas, and Phoenix. With the completion of these
transactions, MetPath is strategically positioned with efficient low-cost
operations throughout the United States.
MetPath's sales increased in both 1993 and 1992. Approximately 75% of the
1993 sales growth resulted from Damon and other acquisitions. Excluding the
impact of non-recurring charges, MetPath's 1993 earnings were up slightly due
to the acquisition of Damon. Earnings growth in 1993 was hindered by
competitive pricing pressures and an increasingly higher mix of business from
lower-priced managed-care clients. MetPath recorded a $58.5 million
restructuring charge in 1993 primarily for costs of closing MetPath
facilities as a result of the integration of Damon and MetPath operations.
This integration should provide MetPath with significant synergies and
additional opportunities to reduce unit costs in 1994 and 1995.
In September 1993, MetPath recorded a charge of $36.5 million to reflect the
settlement and related legal expenses associated with its compromise
agreement with the Civil Division of the Department of Justice to settle
claims brought on behalf of the Inspector General, U.S. Department of Health
and Human Services. The claims related to the marketing, sale, pricing and
billing of certain blood-test series provided to Medicare patients. The
settlement does not constitute an admission by MetPath with respect to any
issue arising from the civil action. In the third quarter 1993, MetPath,
along with other major clinical laboratories, received subpoenas for
additional information relating to certain other tests. In addition, certain
payors are reviewing their reimbursement practices for laboratory tests in
response to announcements by certain competitors and continued pressure by
government agencies. The outcome of these events is uncertain but could
increase the current downward price trend in the clinical-testing industry.
See "Business of Corning--Recent Developments--Department of Justice
Investigation."
Sales of the pharmaceutical services businesses have increased during the
last three years. Earnings improved significantly in 1993 and 1992 primarily
as a result of strong volume growth and cost-reduction actions. SciCor, Inc.
("SciCor"), which was acquired in 1991, reported increased revenues and
operating profits in both 1993 and 1992 as the market for clinical drug
trials continues to grow.
Sales at Enseco, the environmental-laboratory testing company, declined
slightly in 1993 due to weak market conditions and a scale-back in
operations. Sales in 1992 increased over 1991 levels primarily due to a late
1991 acquisition. Earnings increased slightly in both 1993 and 1992 resulting
from improved operating efficiencies and cost-reduction programs.
Equity companies:
(In millions)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Net sales $18.0 $228.4 $198.7
Corning's share of net income (loss) (0.5) (8.5) 0.7
</TABLE>
In November 1993, MetPath acquired 100% of certain Unilab facilities in
exchange for a majority of the Unilab shares owned by MetPath, the assumption
of approximately $70 million of Unilab debt, and MetPath's investment in J.S.
Pathology PLC. MetPath retained a 12% equity investment in Unilab. At year
end 1992, MetPath owned 43% of Unilab and, in contemplation of this
transaction, accounted for it using the cost method of accounting for
investments in 1993.
Outlook:
Sales of the Laboratory Services segment are expected to increase as a result
of the Damon acquisition and volume gains in all businesses. MetPath's
earnings are expected to increase as a result of significant cost reductions
over the next year and synergies from the Damon acquisition offset somewhat
by the continuing price pressures in the health care industry. Solid growth
is expected to continue in the pharmaceutical services businesses. The
environmental-laboratory testing business will continue to emphasize cost
efficiencies and quality.
Consumer Products
(In millions)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Consolidated sales $734.6 $772.2 (1) $768.7
Income before taxes (2) (3) (35.4) (20.3)(1) 57.7
</TABLE>
(1) The 1992 results of certain businesses which have been transferred from
the Consumer Products segment to the Specialty Materials segment have been
reclassified to conform to the current year's presentation.
(2) Both 1992 and 1993 include the incremental expense due to the adoption of
FAS 106 which totaled $6.3 million in 1992.
(3) Includes $46.5 million and $63.3 million of restructuring charges in 1993
and 1992, respectively.
Consolidated operations:
Consolidated sales in the Consumer Products segment declined in 1993 in
comparison with 1992 due to the impact of a poor worldwide retail sales
environment and the recent exit from the Brazilian market. Profitability has
been affected by increased promotion costs, reduced manufacturing to realign
inventory levels with lower sales volumes and reserves for certain inventory
and product claims. Segment profits were also adversely impacted in 1993 by
restructuring charges. Sales in 1992 were up in comparison with 1991;
however, earnings in 1992 were down primarily due to a restructuring
provision for the shutdown of operations in Brazil.
In December 1993, Corning and Vitro of Mexico agreed to end their cross
ownership of Corning Vitro in the United States and Vitro Corning in Mexico.
As a result of the agreement, in December 1993, Vitro purchased the shares of
capital stock of Vitro Corning owned by Corning and, in February 1994,
Corning purchased the shares of capital stock of Corning Vitro held by Vitro.
The net cost to Corning was $131 million. As a result of the transactions,
Corning Vitro has changed its name to Corning Consumer Products Company.
Corning and Vitro will continue their consumer products alliance through
cross distribution and supply agreements.
Corning Consumer Products' sales decreased in the North American and European
markets in 1993. The decline in the U.S. market was attributable primarily to
trade inventory corrections and reduced promotional activity. European sales
continue to be impacted by the weak economy. In 1992, sales increased in
North America but declined in Europe. Sales improved in Asia-Pacific in both
1993 and 1992.
Sales of Corning Ware(R) cookware and Pyrex(R) ware improved in 1993 compared
with 1992. These increases were offset, however, by declines in sales of
Visions(R) ware, due partially to Corning Consumer Products' exit from
Brazil. Sales of Corelle(R) dinnerware and Revere Ware(R) cookware declined
slightly. Corelle(R) dinnerware volume was affected by trade inventory
corrections and reduced trade promotional activity.
Restructuring charges totaling $46.5 million in this segment included costs
of a reduction in the salaried work force, the consolidation of Corning
Ware(R) cookware and Visions(R) ware manufacturing, and the consolidation of
North American packaging operations.
Sales of Steuben(R) crystal increased over 1992 due to a general increase in
volume as well as the opening of several new retail stores and wholesale
galleries and new product introductions. Earnings of this business improved
slightly in 1993 due to improved glass melting performance and quality
initiatives.
Equity companies:
(In millions)
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Net sales $285.2 $273.4 $87.7
Corning's share of net income (loss) (15.7) (5.4) 1.7
</TABLE>
Equity in earnings in 1993 continued to be negatively impacted by the poor
operating results of Vitro Corning due to the combined impact of the weak
Mexican economy, domestic Mexican inflation, increasing foreign competition
in Mexico and the strength of the Mexican peso. Vitro Corning's 1993
operating losses were offset somewhat by a favorable non-recurring tax
adjustment. Corning also recorded a $9.5 million reduction in equity earnings
resulting from a restructuring charge taken by Vitro Corning in 1993. The
decline in 1992 was the result of equity losses recorded by Vitro Corning,
due primarily to adverse retail market conditions in Mexico.
Outlook:
Sales and earnings are expected to improve in 1994 as the benefits of
restructuring programs implemented in 1993 and a focused marketing strategy
positively impact performance. The change from cross ownership to
distribution and supply agreements with Vitro is expected to have a modest
positive impact on earnings. Economic uncertainties, especially in Europe,
will continue to impact this segment.
Other Revenues and Deductions
Non-operating gains and losses:
In 1993, Corning recognized a non-operating gain of $4.2 million ($2.6
million after tax).
In 1992, Corning recognized net non-operating gains from consolidated
operations totaling $7.0 million ($21.7 million after tax), including a gain
of $10.1 million (before and after tax) from the sale of an additional equity
interest in Corning Japan K.K. and a pre-tax loss of $7.3 million ($9.0
million after-tax gain) from the formation of the consumer housewares venture
with Vitro.
In 1991, Corning recognized net non-operating gains from consolidated
operations totaling $8.1 million ($14.6 million after tax) which included a
gain of $5.3 million (before and after tax) on the sale of an equity interest
in Corning Japan.
Provision for restructuring and other special charges:
In 1993, Corning recorded a charge of $170.5 million ($98.5 million after tax
of $64.6 million and minority interest of $7.4 million) as a result of costs
to integrate the Damon and Costar acquisitions and as a result of a planned
company-wide restructuring program to reduce assets and overhead costs during
the next year. Also in 1993, MetPath recorded a charge of $36.5 million
($22.0 million after tax) to reflect the settlement and related legal
expenses associated with its compromise agreement with the Civil Division of
the Department of Justice to settle claims brought on behalf of the Inspector
General, U.S. Department of Health and Human Services.
In 1992, Corning recorded a charge of $63.3 million ($32.1 million after tax
of $22.9 million and minority interest of $8.3 million) as a result of
Corning Vitro's decision to restructure its Brazilian operations.
Equity earnings:
In 1993, Corning recognized a $203.1 million reduction in equity earnings as
a result of an accounting charge taken by Dow Corning related to
breast-implant litigation and a $9.5 million reduction in equity earnings as
a result of a restructuring charge taken by Vitro Corning.
In 1992, Corning recognized a $37.7 million reduction in equity earnings
which included $24.5 million of accounting charges associated with Dow
Corning's terminated breast-implant business and $13.2 million of
restructuring charges associated with Dow Corning's exit from its Brazilian
operations and other cost-reduction programs.
In 1991, Corning recognized an $8.2 million reduction in equity earnings to
reflect an accounting charge recorded by Dow Corning for costs associated
with its terminated breast-implant business.
Taxes
Corning's effective tax rate varies between years due primarily to the impact
of certain non-operating gains and losses and restructuring charges. The
effective tax rates, excluding these items, were 31% in 1993, 33% in 1992,
and 37% in 1991. The reduced 1993 rate is primarily due to tax benefits
associated with the sale of the process systems business and the revaluation
of deferred tax assets discussed below. The reduced 1992 rate resulted from
the implementation of repatriation programs and increased utilization of tax
credits.
Corning adopted FAS 109 at the beginning of 1993. The impact of adoption of
FAS 109 was not material. On August 10, 1993, the Revenue Reconciliation Act
of 1993 (the "Act") was signed into law. The Act increased the U.S. corporate
statutory tax rate from 34% to 35% for years beginning after December 31,
1992, changed the deductibility of certain expenses and extended certain tax
credits. The increase in the statutory tax rate resulted in a gain from the
revaluation of Corning's net deferred tax assets in the third
quarter 1993 which lowered the 1993 effective tax rate. Excluding this gain,
the impact of the Act did not have a material impact on Corning's effective
tax rate.
Liquidity and Capital Resources
Corning's working capital of $451.4 million at the end of 1993 declined
slightly from $465.2 million at the end of 1992. The ratio of current assets
to current liabilities was 1.4 at the end of 1993 compared with 1.6 at the
end of 1992. Corning's ratio of long-term debt to total capital increased to
45% at the end of 1993 from 28% at the end of 1992. The change in the ratio
of long-term debt to total capital is primarily due to the financing of the
Damon acquisition.
In 1993, Corning increased its available bank credit lines by $155 million.
In addition, Corning borrowed $600 million under agreements with two banks to
finance the acquisition of Damon for approximately $405 million in cash and
the refinancing of approximately $167 million of Damon's debt. In September
1993, Corning issued $200 million of long-term debt securities in public
offerings and used the proceeds of such offerings to repay an equivalent
amount of the acquisition debt. Corning intends to refinance a significant
portion of the remaining acquisition debt with the net proceeds from this
Offering.
Cash Flows
Cash flows from operating activities increased in 1993 compared with 1992
primarily due to a significant reduction in net current operating assets and
liabilities (excluding the impact of acquisitions) offset by the payment by
MetPath to the Department of Justice and the suspension of dividends from Dow
Corning. Cash flows from operating activities increased in 1992 over 1991
primarily due to improved operations.
Cash used in investing activities increased significantly in 1993 over 1992
primarily due to the acquisition of Damon for approximately $405 million.
Cash used in investing activities also increased in 1992 over 1991 primarily
due to increased investments in plant and equipment and acquisitions in the
Laboratory Services segment, partially offset by the receipt of $137 million
of net proceeds from the formation of Corning Vitro and Vitro Corning.
Capital spending increased in 1993 when compared with 1992 primarily due to
the expansion of the liquid-crystal display facility in Japan and the
completion of Corning's corporate headquarters building. Capital spending
increased in 1992 over 1991 primarily due to the continued expansion of the
Wilmington, North Carolina, optical-fiber manufacturing facility, the
construction of additional facilities to support growth in the Laboratory
Services segment and the construction of the corporate headquarters building.
At year end 1993, Corning's capital commitments totaled approximately $199.2
million.
In 1993, cash provided by financing activities increased significantly over
1992 primarily as a result of increased borrowings to finance the acquisition
of Damon and the telecommunications business of GTE Control Devices
Incorporated and to finance continued capital expansion programs. In 1992,
cash used in financing activities increased significantly over 1991 due to
higher levels of common stock repurchases and the timing of dividend
payments.
Corning repurchased 1,323,700; 2,910,500; and 1,989,000 shares of its common
stock in 1993, 1992, and 1991, respectively, pursuant to a systematic plan
authorized by the Board of Directors. This activity is designed to provide
shares for Corning's various employee-benefit programs. Corning suspended its
share repurchase program in May 1993 to conserve cash for acquisition
purposes.
Dividends paid to common shareholders in 1993 totaled $134.1 million compared
with $176.7 million in 1992 and $92.6 million in 1991. The higher 1992
payment resulted from a $0.15 per-share special dividend declared in 1991 and
paid in 1992 and the payment of the fourth quarter 1992 dividend prior to the
end of fiscal 1992. Excluding these items, the increase in dividends paid was
caused by an increase in the dividend rate of 10% and 17% in 1993 and 1992,
respectively, and the increase in common shares outstanding.
Environment
Corning has been named by the Environmental Protection Agency under the
Superfund Act, or by state governments under similar state laws, as a
potentially responsible party for 22 hazardous waste sites. Under the
Superfund Act, all parties who may have contributed any waste to a hazardous
waste site, identified by such Agency, are jointly and severally liable for
the cost of cleanup unless the Agency agrees otherwise. It is Corning's
policy to accrue for its estimated liability based on expert analysis and
continual monitoring by both internal and external consultants. Corning has
accrued for its estimated liability with respect to each of these sites and
has not reduced the liability for any potential insurance recoveries. The
aggregate liability is not material to the Company's operations or financial
position.
Effects of Inflation
Amounts reflected in the financial statements do not provide for the effect
of inflation on operations or financial position. The expenses and asset
values, specifically those related to long-lived assets, reflect historical
cost and do not necessarily represent replacement cost or charges to
operations based on replacement cost. Corning's operations are geared to
provide funds from operations which would be sufficient along with other
sources to replace fixed assets as necessary. Net income would be lower than
reported if the effects of inflation were reflected by charging operations
for replacement costs.
BUSINESS OF CORNING
General
Corning traces its origin to a glass business established by the Houghton
family in 1851. The present corporation was incorporated in the State of New
York in December 1936, and its name was changed from Corning Glass Works to
Corning Incorporated on April 28, 1989.
Corning is an international corporation competing in four broadly-based
business segments: Specialty Materials, Communications, Laboratory Services
and Consumer Products. Corning is engaged principally in the manufacture and
sale of products made from specialty glasses and related inorganic materials
having special properties of chemical stability, electrical resistance, heat
resistance, light transmission and mechanical strength. Corning and its
subsidiaries annually produce some 60,000 different products at 44 plants in
eight countries. In addition, Corning, through subsidiaries and affiliates,
engages in laboratory services businesses, including life and environmental
sciences and clinical-laboratory testing at more than 50 facilities in ten
countries.
Corning's strategy includes growth from new products developed from Corning's
long-standing commitment to research and development and from mergers and
acquisitions. Accordingly, Corning continuously reviews potential acquisition
opportunities, primarily in the laboratory services and communications areas.
However, there can be no assurance that Corning will pursue any such
acquisition opportunity.
In addition to the restructuring programs already under way, Corning is
currently engaged in a comprehensive review of its business and cost
structure. Corning expects this review to be substantially completed by the
end of 1994.
Specialty Materials
Corning's Specialty Materials segment sells more than 40,000 products and has
evolved from Corning's historical business base in materials development. The
major business units within the Specialty Materials segment are: automotive
substrates, ophthalmic and optical products, automotive lighting, science
products, and other advanced materials. Products manufactured by these
businesses include cellular ceramics for automotive and stationary
emission-control devices, plastic and glass ware for laboratory applications
and glass optical lenses.
Corning's long standing commitment to research, development and engineering
has driven the introduction of new products and technologies. In the 1970's
Corning developed the technology and created products for the substrates used
in emission control systems. Today the environmental products business
continues to be a driving force within the Specialty Materials segment.
Corning continues to develop new products and technologies to meet increasing
demand as a result of tightened regulations in the United States and Europe
and new regulations in other parts of the world. For example, to meet
tightening clean air standards, Corning has developed as a prototype an
electrically heated automotive catalytic converter substrate that begins
working within seconds of ignition, which is when most of the pollutants are
generated. Corning has developed a new family of materials, glass-polymers,
the properties of which make them well suited for components in automobiles,
aircraft, lighting systems and electronic devices.
Corning's equity company investments in this segment include Dow Corning,
Pittsburgh Corning and Cormetech, Inc., an equity company which manufactures
and sells stationary emission control devices for power plants.
Communications
Corning's Communications segment consists of the following major product
lines: optical fiber, optical cable, optical components, liquid-crystal
display glass, television bulbs, lenses for projection television, and
magnetic memory disks.
Corning's Communications segment also originates from Corning's commitment to
research and development in new materials. Corning led the development of the
modern opto-electronics market with its invention of optical fiber in the
late 1960's and is the leading supplier of optical fiber and such supporting
components as couplers and signal splitters. Corning is also a leading
supplier of optical cable through its 50% ownership of Siecor. In addition,
Corning has several equity investments in companies that produce optical
fiber internationally.
Approximately two-thirds of the revenues in the Communications segment are
generated by sales of opto-electronic products. Today, optical fiber is
penetrating the communications market as optical fiber is rapidly becoming
the preferred way to transmit telephone, cable-TV and computer data
worldwide. Optical fiber permits the transmission of substantially more data
over greater distances with less distortion than does copper, the product it
is principally replacing. As users of optical fiber increase applications and
expand services, Corning continues to provide new and improved optical-fiber
products and corollary components to an expanding market. During the next few
years, management believes that more fiber will be deployed in distribution
cables and that utilization of fiber to the home will increase.
Corning continues to be a leading producer of glass panels and funnels for
television picture tubes through Corning Asahi Video Products Company, and is
also a world leader in the production of projection television lenses through
its wholly owned subsidiary, U.S. Precision Lens Inc.
The market for liquid-crystal display glass continues to grow, currently
driven by notebook computer and portable-TV sales. Future applications are
expected to include desktop-computer displays, projection-TV systems, video
phones and automotive applications. Corning is the world's leading supplier
in this market.
Another Corning invention, the MemCor(tm) glass-ceramic memory disk for
high-performance hard-disk drives in computers, significantly increases
storage capacity and improves reliability.
Also included in this segment is Biosym, which develops and markets
computer-aided molecular design software.
Laboratory Services
Corning entered the laboratory services market in the early 1970's with its
initial investment in MetPath, a regional U.S. clinical laboratory which
Corning acquired in 1982. Since 1982, Corning has made several other
acquisitions in the clinical, biological, pharmaceutical and
environmental-services industries. In 1991 Corning combined its
laboratory-service business units into a wholly owned subsidiary, Corning
Life Sciences Inc. ("CLSI"), to better manage the development of its business
in this rapidly growing area. Today CLSI, through subsidiaries and
affiliates, operates more than 50 facilities in ten countries that provide
clinical, pharmaceutical and environmental testing services.
CLSI's clinical testing subsidiary, MetPath, performs more than 1,400
different clinical tests for physicians, hospitals, laboratories, industries,
health-maintenance organizations and other managed-care providers through a
quick-response network of regional U.S. laboratories. MetPath is a leader in
providing cost-effective and reliable clinical diagnostic testing services.
See "--Recent Developments--Department of Justice Investigation."
In August 1993 Corning acquired all of the outstanding shares of common stock
of Damon in a transaction accounted for as a purchase. The total purchase
price of this transaction was approximately $405 million, including
acquisition expenses. In addition, approximately $167 million of indebtedness
of Damon has been refinanced. Corning has financed the acquisition of Damon
and the refinancing of Damon's debt with financing agreements entered into
with certain commercial banks. Approximately $200 million of such financing
has been retired with the proceeds from the issuance of long-term debt of
Corning. Corning intends to retire a significant portion of the remaining
acquisition debt with the net proceeds of the Offering.
Damon's principal line of business is clinical-laboratory testing, providing
to the medical profession a full range of routine and esoteric testing
services that are used in the diagnosis, monitoring and treatment of disease.
Damon provides its services to physicians, hospitals, nursing homes, managed
care institutions, corporations and governmental agencies, including agencies
of the United States of America.
On June 7, 1994, Corning acquired all of the outstanding shares of Maryland
Medical and several affiliates for approximately 4.5 million shares of
Corning Common Stock in a pooling of interests transaction.
On June 1, 1994, Corning signed a definitive agreement to acquire all of the
outstanding shares of the capital stock of Nichols in a transaction to be
accounted for as a pooling of interests. Under the terms
of the agreement, Corning will exchange newly issued and registered shares of
Corning Common Stock with a value equal to up to $13 for each share of the
capital stock of Nichols. Using an assumed price of $33 per share of Corning
Common Stock and the number of shares of, and options to purchase, the
capital stock of Nichols presently outstanding, approximately 6.7 million
shares of Corning Common Stock and options to purchase approximately 1
million shares of Corning Common Stock will be issued in the transaction.
Substantially all of the options to purchase shares of Corning Common Stock
will be exercisable immediately following the closing of the transaction. In
no event will more than 9.6 million shares of Corning Common Stock be issued
and reserved for the exercise of options granted in connection with such
transaction.
For a discussion of the registration rights granted to the stockholders of
Maryland Medical and the registration of the shares of Corning Common Stock
to be issued in the Nichols transaction, see "Description of Corning Capital
Stock--Common Stock Eligible for Future Sale."
CLSI's pharmaceutical-testing businesses are conducted by MetPath's wholly
owned subsidiaries, G.H. Besselaar Associates, Hazelton Corporation and
SciCor. These businesses perform chemical and biological testing, clinical
research and data management services primarily for the pharmaceutical
industry. On June 28, 1994, Corning and International Technology created a
jointly owned company to which Corning transferred the net assets of
MetPath's environmental testing laboratory business and International
Technology transferred the assets of its IT Analytical Services business.
Corning and International Technology each own 50 percent of the company. See
"--Recent Developments--Creation of Environmental Testing Services Company."
Corning's Laboratory Services segment is being affected by new federal
legislation implemented in January 1994. The new legislation reduces Medicare
reimbursement rates and will limit future laboratory fee increases. In
addition, the Clinton Administration's health-care plan calls for managed
competition with limitations on total national health-care expenditures and
on the annual growth of such expenditures. A health-care reform model based
on managed competition will likely reduce reimbursements for clinical
laboratory services as managed care networks continue to proliferate. As the
plan also calls for insurance coverage for some 37 million people who
currently have no such coverage, it is expected that demand for such services
will increase. Demand should also increase as a result of a stronger emphasis
on testing as a preventative measure. It is not clear how quickly or to what
extent Medicare and Medicaid programs will be incorporated into the health
reform system. Management believes that while the entire health-care industry
faces dramatic challenges to build a more effective means of delivery of
services, MetPath's leading market position in major geographic areas will
allow Corning to continue to benefit from the ongoing and increasing
consolidation in the industry.
Consumer Products
Corning is well known for its line of consumer housewares with strong brand
names and consumer franchise. Key product lines are Pyrex(R) glassware,
Corelle(R) tableware, Corning Ware(R), Visions(R) cookware, and Revere
Ware(R) cookware. Other Corning consumer products include the prestigious
Steuben(R) crystal and Serengeti(R) sunglasses.
Corning's executive offices are located at One Riverfront Plaza, Corning, New
York 14831, and its telephone number at such offices is (607) 974-9000.
Recent Developments
Creation of Environmental Testing Services Company. On June 28, 1994, Corning
and International Technology created a jointly owned company to which Corning
transferred the net assets of its environmental testing laboratory business
and International Technology transferred the assets of its IT Analytical
Services business. Corning and International Technology each will own 50
percent of the company. Corning will account for its investment in the newly
created company using the equity method of accounting for investments. The
impact of the transaction is not expected to be material to Corning's
financial statements.
Acquisition of Clinical Laboratory Testing Businesses. On June 7, 1994,
Corning acquired all of the outstanding shares of Maryland Medical for
approximately 4.5 million shares of Corning Common Stock in a pooling of
interests transaction.
On June 1, 1994, Corning signed a definitive agreement to acquire all of the
outstanding shares of the capital stock of Nichols in a transaction to be
accounted for as a pooling of interests. Under the terms of the agreement,
Corning will exchange newly issued and registered shares of Corning Common
Stock with a value equal to up to $13 for each share of the capital stock of
Nichols. Using an assumed price of $33 per share of Corning Common Stock and
the number of shares of, and options to purchase, the capital stock of
Nichols presently outstanding, approximately 6.7 million shares of Corning
Common Stock and options to purchase approximately 1 million shares of
Corning Common Stock will be issued in the transaction. Substantially all of
the options to purchase shares of Corning Common Stock will be exercisable
immediately following the closing of the transaction. In no event will more
than 9.6 million shares of Corning Common Stock be issued and reserved for
the exercise of options granted in connection with such transaction. The
final exchange ratio of shares of Corning Common Stock for shares of Nichols
capital stock will be determined by the price of Corning Common Stock during
a 10-day trading period prior to the date of the Nichols stockholders meeting
held to approve the transaction. The transaction is subject to regulatory
approval and is expected to close in the second half of 1994.
Corning's consolidated financial statements for periods prior to these
transactions will not be restated since the acquisitions are not material to
Corning's financial position or results of operations. Corning will likely
record a one-time charge of up to $10 million after-tax in the third quarter
for transaction costs associated with these acquisitions and may possibly
record an additional one-time charge of up to $25 million after-tax in the
second half of 1994 for the integration of the Nichols and Maryland Medical
operations into MetPath.
For a discussion of the registration rights granted to the stockholders of
Maryland Medical and the registration of the shares of Corning Common Stock
to be issued in the Nichols transaction, see "Description of Corning Capital
Stock--Common Stock Eligible for Future Sale."
Sale of Parkersburg Plant. In May 1994, Corning sold its Parkersburg, W.Va.,
glass-tubing products plant to Schott Corporation, a subsidiary of the Schott
Group, for $57 million and decided to exit several minor product lines in the
specialty materials segment. The net gain from these transactions is not
material.
Disposition of Clinical Laboratory Testing Operations. On April 4, 1994,
MetPath sold the clinical laboratory testing operations of Damon in
California for approximately $51 million in cash. No gain or loss will be
recognized as a result of this transaction. The proceeds from the transaction
were used to retire a portion of the debt incurred in connection with the
acquisition of Damon in August 1993.
Breast Implant Litigation. Corning continues to be a defendant in two types
of cases previously reported involving the silicone-gel breast implant
products or materials formerly manufactured or supplied by Dow Corning or a
Dow Corning subsidiary. These cases include (1) several purported federal
securities class action lawsuits and shareholder derivative lawsuits filed
against Corning by shareholders of Corning alleging, among other things,
misrepresentations and omissions of material facts, breach of duty to
shareholders and waste of corporate assets relative to the silicone-gel
breast implant business conducted by Dow Corning and (2) as of May 23, 1994
over 3,490 lawsuits filed in various state courts against Corning and others
(including Dow Corning) by persons claiming injury from the silicone-gel
breast implant products or materials formerly manufactured by Dow Corning or
a Dow Corning subsidiary. Several of such suits have been styled as class
actions and others involve multiple plaintiffs.
All of the more than 3,000 tort lawsuits filed against Corning in federal
courts were consolidated in the United States District Court, Northern
District of Alabama, and in early December 1993, Corning was dismissed from
these cases. This decision by the District Court is non-appealable and,
although the District Court noted that it was "highly unlikely" that
additional discovery would produce new evidence, the decision is subject to
reconsideration if additional information is discovered or if there is a
change in state law. Certain state court tort cases against Corning have also
been consolidated for the purposes of discovery and pretrial matters. During
1994, Corning has made several motions for summary judgment in state courts
and judges have dismissed Corning from all of the over 2,500 tort cases filed
in California, Michigan, New York and Pennsylvania, some of which are on
appeal. Corning's motions seeking dismissal remain pending in various other
states. The federal securities suits are all pending in the United States
District Court for the Southern District of New York.
Corning's management does not believe that the purported securities class
action lawsuits or the purported shareholder derivative lawsuits or the tort
actions filed against Corning described above will have a material adverse
effect on Corning's financial condition or the results of its operations.
Dow Corning has informed Corning that as of April 15, 1994, Dow Corning has
been named in 45 purported breast implant product liability class action
lawsuits and approximately 14,500 individual breast implant product liability
lawsuits (which number includes all or substantially all of the 3,490
lawsuits referred to above)
and that Dow Corning anticipates that it will be named as a defendant in
additional breast implant lawsuits in the future. Dow Corning has also stated
that it is vigorously defending this litigation.
Verdicts in breast implant litigation against Dow Corning and other
defendants which have gone to judgment have varied widely, ranging from
dismissal to the award of significant compensatory and punitive damages.
Dow Corning has also informed Corning that Dow Corning believes that a
substantial portion of the indemnity and defense costs related to the breast
implant litigation brought and to be brought against it is and will be
covered by product liability insurance available to it but that the insurance
companies issuing the policies in question have reserved the right to deny
coverage under various theories and in many cases have refused to pay defense
and indemnity costs which have been incurred by Dow Corning. In this regard,
on June 30, 1993, Dow Corning instituted litigation in California against
certain insurance companies which had issued product liability insurance
policies to it from 1962 through 1985 seeking declaratory judgments that the
insurance company defendants are liable to indemnify Dow Corning for such
liabilities and costs and, in the case of certain insurance company
defendants, damages including punitive damages. In September 1993, several of
Dow Corning's insurers filed a complaint against Dow Corning and other
insurers for declaratory relief in Michigan and moved for the action brought
by Dow Corning in California to be dismissed in favor of the Michigan
litigation. In October 1993, this motion was granted. In March 1994, the
Michigan court ruled that certain of Dow Corning's primary insurers had a
duty to defend Dow Corning with respect to certain breast implant product
liability lawsuits. These insurers were directed to reimburse Dow Corning for
certain defense costs previously incurred. Dow Corning has informed Corning
that it is continuing negotiations with such insurance companies to obtain an
agreement on a formula for the allocation among these insurers of payments of
defense and indemnity expenses related to breast implant products liability
lawsuits and claims.
In March 1994, Dow Corning, along with other defendants and representatives
of breast implant litigation plaintiffs, signed the Settlement Agreement. The
Settlement Agreement is subject to court approval and to withdrawal by Dow
Corning and other defendants and plaintiffs. Under the Settlement Agreement
and related agreements, industry participants (the "Funding Participants")
would contribute approximately $4.2 billion over a period of more than thirty
years to establish several special purpose funds. The Settlement Agreement,
if implemented, would provide for a claims based structured resolution of
claims arising out of silicone breast implants, define the circumstances
under which payments from the funds would be made and include a number of
other provisions related to claims and administration. The Settlement
Agreement defines periods during which breast implant plaintiffs may elect
not to settle their claims by way of the Settlement Agreement and to continue
their individual breast implant litigation against manufacturers and other
defendants (the "Opt Out Plaintiffs"). In certain circumstances, if Dow
Corning considers the number of Opt Out Plaintiffs to be excessive, Dow
Corning is entitled to withdraw from participation in the Settlement
Agreement. Corning is not a party to the Settlement Agreement and will not
make any contribution to the settlement contemplated thereby.
In April 1994, the U.S. District Court for the Northern District of Alabama
preliminarily approved the Settlement Agreement and temporarily stayed and
suspended federal and state class action certification or notice proceedings
relative to federal or state class action lawsuits filed by plaintiffs
included in the settlement class.
In April 1994, the Court also notified the breast implant plaintiffs eligible
to participate in the settlement of a 60-day period during which they have
the ability to become initial Opt Out Plaintiffs. Such period has been
extended to July 1, 1994. A Court-supervised fairness review process of the
Settlement Agreement must be completed before the Settlement Agreement can be
implemented. Once the Settlement Agreement is approved by the Court, claims
can then be validated. The Court's approval of the Settlement Agreement would
be subject to appeal.
Dow Corning recorded a pre-tax charge of $640 million ($415 million after
tax) against its earnings for the fourth quarter of 1993 to reflect its best
estimate as of January 1994 of the net present value of its net liabilities
and costs as a result of its involvement in breast implant litigation and, as
a result of Dow Corning's decision to take this charge, Corning recorded a
charge of $203 million after tax against its equity in earnings of associated
companies for the fourth quarter of 1993 and against the carrying value of
its investment in Dow Corning at the end of fiscal 1993.
If the tort actions filed against Dow Corning or any settlement of the breast
implant controversy should require Dow Corning to record any additional
charges against income, the effect on Corning of any such
additional charges would be limited to their consequent impact (in the amount
of approximately 50% of the amount thereof) on Corning's reported equity in
earnings of associated companies for the period such charges were recognized,
on the book value of Corning's equity investment in Dow Corning and on
Corning's retained earnings. Corning does not believe that its share of any
additional charges taken by Dow Corning resulting from the breast implant
controversy will have a material adverse effect upon Corning's financial
condition. However, it is possible that Corning's shares of any such
additional charges taken by Dow Corning could have a material adverse effect
upon Corning's earnings in the quarters in which any such charges were
recognized by Dow Corning.
Other Dow Corning Matters. Dow Corning received a request dated July 9, 1993
from the Boston Regional Office of the Commission for certain documents and
information related to silicone breast implants. The request stated that the
Boston Regional Office was conducting an informal investigation which
"concerns Dow Corning, its subsidiary Dow Corning Wright and parent
corporations, Dow Chemical Co. and Corning Inc." Dow Corning has informed
Corning that Dow Corning has responded to this request enclosing the
documents and information requested along with related information and
continues to cooperate with the Boston Regional Office.
During the first quarter of 1993, Dow Corning received two federal grand jury
subpoenas initiated by the United States Department of Justice ("DOJ")
seeking documents and information related to silicone breast implants. Dow
Corning has informed Corning that it has delivered the documents and
information requested and continues to cooperate with the DOJ as this grand
jury investigation proceeds.
Department of Justice Investigations. In September 1993, MetPath and MetWest
Inc. ("MetWest"), a wholly owned subsidiary of Unilab, in which Corning had
at the time an interest of approximately 43%, entered into a Settlement
Agreement (the "MetPath Settlement Agreement") with the DOJ and the Inspector
General of the Department of Health and Human Services (the "Inspector
General"). Pursuant to the MetPath Settlement Agreement, MetPath and MetWest
paid to the United States a total of $39.8 million in settlement of civil
claims by the DOJ and the Inspector General that MetPath and MetWest had
wrongfully induced physicians to order certain laboratory tests without
realizing that such tests would be billed to Medicare at rates higher than
those the physicians believed were applicable.
Several state and private insurers have made claims based on the practices
covered by the MetPath Settlement Agreement. Several have settled but it is
not clear at this time what, if any, additional exposure Corning may have to
these entities and to other persons who may assert claims on the basis of
these or other practices.
During August 1993, MetPath, MetWest and Damon (which was acquired by Corning
in that month) together with other participants in the industry received
subpoenas from the Inspector General seeking information regarding their
practices with respect to 14 enumerated tests offered in conjunction with
automatic chemical test panels. Of these 14 tests, 5 were covered by the
MetPath Settlement Agreement and consequently MetPath and MetWest are not
being required to provide further information with regard to them. MetPath,
MetWest and Damon have completed this process of complying with these
subpoenas. MetPath also received in May 1994 two subpoenas from the Inspector
General concerning, in one case, an investigation into billings for tests not
performed or reported for which MetPath had voluntarily made corrective
payments in 1993 and, in the other, an investigation into whether separate
billings for tests which should have been grouped together had occurred. In
addition, a federal grand jury in New Jersey is investigating the billings
for tests not performed or reported. The results of these investigations
cannot currently be predicted but the possibility that they may result in
additional claims by the DOJ or the Inspector General or additional claims or
settlements with parties other than the DOJ and the Inspector General cannot
be excluded.
Other Legal Proceedings. During September 1993, two individuals filed in the
Supreme Court of the State of New York (one in New York County and one in
Suffolk County) separate purported derivative actions against Corning, as
nominal defendant, and Corning's Directors and certain of its officers
seeking on behalf of Corning compensatory and punitive damages in unspecified
amounts (and plaintiffs' costs and disbursements including attorneys' and
experts' fees) by reason of the alleged responsibility of the actual
defendants for the conduct which gave rise to the settlement in the MetPath
litigation described above and their alleged failure to cause Corning to make
timely disclosure thereof. The parties have agreed to consolidate such
actions in a single action before the Supreme Court of the State of New York
in New York County.
During October 1993, two individuals instituted in the United States District
Court for the Southern District of New York separate purported class actions
on behalf of purchasers of Corning securities in the
open market during the period from September 17 to October 6, 1993 against
Corning, certain of its Directors and officers and the underwriters of
Corning's offering, on September 17, 1993, of $100 million of 6.75%
Debentures due on September 15, 2013. The complaints generally allege that
the defendants failed to make timely disclosures of adverse developments in
Corning's business and seek compensatory and punitive damages in unspecified
amounts (and plaintiffs' costs and expenses including attorneys' fees and
disbursements). These two actions, with respect to which the underwriters
have been dismissed, have been consolidated.
Two class actions have been filed in the Court of Chancery for the State of
Delaware against Damon and certain of its officers and directors. These suits
allege damages arising from Damon's failure to mention in the press release
that announced the initial merger agreement it had reached with a company
other than Corning that an unnamed bidder (Corning) had also expressed
interest in acquiring Damon. The class of plaintiffs are those who sold their
stock at the price offered by the other company, rather than the higher
amount later offered and paid by Corning.
Corning's management does not believe that the purported class action
lawsuits or the purported shareholder derivative lawsuits described above
will have a material adverse effect on Corning's financial condition or the
results of its operations.
CORNING DELAWARE
Corning Delaware is a special purpose limited partnership formed under the
laws of the State of Delaware. All of its partnership interests (other than
the Preferred Securities and any interests of any Special General Partner)
are and will be beneficially owned directly or indirectly by Corning. Corning
is the sole general partner in Corning Delaware. Corning Finance Corporation,
a Delaware corporation and a wholly-owned subsidiary of Corning ("Corning
Finance"), initially will be the sole limited partner in Corning Delaware.
Upon issuance of the Preferred Securities, which securities represent limited
partnership interests in Corning Delaware, the holders of such Preferred
Securities will become limited partners in Corning Delaware and Corning
Finance will withdraw as a limited partner. The General Partner will agree to
contribute capital to the extent required to maintain its capital account
balance at 21% of all the capital contributed to Corning Delaware by the
holders of the Preferred Securities. The General Partner will invest 99% of
the total contributions in Corning Delaware in the Subordinated Debentures
and the remaining 1% in Eligible Investments as provided in the Amended and
Restated Limited Partnership Agreement (the "Limited Partnership Agreement").
Corning Delaware will exist for a maximum term of 45 years, unless earlier
dissolved. The Limited Partnership Agreement of Corning Delaware provides
that the General Partner will have liability for the debts and obligations of
Corning Delaware (including certain tax obligations as provided herein, but
excluding obligations to holders of Preferred Securities in their capacities
as holders, such obligations being separately guaranteed pursuant to the
Guarantee). Under Delaware law, limited partners in a Delaware limited
partnership (i.e., holders of the Preferred Securities) will not be
personally liable for the debts, obligations and liabilities of such limited
partnership, whether arising in contract, tort or otherwise, solely by reason
of being a limited partner of Corning Delaware (subject to any obligation
such holders have to repay any funds that may have been wrongfully
distributed to them). All of Corning Delaware's business and affairs will be
conducted by the General Partner. The location of the principal executive
offices of the General Partner is One Riverfront Plaza, Corning, New York
14831, telephone number (607) 974-9000. Corning Delaware exists for the
purpose of issuing the Preferred Securities and investing the proceeds
thereof in the Subordinated Debentures and Eligible Investments, as described
above.
DESCRIPTION OF SECURITIES OFFERED
The securities offered hereby are % Convertible Monthly Income Preferred
Securities of Corning Delaware with a liquidation preference of $50 per
security. The Preferred Securities are convertible at the option of the
holder through Corning Delaware into shares of Corning Common Stock at an
initial conversion rate of shares of Corning Common Stock for
each $50 principal amount of Subordinated Debentures (equivalent to a
conversion rate of shares of Corning Common Stock for each Preferred
Security), subject to adjustment in certain circumstances. The Preferred
Securities are guaranteed, to the extent described herein, by Corning as to
dividends, the Redemption Price and cash and other distributions payable on
liquidation. In certain circumstances the holders can cause Corning Delaware
to exchange all of the Subordinated Debentures for shares of Corning Series C
Preferred Stock and distribute such shares in exchange for the Preferred
Securities.
The following is a description of the principal terms of the Preferred
Securities; the Corning Common Stock and the Corning Series C Preferred Stock
into or for which the Preferred Securities may be con
verted or exchanged; the Guarantee pursuant to which Corning will guarantee,
to the extent described therein, certain payments with respect to the
Preferred Securities; and the Subordinated Debentures and the fiscal agency
agreement pursuant to which the Subordinated Debentures will be issued (the
"Fiscal Agency Agreement").
Preferred Securities
The following summary of the principal terms and provisions of the Preferred
Securities does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the Limited PartnershipAgreement, a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
General
All of the partnership interests in Corning Delaware other than the Preferred
Securities (and any interests of any Special General Partner) will be owned
directly by Corning at all times while the Preferred Securities are
outstanding. The Limited Partnership Agreement authorizes and creates the
Preferred Securities, which represent limited partnership interests in
Corning Delaware. The limited partnership interests represented by the
Preferred Securities will have a preference with respect to cash
distributions and amounts payable on liquidation and redemption over the
other partnership interests in Corning Delaware. The Limited Partnership
Agreement does not permit the issuance of other partnership interests without
the prior approval of holders of not less than 66-2/3% of the aggregate
liquidation preference of the Preferred Securities then outstanding.
Holders of Preferred Securities will have no preemptive rights.
Holders of the Preferred Securities will not have the right to remove or
replace the General Partner.
Dividends
Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions from Corning Delaware, accruing from , 1994 and
payable monthly in arrears on the last day of each calendar month of each
year, commencing , 1994 ("dividends"). The dividends payable on
each Preferred Security will be fixed at a rate per annum of $ or
% of the liquidation preference of $50. The amount of dividends payable
for any period will be computed on the basis of twelve 30-day months and a
360-day year and, for any period shorter than a full month, will be computed
on the basis of the actual number of days elapsed in such period.
Dividends on the Preferred Securities must be declared monthly and paid on
the last day of each calendar month to the extent that Corning Delaware has
funds legally available for the payment of such dividends and cash on hand
sufficient to make such payments. It is anticipated that Corning Delaware's
funds will be limited principally to payments received under the Subordinated
Debentures in which Corning Delaware will invest the proceeds from this
Offering. See "--Description of the Subordinated Debentures."
Corning has the right under the Subordinated Debentures to extend, from time
to time, the interest payment periods on the Subordinated Debentures for up
to 60 months. Monthly dividends on the Preferred Securities would be deferred
(but would continue to compound interest monthly) by Corning Delaware during
any such extended interest payment period. See "Investment
Considerations--Option to Extend Payment Periods", "--Additional Dividends"
and "--Option to Extend Interest Payment Period." The failure of holders of
Preferred Securities to receive dividends in full for 15 consecutive months
would trigger the right of holders of a majority of the aggregate liquidation
preference of the Preferred Securities then outstanding to cause Corning
Delaware to exchange all of the Subordinated Debentures for shares of Corning
Series C Preferred Stock at the Exchange Price and to distribute such shares
to the holders of Preferred Securities in exchange for all of the Preferred
Securities then outstanding. "Exchange Price" means one share of Corning
Series C Preferred Stock for each $100 principal amount of Subordinated
Debentures (which rate of exchange is equivalent to one share of Corning
Series C Preferred Stock for two Preferred Securities). See "--Optional
Exchange for Corning Series C Preferred Stock."
If a Tax Event occurs, then all dividends and distributions (including
distributions to the General Partner) shall be reduced by Additional Taxes,
commencing on the date that is the earlier of (i) three months after the date
of notice of such Tax Event and (ii) the date of a vote taken at a special
partnership meeting (or, in lieu of such a meeting, the date of written
consent) by the holders of the Preferred Securities on the matter of whether
to cause the exchange of all Preferred Securities for shares of Corning
Series C Preferred Stock (such earlier date being referred to herein as the
"Tax Event Date"). Prior to the Tax Event
Date, no reduction will be made on account of Additional Taxes and any
Additional Taxes will be paid by Corning. See "--Optional Exchange for
Corning Series C Preferred Stock."
"Tax Event" means that Corning shall have obtained an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that on or after the date of this Prospectus, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, (b) any amendment to, or
change in, an interpretation or application of any such laws or regulations
by any legislative body, court, governmental agency or regulatory authority
(including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the generally accepted position or (d) any
action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or effective or which
interpretation or pronouncement is issued or announced or which action is
taken, in each case on or after the date of this Prospectus, there is more
than an insubstantial risk that (i) Corning Delaware is subject to federal
income tax with respect to interest accrued or received on the Subordinated
Debentures, or (ii) Corning Delaware is subject to more than a de minimis
amount of taxes, duties or other governmental charges.
"Additional Taxes" means the sum of any additional income taxes, duties and
other governmental charges to which Corning Delaware has become subject from
time to time as a result of a Tax Event, except for United States withholding
taxes.
Corning will agree as General Partner in the Limited Partnership Agreement to
pay any and all Additional Taxes, liabilities, costs and expenses with
respect to such Additional Taxes of Corning Delaware for the period from the
formation of Corning Delaware through the Tax Event Date.
Dividends declared on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of Corning Delaware on the
relevant record dates, which will be one Business Day (as defined below)
prior to the relevant payment dates. Subject to any applicable laws and
regulations and the Limited Partnership Agreement, each such payment will be
made as described under "--Book-Entry-Only Issuance--The Depository Trust
Company" below. In the event that any date on which dividends are payable on
the Preferred Securities is not a Business Day, then payment of the dividend
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date. A "Business Day" means any day other than a day on which banking
institutions in The City of New York or Chicago are authorized or obligated
by law or executive order to close.
Additional Dividends
Corning Delaware shall be required to declare and pay additional dividends at
a rate of % per annum on the Preferred Securities upon any dividend
arrearages in respect of the Preferred Securities in order to provide, in
effect, monthly compounding on such dividend arrearages. (The amounts payable
to effect such monthly compounding on dividend arrearages in respect of the
Preferred Securities being referred to herein as "Additional Dividends").
Certain Restrictions on Corning Delaware
If accumulated and unpaid dividends have not been paid in full on the
Preferred Securities, Corning Delaware may not:
(i) pay, or declare and set aside for payment, any dividends on any other
partnership interests; or
(ii) redeem, purchase, or otherwise acquire any other partnership
interests;
until, in each case, such time as all accumulated and unpaid dividends on all
of the Preferred Securities, including any Additional Dividends thereon,
shall have been paid in full for all dividend periods terminating on or prior
to the date of such payment or the date of such redemption, purchase, or
acquisition, as the case may be.
If accumulated and unpaid dividends have been paid in full on the Preferred
Securities for all prior whole dividend periods, then holders of Preferred
Securities will not be entitled to receive or share in any dividends paid,
declared or set aside for payment on any other partnership interest in
Corning Delaware.
Optional Redemption
Corning Delaware may not redeem the Preferred Securities prior to ,
1998. On and after such date, Corning Delaware at its option may redeem the
Preferred Securities, in whole or in part, on not fewer than 35 nor more than
60 days' prior notice, at any time or from time to time, during the
twelve-month periods beginning on in each of the following
years at the redemption price (expressed as a percentage of the liquidation
preference) indicated below, plus accumulated and unpaid dividends (the
"Redemption Price"):
<TABLE>
<CAPTION>
Date Redemption Price
<S> <C>
, 1998 %
, 1999
, 2000
, 2001
, 2002
, 2003
, 2004 and thereafter 100
</TABLE>
Corning Delaware may not redeem the Preferred Securities in part unless all
accumulated and unpaid dividends have been paid in full on all Preferred
Securities for all monthly dividend periods terminating on or prior to the
date of redemption. In the event there is a redemption of Preferred
Securities after the Tax Event Date, then the Redemption Price for such
Preferred Securities will be reduced by the amount of Additional Taxes, if
any, that are attributable to such redemption of such Preferred Securities.
Mandatory Redemption
Upon repayment or prepayment by Corning of the Subordinated Debentures,
including as a result of the acceleration of the Subordinated Debentures upon
the occurrence of an "Event of Default" described under "Description of
Securities Offered--Description of the Subordinated Debentures--Events of
Default", the proceeds from such repayment or prepayment will be applied to
redeem the allocable portion of the Preferred Securities at the applicable
Redemption Price.
Redemption Procedures
Notice of any redemption (optional or mandatory) of Preferred Securities
(which notice will be irrevocable) will be given by Corning Delaware to
Corning and each record holder of Preferred Securities that are being
redeemed not fewer than 35 nor more than 60 days prior to the date fixed for
redemption thereof. If Corning Delaware gives a notice of redemption, then on
the redemption date, Corning will repay an aggregate principal amount of the
Subordinated Debentures plus accrued and unpaid interest in an amount equal
to the applicable Redemption Price for the Preferred Securities to be
redeemed. Corning Delaware will irrevocably deposit such funds with The
Depository Trust Company ("DTC") or the Paying and Conversion Agent, as the
case may be, and give DTC or the Paying and Conversion Agent, as the case may
be, irrevocable instructions and authority to pay the applicable Redemption
Price to the holders of the Preferred Securities to be redeemed. See
"--Book-Entry-Only Issuance--The Depository Trust Company." If notice of
redemption has been given and funds deposited with DTC or the Paying and
Conversion Agent, as the case may be, as required, then immediately prior to
the close of business on the date of such deposit, all rights of holders of
such Preferred Securities so called for redemption will cease, except the
right of the holders to receive the Redemption Price, but without additional
interest. In the event that any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price is improperly withheld or
refused and not paid by either Corning Delaware or Corning pursuant to the
Guarantee described under "--Description of the Guarantee" below, dividends
on the Preferred Securities called for redemption will continue to accumulate
at the then applicable rate, from the original redemption date to the date
that the Redemption Price is actually paid and the holders of such Preferred
Securities may exercise all of their rights as holders of the Preferred
Securities.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities to be redeemed will be selected by
lot as described under "--Book-Entry-Only Issuance--The Depository Trust
Company" below.
Conversion Rights
General. The Preferred Securities will be convertible at any time, at the
option of the holder thereof, through Corning Delaware into shares of Corning
Common Stock at an initial conversion rate of shares of Corning
Common Stock for each Preferred Security (equivalent to a conversion price of
$ per share of Corning Common Stock), subject to adjustment as
described under "--Conversion Price Adjustments" below. Upon receiving an
irrevocable notice by a holder of a Preferred Security to exercise its
conversion right, Corning Delaware, on behalf of such holder, will exercise
its option to convert an equivalent portion of the Subordinated Debentures
into Corning Common Stock and will distribute such shares of Corning Common
Stock to such holder in exchange for a corresponding portion of such holder's
Preferred Securities. Preferred Securities that have been called for
redemption will not be convertible after the close of business two calendar
days preceding the date fixed for redemption, unless Corning Delaware
defaults in making payment of the amount payable upon such redemption date.
Conversion rights will terminate upon the making of an Exchange Election
referred to below under "--Optional Exchange for Corning Series C Preferred
Stock" and upon the issuance of Corning Series C Preferred Stock pursuant to
such Exchange Election.
Holders of Preferred Securities at the close of business on a dividend
payment record date will be entitled to receive the dividend payable on such
securities on the corresponding dividend payment date notwithstanding the
conversion of such Preferred Securities following such dividend payment
record date. Except as provided in the immediately preceding sentence,
Corning Delaware will make no payment or allowance for accumulated and unpaid
dividends, whether or not in arrears, on converted Preferred Securities.
Corning will make no payment or allowance for dividends on the shares of
Corning Common Stock issued upon such conversion except with respect to
dividends or distributions as of record dates subsequent to such conversion.
Each conversion will be deemed to have been effected immediately prior to the
close of business on the day on which notice was received by Corning
Delaware.
No fractional shares of Corning Common Stock will be issued as a result of
conversion, but in lieu thereof such fractional interest will be paid in
cash.
Conversion Price Adjustments--General. The conversion price will be subject
to adjustment in certain events including, without duplication: (i) the
payment of dividends (and other distributions) payable in Corning Common
Stock on any class of capital stock of Corning; (ii) the issuance to all
holders of Corning Common Stock of rights or warrants entitling holders of
such rights or warrants to subscribe for or purchase Corning Common Stock at
less than the current market price; (iii) subdivisions and combinations of
Corning Common Stock; (iv) the payment of dividends (and other distributions)
to all holders of Corning Common Stock in the form of evidences of
indebtedness of Corning, securities or capital stock, cash, or assets
(including securities, but excluding those rights, warrants, dividends, and
distributions referred to in clause (ii) and dividends and distributions paid
exclusively in cash); (v) the payment of dividends (and other distributions)
on Corning Common Stock paid exclusively in cash, excluding (A) cash
dividends that do not exceed the per share amount of the immediately
preceding regular cash dividend (as adjusted to reflect any of the events
referred to in clauses (i) through (vi) of this sentence), or (B) cash
dividends if the annualized per share amount thereof does not exceed 15% of
the current market price of Corning Common Stock on the trading day
immediately preceding the date of declaration of such dividend; and (vi)
payment in respect of a tender or exchange offer (other than an odd-lot
offer) by Corning or any subsidiary of Corning for Corning Common Stock in
excess of 10% of the current market price of Corning Common Stock on the
trading day next succeeding the last date tenders or exchanges may be made
pursuant to such tender or exchange offer.
If after the Distribution Date for the preferred share purchase rights (the
"Rights") of Corning, as presently constituted or under any similar plan (see
"Description of Corning Capital Stock--Preferred Share Purchase Rights"),
converting holders of the Preferred Securities are not entitled to receive
the Rights that would otherwise be attributable (but for the date of
conversion) to the shares of Corning Common Stock received upon such
conversion, then adjustment of the conversion price shall be made under
clause (iv) of the preceding paragraph as if the Rights were then being
distributed to the common stockholders. If such an adjustment is made and the
Rights are later redeemed, invalidated, or terminated, then a corresponding
reversing adjustment shall be made to the conversion price, on an equitable
basis, to take account of such event.
Corning from time to time may reduce the conversion price by any amount
selected by Corning for any period of at least 20 days, in which case Corning
shall give at least 15 days' notice of such reduction.
Corning may, at its option, make such reductions in the conversion price, in
addition to those set forth above, as the Board of Directors deems advisable
to avoid or diminish any income tax to holders of Corning Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
No adjustment of the conversion price will be made upon the issuance of any
shares of Corning Common Stock pursuant to any present or future plan
providing for the reinvestment of dividends or interest payable on securities
of Corning and the investment of additional optional amounts in shares of
Corning Common Stock under any such plan, or the issuance of any shares of
Corning Common Stock or options or rights to purchase such shares pursuant to
any present or future employee benefit plan or program of Corning or pursuant
to any option, warrant, right, or exercisable, exchangeable, or convertible
security outstanding as of the date the Preferred Securities were first
designated. There shall also be no adjustment of the conversion price in case
of the issuance of any Corning Common Stock (or securities convertible into
or exchangeable for Corning Common Stock) of Corning, except as specifically
described above. If any action would require adjustment of the conversion
price pursuant to more than one of the anti-dilution provisions, only one
adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value to holders of the Preferred
Securities. No adjustment in the conversion price will be required unless
such adjustment would require an increase or decrease of at least 1% of the
conversion price, but any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
Conversion Price Adjustments--Merger, Consolidation or Sale of Assets of
Corning. In the event that Corning is a party to any transaction (including,
without limitation, a merger, consolidation, sale of all or substantially all
of Corning's assets, recapitalization or reclassification of Corning Common
Stock or any compulsory share exchange (each of the foregoing being referred
to as a "Transaction")), in each case, as a result of which shares of Corning
Common Stock shall be converted into the right (i) in the case of any
Transaction other than a Transaction involving a Common Stock Fundamental
Change (as defined below) to receive securities, cash, or other property,
each Preferred Security shall thereafter be convertible into the kind and
amount of securities, cash, and other property receivable upon the
consummation of such Transaction by a holder of that number of shares of
Corning Common Stock into which a Preferred Security was convertible
immediately prior to such Transaction, or (ii) in the case of a Transaction
involving a Common Stock Fundamental Change to receive common stock of the
kind received by holders of Corning Common Stock (but in each case after
giving effect to any adjustment discussed below relating to a Fundamental
Change if such Transaction constitutes a Fundamental Change).
If any Fundamental Change occurs, then the conversion price in effect will be
adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change, each Preferred
Security shall be convertible solely into common stock of the kind received
by holders of Corning Common Stock as a result of such Common Stock
Fundamental Change.
The conversion price in the case of any Transaction involving a Fundamental
Change will be adjusted immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined below), the
conversion price of the Preferred Security will thereupon become the lower of
(A) the conversion price in effect immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other prior adjustments,
and (B) the result obtained by multiplying the greater of the Applicable
Price (as defined below) or the then applicable Reference Market Price (as
defined below) by a fraction of which the numerator will be $50 and the
denominator will be the then current redemption price per Preferred Security
(or, for periods prior to , 1998, an amount per Preferred Security
of $ (for the twelve month period ended , 1995), $ (for
the twelve month period ended , 1996), $ (for the twelve
month period ended , 1997) and $ (for the twelve month period
ended , 1998)); and
(ii) in the case of a Common Stock Fundamental Change, the conversion price
of the Preferred Securities in effect immediately prior to such Common Stock
Fundamental Change, but after giving effect to any other prior adjustments,
will thereupon be adjusted by multiplying such conversion price by a fraction
of which the numerator will be the Purchaser Stock Price (as defined below)
and the denominator will be the Applicable Price; provided, however, that in
the event of a Common Stock Fundamental Change in which (A) 100% of the value
of the consideration received by a holder of Corning Common Stock is common
stock of the successor, acquiror, or other third party (and cash,
if any, is paid only with respect to any fractional interests in such common
stock resulting from such Common Stock Fundamental Change) and (B) all of the
Corning Common Stock will have been exchanged for, converted into, or
acquired for common stock (and cash with respect to fractional interests) of
the successor, acquiror, or other third party, the conversion price of the
Preferred Securities in effect immediately prior to such Common Stock
Fundamental Change will thereupon be adjusted by multiplying such conversion
price by a fraction of which the numerator will be one and the denominator
will be the number of securities of common stock of the successor, acquiror,
or other third party received by a holder of one share of Corning Common
Stock as a result of such Common Stock Fundamental Change.
In the absence of the Fundamental Change provisions, in the case of a
Transaction each Preferred Security would become convertible into the
securities, cash, or property receivable by a holder of the number of shares
of Corning Common Stock into which such Preferred Security was convertible
immediately prior to such Transaction. This change could substantially lessen
or eliminate the value of the conversion privilege associated with the
Preferred Securities. For example, if Corning were acquired in a cash merger,
each Preferred Security would become convertible solely into cash and would
no longer be convertible into securities whose value would vary depending on
the future prospects of Corning and other factors.
The foregoing conversion price adjustments are designed, in "Fundamental
Change" transactions where all or substantially all the Corning Common Stock
is converted into securities, cash, or property and not more than 50% of the
value received by the holders of Corning Common Stock consists of stock
listed or admitted for listing subject to notice of issuance on a national
securities exchange or quoted on the National Market System of the National
Association of Securities Dealers, Inc. (a "Non-Stock Fundamental Change," as
defined below), to increase the securities, cash, or property into which each
Preferred Security is convertible.
In a Non-Stock Fundamental Change transaction where the initial value
received per share of Corning Common Stock (measured as described in the
definition of Applicable Price below) is lower than the then applicable
conversion price of a Preferred Security but greater than or equal to the
"Reference Market Price" (initially $ but subject to adjustment in
certain events as described below), the conversion price will be adjusted as
described above with the effect that each Preferred Security will be
convertible into securities, cash, or property of the same type received by
the holders of Corning Common Stock in the transaction but in an amount that
would at the time of the transaction have had a value equal to the then
current Redemption Price per Preferred Security (or, for periods prior to
, 1998, the amounts per Preferred Security for such periods set
forth in clause (i) above with respect to conversion prices for Non-Stock
Fundamental Changes).
In a Non-Stock Fundamental Change transaction where the initial value
received per share of Corning Common Stock (measured as described in the
definition of Applicable Price) is lower than both the Applicable Conversion
Price of a Preferred Security and the Reference Market Price, the conversion
price will be adjusted as described above but calculated as though such
initial value had been the Reference Market Price.
In a Fundamental Change transaction where all or substantially all the
Corning Common Stock is converted into securities, cash, or property and more
than 50% of the value received by the holders of Corning Common Stock
consists of listed or National Market System traded common stock (a "Common
Stock Fundamental Change," as defined below), the foregoing adjustments are
designed to provide in effect that (a) where Corning Common Stock is
converted partly into such common stock and partly into other securities,
cash, or property, each Preferred Security will be convertible solely into a
number of shares of such common stock determined so that the initial value of
such shares (measured as described in the definition of "Purchaser Stock
Price" below) equals the value of the shares of Corning Common Stock into
which such Preferred Security was convertible immediately before the
transaction (measured as aforesaid) and (b) where Corning Common Stock is
converted solely into such common stock, each Preferred Security will be
convertible into the same number of shares of such common stock receivable by
a holder of the number of shares of Corning Common Stock into which such
Preferred Security was convertible immediately before such transaction.
The term "Applicable Price" means (i) in the case of a Non-Stock Fundamental
Change in which the holders of the Corning Common Stock receive only cash,
the amount of cash received by the holder of one share of Corning Common
Stock and (ii) in the event of any other Non-Stock Fundamental Change or any
Common Stock Fundamental Change, the average of the Closing Prices for the
Corning Common
Stock during the ten trading days prior to and including the record date for
the determination of the holders of Corning Common Stock entitled to receive
such securities, cash, or other property in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change or, if there is no such
record date, the date upon which the holders of the Corning Common Stock
shall have the right to receive such securities, cash, or other property
(such record date or distribution date being hereinafter referred to the
"Entitlement Date"), in each case as adjusted in good faith by the General
Partner to appropriately reflect any of the events referred to in clauses (i)
through (vi) of the first paragraph under "--Conversion Price
Adjustments--General."
The term "Closing Price" means on any day the reported last sales price on
such day or in case no sale takes place on such day, the average of the
reported closing bid and asked prices in each case on the New York Stock
Exchange Composite Tape or, if the stock is not listed or admitted to trading
on such Exchange, on the principal national securities exchange on which such
stock is listed or admitted to trading or if not listed or admitted to
trading on any national securities exchange, the average of the closing bid
and asked prices as furnished by any New York Stock Exchange member firm,
selected by the General Partner for that purpose.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of Corning) of the consideration received by holders of Corning
Common Stock consists of common stock that for each of the ten consecutive
trading days prior to the Entitlement Date has been admitted for listing or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on the National Market System of the National Association
of Securities Dealers, Inc.; provided, however, that a Fundamental Change
shall not be a Common Stock Fundamental Change unless either (i) Corning
continues to exist after the occurrence of such Fundamental Change and the
outstanding Preferred Securities continue to exist as outstanding Preferred
Securities or (ii) not later than the occurrence of such Fundamental Change,
the outstanding Preferred Securities are converted into or exchanged for
shares of convertible preferred stock of an entity succeeding to the business
of Corning, which convertible preferred stock has powers, preferences, and
relative, participating, optional, or other rights, and qualifications,
limitations, and restrictions, substantially similar to those of the
Preferred Securities.
The term "Fundamental Change" means the occurrence of any transaction or
event in connection with a plan pursuant to which all or substantially all of
the Corning Common Stock shall be exchanged for, converted into, acquired
for, or constitute solely the right to receive securities, cash, or other
property (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization, or
otherwise), provided, that, in the case of a plan involving more than one
such transaction or event, for purposes of adjustment of the conversion
price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Corning Common Stock shall be exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash, or other property, but the adjustment shall be based upon
the highest weighted average per share consideration that a holder of Corning
Common Stock could have received in such transaction or event as a result of
which more than 50% of the Corning Common Stock shall have been exchanged
for, converted into, or acquired for or constitute solely the right to
receive securities, cash, or other property.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in such Common Stock Fundamental Change for the ten consecutive
trading days prior to and including the Entitlement Date, as adjusted in good
faith by the General Partner to appropriately reflect any of the events
referred to in clauses (i) through (vi) of the first paragraph under
"--Conversion Price Adjustments--General."
The term "Reference Market Price" shall initially mean $ (which is an
amount equal to 66-2/3% of the reported last sale price for the Corning
Common Stock on the NYSE on , 1994), and in the event of any
adjustment to the conversion price other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the ratio of $
to the initial conversion price of the Preferred Securities.
Optional Exchange for Corning Series C Preferred Stock
Upon the occurrence of an Exchange Event (as defined below), the holders of
not less than a majority of the aggregate liquidation preference of Preferred
Securities then outstanding, voting as a class or by written consent, may, at
their option, cause Corning Delaware to exchange all of the Subordinated
Debentures for shares of Corning Series C Preferred Stock at the Exchange
Price and distribute such shares to the holders of Preferred Securities in
exchange for the Preferred Securities.
The Corning Series C Preferred Stock issued upon any such exchange will have
terms substantially similar to the terms of the Preferred Securities, except
that, among other things, the Corning Series C Preferred Stock will have the
right to elect two additional directors of Corning whenever dividends on the
Corning Series C Preferred Stock are in arrears for 18 months (including for
this purpose any arrearage with respect to the Preferred Securities) and will
not be subject to mandatory redemption. See "--Description of Corning Series
C Preferred Stock." The terms of the Corning Series C Preferred Stock provide
that all accumulated and unpaid dividends (including any Additional
Dividends) on the Preferred Securities that are not paid at the time of
making an Exchange Election shall be treated as accrued and unpaid dividends
on the Corning Series C Preferred Stock. For a discussion of the taxation of
such an exchange to holders, including the possibility that holders who
exchange their Preferred Securities for Corning Series C Preferred Stock may
be subject to additional income tax to the extent accrued but unpaid interest
on the Subordinated Debentures is converted into accumulated and unpaid
dividends on the Corning Series C Preferred Stock received in exchange for
the Preferred Securities, see "Certain Federal Income Tax
Considerations--Exchange of Preferred Securities for Corning Series C
Preferred Stock."
The following events are "Exchange Events":
(a) The failure of holders of Preferred Securities to receive, for 15
consecutive months, the full amount of dividend payments on the Preferred
Securities; or
(b) The occurrence of a Tax Event.
As soon as practicable, but in no event later than 30 days after the
occurrence of an Exchange Event, the General Partner will convene a meeting
of the holders of Preferred Securities (an "Exchange Election Meeting") for
the purpose of acting on the matter of whether to cause Corning Delaware to
exchange the Subordinated Debentures for shares of Corning Series C Preferred
Stock. If the General Partner fails to convene such Exchange Election Meeting
within such 30-day period, the holders of not less than 10% of the aggregate
liquidation preference of the outstanding Preferred Securities will be
entitled to convene such Exchange Election Meeting. Upon the affirmative vote
of the holders of Preferred Securities representing not less than a majority
of the aggregate liquidation preference of the Preferred Securities then
outstanding at an Exchange Election Meeting or, in the absence of such
meeting, upon receipt by Corning Delaware of written consents signed by the
holders of a majority of the aggregate liquidation preference of the
outstanding Preferred Securities, an election to exchange all outstanding
Preferred Securities on the basis described above (an "Exchange Election")
will be deemed to have been made. In the case of a Tax Event, Corning
Delaware will continue to pay dividends on the Preferred Securities without
adjustment for Additional Taxes until the Tax Event Date. During such time,
Corning will pay any and all Additional Taxes of Corning Delaware.
Holders of Preferred Securities, by purchasing such Preferred Securities,
will be deemed to have agreed to be bound by these optional exchange
provisions in regard to the exchange of such Preferred Securities for Corning
Series C Preferred Stock on the terms described above.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution, or
winding-up of Corning Delaware, the holders of Preferred Securities at the
time outstanding will be entitled to receive a liquidation preference of $50
per Preferred Security plus all accumulated and unpaid dividends (whether or
not earned or declared), including any Additional Dividends thereon, to the
date of payment (the "Liquidation Distribution") out of the assets of Corning
Delaware legally available for distribution to partners prior to any
distribution by Corning Delaware on its other partnership interests.
If, upon any liquidation of Corning Delaware, the holders of Preferred
Securities are paid in full the aggregate Liquidation Distribution to which
they are entitled, then such holders will not be entitled to receive or share
in any other assets of Corning Delaware thereafter available for distribution
to any other holders of partnership interests in Corning Delaware.
Pursuant to the Limited Partnership Agreement, Corning Delaware shall be
dissolved and its affairs shall be wound up upon the earliest to occur of:
(i) the expiration of the term of Corning Delaware; (ii) any bankruptcy,
dissolution or insolvency of the General Partner; (iii) upon the entry of a
decree of a judicial dissolution; or (iv) upon the written consent of all
partners of Corning Delaware.
Merger, Consolidation or Sale of Assets of Corning Delaware
The General Partner is authorized and directed to conduct its affairs and to
operate Corning Delaware in such a way that Corning Delaware will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act of 1940 (the "1940 Act") or taxed as a corporation for
federal income tax purposes and so that the Subordinated Debentures will be
treated as indebtedness of Corning for federal income tax purposes. In this
connection, the General Partner is authorized to take any action not
inconsistent with applicable law, the Certificate of Limited Partnership of
Corning Delaware or the Limited Partnership Agreement that does not adversely
affect the interests of the holders of the Preferred Securities and that the
General Partner determines in its discretion to be necessary or desirable for
such purposes.
Corning Delaware may not consolidate or merge with or into, or convey,
transfer or lease its properties and assets substantially as an entirety to
any entity, except as described below. Corning Delaware may, for purposes of
changing its state of domicile in order to avoid federal income tax or 1940
Act consequences adverse to Corning or Corning Delaware or to the holders of
the Preferred Securities, without the consent of the holders of the Preferred
Securities, consolidate or merge with or into a limited partnership or trust
organized as such under the laws of any state of the United States of
America; provided, that (i) such successor entity either (x) expressly
assumes all of the obligations of Corning Delaware under the Preferred
Securities or (y) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank, with
respect to participation in the profits or assets of the successor entity, at
least as high as the Preferred Securities rank with respect to participation
in the profits or assets of Corning Delaware, (ii) Corning expressly
acknowledges such successor entity as the holder of the Subordinated
Debentures, (iii) such merger or consolidation does not cause the Preferred
Securities (or any Successor Securities) to be delisted by any national
securities exchange or other organization on which the Preferred Securities
are then listed, (iv) such merger or consolidation does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger or
consolidation does not adversely affect the powers, preferences and other
special rights of the holders of the Preferred Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (vi) prior to such
merger or consolidation Corning has received an opinion of nationally
recognized independent counsel to Corning Delaware experienced in such
matters to the effect that (x) such successor entity will be treated as a
partnership for federal income tax purposes, (y) following such merger or
consolidation, Corning and such successor entity will be in compliance with
the 1940 Act without registering thereunder as an investment company and (z)
such merger or consolidation will not adversely affect the limited liability
of the holders of the Preferred Securities.
Voting Rights
Except as provided below and under "--Description of the
Guarantee--Amendments and Assignment" and as otherwise required by law and
the Limited Partnership Agreement, the holders of the Preferred Securities
will have no voting rights.
If (i) Corning Delaware fails to pay dividends in full on the Preferred
Securities for 15 consecutive months (other than as a result of a
determination by Corning to defer interest payments on the Subordinated
Debentures as described under "Description of Securities Offered--Description
of the Subordinated Debentures--Option to Extend Interest Payment Period");
(ii) an Event of Default (as defined under "Description of Securities
Offered--Description of the Subordinated Debentures--Events of Default")
occurs and is continuing with respect to the Subordinated Debentures; or
(iii) Corning is in default under any of its payment obligations under the
Guarantee (as described under "--Description of the Guarantee"), then the
holders of the Preferred Securities, upon the affirmative vote of not less
than a majority in aggregate liquidation preference of the Preferred
Securities then outstanding, will be entitled to appoint and authorize a
special general partner (a "Special General Partner") to enforce Corning
Delaware's rights under the Subordinated Debentures, enforce the rights of
the holders of Preferred Securities under the Guarantee and enforce the
rights of the holders to receive dividends on the Preferred Securities. For
pur-
poses of determining whether Corning Delaware has failed to pay dividends in
full for 15 consecutive months, dividends shall be deemed to remain in
arrears, notwithstanding any partial payments in respect thereof, until all
accumulated and unpaid dividends have been or contemporaneously are paid. Not
later than 30 days after such right to appoint a Special General Partner
arises, the General Partner will convene a meeting to elect a Special General
Partner. If the General Partner fails to convene such meeting within such
30-day period, the holders of not less than 10% of the aggregate liquidation
preference of the Preferred Securities then outstanding will be entitled to
convene such meeting. Any Special General Partner so appointed shall vacate
office immediately if Corning Delaware (or Corning pursuant to the Guarantee)
shall have paid in full all accumulated and unpaid dividends on the Preferred
Securities or such Event of Default or default, as the case may be, shall
have been cured. Notwithstanding the appointment of any such Special General
Partner, Corning will retain all rights as obligor under the Subordinated
Debentures, including the right to extend the interest payment period as
provided under "--Description of the Subordinated Debentures--Option to
Extend Interest Payment Period."
If any proposed amendment to the Limited Partnership Agreement provides for,
or the General Partner otherwise proposes to effect, (x) any action that
would materially adversely affect the powers, preferences or special rights
of the Preferred Securities, whether by way of amendment to the Limited
Partnership Agreement or otherwise (including, without limitation, the
authorization or issuance of any additional limited partnership interests in
Corning Delaware), or (y) the dissolution, winding-up or termination of
Corning Delaware (other than in connection with the exchange of Corning
Series C Preferred Stock for Preferred Securities upon the occurrence of an
Exchange Event or as described under "--Merger, Consolidation or Sale of
Assets of Corning Delaware"), then the holders of outstanding Preferred
Securities will be entitled to vote on such amendment or action of the
General Partner (but not on any other amendment or action), and such
amendment or action shall not be effective except with the approval of the
holders of not less than 66-2/3% or more of the aggregate liquidation
preference of the Preferred Securities then outstanding; provided, however,
that no such approval shall be required if the dissolution, winding-up or
termination of Corning Delaware is proposed or initiated pursuant to the
Limited Partnership Agreement.
The rights attached to the Preferred Securities will be deemed to be
materially adversely affected by the creation or issue of, and a vote of the
holders of Preferred Securities will be required for the creation or issue
of, any partnership interests in Corning Delaware other than the interests
represented by the Preferred Securities, the interests of the General Partner
and the interests of any Special General Partner.
So long as any Subordinated Debentures are held by Corning Delaware, the
General Partner shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Special General Partner (as
defined under "Description of Securities Offered--Description of the
Subordinated Debentures"), or exercising any trust or power conferred on the
Special General Partner with respect to the Subordinated Debentures, (ii)
waive any past default, which is waivable under the Fiscal Agency Agreement,
(iii) exercise any right to rescind or annul a declaration that the principal
of all the Subordinated Debentures shall be due and payable, (iv) consent to
any amendment, modification or termination of the Subordinated Debentures or
of the Fiscal Agency Agreement without, in each case, obtaining the prior
approval of the holders of at least 66-2/3% or more of the aggregate
liquidation preference of the Preferred Securities then outstanding,
provided, however, that where a consent under the Subordinated Debentures
would require the consent of each holder affected thereby, no such consent
shall be given by the General Partner without the prior consent of each
holder of the Preferred Securities. The General Partner shall not revoke any
action previously authorized or approved by the Special General Partner or by
a vote of Preferred Securities, without the approval of the holders of
Preferred Securities representing not less than 66-2/3% of the aggregate
liquidation preference of the Preferred Securities then outstanding. The
General Partner shall notify all holders of Preferred Securities of any
notice of default received from the Fiscal Agent with respect to the
Subordinated Debentures.
Any required approval of holders of Preferred Securities may be given at a
meeting of such holders convened for such purpose or pursuant to written
consent. Corning Delaware will cause a notice of any meeting at which holders
of Preferred Securities are entitled to vote, or of any matter upon which
action by written consent of such holders is to be taken, to be mailed to
each holder of record of Preferred Securities. Each such notice will include
a statement setting forth (i) the date of such meeting or the date by which
such action is to be taken, (ii) a description of any matter on which such
holders are entitled to vote or of such matter upon which written consent is
sought and (iii) instructions for the delivery of proxies or consents.
Book-Entry-Only Issuance--The Depository Trust Company
DTC will act as securities depository for the Preferred Securities. The
Preferred Securities will be issued only as fully-registered securities
registered in the name of Cede & Co. (as nominee for DTC). One or more
fully-registered global Preferred Security certificates will be issued,
representing in the aggregate the total number of Preferred Securities, and
will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a global Preferred Security.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations ("Direct
Participants"). Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through
or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants").
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser
of a Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct or Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which the Beneficial Owners purchased
Preferred Securities. Transfers of ownership interests in Preferred
Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in Preferred
Securities, except upon a resignation of DTC, upon the occurrence of an Event
of Default under the Subordinated Debentures or upon a decision by Corning
Delaware to discontinue the book-entry system for the Preferred Securities.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Preferred Securities are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants
and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such securities
to be redeemed.
Although voting with respect to the Preferred Securities is limited, in those
cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to Corning Delaware as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts
the Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Dividend payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed
by standing instructions and cus
tomary practices and will be the responsibility of such Participant and not
of DTC, Corning Delaware or Corning, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of dividends to
DTC is the responsibility of Corning Delaware, disbursement of such payments
to Direct Participants is the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred Security
will not be entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depository with
respect to the Preferred Securities at any time by giving reasonable notice
to Corning Delaware. Under such circumstances, in the event that a successor
securities depository is not obtained, certificates representing the
Preferred Securities will be printed and delivered. If an Event of Default
occurs under the Subordinated Debentures or if Corning Delaware decides to
discontinue use of the system of book-entry transfers through DTC (or a
successor depository), certificates representing the Preferred Securities
will be printed and delivered.
Transfer Agent, Registrar, Paying and Conversion Agent
Harris Trust and Savings Bank will act as Transfer Agent, Registrar and
Paying and Conversion Agent for the Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of Corning Delaware, but upon payment (with the giving
of such indemnity as Corning Delaware may require) in respect of any tax or
other government charges which may be imposed in relation to it.
Description of Corning Series C Preferred Stock
As described under "--Preferred Securities--Optional Exchange for Corning
Series C Preferred Stock" above, the Preferred Securities may be exchanged in
certain circumstances through Corning Delaware for Corning Series C Preferred
Stock. The following description of the principal terms of the Corning Series
C Preferred Stock does not purport to be complete or to give full effect to
the provisions of statutory or other law and is qualified in its entirety by
reference to the Corning Restated Certificate of Incorporation as amended
(the "Restated Certificate") and the Certificate of Amendment, Preferences
and Rights of the Corning Series C Preferred Stock (the "Certificate of
Amendment"), which are filed as exhibits to the Registration Statement of
which this Prospectus is a part.
The Board of Directors of Corning has designated, and Corning will keep
available, shares ( shares if the Underwriters'
over-allotment option is exercised in full) of Corning Series C Preferred
Stock for issuance upon exchange of the Preferred Securities (as described
under " --Preferred Securities--Optional Exchange for Corning Series C
Preferred Stock" above). At the time the Preferred Securities are issued, all
corporate action required in connection with the issuance of the Corning
Series C Preferred Stock upon the making of an Exchange Election will have
been taken. The terms of the Corning Series C Preferred Stock are
substantially similar to those of the Preferred Securities with the following
principal exceptions:
(a) Accumulated and unpaid dividends (including any Additional Dividends
thereon) on the Preferred Securities, if any, at the time of the making of an
Exchange Election will become accumulated and unpaid dividends on the Corning
Series C Preferred Stock;
(b) If dividends are not paid on the Corning Series C Preferred Stock for
18 monthly dividend periods (including for this purpose any arrearage with
respect to the Preferred Securities), the number of directors of Corning
shall be increased by two persons and the holders of the Corning Series C
Preferred Stock will be entitled to elect the persons to fill such positions;
(c) Dividends on the Corning Series C Preferred Stock need not be declared
even if Corning has funds legally available therefor and cash on hand
sufficient to pay dividends. However, if Corning fails to declare such
dividends, no dividends would be payable on any Junior Stock (as defined
under "--Description of the Guarantee--Subordination") of Corning ranking
junior to the Corning Series C Preferred Stock; and
(d) The Corning Series C Preferred Stock will not be subject to mandatory
redemption.
The Corning Series C Preferred Stock will rank senior to the Corning Common
Stock and the Corning Series A Preferred Stock (as defined below under
"Description of Corning Capital Stock--Series Preferred
Stock") with respect to the payment of dividends and amounts on liquidation,
dissolution and winding-up. The Corning Series C Preferred Stock will rank on
a parity with the Series B Preferred Stock with respect to the payment of
dividends and amounts upon liquidation, dissolution or winding-up. In the
event dividends are not paid in full on either the Corning Series B or Series
C Preferred Stock, the holders of the Corning Series B and Series C Preferred
Stock will share ratably with respect to any dividend payment in proportion
to the respective amounts of the accumulated and unpaid dividends due on such
preferred stock .
In the event of a voluntary or involuntary bankruptcy, liquidation,
dissolution or winding-up of Corning, the holders of Corning Series C
Preferred Stock are entitled to receive out of the net assets of Corning, but
before any distribution is made on any class of securities ranking junior to
the Corning Series C Preferred Stock, $100 per share in cash plus accumulated
and unpaid dividends (whether or not earned or declared) to the date of final
distribution to such holders. After payment of the full amount of the
liquidation distribution to which they are entitled, the holders of shares of
Corning Series C Preferred Stock will not be entitled to any further
participation in any distribution of assets of Corning. In the event that the
assets available for distribution are insufficient to pay in full the
liquidation preference to the holders of the Corning Series B and Series C
Preferred Stock and any other pari passu preferred stock, the holders of such
preferred stock will share in the remaining assets, based on the proportion
of their liquidation preference to the entire amount of unpaid liquidation
preference.
So long as the Subordinated Debentures are exchangeable for the Corning
Series C Preferred Stock, Corning may not authorize or issue any other
preferred stock ranking senior to the Corning Series C Preferred Stock
without the approval of the holders of not less than 66-2/3% of the aggregate
liquidation preference of the Preferred Securities then outstanding. However,
no such vote shall be required for the issuance by Corning of additional
preferred stock ranking pari passu to the Corning Series C Preferred Stock as
to the payment of dividends and amounts upon liquidation, dissolution and
winding-up.
Description of the Guarantee
The following is a description of the principal terms and provisions of the
Guarantee Agreement (the "Guarantee"), which will be executed and delivered
by Corning for the benefit of the holders from time to time of the Preferred
Securities. The following description is qualified in its entirety by
reference to such agreement, a copy of the form of which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
General
Pursuant to the Guarantee, Corning will irrevocably and unconditionally
agree, on a subordinated basis and to the extent set forth therein, to pay in
full to the holders of the Preferred Securities, the Guarantee Payments (as
defined below) (except to the extent previously paid by Corning Delaware), as
and when due, regardless of any defense, right of set-off or counterclaim
that Corning Delaware may have or assert. The following payments, to the
extent not paid by Corning Delaware, are the "Guarantee Payments": (a) any
accumulated and unpaid dividends (including any Additional Dividends thereon)
that have been theretofore declared on the Preferred Securities from monies
legally available therefor; (b) the Redemption Price payable with respect to
Preferred Securities called for redemption by Corning Delaware out of funds
legally available therefor; and (c) upon a liquidation of Corning Delaware,
the lesser of (i) the Liquidation Distribution and (ii) the amount of assets
of Corning Delaware available for distribution to holders of Preferred
Securities in liquidation of Corning Delaware. Corning's obligation to make a
Guarantee Payment may be satisfied by Corning's direct payment of the
required amounts to the holders of Preferred Securities or by Corning's
causing Corning Delaware to pay such amounts to such holders.
If Corning fails to make interest payments on the Subordinated Debentures
purchased by Corning Delaware, Corning Delaware will have insufficient funds
to pay dividends on the Preferred Securities. The Guarantee does not cover
payment of dividends when Corning Delaware does not have sufficient funds to
pay such dividends.
Corning's obligations under the Guarantee will constitute a guarantee of
payment and not of collection. A holder of Preferred Securities may enforce
such obligations directly against Corning, and Corning waives any right or
remedy to require that any action be brought against Corning Delaware or any
other person or entity before proceeding against Corning. Such obligations
will not be discharged except by payment of the Guarantee Payments in full.
Certain Covenants of Corning
In the Guarantee, Corning will covenant and agree that, so long as any
Preferred Securities are outstanding, neither Corning nor any majority owned
subsidiary of Corning shall declare or pay any dividend or distribution on,
or redeem, purchase or otherwise acquire or make a liquidation payment with
respect to, any Junior Stock (as defined below under "--Subordination")
(other than as a result of a reclassification of Junior Stock or the exchange
or conversion of one class or series of Junior Stock for another class or
series of Junior Stock) or make any guarantee payments with respect to the
foregoing (other than payments under the Guarantee or dividends or guarantee
payments to Corning), if at such time Corning has exercised its option to
extend the interest payment period on the Subordinated Debentures and such
extension is continuing, Corning is in default with respect to its payment or
other obligations under the Guarantee or there shall have occurred any event
that, with the giving of notice or the lapse of time or both, would
constitute an Event of Default under the Subordinated Debentures. When
dividends are not paid in full, all dividends declared upon the Preferred
Securities and all dividends declared upon any Pari Passu Stock shall be
declared ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Preferred Securities and accumulated and unpaid
on such Pari Passu Stock. "Pari Passu Stock" means Corning's Series B
Preferred Stock, and any guarantee now or hereafter entered into by Corning
in respect of any preferred or preference stock of any affiliate of Corning,
and any other class or series of preferred stock of Corning, ranking as to
the payment of dividends and amounts upon liquidation, dissolution and
winding-up on a parity with the Series B Preferred Stock. Corning will
covenant to take all actions necessary to ensure the compliance of its
subsidiaries with the above covenant.
Corning will also covenant that, so long as any Preferred Securities are
outstanding, it will (a) maintain direct 100% ownership of the partnership
interests and any other interests in Corning Delaware other than the
Preferred Securities, except as permitted in the Limited Partnership
Agreement, (b) cause at least 21% of the total value of Corning Delaware and
at least 21% of all interest in the capital, income, gain, loss, deduction
and credit of Corning Delaware to be held by Corning, as General Partner,
except as permitted in the Limited Partnership Agreement, (c) not voluntarily
dissolve, wind-up or liquidate itself or Corning Delaware, (d) remain the
General Partner and timely perform all of its duties as General Partner of
Corning Delaware (including the duty to cause Corning Delaware to declare and
pay dividends on the Preferred Securities), unless a permitted successor
General Partner is appointed, and (e) subject to the terms of the Preferred
Securities, use reasonable efforts to cause Corning Delaware to remain a
Delaware limited partnership and otherwise continue to be treated as a
partnership for United States federal income tax purposes.
Subordination
Corning's obligations under the Guarantee to make Guarantee Payments will
constitute an unsecured obligation of Corning that will rank (i) subordinate
and junior in right of payment to all liabilities of Corning, (ii) pari passu
with the Series B Preferred Stock, with any guarantee now or hereafter
entered into by Corning in respect of any preferred or preference stock of
any affiliate of Corning and any other class or series of Corning preferred
stock ranking as to the payment of dividends and amounts upon liquidation,
dissolution and winding up on a parity with the Series B Preferred Stock and
(iii) senior to Corning Common Stock, the Series A Preferred Stock and any
other class or series of capital stock issued by Corning or any of its
affiliates which by its express terms ranks junior in the payment of
dividends and amounts on liquidation, dissolution, and winding-up to the
Preferred Securities ("Junior Stock").
Amendments and Assignment
The terms of the Guarantee may be amended only with the prior approval of the
holders of not less than 66-2/3% of the aggregate liquidation preference of
the Preferred Securities then outstanding. The manner of obtaining any such
approval of holders of the Preferred Securities will be as set forth in
"--Preferred Securities--Voting Rights." All provisions contained in the
Guarantee will bind the successors, assigns, receivers, trustees and
representatives of Corning and will inure to the benefit of the holders of
the Preferred Securities. Except in connection with any merger or
consolidation of Corning with or into another entity or any sale, transfer or
lease of Corning's assets to another entity complying with the provisions
under "--Consolidation, Merger or Sale of Assets" below. Corning may not
assign its rights or delegate its obligations under the Guarantee without the
prior approval of the holders of not less than 66-2/3% of the aggregate
liquidation preference of the Preferred Securities then outstanding.
Termination
Corning's obligation to make Guarantee Payments under the Guarantee will
terminate as to each holder of Preferred Securities and be of no further
force and effect upon (a) full payment of the Redemption Price of such
holder's Preferred Securities, (b) full payment of the amounts payable to
such holder upon liquidation of Corning Delaware, (c) the distribution of
Corning Common Stock to such holder in respect of the conversion of all of
such holder's Preferred Securities into Corning Common Stock or (d) the
distribution of Corning Series C Preferred Stock to such holder in respect of
the exchange of the Subordinated Debentures for Corning Series C Preferred
Stock. Notwithstanding the foregoing, Corning's obligation to make Guarantee
Payments will continue to be effective or will be reinstated, as the case may
be, as to a holder if at any time such holder must restore payment of any
sums paid under the Preferred Securities or under the Guarantee for any
reason whatsoever.
Consolidation, Merger or Sale of Assets
The Guarantee provides that Corning may merge or consolidate with or into
another entity, may permit another entity to merge or consolidate with or
into Corning and may sell, transfer or lease all or substantially all of its
assets to another entity if (i) at such time no Event of Default (as defined
in the Fiscal Agency Agreement) shall have occurred and be continuing, or
would occur as a result of such merger, consolidation, sale, transfer or
lease and (ii) the survivor of such merger or consolidation or entity to
which Corning's assets are sold, transferred or leased is an entity organized
under the laws of the United States or any state thereof, becomes the General
Partner, assumes all of Corning's obligations under the Guarantee and has a
net worth equal to at least 10% of the total contributions to Corning
Delaware.
Governing Law
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
Description of the Subordinated Debentures
The following summary of the principal terms and provisions of the
Subordinated Debentures in which Corning Delaware will invest the proceeds of
the issuance and sale of the Preferred Securities and substantially all of
the capital contributed to Corning Delaware by the General Partner (the
"General Partner Payment") does not purport to be complete and is qualified
in its entirety by reference to the Fiscal Agency Agreement among Corning,
Corning Delaware and Harris Trust and Savings Bank, as fiscal agent (the
"Fiscal Agent"), a form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. All of the
Subordinated Debentures will be issued under the Fiscal Agency Agreement.
General
The Subordinated Debentures will be limited in aggregate principal amount to
the sum of the aggregate amount of the proceeds received by Corning Delaware
from the Offering and the General Partner Payment less 1% of such sum.
The entire principal amount of the Subordinated Debentures will become due
and payable, together with any accrued and unpaid interest thereon, including
Additional Interest (as defined below), on the earliest of , 2024
or the date upon which Corning Delaware is dissolved, wound-up, liquidated or
terminated.
Prepayment
Corning will have the right to prepay the Subordinated Debentures, in whole
or in part (together with any accrued but unpaid interest on the portion
being prepaid), at any time on or after , 1998, during the twelve-month
periods beginning on in each of the following years at the
following prepayment prices (expressed as a percentage of the principal
amount of the Subordinated Debentures being prepaid):
<TABLE>
<CAPTION>
Prepayment Price
Year (% of principal amount)
<S> <C>
1998 %
1999
2000
2001
2002
2003
2004 and thereafter
</TABLE>
Interest
The Subordinated Debentures will bear interest at the rate of % per annum
from the original date of issuance, payable monthly in arrears on the last
day of each calendar month of each year (each an "Interest Payment Date"),
commencing , 1994. Interest will compound monthly and will accrue
at the annual rate of % on any interest installment not paid monthly or
when otherwise due.
The amount of interest payable for any period will be computed on the basis
of twelve 30-day months and a 360-day year and, for any period shorter than a
full monthly interest period, will be computed on the basis of the actual
number of days elapsed in such period. In the event that any date on which
interest is payable on the Subordinated Debentures is not a Business Day,
then a payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is
in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date. A "Business Day" shall mean any day other
than a day on which banking institutions in The City of New York are
authorized or required by law to close.
Option to Extend Interest Payment Period
Corning shall have the right at any time and from time to time during the
term of the Subordinated Debentures to extend interest payment periods for up
to 60 months, during which periods interest will compound monthly and during
which Corning shall have the right to make partial payments of interest and
at the end of which period Corning shall pay all interest then accrued and
unpaid (together with Additional Interest); provided that, during any such
extended interest payment period neither Corning nor any majority owned
subsidiary of Corning shall declare or pay any dividend on, or redeem,
purchase, acquire for value or make a liquidation payment with respect to,
any Junior Stock (other than as a result of a reclassification of Junior
Stock or the exchange or conversion of one class or series of Junior Stock
for another class or series of Junior Stock) or make any guarantee payments
with respect to the foregoing (other than payments under the Guarantee or
dividends or guarantee payments to Corning). Prior to the termination of any
such extended interest payment period, Corning may further extend the
interest payment period, provided that such extended interest payment period
together with all such further extensions thereof may not exceed 60 months.
Corning shall give Corning Delaware notice of its selection of an extended
interest payment period one Business Day prior to the earlier of (i) the date
the related dividends are payable or (ii) the date Corning Delaware is
required to give notice of the record or payment date of such related
dividend to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Preferred Securities, but in any event not
less than two Business Days prior to such record date. The General Partner
shall give notice of Corning's selection of an extended interest payment
period to the holders of the Preferred Securities.
Additional Interest
Corning shall be required to pay any interest upon interest that has not been
paid on the Subordinated Debentures monthly. Accordingly, in such
circumstance, Corning will pay interest upon interest in order to provide for
monthly compounding on the Subordinated Debentures (the amounts of interest
payable to effect monthly compounding on the Subordinated Debentures being
referred to herein as "Additional Interest").
Subordination
The Fiscal Agency Agreement provides that the Subordinated Debentures are
subordinate and junior in right of payment to all Senior Indebtedness (as
defined below) of Corning and will rank pari passu with the claims of
Corning's trade creditors.
Upon any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of Corning, the holders of all Senior Indebtedness will first be
entitled to receive payment in full of all amounts due thereon before any
payment will be made in respect of the principal of or premium, if any, or
interest on the Subordinated Debentures. In the event of the acceleration of
the maturity of the Subordinated Debentures, the holders of all Senior
Indebtedness will first be entitled to receive payment in full of all amounts
due thereon before any payment will be made upon the principal of or premium,
if any, or interest on the Subordinated Debentures. No payments on account of
principal, premium, if any, or interest in respect of the Subordinated
Debentures may be made if there shall have occurred and be continuing a
default in any payment with respect to Senior Indebtedness, or an event of
default with respect to any Senior Indebtedness permitting the holders
thereof to accelerate the maturity thereof.
By reason of such subordination, in the event of any proceeding of the type
described in the preceding paragraph involving Corning, creditors of Corning
who are holders of Senior Indebtedness and general unsecured creditors of
Corning may recover more, ratably, than Corning Delaware.
The term "Senior Indebtedness" is defined to mean the principal of, premium,
if any, interest on, and any other payment due pursuant to any of the
following, whether outstanding at the date of execution of the Fiscal Agency
Agreement or thereafter incurred, created or assumed:
(a) all indebtedness of Corning for money borrowed (including any
indebtedness secured by a mortgage or other lien which is (i) given to secure
all or part of the purchase price of property subject thereto, whether given
to the vendor of such property or to another or (ii) existing on property at
the time of acquisition thereof) but, in either case, excluding trade
accounts payable or similar accrued liabilities arising in the ordinary
course of business;
(b) all indebtedness of Corning for money borrowed evidenced by notes,
debentures, bonds or other securities;
(c) all lease obligations of Corning which are capitalized on the books of
Corning in accordance with generally accepted accounting principles;
(d) all indebtedness of others of the kinds described in either of the
preceding clauses (a) or (b) and all lease obligations of others of the kind
described in the preceding clause (c) assumed by or guaranteed in any manner
by Corning or in effect guaranteed by Corning through an agreement to
purchase, contingent or otherwise;
(e) all obligations of Corning with respect to letters of credit issued in
connection with indebtedness of others of the kind described in the preceding
clauses (a) or (b) or lease obligations of the kind described in the
preceding clause (c); and
(f) all renewals, extensions or refundings of indebtedness of the kinds
described in any of the preceding clauses (a), (b) or (d), all renewals or
extensions of lease obligations of the kinds described in either the
preceding clauses (c) and (d) and all renewals or extensions of obligations
with respect to letters of credit of the kind described in the preceding
clause (e);
unless, in the case of any particular indebtedness, lease obligation,
renewal, extension, refunding or obligations with respect to letters of
credit, the instrument or lease creating or evidencing the same or the
assumption or guarantee of the same expressly provides that such
indebtedness, lease, obligation, renewal, extension or refunding is not
superior in right of payment to or is pari passu with the Subordinated
Debentures. Such Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the benefits of the subordination provisions irrespective of
any amendment, modification or waiver of any term of such Senior
Indebtedness.
As of June 19, 1994, Senior Indebtedness of Corning aggregated approximately
$1.9 billion. The Fiscal Agency Agreement does not limit Corning's ability to
incur Senior Indebtedness.
Certain Covenants of Corning
Corning will covenant that neither it nor any majority owned subsidiary of
Corning will declare or pay any dividend on, or redeem, purchase, acquire for
value or make a liquidation payment with respect to, any Junior Stock, or
make any guarantee payments with respect to the foregoing if at such time (i)
there shall have occurred any event that, with the giving of notice or the
lapse of time or both would constitute an Event of Default
(as defined below) under the Subordinated Debentures, (ii) Corning shall be
in default with respect to its payment or other obligations under the
Guarantee or (iii) Corning shall have given notice of its selection of an
extended interest payment period as provided in the Subordinated Debentures
and such period or any extension thereof shall be continuing. Corning will
also covenant (i) to remain the General Partner of Corning Delaware, provided
that any permitted successor of Corning under the Limited Partnership
Agreement may succeed to Corning's duties as General Partner, (ii) to cause
at least 21% of the total value of Corning Delaware and at least 21% of all
interests in the capital, income, gain, loss, deduction and credit of Corning
Delaware to be held by Corning as General Parter, (iii) not to voluntarily
dissolve, wind-up or liquidate Corning Delaware, (iv) to perform timely all
of its duties as General Partner (including the duty to pay dividends on the
Preferred Securities as described under "--Description of the
Guarantee--General"), (v) to maintain direct ownership of all partnership
interests of Corning Delaware other than the Preferred Securities and any
Special General Partnership Interest, (vi) to use its reasonable efforts to
cause Corning Delaware to remain a limited partnership and otherwise to
continue to be treated as a partnership for United States federal income tax
purposes and (vii) to deliver shares of Corning Series C Preferred Stock or
Corning Common Stock upon an election by Corning Delaware to exchange or
convert the Subordinated Debentures.
Events of Default
If one or more of the following events (each an "Event of Default") shall
occur and be continuing :
(a) failure to pay any principal of the Subordinated Debentures when due;
(b) failure to pay any interest on the Subordinated Debentures, including
any Additional Interest, when due and such failure continues for a period of
10 days; provided that a valid extension of the interest payment period by
Corning shall not constitute a default in the payment of interest for this
purpose;
(c) failure by Corning to deliver shares of Corning Series C Preferred
Stock or Corning Common Stock upon an election by Corning Delaware to
exchange or convert the Subordinated Debentures;
(d) failure by Corning to perform in any material respect any other
covenant in the Fiscal Agency Agreement for the benefit of the holders of
Subordinated Debentures continued for a period of 60 days after written
notice to Corning from Corning Delaware or any holder of Preferred
Securities;
(e) the dissolution, winding-up, liquidation or termination of Corning
Delaware; or
(f) certain events of bankruptcy, insolvency or liquidation of Corning;
then Corning Delaware, or any subsequent holder of the Subordinated
Debentures, will have the right to declare the principal of and the interest
on the Subordinated Debentures (including any Additional Interest) and any
other amounts payable under the Subordinated Debentures to be forthwith due
and payable and to enforce its other rights as a creditor with respect to the
Subordinated Debentures. Additionally, under the terms of the Preferred
Securities, the holders of outstanding Preferred Securities will have the
rights described above under "--Preferred Securities--Voting Rights,"
including the right to appoint a Special General Partner, which Special
General Partner shall be authorized to exercise Corning Delaware's right to
accelerate the principal amount of the Subordinated Debentures and accrued
interest (including any Additional Interest) thereon and to enforce Corning
Delaware's other rights as a creditor under the Subordinated Debentures.
Conversion of the Subordinated Debentures
The Subordinated Debentures will be convertible into Corning Common Stock at
the option of Corning Delaware at any time on or before the close of business
on the maturity date thereof at the initial conversion price set forth on the
cover page of this Prospectus subject to the adjustments described under
"--Preferred Securities--Conversion Rights." Upon conversion of the Preferred
Securities, Corning Delaware will convert $50 principal amount of the
Subordinated Debentures for every Preferred Security so converted. Corning's
delivery to Corning Delaware of the fixed number of shares of Corning Common
Stock into which the Subordinated Debentures are convertible (together with
the cash payment, if any, in lieu of fractional shares) will be deemed to
satisfy Corning's obligation to pay the principal amount of the Subordinated
Debentures, including any applicable redemption premium, and the accrued and
unpaid interest attributable to the period from the last date to which
interest has been paid or duly provided for.
Exchange of the Subordinated Debentures
The Subordinated Debentures will be exchangeable for shares of Corning Series
C Preferred Stock upon an Exchange Event on or before the close of business
on the maturity date thereof at the rate of
one share of Corning Series C Preferred Stock for each $100 principal amount
of the Subordinated Debentures. Accrued and unpaid interest (including
Additional Interest) on the Subordinated Debentures will be treated as
accrued and unpaid dividends on the Corning Series C Preferred Stock.
Modification of the Fiscal Agency Agreement
The Fiscal Agency Agreement may be amended by mutual consent of the parties
in any manner the parties shall agree; provided that, so long as any of the
Preferred Securities remain outstanding, no such amendment may be made that
adversely affects the holders of Preferred Securities, and no termination of
the Fiscal Agency Agreement may occur, and no Event of Default or compliance
with any covenant under the Fiscal Agency Agreement may be waived by Corning
Delaware, without the prior consent of the holders of at least 66-2/3% of the
aggregate liquidation preference of the Preferred Securities then outstanding
unless and until the Subordinated Debentures and all accrued and unpaid
interest thereon have been paid in full.
Governing Law
The Fiscal Agency Agreement and the Subordinated Debentures will be governed
by, and construed in accordance with, the laws of the State of New York.
Information Concerning the Fiscal Agent
The Fiscal Agent is an agent of Corning and owes no duty to the holders of
Subordinated Debentures or holders of the Preferred Securities. Corning and
Corning Delaware have agreed in the Fiscal Agency Agreement to indemnify and
hold harmless the Fiscal Agent against any losses or damages it may suffer as
Fiscal Agent.
Harris Trust and Savings Bank, the Fiscal Agent under the Fiscal Agency
Agreement, has from time to time engaged in transactions with, or performed
services for, Corning in the ordinary course of business.
DESCRIPTION OF CORNING CAPITAL STOCK
General
The following is a brief summary of certain provisions of the Restated
Certificate and does not relate to or give effect to provisions of statutory
or other law except as specifically stated. The Restated Certificate
authorizes the issuance of 500,000,000 shares of Common Stock. As of June 23,
1994, 213,575,956 shares of Common Stock were outstanding. The rights of
holders of Corning Common Stock are governed by the Restated Certificate, the
Company's By-Laws and by the New York Business Corporation Law (the "NYBCL").
Voting Rights
Subject to the voting of any shares of Series Preferred Stock that may be
outstanding, voting power is vested in the Common Stock, each share having
one vote.
Preemptive Rights
The Restated Certificate provides that no holder of Common Stock or Series
Preferred Stock (as defined below) of the Company shall have any preemptive
rights except as the Board of Directors of the Company may determine from
time to time. No such rights have been granted by the Board of Directors of
the Company.
Liquidation Rights
Subject to the preferential rights of any outstanding Series Preferred Stock,
in the event of any liquidation of the Company, holders of Common Stock then
outstanding are entitled to share ratably in the assets of the Company
available for distribution to such holders.
Dividend Rights and Restrictions
Subject to any preferential rights of any outstanding Series Preferred Stock
and any outstanding Preferred Securities, such dividends as may be determined
by the Board of Directors may be declared and paid on the Common Stock from
time to time out of any funds legally available therefor. The Company has
regularly paid cash dividends since 1881 and currently expects to continue to
pay cash dividends. The Company's current quarterly cash dividend is $.17 per
share of Common Stock. The continued declaration of dividends by the Board of
Directors of the Company is subject to, among other things, the Company's
current and prospective earnings, financial condition and capital
requirements and such other factors as the Board of Directors may deem
relevant.
Other Provisions
The Common Stock has no redemption, sinking fund or conversion privileges
applicable thereto and holders of Common Stock are not liable to assessments
or to further call.
Common Stock Eligible for Future Sale
In connection with the acquisition by Corning on June 7, 1994 of all of the
outstanding shares of Maryland Medical for approximately 4.5 million shares
of Corning Common Stock, Corning granted to the stockholders of Maryland
Medical registration rights for such shares of Corning Common Stock. Pursuant
to such rights, Corning is required to file a registration statement covering
all 4.5 million shares of Corning Common Stock no later than 90 days after
the written request of the designated representative of such stockholders. As
of June 27, 1994, no such request had been received by Corning.
On June 1, 1994 Corning signed a definitive agreement to acquire all of the
outstanding shares of the capital stock of Nichols in a transaction to be
accounted for as a pooling of interests. Under the terms of the agreement,
Corning will exchange newly issued and registered shares of Corning Common
Stock with a value equal to up to $13 for each share of the capital stock of
Nichols outstanding. Using an assumed price of $33 per share of Corning
Common Stock and the number of shares of the capital stock of Nichols
presently outstanding, approximately 6.7 million shares of Corning Common
Stock will be issued in such exchange. The final exchange ratio of shares of
Corning Common Stock for shares of Nichols capital stock will be determined
by the price of Corning Common Stock during the 10-day trading period ending
on the fifth trading day prior to the date of the Nichols stockholders
meeting held to approve the transaction. In no event will more than 8.4
million shares of Corning Common Stock be issued in exchange for the
outstanding shares of the capital stock of Nichols.
At the closing of the Nichols transaction, outstanding options to purchase
the capital stock of Nichols will be converted to options to purchase Corning
Common Stock in accordance with the final exchange ratio. At a value of $13
per share of capital stock of Nichols, substantially all of the options to
purchase the capital stock of Nichols are "in the money." Using an assumed
price of $33 per share of Corning Common Stock and the number of options to
purchase the capital stock of Nichols presently outstanding, approximately
1.0 million shares of Corning Common Stock will be reserved for issuance upon
the exercise of such options. Substantially all of such options to purchase
Corning Common Stock will be exercisable immediately following the closing of
the transaction. In no event will more than 1.2 million shares of Corning
Common Stock be issued upon the exercise of outstanding options. Corning
believes that approximately 85% of the shares of Corning Common Stock to be
issued in the Nichols transaction will be freely transferable upon
consummation of the acquisition.
The Nichols transaction is subject to regulatory approval and is expected to
close in the second half of 1994.
Series Preferred Stock
The Restated Certificate authorizes the issuance of up to 10,000,000 shares
of Series Preferred Stock, par value $100 per share (the "Series Preferred
Stock"). The Company's Board of Directors has the authority to issue such
shares from time to time, without stockholder approval, and the authority to
determine the designations, preferences, rights, including voting rights, and
restrictions of such shares, subject to the NYBCL. Pursuant to this
authority, the Board of Directors has designated 600,000 shares of Series
Preferred Stock as Series A Preferred Stock (the "Series A Preferred Stock"),
500,000 shares of Series Preferred Stock as Series B Preferred Stock (the
"Series B Preferred Stock"), and shares of Series Preferred Stock as
Series C Preferred Stock. No other class of Series Preferred Stock has been
designated by the Board of Directors. For a description of the Corning Series
C Preferred Stock, see "Description of Securities Offered--Corning Series C
Preferred Stock."
Series B Preferred Stock
Cumulative cash dividends at the rate of 8% per annum are payable on shares
of the Series B Preferred Stock that have been issued. The Company has
regularly paid dividends on the Series B Preferred Stock. No dividends may be
paid or declared on the Series A Preferred Stock or the Common Stock unless
all dividends for all prior dividend periods have been paid or declared on
the Series B Preferred Stock, the Series C Preferred Stock and the Preferred
Securities.
Holders of Series B Preferred Stock are entitled to vote, voting together
with the Common Stock and not as a separate class, on all matters submitted
to holders of the Common Stock, each share of Series B Preferred Stock having
four votes, subject to adjustment.
Holders of Series B Preferred Stock have no preemptive rights. In the event
of a liquidation, dissolution or winding-up of the Company, holders of Series
B Preferred Stock shall be entitled to receive a distribution in the amount
of $100 per share, plus accrued and unpaid dividends, before any distribution
on the Common Stock or Series A Preferred Stock. The Series B Preferred Stock
ranks pari passu with the Corning Series C Preferred Stock with respect to
the payment of dividends and amounts on liquidation, dissolution and
winding-up. See "Description of Securities Offered--Series C Preferred
Stock."
The Series B Preferred Stock is redeemable, in whole or in part, at the
election of the Company, at any time, at the following redemption prices per
share:
<TABLE>
<CAPTION>
During the Twelve-
Month Period Price Per
Beginning October 1, Share
<S> <C>
1993 $104.00
1994 $103.00
1995 $102.00
1996 $101.00
</TABLE>
and thereafter at $100.00 per share plus, in each case, accrued and unpaid
dividends.
The Series B Preferred Stock is subject to redemption, at the option of the
holder, at any time upon five Business Days' notice, at a redemption price
equal to $100 plus accrued and unpaid dividends, if the proceeds are
necessary (i) to make a distribution pursuant to an investment election made
under the employee benefit plan or (ii) to satisfy any indebtedness to which
the employee benefit plan is subject, provided that such payment is necessary
to remedy or prevent a default under such indebtedness.
The Company, at its option, may make payment of the redemption price required
upon redemption of shares of Series B Preferred Stock in cash or in shares of
Common Stock, or in any combination of such shares and cash.
The Series B Preferred Stock is convertible at the option of the holder, at
any time, into Common Stock at a conversion price of $25 per share of Common
Stock, each share of Series B Preferred Stock being valued at $100 for the
purpose of such conversion, producing a conversion ratio equal to four shares
of Common Stock for each share of Series B Preferred Stock so converted,
subject to certain adjustments to prevent dilution.
Preferred Share Purchase Rights
Attached to each share of Common Stock is one preferred share purchase right
("Right"). Each Right entitles the registered holder to purchase from the
Company one four-hundredth of a share of Series A Preferred Stock at a price
of $62.50 per one four-hundredth of a share of Series A Preferred Stock (the
"Exercise Price"), subject to adjustment. The Rights expire on July 15, 1996
(the "Final Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed by the Company.
The Rights represented by the certificates for Common Stock, are not
exercisable, and are not transferable apart from the Common Stock, until the
earlier of (i) ten days following the public announcement by the Company or
an Acquiring Person (as defined below) that a person or group has acquired
beneficial ownership of 20% or more of the Company's Common Stock (an
"Acquiring Person") or (ii) ten business days (or such later date as the
Board of Directors may determine) after the commencement or first public
announcement of a tender or exchange offer that would result in a person or
group beneficially owning 20% or more of the Company's outstanding Common
Stock (the earlier of such dates being called the "Distribution Date").
Separate certificates for the Rights will be mailed to holders of record of
the Common Stock as of such date. The Rights could then begin trading
separately from the Common Stock.
Generally, in the event that a person or group becomes an Acquiring Person,
each Right, other than the Rights owned by the Acquiring Person, will
thereafter entitle the holder to receive, upon exercise of the Right, Common
Stock having a value equal to two times the Exercise Price of the Right. In
the event that the Company is acquired in a merger, consolidation, or other
business combination transaction or more than 50% of the Company's assets,
cash flow or earning power is sold or transferred, each Right, other than the
Rights owned by an Acquiring Person, will thereafter entitle the holder
thereof to receive, upon the exercise of the Right, common stock of the
surviving corporation having a value equal to two times the Exercise Price of
the Right.
The Rights are redeemable in whole, but not in part, at $.0125 per Right at
any time on or prior to any person or group becoming an Acquiring Person,
provided that the Rights may no longer be redeemed
if such person or group shall have acquired beneficial ownership of 90% or
more of the Common Stock. The right to exercise the Rights terminates at the
time that the Board of Directors elects to redeem the Rights. Notice of
redemption shall be given by mailing such notice to the registered holders of
the Rights. At no time will the Rights have any voting rights. The Rights
Agent is Harris Trust and Savings Bank (the "Rights Agent").
The exercise price payable, and the number of shares of Series A Preferred
Stock or other securities or property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of, the shares of Series A Preferred Stock, (ii) upon the
grant to holders of the shares of Series A Preferred Stock of certain rights
or warrants to subscribe for or purchase shares of Series A Preferred Stock
at a price, or securities convertible into shares of Series A Preferred Stock
with a conversion price, less than the then current market price of the
shares of Series A Preferred Stock or (iii) upon the distribution to holders
of the shares of Series A Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in shares of Series A Preferred Stock)
or of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one four-hundredths of a
share of Series A Preferred Stock issuable upon exercise of each Right are
also subject to adjustment in the event of a stock split of, or stock
dividend on, or subdivision, consolidation or combination of, the Common
Stock prior to the Distribution Date. With certain exceptions, no adjustment
in the exercise price will be required until cumulative adjustments require
an adjustment of at least 1% in such exercise price.
Upon exercise of the Rights, no fractional shares of Series A Preferred Stock
will be issued (other than fractions which are integral multiples of one
four-hundredth of a share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof an adjustment in cash
will be made.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Board of Directors of the Company,
except pursuant to an offer conditioned on a substantial number of Rights
being acquired. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors since the Rights may
be redeemed by the Company at $.0125 per Right prior to the fifteenth day
after the acquisition by a person or group of beneficial ownership of 20% or
more of the Common Stock (subject to certain exceptions).
The shares of Series A Preferred Stock purchasable upon exercise of the
Rights will rank junior to all other series of the Company's Preferred Stock
(including the Series B and Series C Preferred Stock) or any similar stock
that specifically provides that they shall rank prior to the shares of Series
A Preferred Stock. The shares of Series A Preferred Stock will be
nonredeemable. Each share of Series A Preferred Stock will be entitled to a
minimum preferential quarterly dividend of $10 per share, but will be
entitled to an aggregate dividend of 100 times the dividend declared per
share of Common Stock. In the event of liquidation, the holders of the shares
of Series A Preferred Stock will be entitled to a minimum preferential
liquidation payment of $100 per share, but will be entitled to an aggregate
payment of 100 times the payment made per share of Common Stock. Each share
of Series A Preferred Stock will have 100 votes, voting together with the
Common Stock. In the event of any merger, consolidation or other transaction
in which Common Stock is exchanged, each share of Series A Preferred Stock
will be entitled to receive 100 times the amount and type of consideration
received per share of Common Stock. These rights are protected by customary
antidilution provisions. Because of the nature of the Series A Preferred
Stock's dividend, liquidation and voting rights, the value of the interest in
a share of Series A Preferred Stock purchasable upon the exercise of each
Right should approximate the value of one share of Common Stock.
The foregoing description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the description of the Rights
contained in the Rights Agreement, dated as of July 2, 1986 between the
Company and the Rights Agent, as amended by the Amended Rights Agreement,
dated as of October 4, 1989, included as an exhibit to this Registration
Statement.
Corning's Fair Price Amendment
In 1985, the Company's stockholders adopted an amendment (the "Fair Price
Amendment") to the Restated Certificate that, in general, requires the
approval by the holders of at least 80% of the voting power of the
outstanding capital stock of the Company (other than the Series C Preferred
Stock) entitled
to vote generally in the election of directors (the "Voting Stock") as a
condition for mergers and certain other business combinations with any
beneficial owner of more than 10% of such voting power unless (1) the
transaction is approved by at least a majority of the Continuing Directors
(as defined in the Restated Certificate) or (2) certain minimum price, form
of consideration and procedural requirements are met. Certain terms used
herein are defined in the Restated Certificate.
Amendment or repeal of this provision or the adoption of any provision
inconsistent therewith would require the affirmative vote of at least 80% of
the Voting Stock unless the proposed amendment or repeal or the adoption of
the inconsistent provisions were approved by two-thirds of the entire Board
of Directors and a majority of the Continuing Directors.
Certain Other Provisions of the Restated Certificate and By-Laws
In addition to the Preferred Share Purchase Rights and the Fair Price
Amendment, the Restated Certificate and By-Laws contain other provisions that
may discourage a third party from seeking to acquire the Company or to
commence a proxy contest or other takeover-related action. The Company has
classified its Board of Directors such that one-third of the Board is elected
each year to three-year terms of office. In addition, holders of Common Stock
may remove a Director from office at any time prior to the expiration of his
or her term only with cause and by vote of a majority of holders of Common
Stock outstanding. These provisions, together with provisions concerning the
size of the Board and requiring that premature vacancies on the Board be
filled only by a majority of the entire Board, may not be amended, altered or
repealed, nor may the Company adopt any provisions inconsistent therewith,
without the affirmative vote of at least 80% of the Voting Stock of the
Company or the approval of two-thirds of the entire Board of Directors.
The Company's By-Laws contain certain procedural requirements with respect to
the nomination of directors by stockholders that require, among other things,
delivery of notice by such stockholders to the Secretary of the Company not
later than 60 days nor more than 90 days prior to the date of the
stockholders meeting at which such nomination is to be considered. The
By-Laws do not provide that a meeting of the Board of Directors may be called
by stockholders.
The Restated Certificate provides that no director will be liable to the
Company or its stockholders for a breach of duty as a director except as
provided by the NYBCL.
The effect of these provisions may be to deter attempts either to obtain
control of the Company or to acquire a substantial amount of its stock, even
if such a proposed transaction were at a significant premium over the
then-prevailing market value of the Common Stock, or to deter attempts to
remove the Board of Directors and management of the Company, even though some
or a majority of the holders of Common Stock may believe such actions to be
beneficial.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
General
In the opinion of Shearman & Sterling, special federal income tax counsel to
Corning and Corning Delaware, the following discussion accurately describes,
subject to the limitations stated herein, the material federal income tax
considerations relevant to the purchase, ownership and disposition of the
Preferred Securities. This discussion is a summary that does not purport to
deal with all aspects of federal income taxation that may be relevant to
holders of the Preferred Securities, nor to certain types of holders subject
to special treatment under the federal income tax laws (for example, banks,
life insurance companies, dealers, tax-exempt organizations, persons whose
functional currency is not the U.S. dollar or foreign persons and foreign
entities). This discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
(proposed, temporary and final) promulgated thereunder, judicial decisions
and Internal Revenue Service ("IRS") rulings, all of which are subject to
change, which change may be retroactively applied in a manner that could
adversely affect a holder of the Preferred Securities. Unless otherwise
indicated, the information below is directed at initial purchasers that
acquire Preferred Securities at original issue for their initial offering
price, and that hold Preferred Securities as capital assets (generally
property held for investment.)
Prospective investors are advised to consult their own tax advisors with
regard to the federal income, estate and gift tax consequences of purchasing,
holding and disposing of Preferred Securities, as well as the tax
consequences arising under the laws of any state, foreign country or other
jurisdiction. Further, while the following summary reflects the opinion of
Shearman & Sterling an opinion of counsel is not bind
ing on the IRS or the courts, and neither Corning nor Corning Delaware have
sought, nor do they intend to seek, a ruling from the IRS that the position
as reflected in the discussion below will be accepted by the IRS. Moreover,
there are no cases or rulings on similar transactions and, as a result, there
can be no assurance that the IRS will agree with the conclusions and
discussions below.
Tax Classification
While the following matters are not free from doubt, Shearman & Sterling is
of the opinion that (i) Corning Delaware will be classified as a partnership
for federal income tax purposes and not as an association (or as a publicly
traded partnership) taxable as a corporation, and (ii) the Subordinated
Debentures will be classified as indebtedness of Corning for such purposes.
This advice is based upon the terms of the Subordinated Debentures, the
Limited Partnership Agreement, the Fiscal Agency Agreement and related
documents and transactions as described in this Prospectus (and assumes
ongoing compliance with such agreement and documents) and upon the conclusion
by Shearman & Sterling that the nature of the income of Corning Delaware will
exempt it from the rule that certain publicly traded partnerships are taxable
as corporations (assuming Corning Delaware will not register under the 1940
Act).
Prospective investors and their advisors should be aware, however, that the
proper characterization of the arrangement involving Corning Delaware, the
Preferred Securities and the Subordinated Debentures is not entirely clear
and the IRS has recently announced that it will scrutinize and may challenge
certain aspects of transactions with some features that are similar to this
arrangement. If, contrary to the opinion of tax counsel, the IRS successfully
argued that Corning Delaware should be taxable as a corporation, Corning
Delaware (including the income from the Subordinated Debentures) would be
subject to federal income tax at corporate rates and distributions to holders
of Preferred Securities likely would be taxable as dividend income to the
extent of the earnings and profits of Corning Delaware. Similarly, if,
contrary to the opinion of tax counsel, the IRS successfully asserted that
the Subordinated Debentures were properly classified as stock or other equity
in Corning, then payments on the Subordinated Debentures would not be
deductible by Corning as interest, but instead likely would be treated as
distributions to holders taxable as dividends to the extent of the earnings
and profits of Corning and perhaps without a dividends-received deduction
with respect to such dividends. Either event could have adverse tax
consequences for certain holders and could result in substantially reduced
amounts payable to holders, as well as resulting in holders receiving Corning
Series C Preferred Stock in a taxable transaction that has other possible
adverse tax consequences. See "--Exchange of Preferred Securities for Corning
Series C Preferred Stock."
Prospective investors should also be aware that the IRS recently issued a
proposed Treasury regulation under which the IRS can disregard or recast the
form of a transaction if a partnership is formed or availed of in connection
with a transaction (or series of related transactions) "with a principal
purpose of substantially reducing the present value of the partners'
aggregate federal tax liability" in a manner inconsistent with the intent of
the partnership provisions of the Code. In the view of Shearman & Sterling,
based in part upon certain representations of Corning, Corning Delaware
should not be considered to be formed or availed of with such a purpose
because the transactions involving Corning Delaware are not of the type
intended to fall within the scope of such proposed regulation. There can be
no assurance, however, that the IRS will agree with this view. Unless
otherwise noted, the remainder of this summary assumes, in accordance with
the opinion of Shearman & Sterling, that Corning Delaware is properly
classified as a partnership and the Subordinated Debentures are properly
classified as indebtedness of Corning for income tax purposes.
Income from Preferred Securities
As partners in a partnership, each holder of Preferred Securities will be
required to include in gross income its distributive share of the net income
of Corning Delaware, which net income generally will be equal to the amount
of interest received or accrued on the Subordinated Debentures. See
"--Original Issue Discount" below. Any amount so included in a holder's gross
income will increase its tax basis in the Preferred Securities, and the
amount of distributions of cash or other property by Corning Delaware to the
holder will reduce such holder's tax basis in the Preferred Securities. No
portion of the amounts received on the Preferred Securities will be eligible
for the dividends received deduction.
Corning Delaware does not presently intend to make an election under Section
754 of the Code. As a result, a subsequent purchaser of Preferred Securities
will not be permitted to adjust the tax basis in its allocable share of
Corning Delaware's assets so as to reflect any difference between its
purchase price for the Preferred Securities and the underlying tax basis of
Corning Delaware in its assets. As a result, a holder of a Preferred Security
may be allocated a larger or smaller amount of Corning Delaware's income than
would otherwise be appropriate based upon such holder's purchase price for the
Preferred Security.
Under Section 708 of the Code, Corning Delaware will be deemed to terminate
for federal income tax purposes if 50% or more of the capital and profits
interests in Corning Delaware are sold or exchanged within a 12-month period.
If such a termination occurs, there will be a closing of the partnership's
taxable year for all partners and Corning Delaware will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to Corning Delaware, as a new partnership.
Corning Delaware will not comply with certain technical requirements that
might apply when such a constructive termination occurs. As a result, Corning
Delaware may be subject to certain tax penalties and may incur additional
expenses if it is required to comply with those requirements. (Furthermore,
Corning Delaware might not be able to comply due to lack of data.)
Original Issue Discount
Under Treasury Regulations, the stated interest payments on the Subordinated
Debentures will be treated as "original issue discount" because Corning has
an option, under the terms of the Subordinated Debentures, to extend interest
payment periods for up to 60 months. Under the Code, holders of debt with
original issue discount must include that discount in income on an economic
accrual basis and before the receipt of cash attributable to the interest
regardless of their method of tax accounting. In the event that the interest
payment period is extended, Corning Delaware will continue to accrue income
equal to the amount of the interest payment due at the end of the extended
interest payment period on an economic accrual basis over the length of the
extended interest payment period.
Accrued income will be allocated, but not distributed, to holders of record
on the Business Day preceding the last day of each calendar month. As a
result, holders of record during an extended interest payment period will
include interest in gross income in advance of the receipt of cash, and any
such holders who dispose of Preferred Securities prior to the record date for
the payment of dividends following such extended interest payment period will
include such holder's allocable share of such interest in gross income but
will not receive any cash related thereto. The tax basis of a Preferred
Security will be increased by the amount of any interest that is included in
income without a corresponding receipt of cash and will be decreased when and
if such cash is subsequently received from Corning Delaware.
Under Treasury Regulations, no portion of the price paid for a debt
instrument is to be allocated to the right to convert into, or the right to
exchange for, stock of the corporation issuing the debt instrument. As such,
neither Corning Delaware nor the holders of Preferred Securities should be
required to allocate a portion of their purchase price to the right of
Corning Delaware to convert the Subordinated Debentures into Corning Common
Stock or to exchange the Subordinated Debentures for Corning Series C
Preferred Stock. Nevertheless, the IRS may take a contrary view, or may
require an allocation of purchase price to the Guarantee. If the IRS were
successful in requiring such an allocation, a holder could be required to
include an incremental amount of original issue discount (in addition to
stated interest) in income over the life of the Preferred Securities. Corning
intends to take the position that no allocation that would result in
additional original issue discount (in excess of stated interest) is
required.
Disposition of Preferred Securities
Generally, capital gain or loss will be recognized on a sale of Preferred
Securities, including a complete redemption for cash, equal to the difference
between the amount realized and the holder's tax basis in the Preferred
Securities sold. Gain or loss recognized by a holder on the sale or exchange
of a Preferred Security held for more than one year generally will be taxable
as long-term capital gain or loss. The adjusted tax basis of the Preferred
Securities sold by a holder will equal the amount paid by such holder
for the Preferred Securities, plus the share of partnership income allocated
to such holder and reduced by any cash or other property distributed
to such holder by Corning Delaware. A holder acquiring Preferred
Securities at different prices may be required to maintain a single aggregate
adjusted tax basis in such Preferred Securities, and, upon sale or other
disposition of some of the Preferred Securities,
allocate a pro rata portion of such aggregate tax basis to the Preferred
Securities sold (rather than maintaining a separate tax basis in each
Preferred Security for purposes of computing gain or loss on a sale of that
Preferred Security).
If a holder of Preferred Securities is required to recognize an aggregate
amount of income over the life of the Preferred Security that exceeds the
aggregate cash distribution with respect thereto, such excess generally will
result in a capital loss upon the retirement of the Preferred Securities.
Corning Delaware is obligated to redeem the Preferred Securities for cash on
repayment or on any prepayment of the Subordinated Debentures. Corning will
pay a prepayment premium to Corning Delaware if Corning prepays any portion
of the Subordinated Debentures before , 2004 and Corning Delaware will
pay a corresponding redemption premium to holders of Preferred Securities
whose Preferred Securities are redeemed before , 2004. Corning
Delaware will recognize capital gain on a prepayment of the Subordinated
Debentures to the extent of the prepayment premium. Corning Delaware's gain
will be allocated to the holder whose Preferred Securities are subsequently
redeemed by Corning Delaware, and the allocated gain should increase the
holder's adjusted tax basis in these Preferred Securities. A holder who has a
basis increase due to such allocation to the holder of Corning Delaware's
gain on Corning's prepayment of the Subordinated Debentures will not have
additional taxable gain attributable to the redemption premium upon Corning
Delaware's subsequent redemption of the holder's Preferred Securities.
Corning Delaware will allocate income to holders of Preferred Securities on
the Business Day preceding the last day of each calendar month. As a result
of such monthly allocation, a holder purchasing Preferred Securities may be
allocated tax items attributable to periods before the transfer. The use of
such monthly allocation may not be permitted under applicable Treasury
Regulations, and, if not allowed, taxable income of Corning Delaware may be
reallocated among holders of Preferred Securities. The General Partner is
authorized to adjust allocations if necessary to reflect the economic income
of holders or as otherwise required by the Code.
Exchange of Preferred Securities for Corning Common Stock
The Subordinated Debentures may be converted at the option of Corning
Delaware into Corning Common Stock and the Limited Partnership Agreement
allows a holder to direct Corning Delaware to make such a conversion for the
holder to the extent of such holder's allocable share of the Subordinated
Debentures and distribute Corning Common Stock to such holder in exchange for
such holder's Preferred Securities. A holder's exchange of Preferred
Securities through Corning Delaware for shares of Corning Common Stock should
be treated as a distribution of Corning Common Stock by Corning Delaware in
redemption of all or part of the holder's interest in a partnership. Neither
a holder nor Corning Delaware should recognize gain or loss on the conversion
or the exchange. However, when Corning Delaware exchanges Subordinated
Debentures with Corning to obtain shares of Corning Common Stock for delivery
to a holder in exchange for the holder's Preferred Securities, interest
income which has accrued on that portion of the Subordinated Debentures since
the last interest payment date will be allocated to the holder exchanging
Preferred Securities, but no cash will be distributed in connection with this
income. As a result, holders of Preferred Securities who exchange these
securities on a date other than an interest payment date will include some
interest in gross income but will not receive any cash related to that
interest. This income will increase the holder's basis in its Preferred
Securities. In addition, under the current advance ruling policy of the IRS,
cash received by Corning Delaware in lieu of a fractional share of Corning
Common Stock upon conversion of all or part of the Subordinated Debentures
should be treated as a payment in exchange for the fractional share of
Corning Common Stock. This treatment generally will result in Corning
Delaware recognizing gain or loss, if any, measured by the difference between
the cash received for the fractional share interest and Corning Delaware's
tax basis in such fractional share interest. This gain will be allocated to
the holder of Preferred Securities who converts those shares through Corning
Delaware into shares of Corning Common Stock, and the cash which Corning
Delaware receives in lieu of a fractional share interest will be distributed
to that holder.
In the case of an exchange upon conversion for all of the holder's Preferred
Securities, the holder's tax basis in the shares of Corning Common Stock
received will equal the holder's tax basis in the Preferred Securities
immediately before such exchange increased by the gain allocated to the
holder on any fractional share interest redeemed by Corning and reduced by
any cash distributed to the holder with respect to a fractional share
interest. In the case of an exchange for less than all of a holder's
Preferred Securities, the holder's tax basis in the shares of Corning Common
Stock received will be the lesser of the holder's tax basis in such holder's
Preferred Securities immediately before such exchange or Corning
Delaware's tax basis in the portion of the Subordinated Debentures
converted for those shares of Corning Common Stock increased by
any gain recognized by Corning Delaware on conversion in respect of any
fractional share interest redeemed by Corning and decreased by any cash
received by Corning Delaware in connection therewith. In such case, the
holder's aggregate tax basis in its remaining Preferred Securities will be
its aggregate tax basis in such holder's Preferred Securities immediately
before such redemption, reduced (but not below zero) by the sum of Corning
Delaware's tax basis in the shares of Corning Common Stock delivered in such
redemption as described above, and the amount of cash paid by Corning
Delaware to a holder in lieu of a fractional share interest, if any.
The holding period for Corning Common Stock received in exchange for a
holder's Preferred Securities will begin on the date Corning Delaware
acquired the Subordinated Debentures, except that the holding period of
Corning Common Stock received by Corning Delaware in satisfaction of accrued
but unpaid interest, if any, may commence on the date of conversion, although
there is no authority precisely on point. Gain or loss upon a sale or other
taxable disposition of the Corning Common Stock will be capital gain or loss
if the Corning Common Stock is a capital asset in the hands of the holder.
Holders should be aware that the tax treatment of the conversion feature is
not entirely clear and the IRS might argue that, for tax purposes, the
conversion of a Subordinated Debenture into Corning Common Stock (and Corning
Delaware's subsequent distribution of such stock to a holder) should be
treated as an exchange by the holder of its Preferred Securities against
Corning for Corning Common Stock. While unlikely, if this argument were
asserted and sustained, the conversion of the Preferred Securities by a
holder for Corning Common Stock would be a taxable transaction in which a
holder recognizes capital gain or loss.
Adjustment of Conversion Price
Treasury Regulations promulgated under Section 305 of the Code would treat
Corning Delaware (and, thus, holders of Preferred Securities) as having
received a constructive distribution from Corning in the event the conversion
ratio of the Subordinated Debentures were adjusted if (i) as a result of such
adjustment, the proportionate interest of Corning Delaware in the assets or
earnings and profits of Corning were increased and (ii) the adjustment was
not made pursuant to a bona fide, reasonable antidilution formula. An
adjustment in the conversion ratio would not be considered made pursuant to
such a formula if the adjustment was made to compensate for certain taxable
distributions with respect to the stock into which the Subordinated
Debentures are convertible. Thus, under certain circumstances, a reduction in
the conversion price for the Subordinated Debentures is likely to be taxable
to Corning Delaware as a dividend to the extent of the current or accumulated
earnings and profits of Corning. The holders of the Preferred Securities
would be required to include their allocable share of such constructive
dividend in gross income but will not receive any cash related thereto. In
addition, the failure to fully adjust the conversion price of the
Subordinated Debentures to reflect distributions of stock dividends with
respect to the Corning Common Stock may result in a taxable dividend to the
holders of the Corning Common Stock.
Similarly, under Section 305 of the Code, adjustments to the conversion price
of the Corning Series C Preferred Stock, which may occur under certain
circumstances, may result in deemed dividend income to holders of the Corning
Series C Preferred Stock if such adjustments are not made pursuant to a bona
fide, reasonable antidilution formula, and failure to make such adjustments
to the conversion price of the Corning Series C Preferred Stock may result in
deemed dividend income to holders of the Corning Common Stock.
Exchange of Preferred Securities for Corning Series C Preferred Stock
Under certain circumstances, as described under the caption "Description of
Securities Offered--Preferred Securities--Optional Exchange for Corning
Series C Preferred Stock," Subordinated Debentures will be exchanged by
Corning Delaware for Corning Series C Preferred Stock which would then be
distributed to the holders of the Preferred Securities in a complete
liquidation of Corning Delaware. If Corning Delaware is taxed as a
partnership, Corning Delaware's subsequent distribution of the Corning Series
C Preferred Stock to the holders in exchange for the holders' Preferred
Securities should be treated as a non-taxable exchange to Corning Delaware
and to each holder of Preferred Securities and should result in the holder of
such Preferred Securities receiving an aggregate tax basis in the Corning
Series C Preferred Stock equal to such holder's aggregate tax basis in its
Preferred Securities. A holder's holding period for the Corning Series C
Preferred Stock so received in liquidation of Corning Delaware as a
partnership would include the period for which the Preferred Securities were
held by such holder. Under a change in law, a change in legal interpretation
or the other circumstances giving rise to a Tax Event, however, the
liquidation of Corning Delaware could be a taxable event to both
Corning Delaware and the holders of the Preferred Securities.
Notwithstanding partnership treatment, however, holders should be aware that
the taxation of the exchange feature is not entirely clear and the IRS might
argue that, for tax purposes, the exchange of Subordinated Debentures for
Corning Series C Preferred Stock (and Corning Delaware's subsequent
distribution of such stock to a holder) should be treated as an exchange by
the holder of its Preferred Securities against Corning for Corning Series C
Preferred Stock. If this argument were asserted and sustained, the exchange
of the Preferred Securities by a holder for Corning Series C Preferred Stock
would be a taxable transaction in which a holder recognizes capital gain or
loss.
In addition, if Corning exercises its option to extend interest payment
periods under the Subordinated Debentures for more than fifteen months or if
a Tax Event occurs, holders will have the option of causing Corning Delaware
to exchange the Subordinated Debentures for Corning Series C Preferred Stock
and to distribute such stock to such holders in exchange for their Preferred
Securities. Holders who exchange their Preferred Securities for Corning
Series C Preferred Stock, however, may be subject to additional income tax to
the extent accrued but unpaid interest (taxed as original issue discount) on
the Subordinated Debentures is converted into accumulated and unpaid
dividends on the Corning Series C Preferred Stock received in exchange for
the Preferred Securities. This is because holders first would be subject to
tax on their distributive share of Corning Delaware's unpaid interest income
on the Subordinated Debentures as such interest accrues during the extended
period (with a corresponding increase in the tax basis of the holders'
Preferred Securities). If the holders exchange their Preferred Securities for
Corning Series C Preferred Stock when there is accrued but unpaid interest
due on the Subordinated Debentures and such unpaid interest is converted into
accumulated and unpaid dividends on the Corning Series C Preferred Stock
received in the exchange, the holders would be subject to tax again on the
previously taxed accrued interest to the extent Corning subsequently paid
such amount as dividends to the holders. Moreover, if such accumulated,
unpaid dividends on the Corning Series C Preferred Stock were considered to
cause the dividend rate on the Corning Series C Preferred Stock to decline in
the future, then, under Section 1059(f) of the Code, such dividends may be
treated as "extraordinary dividends" for tax purposes (regardless of the
period over which a holder has or is deemed to have held the Corning Series C
Preferred Stock) and corporate holders generally would be required to reduce
their tax basis in their Corning Series C Preferred Stock by the "non-taxed"
portion of such dividends (which portion generally reflects the dividends
received deduction claimed by the corporate holder with respect to such
extraordinary dividend).
Holders are urged to consult their own tax advisors as to the tax
consequences to them of an exchange of their Preferred Securities for Corning
Series C Preferred Stock.
Corning Delaware Information Returns and Audit Procedures
The General Partner in Corning Delaware will furnish each holder with a
Schedule K-1 each year setting forth such holder's allocable share of income
for the prior calendar year. The General Partner is required, under the
Limited Partnership Agreement, to furnish such Schedule K-1 as soon as
practicable following the end of the taxable year, but in any event prior to
March 31st of each succeeding year (assuming, as anticipated, that Corning
Delaware's taxable year is a calendar year).
Any person who holds Preferred Securities as nominee for another person is
required to furnish to Corning Delaware (a) the name, address and taxpayer
identification number of the beneficial owner and the nominee; (b)
information as to whether the beneficial owner is (i) a person that is not a
United States person, (ii) a foreign government, an international
organization or any wholly owned agency or instrumentality of either of the
foregoing, or (iii) a tax-exempt entity; (c) the amount and description of
Preferred Securities held, acquired or transferred for the beneficial owner;
and (d) certain information including the dates of acquisitions and
transfers, means of such acquisitions and transfers, and acquisition cost for
purchases, as well as the amount of net proceeds from sales. Brokers and
financial institutions are required to furnish additional information,
including whether they are United States persons and certain information on
Preferred Securities they acquire, hold or transfer for their own accounts. A
penalty of $50 per failure (up to a maximum of $100,000 per calendar year) is
imposed by the Code for failure to report such information to Corning
Delaware. The nominee is required to supply the beneficial owners of the
Preferred Securities with the information furnished to Corning Delaware.
The General Partner, as the tax matters partner, will be responsible for
representing the holders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of
limitations for partnership items does not expire before three years since
the later of the filing or the last date for filing of the partnership
information return. Any adverse determination following an audit of the
return of Corning Delaware by the appropriate taxing authorities could result
in an adjustment of the tax returns of the holders, and, under certain
circumstances, a holder may be precluded from separately litigating a
proposed adjustment to the items of the partnership. An adjustment could also
result in an audit of a holder's tax return and adjustments of items not
related to the income and losses of Corning Delaware.
Foreign Holders
Ownership of Preferred Securities by nonresident aliens, foreign corporations
and other foreign persons raises tax considerations unique to such persons
and may have substantially adverse tax consequences to them. Therefore,
prospective investors who are foreign persons or which are foreign entities
are urged to consult with their United States tax advisors as to whether an
investment in a Preferred Security represents an appropriate investment in
light of those unique tax considerations and possible adverse tax
consequences.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to payments to
noncorporate holders of the proceeds of the sale of Preferred Securities,
Corning Series C Preferred Stock or Corning Common Stock within the United
States and "backup withholding" at a rate of 31% will apply to such payments
if the holder fails to provide an accurate taxpayer identification number.
Proposed Tax Legislation
Legislation pending before Congress would apply special rules to "large
partnerships," generally defined as partnerships with at least 250 partners
during a taxable year (counting towards such total each owner during the year
of a partnership interest that is transferred during the year). Under the
legislation, certain computations are made at the partnership level rather
than the partner level. In particular, taxable income is calculated at the
partnership level, and is calculated generally in the same manner as for an
individual, except that 70% of miscellaneous itemized deductions (such as
expenses for the production of non-business income) are disallowed. As a
result, all partners (including corporations) might have a portion of their
share of partnership deductions (other than interest expense) disallowed. In
addition, large partnerships would become subject to new audit procedures;
among other things, an adjustment to taxable income of the partnership for a
prior year would flow through to current partners in the year the audit was
settled, and the partnership itself (rather than the partners) would be
subject to any applicable interest or penalties. Moreover, under this
legislation, a large partnership would not be deemed to terminate under
Section 708 of the Code solely because 50% or more of its interests are sold
or exchanged within a 12-month period. As proposed, these rules would apply
to partnership taxable years ending on or after December 31, 1994.
This legislation is currently pending before Congress; however, no prediction
can be made whether this proposal or similar legislation might be enacted in
the future, or the ultimate effective date of such legislation or whether the
number of holders would cause Corning Delaware to be considered a "large
partnership."
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
THE PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, Corning
Delaware has agreed to sell to each of the Underwriters named below, and each
of such Underwriters, for whom Goldman, Sachs & Co. and Lazard Freres & Co.
are acting as representatives, has severally agreed to purchase from Corning
Delaware, the respective number of Preferred Securities set forth opposite
its name below:
<TABLE>
<CAPTION>
Number of
Underwriter Preferred Securities
<S> <C>
Goldman, Sachs & Co.
Lazard Freres & Co.
Total ,000
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the Underwriters
are committed to take and pay for all such Preferred Securities
offered hereby, if any are taken.
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price set forth on the cover
page of this Prospectus, and in part to certain securities dealers at such
price less a concession of $ . per Preferred Security. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of $ .
per Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the representatives.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used by Corning Delaware to purchase the Subordinated
Debentures of Corning, the Underwriting Agreement provides that Corning will
pay as compensation to the Underwriters ("Underwriters' Compensation"), a
commission of $ . per Preferred Security.
Corning and Corning Delaware have granted the Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to
an aggregate of additional Preferred Securities solely to cover
over-allotments, if any. If the Underwriters exercise their over-allotment
option, the Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of Preferred Securities to be purchased by each of them, as shown in
the foregoing table, bears to the Preferred Securities offered.
Corning and Corning Delaware have agreed not to offer, sell, contract to
sell, or otherwise dispose of any shares of Corning Common Stock, any other
capital stock of Corning, any other security convertible into or exercisable
or exchangeable for Corning Common Stock or any such other capital stock or
debt securities substantially similar to the Subordinated Debentures for a
period of 90 days after the date of this Prospectus without the prior written
consent of the representatives, except for (a) the Preferred Securities
offered hereby, (b) Corning Common Stock or Corning Series C Preferred Stock
issued or delivered upon conversion or exchange of the Subordinated
Debentures, (c) securities issued or delivered upon conversion, exchange or
exercise of any other securities of Corning outstanding on the date of this
Prospectus, (d) securities issued pursuant to Corning's stock option or other
benefit or incentive plans maintained for its officers, directors or
employees, (e) securities issued in connection with mergers, acquisitions or
similar transactions, (f) partnership interests of Corning Delaware issued to
Corning in connection with the sale of the over-allotment shares in order to
maintain Corning's 21% interest in the total capital of Corning Delaware or
(g) Corning Common Stock issued pursuant to the Nichols transaction.
Certain of the Underwriters are customers of, or engage in transactions with,
and from time to time have performed services for, Corning and its
subsidiaries and associated companies in the ordinary course of business.
Prior to this Offering, there has been no public market for the Preferred
Securities. Application will be made to list the Preferred Securities on the
New York Stock Exchange under the symbol "GLW pfM." In order to meet one of
the requirements for listing the Preferred Securities on the New York Stock
Exchange, the Underwriters will undertake to sell lots of 100 or more
Preferred Securities to a minimum of 2,000 beneficial holders.
Corning and Corning Delaware have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
VALIDITY OF THE SECURITIES
The validity of the Preferred Securities, the Guarantee, the Corning Common
Stock and the Corning Series C Preferred Stock issuable upon conversion or
exchange of the Subordinated Debentures will be passed upon for Corning by
William C. Ughetta, Esq., Senior Vice President and General Counsel of
Corning, and for the Underwriters by Sullivan & Cromwell, New York, New York.
Additionally, certain matters as to (i) the formation of Corning Delaware and
the authority of Corning and Corning Delaware to enter into certain
agreements relating to the transaction and (ii) United States taxation will
be passed upon by Shearman & Sterling, New York, New York. Mr. Ughetta owns
substantially less than 1% of the outstanding shares of Corning Common Stock.
EXPERTS
The consolidated financial statements of Corning and of Dow Corning
incorporated in this Prospectus by reference to Corning's 1993 Annual Report
on Form 10-K for the year ended January 2, 1994, have been so incorporated in
reliance on the reports of Price Waterhouse, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Damon, as of December 31, 1992 and
1991, and for each of the three years ended December 31, 1992, incorporated
by reference in this Prospectus by reference to Corning's Current Report on
Form 8-K dated August 4, 1993 have been so incorporated in reliance on the
report of Arthur Andersen & Co., independent public accountants, given on the
authority of said firm as experts in accounting and auditing.
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell
or the solicitation of an offer to buy any securities other than the
securities to which it relates or an offer to sell or the solicitation of an
offer to buy such securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of Corning and Corning Delaware
since the date hereof or that the information contained herein is correct as
of any time subsequent to its date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information 3
Incorporation of Certain Documents by
Reference 3
Prospectus Summary 4
Use of Proceeds 11
Investment Considerations 11
Capitalization 12
Ratios of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends 13
Market Prices of Corning Common Stock
and Dividends 14
Selected Consolidated Financial Data 14
Corning Unaudited Pro Forma Combined
1993 Statement of Income 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 23
Business of Corning 32
Corning Delaware 38
Description of Securities Offered 38
Description of Corning Capital Stock 57
Certain Federal Income Tax
Considerations 61
Underwriting 67
Validity of the Securities 69
Experts 69
</TABLE>
5,500,000
CORNING DELAWARE
GUARANTEED BY
Corning Incorporated
% Convertible Monthly Income
Preferred Securities
Goldman, Sachs & Co.
Lazard Freres & Co.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses to be incurred in
connection with the distribution of the securities to be registered, other
than underwriting commissions. Corning will pay the following expenses:
<TABLE>
<CAPTION>
<S> <C>
Registration Fee--Securities and Exchange
Commission $ 109,053
Filing Fee--New York Stock Exchange 68,520
Legal Fees and Expenses 200,000
Printing Fees 70,000
Accounting Fees 60,000
Blue Sky Fees and Expenses 12,000
Rating Agency Fees 155,000
Fiscal Agent Fees 5,000
Miscellaneous 9,480
Total $580,000
</TABLE>
Item 15. Indemnification of Directors and Officers.
Sections 722 and 723 of the Business Corporation Law of the State of New York
(the "NYBCL") provide that a corporation may indemnify its current and former
directors and officers under certain circumstances.
Article VIII of Corning's By-Laws provides that Corning shall indemnify each
director and officer against all costs and expenses actually and reasonably
incurred by him in connection with the defense of any claim, action, suit or
proceeding against him by reason of his being or having been a director or
officer of the registrant to the full extent permitted by, and consistent
with, the NYBCL.
Item 16. Exhibits.
<TABLE>
<CAPTION>
Number Description
<S> <C>
1.1 Form of Underwriting Agreement
2.1 Certificate of Limited Partnership of Corning Delaware
2.2 Form of Amended and Restated Limited Partnership Agreement of Corning Delaware
3.1 Restated Certificate of Incorporation, dated July 12, 1989, and the Certificate of
Amendment, dated September 28, 1989, to the Restated Certificate of Incorporation
of Corning (incorporated by reference to Exhibit 3(a) of Corning's Annual Report
on Form 10-K for the fiscal year ended December 31, 1989)
3.2 By-laws of Corning (incorporated by reference to Exhibit 3(a) of Corning's Annual
Report on Form 10-K for the fiscal year ended December 30, 1990)
3.3 Certificate of Amendment, dated April 30, 1992, of the Restated Certificate of
Incorporation of Corning (incorporated by reference to Exhibit 3(a) of Corning's
Annual Report on Form 10-K for the fiscal year ended January 3, 1993)
3.4 Certificate of Amendment dated June , 1994 of the Restated Certificate of Incorporation
of Corning, with respect to the Corning Series C Preferred Stock
4.1 Form and terms of Corning Delaware Preferred Securities (included in Exhibit 2.2)
4.2 Form and Terms of Corning Series C Preferred Stock (included in Exhibit 3.4)
4.3 Form of Fiscal Agency Agreement
4.4 Form of Subordinated Debenture (included in Exhibit 4.3)
4.5 Form of Guarantee
4.6 Form of Corning Common Stock Certificate (incorporated by reference to Exhibit 4
to Registration Statement on Form S-4 filed with the Commission on June 17, 1992
(Registration Statement No. 33-48488))
4.7 Rights Agreement, dated as of July 2, 1986, between Corning Incorporated and Harris
Trust and Savings Bank, as amended (incorporated by reference to Exhibit 1 to Registration
Statement on Form 8-A, filed with the Commission on July 2, 1986, and Exhibit 1 to
Amendment No. 1 on Form 8, filed with the Commission on October 10, 1989)
4.8 Form of Corning Preferred Share Purchase Right (included in Exhibit 4.7)
4.9 Registration Rights Agreement, dated as of June 7, 1994, among Corning Incorporated,
Maryland Medical Laboratories, Inc., Maryland Medical Data, Inc., Pharmaceutical
Laboratory Services, Inc., Passen Professional Services, P.A., and Podiatric Pathology
Laboratories, Inc.
5.1 Opinion of William C. Ughetta, Esq., Senior Vice President and General Counsel
8.1 Opinion of Shearman & Sterling as to tax matters
12.1 Ratio of Earnings to Combined Fixed Charges and Preferred Dividends
23.1 Consent of Price Waterhouse, independent accountants
23.2 Consent of Arthur Andersen & Co., independent public accountants
23.3 Consent of William C. Ughetta, Esq. (included in Exhibit 5.1)
23.4 Consent of Shearman & Sterling (included in Exhibit 8.1)
24.1 Powers of Attorney*
</TABLE>
* Previously filed.
Item 17. Undertakings.
Corning and Corning Delaware hereby undertake (1) to file, during any period
in which offers or sales are being made, a post-effective amendment to this
Registration Statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1993; (ii) to reflect in the prospectus any
facts or events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment thereto) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to such
information in the Registration Statement; provided, however, that paragraphs
(1)(i) and (1)(ii) do not apply if the information required to be included in
a post-effective amendment thereby is contained in periodic reports filed by
the Company pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement; (2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; (3) to remove from registration by means
of post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering; and (4) that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
Corning's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Corning and Corning Delaware hereby undertake that, (1) for purposes of
determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the time
it was declared effective; and (2) for purposes of determining any liability
under the Securities Act, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Corning
and Corning Delaware pursuant to the foregoing provisions, or otherwise,
Corning and Corning Delaware have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable. In the
event a claim for indemnification against such liabilities (other than the
payment by Corning or Corning Delaware of expenses incurred or paid by a
director, officer or controlling person of Corning or Corning Delaware in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, Corning and Corning Delaware will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in such Act and will be governed
by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Corning Delaware, L.P., a Delaware limited partnership, certifies that it has
reasonable grounds to believe it meets all the requirements for filing on
Form S-3 and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Corning,
State of New York, on the 28th day of June, 1994.
Corning Delaware, L.P.
(Registrant)
By Corning Incorporated as General Partner
By /s/ William C. Ughetta
William C. Ughetta, Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, Corning
Incorporated, a New York corporation, certifies that it has reasonable
grounds to believe it meets all the requirements for filing on Form S-3 and
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Corning, State of New
York, on the 28th day of June, 1994.
Corning Incorporated
(Registrant)
By /s/ William C. Ughetta
William C. Ughetta, Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below on June 28, 1994 by the following directors
and officers of Corning Incorporated in the capacities indicated:
<TABLE>
<CAPTION>
Signature Capacity
<S> <C>
/s/ James R. Houghton Chairman of the Board, Principal Executive Officer
(James R. Houghton) and Director
/s/ Van C. Campbell Vice Chairman, Principal Financial Officer and
(Van C. Campbell) Director
/s/ Larry Aiello, Jr. Vice President, Controller, and Principal Accounting
(Larry Aiello, Jr.) Officer
*
(Roger G. Ackerman) President, Principal Operating Officer and Director
*
(Robert Barker) Director
*
(Mary L. Bundy) Director
*
(Barber B. Conable, Jr.) Director
*
(David A. Duke) Director
*
(E. Martin Gibson) Director
*
(Gordon Gund) Director
(John M. Hennessy) Director
*
(Vernon E. Jordan, Jr.) Director
*
(James W. Kinnear) Director
*
(James J. O'Connor) Director
*
(Catherine A. Rein) Director
*
(Henry Rosovsky) Director
*
(William D. Smithburg) Director
*
(Robert G. Stone, Jr.) Director
* By /s/ William C. Ughetta
(William C. Ughetta)
Attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
<S> <C> <C>
1.1 Form of Underwriting Agreement
2.1 Certificate of Limited Partnership of Corning Delaware
2.2 Form of Amended and Restated Limited Partnership Agreement of Corning Delaware
3.1 Restated Certificate of Incorporation, dated July 12, 1989, and the Certificate
of Amendment, dated September 28, 1989, to the Restated Certificate of
Incorporation of Corning (incorporated by reference to Exhibit 3(a) of Corning's
Annual Report on Form 10-K for the fiscal year ended December 31, 1989)
3.2 By-laws of Corning (incorporated by reference to Exhibit 3(a) of Corning's Annual
Report on Form 10-K for the fiscal year ended December 30, 1990)
3.3 Certificate of Amendment, dated April 30, 1992, of the Restated Certificate of
Incorporation of Corning (incorporated by reference to Exhibit 3(a) of Corning's
Annual Report on Form 10-K for the fiscal year ended January 3, 1993)
3.4 Certificate of Amendment dated June , 1994 of the Restated Certificate of
Incorporation of Corning, with respect to the Corning Series C Preferred Stock
4.1 Form and terms of Corning Delaware Preferred Securities (included in Exhibit 2.2)
4.2 Form and Terms of Corning Series C Preferred Stock (included in Exhibit 3.4)
4.3 Form of Fiscal Agency Agreement
4.4 Form of Subordinated Debenture (included in Exhibit 4.3)
4.5 Form of Guarantee
4.6 Form of Corning Common Stock Certificate (incorporated by reference to Exhibit 4
to Registration Statement on Form S-4 filed with the Commission on June 17, 1992
(Registration Statement No. 33-48488))
4.7 Rights Agreement, dated as of July 2, 1986, between Corning Incorporated and
Harris Trust and Savings Bank, as amended (incorporated by reference to Exhibit 1
to Registration Statement on Form 8-A, filed with the Commission on July 2, 1986,
and Exhibit 1 to Amendment No. 1 on Form 8, filed with the Commission on October
10, 1989)
4.8 Form of Corning Preferred Share Purchase Right (included in Exhibit 4.7)
4.9 Registration Rights Agreement, dated as of June 7, 1994, among Corning
Incorporated, Maryland Medical Laboratories, Inc., Maryland Medical Data, Inc.,
Pharmaceutical Laboratory Services, Inc., Passen Professional Services, P.A., and
Podiatric Pathology Laboratories, Inc.
5.1 Opinion of William C. Ughetta, Esq., Senior Vice President and General Counsel
8.1 Opinion of Shearman & Sterling as to tax matters
12.1 Ratio of Earnings to Combined Fixed Charges and Preferred Dividends
23.1 Consent of Price Waterhouse, independent accountants
23.2 Consent of Arthur Andersen & Co., independent public accountants
23.3 Consent of William C. Ughetta, Esq. (included in Exhibit 5.1)
23.4 Consent of Shearman & Sterling (included in Exhibit 8.1)
24.1 Powers of Attorney*
</TABLE>
* Previously filed <PAGE>
<PAGE>
Exhibit 1.1
Draft of June 27, 1994
Corning Delaware L.P.
% Convertible Monthly Income Preferred Securities
(liquidation preference $50 per share)
guaranteed by
Corning Incorporated
Underwriting Agreement
, 1994
Goldman, Sachs & Co.,
Lazard Freres & Co.,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Dear Sirs:
Corning Delaware L.P., a Delaware limited partnership (the
"Company"), and Corning Incorporated, a New York corporation, as
general partner in the Company and as guarantor (the "Guarantor" or
"Corning"), propose, subject to the terms and conditions stated herein,
that the Company issue and sell to the Underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of shares
(the "Firm Shares") and, at the election of the Underwriters, up to
additional shares (the "Optional Shares") of % Convertible Monthly
Income Preferred Securities (liquidation preference $50 per share)
representing limited partnership interests (the "Preferred Securities") of
the Company guaranteed pursuant to a Guarantee (the "Guarantee") by
the Guarantor as to the payment of dividends, as, if and when declared
and as to payments on liquidation or redemption, entitled to the benefits
of a Fiscal Agency Agreement (in the form filed as an exhibit to the
Registration Statement referred to below, the "Fiscal Agency
Agreement") among the Company, Corning and Harris Trust and
Savings Bank, as fiscal agent (the "Fiscal Agent") and convertible into
shares of Common Stock, par value $.50 per share (the "Corning
Common Stock"), of the Guarantor and exchangeable into shares of
Series C Convertible Preferred Stock, par value $100 per share (the
"Corning Preferred Stock"), of the Guarantor (the Firm Shares and the
Optional Shares which the Underwriters elect to purchase pursuant to
Section 2 hereof being referred to collectively as the "Shares".
1. Each of the Company and the Guarantor jointly and severally
represents and warrants to, and agrees with, each of the Underwriters
that:
(a) A registration statement on Form S-3 (File No. 33-
53821) in respect of the Shares, the Guarantee, the Corning
Common Stock and the Corning Preferred Stock (collectively,
the "Registered Securities") has been filed with the Securities
and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), and delivered
to you; such registration statement and any post-effective
amendment thereto, each in the form heretofore delivered to
you and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein,
to you for each of the other Underwriters, have been declared
effective by the Commission in such form; no other document
with respect to such registration statement or document
incorporated by reference therein has heretofore been filed, or
transmitted for filing, with the Commission; and no stop order
suspending the effectiveness of such registration statement has
been issued and no proceeding for that purpose has been
initiated or threatened by the Commission (any preliminary
prospectus included in such registration statement or thereafter
filed with the Commission pursuant to Rule 424(a) of the rules
and regulations of the Commission under the Act, being
hereinafter called a "Preliminary Prospectus"; the various parts
of such registration statement, including all exhibits thereto and
including (i) the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof and
deemed by virtue of Rule 430A under the Act to be part of the
registration statement at the time it was declared effective and
(ii) the documents incorporated by reference in the prospectus
contained in the registration statement at the time such part of
the registration statement became effective, each as amended
at the time such part of the registration statement became
effective, are hereinafter collectively called the "Registration
Statement"; such final prospectus, in the form first filed pursuant
to Rule 424(b) under the Act, is hereinafter called the
"Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date
of such Preliminary Prospectus or Prospectus, as the case may
be; and any reference to any amendment or supplement to any
Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any documents filed after the date of such
Preliminary Prospectus or Prospectus, as the case may be,
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such
Preliminary Prospectus or Prospectus, as the case may be; and
any reference to any amendment to the Registration Statement
shall be deemed to refer to and include any annual report of the
Guarantor filed pursuant to Section 13(a) or 15(d) of the
Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration
Statement);
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission,
and each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder,
and did not contain an 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 the light of the
circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
Company or the Guarantor by an Underwriter through you
expressly for use therein;
(c) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading; and any further documents
so filed and incorporated by reference in the Prospectus or any
further amendment or supplement thereto, when such
documents become effective or are filed with the Commission,
as the case may be, will conform in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder and will
not contain an 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 not misleading; provided,
however, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company
or the Guarantor by an Underwriter through you expressly for
use therein;
(d) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all
material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder and do not and
will not, (i) as of the applicable effective date as to the
Registration Statement and any amendment thereto and (ii) as
of the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an 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 not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in
writing to the Company or the Guarantor by an Underwriter
through you expressly for use therein;
(e) None of the Company, the Guarantor or any of the
Guarantor's subsidiaries has sustained since the date of the
latest audited financial statements included or incorporated by
reference in the Prospectus any material loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than
as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been
any change in the capital stock or long-term debt of the
Guarantor or any of its subsidiaries or any material adverse
change, or any development involving a prospective material
adverse change, in or affecting the general affairs,
management, financial position, or partners' capital of the
Company or the general affairs, management, financial position,
stockholder's equity or results of operations of the Guarantor
and its subsidiaries, considered as a whole, otherwise than as
set forth in or contemplated by the Prospectus;
(f) The Company has been duly formed and is validly
existing as a limited partnership in good standing under the
Delaware Revised Uniform Limited Partnership Act, as
amended (the "Partnership Act"); the Company is a special
purpose limited partnership as described in the Prospectus and
has conducted and will conduct no business other than the
transactions contemplated by this Agreement and described in
the Prospectus; the Company is not a party to or bound by any
agreement or instrument other than the Amended and Restated
Limited Partnership Agreement of the Company (in the form
filed as an exhibit to the Registration Statement, the
"Partnership Agreement") and the Fiscal Agency Agreement;
the Company has no liabilities or obligations other than those
arising out of the transactions contemplated by this Agreement
and described in the Prospectus; and the Company is not a
party to or subject to any action, suit or proceeding of any
nature;
(g) The Guarantor has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of New York, with power and authority (corporate
and other) to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction; and each Significant Subsidiary (as defined in
Regulation S-X under the Act) of the Guarantor has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation;
(h) Up to the date hereof, Corning, has been and is the
sole General Partner in the Company and Corning Finance
Corporation, a Delaware corporation and a wholly-owned
subsidiary of Corning ("Corning Finance") is the sole limited
partner in the Company. At the First Time of Delivery (as
defined in Section 4 hereof) Corning will be the sole General
Partner of the Company, the holders of the Preferred Securities
will become limited partners of the Company and Corning
Finance will withdraw as a limited partner; the Guarantor has
an authorized capitalization as set forth in the Prospectus; since
such date there has been no change in the consolidated
capitalization of the Guarantor and its subsidiaries; and all of
the outstanding partnership interests of the Company and all of
the issued shares of capital stock of the Guarantor have been
duly and validly authorized and issued, are fully paid and non-
assessable (other than the general partnership interest in the
Company), and conform to the descriptions thereof contained
in the Prospectus;
(i) The Shares have been duly and validly authorized by
the Company, and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and
fully paid and non-assessable and will conform to the
description thereof contained in the Prospectus; and the Shares
will have the rights set forth in the Partnership Agreement and
the terms of the Shares are valid and binding on the Company;
the Shares are convertible through the Company into shares of
Corning Common Stock and exchangeable through the
Company for shares of Corning Preferred Stock in accordance
with the Partnership Agreement; the shares of Corning Common
Stock initially issuable upon conversion of the convertible
subordinated debentures of Corning issued pursuant to the
Fiscal Agency Agreement (the "Subordinated Debentures") and
the shares of Corning Preferred Stock initially issuable upon
exchange of the Subordinated Debentures have been duly
authorized and reserved for issuance and, when issued and
delivered in accordance with the terms of the Subordinated
Debentures, will be duly and validly issued, fully paid and non-
assessable and will conform to the descriptions thereof
contained in the Prospectus; the terms of the Corning Preferred
Stock are valid and binding on Corning; and the holders of
outstanding capital stock of the Guarantor are not entitled to
preemptive or other rights afforded by the Guarantor to
subscribe for the shares of Corning Common Stock or the
shares of Corning Preferred Stock issuable through the
Company upon conversion or exchange of the Shares;
(j) The Guarantee, the Subordinated Debentures, the
Partnership Agreement and the Fiscal Agency Agreement (the
Guarantee, the Subordinated Debentures, the Partnership
Agreement and the Fiscal Agency Agreement being collectively
referred to as the "Guarantor Agreements") have each been
duly authorized and when validly executed and delivered by the
Guarantor and, in the case of the Fiscal Agency Agreement, by
the Company and the Fiscal Agent, and, in case of the
Partnership Agreement, the Company and [Corning Finance],
will constitute legal, valid and binding obligations of the
Guarantor, enforceable in accordance with their respective
terms, subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights
and to general equity principles; the Subordinated Debentures
are entitled to the benefits of the Fiscal Agency Agreement; and
the Guarantor Agreements conform to the descriptions thereof
in the Preliminary Prospectus and will conform to the
descriptions thereof in the Prospectus;
(k) Corning is the sole general partner in the Company;
and all of the issued limited partnership interests of the
Company other than the Shares are owned directly or indirectly
by Corning, free and clear of all liens, encumbrances, equities
or claims;
(l) The issue and sale of the Shares by the Company,
the compliance by the Company with all of the provisions of this
Agreement, the purchase of the Subordinated Debentures by
the Company, the execution, delivery and performance by the
Company of the Fiscal Agency Agreement and the
consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, any
agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the property or
assets of the Company is subject, nor will such action result in
any violation of the provisions of the Partnership Agreement or
any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the
issue and sale of the Shares by the Company, the purchase of
the Subordinated Debentures by the Company or the
consummation by the Company of the transactions
contemplated by this Agreement, except the registration under
the Act of the Registered Securities, registration of the Shares
under the Exchange Act, listing of the Shares on the New York
Stock Exchange and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase of
the Shares and the distribution of the Securities by the
Underwriters;
(m) The issue and sale of the Shares by the Company
and the issuance by Corning of the Guarantee, the issuance by
Corning of the shares of Corning Common Stock issuable upon
conversion of the Subordinated Debentures and the issuance
by Corning of the Corning Preferred Stock issuable upon
exchange of the Subordinated Debentures, the compliance by
the Company and the Guarantor with all of the provisions of this
Agreement, the execution, delivery and performance by the
Guarantor of the Guarantor Agreements, and the consummation
of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any agreement or
instrument to which the Guarantor is a party or by which it is
bound or to which any of its property or assets is subject or any
agreement or instrument to which any of the Guarantor's
subsidiaries is a party or by which any of its subsidiaries is
bound or to which any of the property or assets of its
subsidiaries is subject, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or by-laws of
the Guarantor or the charter or by-laws of any of the
Guarantor's subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Guarantor or any of the Guarantor's
subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required
for the issue of the Guarantee, the issuance of the shares of
Corning Common Stock issuable upon conversion of the
Subordinated Debentures and the issuance of the shares of
Corning Preferred Stock issuable upon exchange of the
Subordinated Debentures or the consummation by the
Guarantor of the transactions contemplated by this Agreement,
except the registration under the Act of the Registered
Securities and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase of
the Shares and distribution of the Securities by the
Underwriters;
(n) Neither the Company nor the Guarantor is in
violation of its organizational documents or in default in the
performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or
its properties may be bound;
(o) The statements set forth in the Prospectus under the
captions "Description of Securities Offered" and "Description of
Corning Capital Stock" insofar as they purport to constitute a
summary of the terms of the securities therein described, and,
subject to the limitations set forth therein, under the caption
"Taxation" are accurate, complete and fair;
(p) Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the
Guarantor or any of the Guarantor's subsidiaries is a party or of
which any property of the Guarantor or any of the Guarantor's
subsidiaries is the subject which, if determined adversely to the
Guarantor or any of the Guarantor's subsidiaries, would
individually or in the aggregate have a material adverse effect
on the consolidated financial position, stockholders' equity or
results of operations of the Guarantor and its subsidiaries; and,
to the best of the Guarantor's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others;
(q) Neither the Company nor the Guarantor is, and after
giving effect to the offering and sale of the Shares, neither the
Company nor the Guarantor will be, an "investment company"
or an entity "controlled" by an "investment company" required
to register under the Investment Company Act of 1940, as
amended (the "Investment Company Act");
(r) None of the Company, the Guarantor or any of the
Guarantor's affiliates does business with the Government of
Cuba or with any person or affiliate located in Cuba within the
meaning of Section 517.075, Florida Statues; and
(s) Except with respect to the Registration Rights
Agreement, entered into as of ______, 1994, among Corning,
Maryland Medical Laboratory, Inc. and certain other persons
named therein, and the Merger Agreement, dated July 1, 1994,
between Corning and Nichols Institute (the "Nichols Merger
Agreement"); there are no contracts, agreements or
understandings between the Company or Corning and any
person granting such person the right to require the Company
or the Corning to file a registration statement under the Act with
respect to any partnership interests of the Company or the
Corning Common Stock or any preferred stock of Corning
owned or to be owned by such person or to require the
Company or Corning to include such securities in the securities
registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company or Corning under the Act.
2. Subject to the terms and conditions herein set forth, (a) the
Company and Corning agree to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase, at a purchase price per share of $50.00 per share,
the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto and (b) in the event and to the extent
that the Underwriters shall exercise the election to purchase Optional
Shares as provided below, the Company and Corning agree to issue
and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase at the purchase price per
Share set forth in clause (a) of this Section 2, that portion of the number
of Optional Shares as to which such election shall have been exercised
(to be adjusted by you so as to eliminate fractional shares) determined
by multiplying such number of Optional Shares by a fraction the
numerator of which is the maximum number of Optional Shares which
such Underwriter is entitled to purchase as set forth opposite the name
of such Underwriter in Schedule II hereto and the denominator of which
is the maximum number of the Optional Shares which all of the
Underwriters are entitled to purchase hereunder.
The Company and Corning hereby grant to the Underwriters the
right to purchase at their election up to Optional Shares, at the
purchase price per Share set forth in the paragraph above, for the sole
purpose of covering overallotments in the sale of the Firm Shares. Any
such election to purchase Optional Shares may be exercised only by
written notice from you to the Company, given within a period of 30
calendar days after the date of this Agreement, setting forth the
aggregate number of Optional Shares to be purchased and the date on
which such Optional Shares are to be delivered, as determined by you
but in no event earlier than the First Time of Delivery (as defined in
Section 4 hereof) or, unless you and the Company otherwise agree in
writing, earlier than two or later than ten business days after the date of
such notice.
As compensation to the Underwriters for their commitments
hereunder, and in view of the fact that the proceeds of the sale of the
Shares will be used by the Company to purchase the Subordinated
Debentures of the Guarantor, the Guarantor hereby agrees to pay at
each Time of Delivery (as defined in Section 4 hereof) to Goldman,
Sachs & Co., for the accounts of the several Underwriters, an amount
equal to $. per share for the Shares to be delivered at such Time of
Delivery.
3. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for
sale upon the terms and conditions set forth in the Prospectus.
4. A certificate or certificates in definitive form for the Shares
to be purchased by each Underwriter hereunder, and in such
denominations and registered in such names as Goldman, Sachs & Co.
may request upon at least forty-eight hours' prior notice to the
Company, shall be delivered by or on behalf of the Company to you for
the account of such Underwriter, against payment by such Underwriter
or on its behalf of the purchase price therefor by check in New York
Clearing House (next day) funds. The time, date and location of such
delivery and payment shall be, with respect to the Firm Shares, 9:30
a.m. New York time, on , 1994, or at such other time and date as
you, the Company and Corning may agree upon in writing at the office
of Sullivan & Cromwell, 250 Park Avenue, New York, New York and,
with respect to the Optional Shares, 9:30 a.m., New York time, on the
date specified by you in the written notice given by you of the
Underwriters' election to purchase such Optional Shares, or at such
other time and date as you, the Company and Corning may agree upon
in writing at the above office of Sullivan & Cromwell. Such time and
date for delivery of the Firm Shares is herein called the "First Time of
Delivery," such time and date for delivery of the Optional Shares, if not
the First Time of Delivery, is herein called the "Second Time of
Delivery," and each such time and date for delivery is herein called a
"Time of Delivery." Such certificates will be made available for checking
and packaging at least twenty-four hours prior to each Time of Delivery
at the office of The Depository Trust Company, 55 Water Street, New
York, New York 10004.
At each Time of Delivery, the Guarantor will pay, or cause to be
paid, the compensation payable at such Time of Delivery to the
Underwriters under Section 2 hereof by check in New York Clearing
House (next day) funds.
5. The Company and the Guarantor jointly and severally agree
with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by
you and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on
the second business day following the execution and delivery of
this Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or
the Prospectus prior to the last Time of Delivery which shall be
reasonably disapproved by you promptly after reasonable notice
thereof; to advise you promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the
Prospectus or any amended prospectus has been filed and to
furnish you with copies thereof; in the case of the Guarantor, to
file promptly all reports and any definitive proxy or information
statements required to be filed by the Guarantor with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for
so long as the delivery of a prospectus is required in connection
with the offering or sale of the Securities; to advise you,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the
Registered Securities for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending
or supplementing of the Registration Statement or Prospectus
or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending the
use of any prospectus relating to the Securities or suspending
any such qualification, to use promptly its best efforts to obtain
its withdrawal;
(b) Promptly from time to time to take such action as
you may reasonably request to qualify the Registered Securities
for offering and sale under the securities laws of such
jurisdictions of the United States as you may request and such
other jurisdictions as the Company, Corning and you may agree
and to comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Shares,
provided that in connection therewith neither the Company nor
the Guarantor shall be required to qualify as a foreign
corporation or to file a general consent to service of process in
any jurisdiction;
(c) To furnish the Underwriters with copies of the
Prospectus in such quantities as you may from time to time
reasonably request, and, if the delivery of a prospectus is
required at any time prior to the expiration of nine months after
the time of issue of the Prospectus in connection with the
offering or sale of the Shares and if at such time any event shall
have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or
supplement the Prospectus or to file under the Exchange Act
any document incorporated by reference in the Prospectus in
order to comply with the Act or the Exchange Act, to notify you
and upon your request to file such document and to prepare
and furnish without charge to each Underwriter and to any
dealer in securities as many copies as you may from time to
time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement
or omission or effect such compliance, and in case any
Underwriter is required under the Act to deliver a prospectus in
connection with the distribution of any of the Shares at any time
nine months or more after the date of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many copies as you may
request of an amended or supplemented Prospectus complying
with Section 10(a) (3) of the Act;
(d) In the case of the Guarantor, to make generally
available to its securityholders as soon as practicable, but in
any event not later than eighteen months after the effective date
of the Registration Statement (as defined in Rule 158(c)), an
earning statement of the Guarantor and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Act
and the rules and regulations thereunder (including at the option
of the Guarantor Rule 158 under the Act);
(e) During the period beginning from the date hereof
and continuing to and including the date which is 90 days after
the date of the Prospectus, not to offer, sell, contract to sell or
otherwise dispose of any shares of Corning Common Stock,
any other shares of Capital Stock of Corning, any other security
convertible into or exercisable or exchangeable for Corning
Common Stock or any such capital stock or debt securities
substantially similar to the Subordinated Debentures or any
other securities substantially similar to the Shares, other than
the Shares, shares of Corning Common Stock or Corning
Preferred Stock issued or delivered upon conversion or
exchange of the Subordinated Debentures, securities issued or
delivered upon conversion, exchange, or exercise of any other
securities of the Guarantor outstanding on the date of the
Prospectus, securities issued pursuant to the Guarantor's stock
option or other benefit or incentive plans maintained for its
officers, directors, or employees, securities issued by the
Guarantor in connection with mergers, acquisitions or similar
transactions (provided that the recipient of the securities issued
in any such merger, acquisition or similar transactions agrees
in writing to comply with, and be bound by, this Section 5(e)),
Corning Common Stock issued pursuant to the Nichols Merger
Agreement, or partnership interests of the Company issued to
the Guarantor in connection with the sale of the Optional
Shares in order to maintain the Guarantor's 21% interest in the
total capital of the Company;
(f) To furnish to the holders of Shares as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income,
stockholders' equity and cash flow of the Guarantor and its
consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning with the
first such fiscal quarter ending after the effective date of the
Registration Statement), consolidated summary financial
information of the Guarantor and its subsidiaries for such
quarter in reasonable detail;
(g) During a period of three years from the effective
date of the Registration Statement, to furnish to you copies of
all reports or other communications (financial or other) furnished
to holders of Corning Common Stock, and to deliver to you as
soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of
the Company or the Guarantor is listed;
(h) In the case of the Guarantor, to issue the Guarantee
concurrently with the issue and sale of the Shares as
contemplated herein;
(i) To use the net proceeds received by it from the sale
of the Shares and the Subordinated Debentures pursuant to this
Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds"; and
(j) To use its best efforts to list, subject to notice of
issuance, the Shares on the New York Stock Exchange.
6. The Guarantor covenants and agrees with the several
Underwriters that it will pay the following: (i) the fees, disbursements
and expenses of the Company's and the Guarantor's counsel and
accountants in connection with the registration of the Registered
Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and any amendments and
supplements thereto and the mailing and delivering of copies thereof to
the Underwriters and dealers; (ii) the cost of printing or producing any
Agreement among Underwriters, this Agreement, the Blue Sky and
Legal Investment Memoranda and any other documents in connection
with the offering, purchase, sale and delivery of the Securities; (iii) all
expenses in connection with the qualification of the Registered
Securities for offering and sale under state securities laws as provided
in Section 5(b) hereof, including the fees and disbursements of counsel
for the Underwriters in connection with such qualification and in
connection with the Blue Sky survey; (iv) any fees charged by securities
rating services for rating the Securities; (v) the filing fees incident to
securing any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost and
charges of the transfer agent or registrar; (vii) the cost of qualifying the
Shares and the Corning Preferred Stock with The Depository Trust
Company; (viii) all fees and expenses of the Fiscal Agent and its
counsel; (ix) all fees and expenses in connection with the listing of the
Shares on the New York Stock Exchange and the cost of registering the
Shares under Section 12 of the Exchange Act; (x) the cost of preparing
certificates for the Shares and the Subordinated Debentures; and (xi) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that, except as provided in this
Section, Section 8 and Section 11 hereof, the Underwriters will pay all
of their own costs and expenses, including the fees of their counsel,
stock transfer taxes on resale of any of the Shares by them, and any
advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the
Shares to be delivered at each Time of Delivery, shall be subject, in
their discretion, to the condition that all representations and warranties
and other statements of the Company and the Guarantor herein are, at
and as of such Time of Delivery, true and correct, the condition that the
Company and the Guarantor shall have performed all of their obligations
hereunder theretofore to be performed, and the following additional
conditions:
(a) The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and regulations
under the Act and in accordance with Section 5(a) hereof; no
stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) Sullivan & Cromwell, counsel for the Underwriters,
shall have furnished to you such opinion or opinions, dated
such Time of Delivery, with respect to: the incorporation of the
Guarantor and the formation of the Company; insofar as the
Federal laws of the United States, the laws of the State of New
York or the Delaware General Corporation Law are concerned,
the validity of the Registered Securities and the Subordinated
Debentures being delivered at such Time of Delivery; the
Registration Statement and the Prospectus; and other related
matters as you may reasonably request; and such counsel shall
have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) William C. Ughetta, Esq., Senior Vice President and
General Counsel of the Guarantor, shall have furnished to you
his written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Guarantor has been duly incorporated and
is validly existing as a corporation in good standing
under the laws of the State of New York, with power
and authority (corporate and other) to own its properties
and conduct its business as described in the
Prospectus;
(ii) The Company has been duly formed and is
validly existing as a limited partnership in good standing
under the Partnership Act, the Company is a special
purpose limited partnership as described in the
Prospectus; the Company is not a party to or bound by
any agreement or instrument other than the Partnership
Agreement and the Fiscal Agency Agreement; and to
the best of such counsel's knowledge, there are no
legal or governmental proceedings to which the
Company is a party or of which any property of the
Company is the subject and no such proceedings are
threatened or contemplated by governmental authorities
or threatened by others;
(iii) As of the date of such Time of Delivery the
Guarantor is the sole General Partner of the Company
and the holders of the Shares are the sole limited
partners and there are no other partners in the
Company; the Guarantor has an authorized
capitalization as set forth in the Prospectus, and all of
the issued shares of capital stock of the Guarantor and
all of the issued partnership interests of the Company
have been duly and validly authorized and issued and
are fully paid and non-assessable (other than the
general partnership interest in the Company) and
conform in all material respects to the descriptions
thereof contained in the Prospectus; and all of the
issued partnership interests of the Company, other than
the Shares, are owned directly by the Guarantor, free
and clear of all liens, encumbrances, equities or claims;
(iv) The Guarantor Agreements have each been
duly authorized, executed and delivered by the
Guarantor and the Company and such Agreements
constitute legal, valid and binding obligations of the
Guarantor and the Company, as the case may be,
enforceable in accordance with their respective terms,
subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or
affecting creditors' rights and to general equity
principles; the Subordinated Debentures are entitled to
the benefits provided by the Fiscal Agency Agreement;
and the Guarantor Agreements conform in all material
respects to the descriptions thereof in the Prospectus;
(v) The Shares have been duly and validly
authorized by the Company, and, when issued and
delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and non-
assessable and will conform to the description thereof
contained in the Prospectus; the Shares have the rights
set forth in the Partnership Agreement and the terms of
the Shares are valid and binding on the Company; the
Shares are convertible through the Company into
shares of Corning Common Stock and exchangeable
through the Company for shares of Corning Preferred
Stock in accordance with the Partnership Agreement
and the Fiscal Agency Agreement; the shares of
Corning Common Stock initially issuable upon
conversion of the Subordinated Debentures and the
shares of Corning Preferred Stock initially issuable
upon exchange of the Subordinated Debentures have
been duly authorized and reserved for issuance and,
when issued and delivered in accordance with the
terms of the Subordinated Debentures, will be duly and
validly issued, fully paid and non-assessable and will
conform in all material respects to the descriptions
thereof contained in the Prospectus; the terms of the
Corning Preferred Stock are valid and binding on
Corning; and the holders of outstanding capital stock of
the Guarantor are not entitled to preemptive or other
rights afforded by the Guarantor to subscribe for the
shares of Corning Common Stock or the shares of
Corning Preferred Stock issuable through the Company
upon conversion or exchange of the Shares;
(vi) With such exceptions as are not material, the
Guarantor has been duly qualified as a foreign
corporation for the transaction of business and is in
good standing under the laws of each United States
jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such
qualification, or is subject to no material liability or
disability by reason of failure to be so qualified in any
such jurisdiction (such counsel being entitled to rely in
respect of the opinion in this clause (vi) upon opinions
of local counsel and in respect of matters of fact upon
certificates of public officials or officers of the
Guarantor, provided that such counsel shall state that
he believes that both you and he are justified in so
relying upon such opinions and certificates);
(vii) To the best of such counsel's knowledge and
other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the
Guarantor or any of the Guarantor's subsidiaries is a
party or of which any property of the Guarantor or any
of the Guarantor's subsidiaries is the subject (other
than as set forth in the Prospectus and other than
litigation incident to the kind of business conducted by
the Guarantor and its subsidiaries, none of which
litigation is material to the Guarantor and its
subsidiaries considered as a whole) which, if
determined adversely to the Guarantor or any of the
Guarantor's subsidiaries, as the case may be, would
individually or in the aggregate have a material adverse
effect on the consolidated financial position,
stockholders' equity or results of operations of the
Guarantor and its subsidiaries; and, to the best of such
counsel's knowledge, no such proceedings are
threatened by governmental authorities or by others;
and such counsel has not received notice that any such
proceedings are threatened by governmental authorities
or by others;
(viii) This Agreement has been duly authorized,
executed and delivered by each of the Company and
the Guarantor;
(ix) The issue and sale by the Company of the
Shares being delivered at such Time of Delivery, the
compliance by the Company with all of the provisions
of this Agreement, the purchase by the Company of the
Subordinated Debentures, the execution, delivery and
performance by the Company of the Fiscal Agency
Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or
result in a breach of any of the terms or provisions of,
or constitute a default under, any agreement or
instrument known to such counsel to which the
Company is a party or by which the Company is bound
or to which any of the property or assets of the
Company is subject, nor will such action result in any
violation of the provisions of the Partnership Agreement
or certificate of limited partnership of the Company or
any statute or any order, rule or regulation known to
such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of its
properties;
(x) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue
and sale of the Shares by the Company, the purchase
by the Company of the Subordinated Debentures or the
consummation by the Company of the transactions
contemplated by this Agreement, except the registration
under the Act of the Registered Securities, registration
of the shares under the Exchange Act, listing of the
Shares on the New York Stock Exchange, each of
which has been made or obtained, and such consents,
approvals, authorizations, registrations or qualifications
as have been obtained or may be required under state
securities or Blue Sky laws in connection with the
purchase of the Shares and the distribution of the
Shares by the Underwriters;
(xi) The issue and sale of the Shares by the
Company and the issuance by Corning of the shares of
Corning Common Stock issuable upon conversion of
the Subordinated Debentures and the issuance of the
shares of Corning Preferred Stock issuable upon
exchange of the Subordinated Debentures by the
Guarantor, the compliance by the Guarantor with all of
the provisions of this Agreement, the execution, delivery
and performance by the Guarantor of the Guarantor
Agreements and the consummation of the transactions
herein and therein contemplated will not conflict with or
result in a breach of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the
Guarantor or any of the Guarantor's subsidiaries is a
party or by which the Guarantor or any of the
Guarantor's subsidiaries is bound or to which any of the
property or assets of the Guarantor or any of the
Guarantor's subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate
of Incorporation or by-laws of the Guarantor or any
statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body
having jurisdiction over the Guarantor, any of the
Guarantor's subsidiaries or any of their properties;
(xii) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue
of the Guarantee, the issuance of the shares of Corning
Common Stock issuable upon conversion of the
Subordinated Debentures or the issuance of the
Corning Preferred Stock issuable upon exchange of the
Subordinated Debentures or the consummation by the
Guarantor of the transactions contemplated herein and
therein, except the registration under the Act of the
Registered Securities, which has been made, and such
consents, approvals, authorizations, registrations or
qualifications as have been obtained or may be
required under state securities or Blue Sky laws in
connection with the purchase of the Shares and the
distribution of the Shares by the Underwriters;
(xiii) The statements set forth in the Prospectus
under the captions "Description of Securities Offered",
"Description of Corning Capital Stock" and
"Underwriting", insofar as they constitute summaries of
securities or documents are accurate summaries and
fairly present the information with respect to such
securities or documents and insofar as they constitute
matters of law or legal conclusions are accurate, correct
and fairly present the information set forth therein;
(xiv) Neither the Company nor the Guarantor is an
"investment company" or an entity "controlled" by an
"investment company" required to be registered under
the Investment Company Act;
(xv) The documents incorporated by reference in
the Prospectus or any further amendment or
supplement thereto made by the Company or the
Guarantor prior to such Time of Delivery (other than the
financial statements and related schedules therein, as
to which such counsel need express no opinion), when
they became effective or were filed with the
Commission, as the case may be, complied as to form
in all material respects with the requirements of the Act
or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; and such
counsel has no reason to believe that any of such
documents, when such documents became effective or
were so filed, as the case may be, contained, in the
case of a registration statement which became effective
under the Act, an untrue statement of a material fact or
omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or, in the case of other documents which
were filed under the Exchange Act with the
Commission, an untrue statement of a material fact or
omitted to state a material fact necessary in order to
make the statements therein, in the light of the
circumstances under which they were made when such
documents were so filed, not misleading; and
(xvi) The Registration Statement and the
Prospectus and any further amendments and
supplements thereto made by the Company or the
Guarantor prior to such Time of Delivery (other than the
financial statements and related schedules therein, as
to which such counsel need express no opinion) comply
as to form in all material respects with the requirements
of the Act and the rules and regulations thereunder;
although such counsel does not assume any
responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration
Statement or the Prospectus, except for those referred
to in the opinion in Subsection (xv) of this Section 7(c),
such counsel has no reason to believe that, as of its
effective date, the Registration Statement or any further
amendment thereto made by the Company or the
Guarantor prior to such Time of Delivery (other than the
financial statements and related schedules therein, as
to which such counsel need express no opinion)
contained an untrue statement of a material fact or
omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in
the light of the circumstances under which they were
made, not misleading or that, as of its date, the
Prospectus or any further amendment or supplement
thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related
schedules therein and other financial data therein, as to
which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which
they were made, not misleading or that, as of such
Time of Delivery either the Registration Statement or
the Prospectus or any further amendment or
supplement thereto made by the Company or the
Guarantor prior to such Time of Delivery (other than the
financial statements and related schedules therein, as
to which such counsel need express no opinion)
contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the
statements therein, in light of the circumstances in
which they were made, not misleading; and such
counsel does not know of any amendment to the
Registration Statement required to be filed or of any
contracts or other documents of a character required to
be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the
Prospectus or required to be described in the
Registration Statement or the Prospectus which are not
filed or incorporated by reference or described as
required.
(d) Shearman & Sterling, special counsel for the
Company and the Guarantor, shall have furnished to you their
written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the same effect as the
opinions set forth in paragraphs (ii), (iv), (v), (xv) and (xvi) of
Section 7(c) of this Agreement and to the effect that:
(i) The information set forth in the Prospectus
(i) concerning the legal proceedings under the captions
"Business of Corning -- Recent Developments -- Breast
Implant Litigation" and "-- Other Legal Proceedings" and
(ii) concerning the legal proceedings involving the billing
practices of the Guarantor's Metpath division of its
wholly owned subsidiary, Corning Lab Services, Inc.,
under the caption "Business -- Recent Developments --
Department of Justice Investigation", is appropriately
responsive to the requirements of the Act and the rules
and regulations thereunder; and
(ii) The statements made in the Prospectus
under the caption "Certain Federal Income Tax
Considerations", to the extent they constitute matters of
law or legal conclusions, have been reviewed, subject
to the limitations set forth therein, by such counsel and
are accurate, correct and fairly present the information
set forth therein.
(e) On the date of this Agreement and also at each
Time of Delivery, Price Waterhouse and Arthur Andersen & Co.
shall have furnished to you a letter or letters, dated the
respective date of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annexes I and II
hereto;
(f) The Partnership Agreement, the Guarantee and the
Fiscal Agency Agreement shall have been executed and
delivered, and in the case of the Certificate of Amendment with
respect to the Corning Preferred Stock executed and filed, in
each case in a form reasonably satisfactory to you;
(g) (i) None of the Company, the Guarantor or any of
the Guarantor's subsidiaries shall have sustained since the date
of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is
given in the Prospectus there shall not have been any change
in the capital stock or long-term debt of the Guarantor or any of
the Guarantor's subsidiaries or any change, or any development
involving a prospective change, in or affecting the general
affairs, management, financial position or partners' capital of the
Company or the general affairs, management, consolidated
financial position, stockholders' equity or results of operations
of the Guarantor or the Guarantor's subsidiaries, otherwise than
as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in Clause (i) or (ii), is in your
judgment so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering of the Shares
or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the
Prospectus;
(h) On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Shares or any of the
Guarantor's debt securities or preferred stock by any "nationally
recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2)
under the Act, and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with
possible negative implications, its rating of the Shares or any of
the Guarantor's debt securities or preferred stock;
(i) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York
Stock Exchange; (ii) a suspension or material limitation in
trading in the Guarantor's securities on the New York Stock
Exchange; (iii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York
State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United
States of a national emergency or war if the effect of any such
event specified in this Clause (iv) in your judgment makes it
impracticable or inadvisable to proceed with the public offering
of the Securities or the delivery of the Shares being delivered
at such Time of Delivery on the terms and in the manner
contemplated by the Prospectus;
(j) The Shares to be sold by the Company at such Time
of Delivery shall have been duly listed, subject to notice of
issuance, on the New York Stock Exchange; and
(k) The Company and the Guarantor shall have
furnished or caused to be furnished to you at such Time of
Delivery certificates of officers of the Company and the
Guarantor satisfactory to you, as to the accuracy of the
representations and warranties of the Company and the
Guarantor herein at and as of such Time of Delivery, as to the
performance by the Company and the Guarantor of all of their
obligations hereunder to be performed at or prior to such Time
of Delivery, as to the matters set forth in subsections (a) and (g)
of this Section and as to such other matters as you may
reasonably request.
8. (a) The Company and the Guarantor will jointly and severally
indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter
may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon an untrue statement or alleged untrue statement of
a material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that
neither the Company nor the Guarantor shall be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company or the Guarantor by any Underwriter through
you expressly for use therein and provided, further, that neither the
Company nor the Guarantor shall be liable to the Underwriter under the
indemnity agreement in this subsection (a) with respect to any
Preliminary Prospectus to the extent that any such loss, claim, damage
or liability of the Underwriter results from the fact that the Underwriter
sold Shares to a person as to whom it shall be established that there
was not sent or given, at or prior to the written confirmation of such
sale, a copy of the Prospectus (excluding documents incorporated by
reference) in any case where such delivery is required by the Act if the
Company or the Guarantor has previously furnished copies thereof to
the Underwriter and the loss, claim, damage or lability of the Underwriter
results from an untrue statement or omission of a material fact
contained in the Preliminary Prospectus which was corrected in the
Prospectus (excluding documents incorporated by reference).
(b) Each Underwriter will indemnify and hold harmless the
Company and the Guarantor against any losses, claims, damages or
liabilities to which the Company or the Guarantor may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement, or
the Prospectus or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Prospectus,
the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company or the Guarantor by such Underwriter through
you expressly for use therein; and will reimburse the Company and the
Guarantor for any legal or other expenses reasonably incurred by the
Company or the Guarantor in connection with investigating or defending
any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under
such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under
such subsection for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending
or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless such
settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such
action or claim and (ii) does not include a statement as to an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the Guarantor on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under subsection
(c) above, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Guarantor on the one hand and the
Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Guarantor on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as (i) the total proceeds from the
offering (before deducting expenses) received by the Company less the
total underwriting compensation paid by the Guarantor bears to (ii) the
total underwriting compensation received by the Underwriters, in each
case as set forth in, or in footnotes to, the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company and the Guarantor
on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the
Guarantor and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined
by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d),
no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Shares underwritten by
it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company and the Guarantor under
this Section 8 shall be in addition to any liability which the Company and
the Guarantor may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the
Company and the Guarantor and to each person, if any, who controls
the Company or the Guarantor within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a
Time of Delivery, you may in your discretion arrange for you or another
party or other parties to purchase such Shares on the terms contained
herein. If within thirty-six hours after such default by any Underwriter
you do not arrange for the purchase of such Shares, then the Company
and the Guarantor shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you
to purchase such Shares on such terms. In the event that, within the
respective prescribed periods, you notify the Company and the
Guarantor that you have so arranged for the purchase of such Shares,
or the Company or the Guarantor notifies you that it has so arranged for
the purchase of such Shares, you or the Company and the Guarantor
shall have the right to postpone such Time of Delivery for a period of
not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the
Company and the Guarantor agree to file promptly any amendments to
the Registration Statement or the Prospectus which in your opinion may
thereby be made necessary. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to this
Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the
Company and the Guarantor as provided in subsection (a) above, the
aggregate number of such Shares which remains unpurchased does not
exceed one-eleventh of the aggregate number of all the Shares to be
purchased at such Time of Delivery, then the Company and the
Guarantor shall have the right to require each non-defaulting
Underwriter to purchase the number of shares which such Underwriter
agreed to purchase hereunder at such Time of Delivery and, in addition,
to require each non-defaulting Underwriter to purchase its pro rata share
(based on the number of Shares which such Underwriter agreed to
purchase hereunder) of the Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the
Company and the Guarantor as provided in subsection (a) above, the
aggregate number of such Shares which remains unpurchased exceeds
one-eleventh of the aggregate number of all the Shares to be purchased
at such Time of Delivery, or if the Company and the Guarantor shall not
exercise the right described in subsection (b) above to require non-
defaulting Underwriters to purchase Shares of a defaulting Underwriter
or Underwriters, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Underwriters to purchase and of
the Company and Guarantor to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter, the Company or the Guarantor, except for the expenses to
be borne by the Company, the Guarantor and the Underwriters as
provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Guarantor and the
several Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation (or any statement
as to the results thereof) made by or on behalf of any Underwriter or
any controlling person of any Underwriter, or the Company, the
Guarantor or any officer or director or controlling person of the Company
or the Guarantor, and shall survive delivery of and payment for the
Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Guarantor shall be under any
liability to any Underwriter except as provided in Section 6 and
Section 8 hereof; but if, for any other reason Shares are not delivered
by or on behalf of the Company as herein provided, the Company and
the Guarantor will reimburse the Underwriter for all out-of-pocket
expenses, including fees and disbursements of counsel, reasonably
incurred by the Underwriter in making preparations for the purchase,
sale and delivery of the Shares, but the Company and the Guarantor
shall then be under no further liability to the Underwriter in respect of
the Shares not so delivered except as provided in Section 6 and Section
8 hereof.
In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by you jointly or by Goldman, Sachs & Co.
on behalf of you as representatives.
12. All statements, requests, notices and agreements
hereunder shall be in writing, and if to the Underwriters shall be
delivered or sent by mail, telex or facsimile transmission to you as the
representatives in care of Goldman, Sachs & Co., 85 Broad Street, New
York, New York 10004, Attention: Registration Department; and if to the
Company or the Guarantor by mail to it at the address of the Company
or the Guarantor set forth in the Registration Statement, Attention:
Secretary; provided, however that any notice to an Underwriter pursuant
to Section 8(c) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriters' Questionnaire, or telex constituting such Questionnaire,
which address will be supplied to the Company by you upon request.
Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to
the benefit of, the Underwriters, the Company, the Guarantor and, to the
extent provided in Sections 8 and 10 hereof, the officers and directors
of the Guarantor or the Company and each person who controls the
Company and the Guarantor or any Underwriter, and their respective
heirs, executors, administrators, successors and assigns, and no other
person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
15. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
<PAGE>
If the foregoing is in accordance with your understanding,
please sign and return to us two counterparts hereof, and upon the
acceptance hereof by you, on behalf of each of the Underwriters, this
letter and such acceptance hereof shall constitute a binding agreement
between each of the Underwriters, on the one hand, and the Company
and the Guarantor, on the other hand. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is
pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company and
the Guarantor for examination upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
Corning Delaware L.P.
By: Corning Incorporated
as General Partner
___________________________________
Name:
Title:
Corning Incorporated
___________________________________
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.,
Lazard Freres & Co.
By: _____________________________________
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
<PAGE>
<PAGE>
SCHEDULE I
Underwriter
Total Number of
Firm Shares
Underwriter to be Purchased
Goldman, Sachs & Co.
Lazard Freres & Co.
Total ,000,000
<PAGE>
<PAGE>
ANNEX I
[Form of letter of Price Waterhouse
to be delivered pursuant to Section 7(e)]
Pursuant to Section 7(f) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Guarantor and its subsidiaries within the meaning
of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if
applicable, financial forecasts and/or pro forma financial
information) examined by them and included or incorporated by
reference in the Registration Statement or the Prospectus
comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as
applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute
of Certified Public Accountants of the unaudited consolidated
interim financial statements, selected financial data, pro forma
financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements
of the Guarantor for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been
furnished to the representatives of the Underwriters (the
"Representatives");
(iii) They have made a review in accordance with
standards established by the American Institute of Certified
Public Accountants of the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus as indicated in their reports thereon copies of which
have been separately furnished to the Representative and on
the basis of specified procedures including inquiries of officials
of the Guarantor who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act
and the related published rules and regulations, nothing came
to their attention that caused them to believe that the unaudited
condensed consolidated financial statements do not comply as
to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of the Guarantor for the five most recent fiscal years
included in the Prospectus and included or incorporated by
reference in Item 6 of the Guarantor's Annual Report on
Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in
the audited consolidated financial statements for such five fiscal
years which were included or incorporated by reference in the
Guarantor's Annual Reports on Form 10-K for such fiscal years;
(v) They have compared the information in the
Prospectus under selected captions with the disclosure
requirements of Regulation S-K and on the basis of limited
procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused
them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301,
302 and 503(d) respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing
standards, consisting of a reading of the unaudited financial
statements and other information referred to below, a reading
of the latest available interim financial statements of the
Guarantor and its subsidiaries, inspection of the minute books
of the Guarantor and its subsidiaries since the date of the latest
audited financial statements included or incorporated by
reference in the Prospectus, inquiries of officials of the
Guarantor and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as
may be specified in such letter, nothing came to their attention
that caused them to believe that:
(A) (i) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus and/or incorporated by reference in the
Guarantor's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of the Exchange
Act as it applies to Form 10-Q and the related
published rules and regulations thereunder or (ii) any
material modifications should be made to the unaudited
consolidated statements of income, consolidated
balance sheet and consolidated statements of cash
flows included in the Prospectus or included in the
Guarantor's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus, for them
to be in conformity with generally accepted accounting
principles;
(B) any other unaudited income statement data
and balance sheet items included in the Prospectus do
not agree with the corresponding items in the unaudited
consolidated financial statements from which such data
and items were derived, and any such unaudited data
and items were not determined on a basis substantially
consistent with the basis for the corresponding amounts
in the audited consolidated financial statements
included or incorporated by reference in the
Guarantor's Annual Report on Form 10-K for the most
recent fiscal year;
(C) the unaudited financial statements which
were not included in the Prospectus but from which
were derived the unaudited condensed financial
statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items
included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent
with the basis for the audited financial statements
included or incorporated by reference in the
Guarantor's Annual Report on Form 10-K for the most
recent fiscal year;
(D) any unaudited pro forma consolidated
condensed financial statements included or
incorporated by reference in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to
the historical amounts in the compilation of those
statements;
(E) as of a specified date not more than five
days prior to the date of such letter, there have been
any changes in the consolidated capital stock (other
than issuances of capital stock upon exercise of options
and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of
convertible securities, in each case which were
outstanding on the date of the latest balance sheet
included or incorporated by reference in the
Prospectus), or any increase in the consolidated long-
term debt of the Guarantor and its subsidiaries or any
increases in any items specified by the
Representatives, in each case as compared with
amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus, except in
each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur
or which are described in such letter; and
(F) for the period from the date of the latest
financial statements included or incorporated by
reference in the Prospectus to the specified date
referred to in Clause (E) there were any decreases in
consolidated net revenue or other items specified by
the Representatives, or any increases in any items
specified by the Representatives, in each case as
compared with the comparable period in the preceding
year and with any other period of corresponding length
specified by the Representatives, except in each case
for increases or decreases which the Prospectus
discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the
limited procedures, inspection of minute books, inquiries and
other procedures referred to in paragraphs (iii), (iv), (v) and (vi)
above, they have carried out certain specified procedures, not
constituting an examination in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the
Representatives which are derived from the general accounting
records of the Guarantor and its subsidiaries, which appear in
the Prospectus (excluding documents incorporated by
reference) or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives or in
documents incorporated by reference in the Prospectus
specified by the Representatives, and have compared certain of
such amounts, percentages and financial information with the
accounting records of the Guarantor and its subsidiaries and
have found them to be in agreement.
All references in this Annex I to the Prospectus shall be deemed
to refer to the Prospectus (including the documents incorporated by
reference therein) as defined in the Underwriting Agreement as of the
date of the letter delivered on the date of the Underwriting Agreement
and to the Prospectus as amended or supplemented (including all
documents incorporated by reference therein) for the purposes of the
letter delivered at each Time of Delivery.<PAGE>
<PAGE>
ANNEX II
[Form of Letter of Arthur Andersen & Co.
to be delivered pursuant to Section 7(e)]
(i) They are independent certified public accountants with
respect to Damon Corporation ("Damon") and its subsidiaries
within the meaning of the Act and the applicable published rules
and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and,
if applicable, financial forecasts and/or pro forma financial
information) examined by them and included or incorporated by
reference in the Prospectus or the Registration Statement
comply as to form in all material respects with the applicable
accounting requirements of the Act or the Exchange Act, as
applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute
of Certified Public Accountants of the unaudited consolidated
interim financial statements, selected financial data, pro forma
financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements
of Damon for the periods specified in such letter, as indicated
in their reports thereon, copies of which have been furnished to
the Underwriter;
(iii) The unaudited selected financial information with
respect to the consolidated results of operations and financial
position of Damon for the three most recent fiscal years
included or incorporated by reference in the Prospectus agrees
with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for
such three fiscal years which were included or incorporated by
reference in Damon's Annual Reports on Form 10-K for such
fiscal years;
(iv) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements
and other information referred to below, a reading of the latest
available interim financial statements of Damon and its
subsidiaries, inspection of the minute books of Damon and its
subsidiaries since the date of the latest audited financial
statements included or incorporated by reference in the
Prospectus, inquiries of officials of Damon and its subsidiaries
responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A)(i) the unaudited consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows of Damon included or
incorporated by reference in the Prospectus do not
comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act
as it applies to Form 10-Q and the related published
rules and regulations thereunder, or (ii) any material
modifications should be made to the unaudited
condensed consolidated statements of income,
consolidated balance sheets and consolidated
statements of cash flows included or incorporated by
reference in the Prospectus, for them to be in conformity
with generally accepted accounting principles;
(B) any other unaudited income statement data and
balance sheet items of Damon included in the
Prospectus do not agree with the corresponding items
in the unaudited consolidated financial statements from
which such data and items were derived, and any such
unaudited data and items were not determined on a
basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated
financial statements of Damon included or incorporated
by reference in the Prospectus; and
(C) the unaudited financial statements of Damon
which were not included in the Prospectus but from
which were derived any unaudited condensed financial
statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items
included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent
with the basis for the audited consolidated financial
statements of Damon included or incorporated by
reference in the Prospectus.
All references in this Annex II to the Prospectus shall be
deemed to refer to the Prospectus (including the documents
incorporated by reference therein) as defined in the Underwriting
Agreement as of the date of the letter delivered on the date of the
Underwriting Agreement and to the Prospectus as amended or
supplemented (including all documents incorporated by reference
therein) for the purposes of the letter delivered at each Time of Delivery.
<PAGE>
EXHIBIT 2.1
CERTIFICATE OF LIMITED PARTNERSHIP
OF
CORNING DELAWARE, L.P.
This Certificate of Limited Partnership of Corning Delaware, L.P. (the
"Partnership") is being executed and filed by the undersigned General Partner
(the "General Partner") to form a limited partnership under the Delaware
Revised Uniform Limited Partnership Act (6 Del. C. S. 17-101 et seq.).
ARTICLE ONE
The name of the limited partnership formed hereby is Corning Delaware, L.P.
ARTICLE TWO
The address of the registered office of the Partnership in the State of
Delaware is at Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801, and the name and address of the registered
agent for service of process of the Partnership in the State of Delaware is
The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801.
ARTICLE THREE
The name and business address of the General Partner of the Partnership are
as follows:
NAME BUSINESS ADDRESS
Corning Incorporated One Riverfront Plaza
Corning, New York 14831
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Limited
Partnership as of the 18th day of May, 1994.
GENERAL PARTNER:
Corning Incorporated
By: /s/ William C. Ughetta
Name: William C. Ughetta
Title: Senior Vice President and
General Counsel
<PAGE>
<PAGE>
EXHIBIT 2.2
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
CORNING DELAWARE, L.P.<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . 1
Section 1.2 Headings . . . . . . . . . . . . . . . . . . . 9
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.l Continuation of the Partnership. . . . . . . . 10
Section 2.2 Name . . . . . . . . . . . . . . . . . . . . . 10
Section 2.3 Business of the Partnership. . . . . . . . . . 10
Section 2.4 Term . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5 Registered Agent and Office. . . . . . . . . . 10
Section 2.6 Principal Place of Business. . . . . . . . . . 11
Section 2.7 Name and Business Address of General Partner . 11
Section 2.8 Qualification to Do Business . . . . . . . . . 11
Section 2.9 Admission of Holders of Preferred
Securities; Withdrawal of Initial
Limited Partner . . .. . . . . . . . . . . . . 11
ARTICLE III
CAPITAL CONTRIBUTIONS, REPRESENTATION OF
PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL ACCOUNTS
Section 3.1 Capital Contributions. . . . . . . . . . . . . 12
Section 3.2 Preferred Security Holder's Interest
Represented by Preferred Securities . . . . . 12
Section 3.3 Capital Accounts . . . . . . . . . . . . . . . 12
Section 3.4 Interest on Capital Contributions. . . . . . . 13
Section 3.5 Withdrawal and Return of Capital Contributions 13
Section 3.6 Investment of Capital Contributions. . . . . . 13
ARTICLE IV
ALLOCATIONS
Section 4.1 Profits and Losses . . . . . . . . . . . . . . 14
Section 4.2 Special Allocations. . . . . . . . . . . . . . 15
Section 4.3 Allocations for Income Tax Purposes. . . . . . 16
Section 4.4 Withholding. . . . . . . . . . . . . . . . . . 17
ARTICLE V
DIVIDENDS AND DISTRIBUTIONS
Section 5.1 Dividends. . . . . . . . . . . . . . . . . . . 17
Section 5.2 Limitations on Distributions.. . . . . . . . . 17
ARTICLE VI
ISSUANCE OF PREFERRED SECURITIES
Section 6.1 General Provisions Regarding Preferred
Securities . . . . . . . . . . . . . . . . . . 18
Section 6.2 Preferred Securities . . . . . . . . . . . . . 19
Section 6.3. Conversion Rights of Preferred Securities. . . 25
Section 6.4 Optional Exchange for Corning Preferred Stock. 28
Section 7.1 Books and Records. . . . . . . . . . . . . . . 30
Section 7.2 Accounting Method. . . . . . . . . . . . . . . 30
Section 7.3 Annual Audit . . . . . . . . . . . . . . . . . 31
ARTICLE VIII
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 8.1 Limitations. . . . . . . . . . . . . . . . . . 31
Section 8.2 Liability. . . . . . . . . . . . . . . . . . . 31
Section 8.3 Priority . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 9.1 Authority. . . . . . . . . . . . . . . . . . . 31
Section 9.2 Powers and Duties of General Partner . . . . . 32
Section 9.3 Expenses Payable by General Partner. . . . . . 33
Section 9.4 Liability. . . . . . . . . . . . . . . . . . . 33
Section 9.5 Exculpation. . . . . . . . . . . . . . . . . . 34
Section 9.6 Fiduciary Duty . . . . . . . . . . . . . . . . 34
Section 9.7 Indemnification. . . . . . . . . . . . . . . . 35
Section 9.8 Investment Company or Tax Actions. . . . . . . 35
Section 9.9 Outside Businesses . . . . . . . . . . . . . . 36
Section 9.10 Limits on General Partner's Powers . . . . . . 36
Section 9.11 Tax Matters Partner. . . . . . . . . . . . . . 38
Section 9.12 Consolidation, Merger or Sale of Assets. . . . 38
Section 10.1 Transfer of Interests. . . . . . . . . . . . . 39
Section 10.2 Transfer of LP Certificates. . . . . . . . . . 40
Section 10.3 Persons Deemed Preferred Security Holders . . 40
Section 10.4 Book Entry Interests . . . . . . . . . . . . . 40
Section 10.5 Notices to Clearing Agency . . . . . . . . . . 41
Section 10.6 Definitive LP Certificates . . . . . . . . . . 41
ARTICLE XI
WITHDRAWAL; DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 11.l Withdrawal of Partners . . . . . . . . . . . . 42
Section 11.2 Dissolution of the Partnership . . . . . . . . 42
Section 11.3 Liquidation. . . . . . . . . . . . . . . . . . 42
Section 11.4 Distribution in Liquidation. . . . . . . . . . 43
Section 11.5 Rights of Limited Partners . . . . . . . . . . 44
Section 11.6 Termination. . . . . . . . . . . . . . . . . . 44
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments . . . . . . . . . . . . . . . . . . 44
Section 12.2 Amendment of Certificate . . . . . . . . . . . 44
Section 12.3 Meetings of Partners . . . . . . . . . . . . . 44
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. . . . . . . . . . . . . . . . . . . . 45
Section 13.2 Power of Attorney. . . . . . . . . . . . . . . 46
Section 13.3 Entire Agreement . . . . . . . . . . . . . . . 47
Section 13.4 GOVERNING LAW. . . . . . . . . . . . . . . . . 47
Section 13.5 Effect . . . . . . . . . . . . . . . . . . . . 47
Section 13.6 Pronouns and Number. . . . . . . . . . . . . . 47
Section 13.7 Captions . . . . . . . . . . . . . . . . . . . 47
Section 13.8 Partial Enforceability . . . . . . . . . . . . 47
Section 13.9 Counterparts . . . . . . . . . . . . . . . . . 47
Section 13.10 Remedies . . . . . . . . . . . . . . . . . . . 47
EXHIBIT A--Form of LP Certificate representing Preferred Securities
<PAGE>
<PAGE>
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
CORNING DELAWARE, L.P.
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP of Corning Delaware, L.P., a Delaware
limited partnership (the "Partnership"), dated as of ______ 1994, among
Corning Incorporated, a New York corporation ("Corning"), as the
general partner, Corning Finance Corporation, a Delaware corporation,
as the initial limited partner (the "Initial Limited Partner"), and such
other Persons (as defined herein) who become Partners (as defined
herein) as provided herein.
WHEREAS, Corning and the Initial Limited Partner
entered into an Agreement of Limited Partnership, dated as of May 19,
1994 (the "Original Limited Partnership Agreement");
WHEREAS, the Certificate of Limited Partnership of the
Partnership was filed with the Office of the Secretary of State of the
State of Delaware on May 19, 1994; and
WHEREAS, the Partners desire to continue the
Partnership under the Act (as defined herein) and to amend and restate
the Original Limited Partnership Agreement in its entirety.
NOW, THEREFORE, in consideration of the agreements
and obligations set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree to amend and restate the
Original Limited Partnership Agreement as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. Unless the context otherwise
requires, the terms defined in this Article II shall, for the purposes of
this Agreement, have the meanings herein specified.
"Act" means the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time.
"Action" means any action permitted to be taken by the
General Partner under this Agreement relating to the terms of the
Preferred Securities, which action shall be in writing.
"Additional Dividends" means Dividends that shall be
declared and paid by the Partnership on any Dividend arrearages in
respect of the Preferred Securities at the rate of ___% per annum
compounded monthly.
"Additional Interest" means interest that shall accrue on
any interest on the Subordinated Debentures that is not paid monthly
and that shall accrue at the rate of ___% per annum compounded
monthly.
"Additional Taxes" means the sum of any additional
income taxes, duties and other governmental charges imposed on or
otherwise payable by the Partnership (including, without limitation, any
estimated taxes) as a result of a Tax Event, except for United States
withholding taxes.
"Affiliate" means, with respect to a specified Person, (a)
any Person directly or indirectly owning, controlling or holding with
power to vote 10% or more of the outstanding voting securities or other
ownership interests of the specified Person, (b) any Person 10% or more
of whose outstanding voting securities or other ownership interests are
directly or indirectly owned, controlled or held with power to vote by
the specified Person, (c) any Person directly or indirectly controlling,
controlled by, or under common control with the specified Person, (d) a
partnership in which the specified Person is a general partner, (e) any
officer or director of the specified Person and (f) if the specified Person
is an officer, director, general partner or employee, any other entity for
which the specified Person acts in any such capacity.
"Agreement" means this Amended and Restated
Agreement of Limited Partnership, as amended, modified, supplemented
or restated from time to time in accordance with its terms.
"Book Entry Interests" means a beneficial interest in the
LP Certificates, ownership and transfers of which shall be made through
the book-entry system of a Clearing Agency as described in Section
10.4.
"Business Day" means any day other than a day on which
banking institutions in The City of New York or Chicago are authorized
or required by law to close.
"Capital Account" has the meaning set forth in Section
3.3.
"Certificate" means the Certificate of Limited Partnership
of the Partnership filed with the Secretary of State of the State of
Delaware on May 19, 1994, as it may be amended and restated from
time to time.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is
acting as depository for the Preferred Securities and in whose name (or
nominee's name) shall be registered one or more global LP Certificates
and which shall undertake to effect book-entry transfers and pledges of
the Preferred Securities.
"Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from time to
time a Clearing Agency effects book- entry transfers and pledges of
interests in securities deposited with the Clearing Agency.
"Closing Date" means each "Time of Delivery" under the
Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any corresponding federal tax statute
enacted after the date of this Agreement. A reference to a specific
section ( ) of the Code refers not only to such specific section but also
to any corresponding provision of any federal tax statute enacted after
the date of this Agreement, as such specific section or corresponding
provision is in effect on the date of application of the provisions of this
Agreement containing such reference.
"Corning" has the meaning set forth in the forepart of this
Agreement.
"Corning Common Stock" means the Common Stock, par
value $.50 per share, of Corning. However, subject to the provisions of
Article VIII of the Fiscal Agency Agreement, shares of Corning
Common Stock issuable on conversion of Preferred Securities shall
include only shares of the class designated as Common Stock of
Corning on the first Closing Date or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which
have no preference in respect of dividends or amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or
winding-up of Corning and which are not subject to redemption by
Corning; provided, that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares of such
class resulting from all reclassification bears to the total number of
shares of all such classes resulting from all such reclassification.
"Corning Preferred Stock" means the Series C
Cumulative Convertible Preferred Stock of Corning with a liquidation
preference of $100 per share.
"Covered Person" means any Partner or Special General
Partner, any Affiliate of any Partner or Special General Partner and any
officers, directors, shareholders, partners, employees, representatives or
agents of any Partner or Special General Partner or their respective
Affiliates, or any employee or agent of the Partnership or Special
General Partner or their respective Affiliates.
"Definitive LP Certificates" has the meaning set forth in
Section 10.4 of this Agreement.
"Dividends" means the cumulative cash distributions
from the Partnership with respect to the Interests represented by the
Preferred Securities, accruing from the first Closing Date and payable
monthly in arrears on the last day of each calendar month of each year,
commencing _______, 1994.
"Dividend Payment Date" has the meaning set forth in
Section 6.2(b)(ii) of this Agreement.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"Eligible Investment Account" means either (a) a
segregated account with an Eligible Institution or (b) a segregated trust
account with the corporate trust department of a depository institution
organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any domestic branch of
a foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from each Rating
Agency in one of its generic rating categories which signifies
investment grade.
"Eligible Institution" means (a) the Fiscal Agent or (b) a
depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or
any domestic branch of a foreign bank), (1) (i) which has either (A) a
long-term unsecured debt rating of AAA or better by S&P's and Aaa or
better by Moody's or (B) a short-term unsecured debt rating or a
certificate of deposit rating of A-1+ or better by S&P's and P-1 or
better by Moody's and (ii) whose deposits are insured by the FDIC or
(2) (i) the parent of which has a long-term or short-term unsecured debt
rating which signifies investment grade and (ii) whose deposits are
insured by the FDIC.
"Eligible Investments" mean book-entry securities,
negotiable instruments, cash or securities represented by instruments in
bearer or registered form which evidence:
<PAGE>
(a) direct obligations of, and obligations fully
guaranteed as to timely payment by, the Government of the
United States of America;
(b) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company
incorporated under the laws of the United States of America or
any state thereof and subject to supervision and examination by
federal or state banking or depository institution authorities;
provided, however, that at the time of the investment or
contractual commitment to invest therein, the commercial paper
or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person
other than such depository institution or trust company) thereof
shall have a credit rating from each of S&P's, Moody's and, if
rated by Fitch, Fitch in the highest investment category granted
thereby;
(c) commercial paper having, at the time of the
investment or contractual commitment to invest therein, a rating
from each of S&P's, Moody's and, if rated
by Fitch, Fitch in the highest investment
rating category granted thereby;
(d) investments in money market funds having a
rating from each of S&P's and Moody's in the highest investment
rating category granted thereby;
(e) demand deposits, time deposits and certificates of
deposit which are fully insured by the FDIC;
(f) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b) above; or
(g) repurchase obligations with respect to any security
that is a direct obligation of, or fully guaranteed by, the
Government of the United States of America or
any agency or instrumentality thereof, the
obligations of which are backed by the full faith
and credit of the United Sates of America, in
either case entered into with (i) a depository
institution or trust company (acting as principal)
described in clause (b) or (ii) a depository
institution or trust company which is an Eligible
Institution and the deposits of which are insured
by the FDIC.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exchange Event" has the meaning specified in Section
6.4(b) of this Agreement.
"Exchange Price" means one share of Corning Preferred
Stock (with a liquidation preference of $100) for each $100 principal
amount of Subordinated Debentures (which rate of exchange is
equivalent to one share of Corning Preferred Stock for two Preferred
Securities).
"Exchange Election Meeting" has the meaning specified
in Section 6.4(c) of this Agreement.
"FDIC" means the Federal Deposit Insurance Corporation
or any successor thereto.
"Fiscal Agent" means Harris Trust and Savings Bank and
its successors and assigns.
"Fiscal Agency Agreement" means the fiscal agency
agreement dated as of _________, 1994 among the Partnership, Corning
and the Fiscal Agent pursuant to which the Subordinated Debentures are
issued.
"Fiscal Period" means each calendar month.
"Fiscal Year" means (i) the period commencing upon the
formation of the Partnership and ending on December 31, 1994, and (ii)
any subsequent twelve (12) month period commencing on January 1 and
ending on December 31.
"Fitch" means Fitch Investors Service, Inc. or any
successor thereto.
"General Partner" means Corning in its capacity as
general partner of the Partnership, its permitted successors, or any
successor general partner in the Partnership admitted as such pursuant to
the applicable provisions of this Agreement.
"Guarantee" means the Guarantee Agreement dated as of
______, 1994 of Corning in favor of the Preferred Security Holders
with respect to the Preferred Securities.
"Holder" or "Preferred Security Holder" means a Limited
Partner in whose name an LP Certificate representing Preferred
Securities is registered.
"Indemnified Person" means the General Partner, any
Special General Partner, any Affiliate of the General Partner or any
Special General Partner, any officers, directors, shareholders, partners,
employees, representatives or agents of the General Partner or any
Special General Partner, and any employee or agent of the Partnership
or the Special General Partner and their respective Affiliates.
"Initial Limited Partner" means Corning Finance
Corporation, a Delaware corporation.
"Interest" means the entire ownership interest of a Partner
in the Partnership at any particular time, including, without limitation,
its interest in the capital, profits, losses and distributions of the
Partnership.
"Limited Partner" means any Person who is admitted to
the Partnership as a Limited Partner pursuant to the terms of this
Agreement.
"Liquidation Distribution" has the meaning set forth in
Section 6.2(f).
"Liquidator" has the meaning specified in Section 11.3 of
this Agreement.
"LP Certificate" means a certificate substantially in the
form attached hereto as Annex A, evidencing the Preferred Securities
held by a Limited Partner.
"Majority or other stated Percentage in Liquidation
Preference" means Holder(s) of Preferred Securities who are the record
owners of Preferred Securities whose aggregate liquidation preferences
represent not less than 50% or not less than such stated percentage of
the aggregate liquidation preference of all Preferred Securities then
outstanding.
"Meeting Date" means the earlier of (i) the date of an
Exchange Election Meeting called in connection with a Tax Event and
(ii) any date on which the Limited Partners act by written consent with
respect to a Tax Event.
"Moody's" means Moody's Investors Service, Inc. or any
successor thereto.
"Net Income" and "Net Loss", respectively, for any Fiscal
Period means the income and loss, respectively, of the Partnership for
such Fiscal Period as determined in accordance with the method of
accounting followed by the Partnership for federal income tax purposes,
including, for all purposes, the net income, if any, from Eligible
Investments and any income exempt from tax; provided, however, that
any item allocated under Section 4.2 shall be excluded from the
computation of Net Income and Net Loss.
"Notice Date" means the date of a notice of the
occurrence of a Tax Event, distributed to the Holders.
"Original Limited Partnership Agreement" has the
meaning set forth in the recitals to this Agreement.
"Partners" means the General Partner and, if appointed
pursuant to Section 6.2(g), any Special General Partner and the Limited
Partners, collectively, where no distinction is required by the context in
which the term is used.
"Partnership" means the limited partnership formed under
the Act pursuant to the Original Limited Partnership Agreement upon
filing of the Certificate, and continued pursuant to this Agreement.
"Partnership Distribution Account" has the meaning
specified in Section 3.6(b) of this Agreement.
"Person" means any individual, corporation, association,
partnership, trust or other entity.
"Power of Attorney" means the Power of Attorney
granted pursuant to Section 13.2.
"Preferred Securities" means the Interests of Limited
Partners represented by one or more LP Certificates and described in
Article VI.
"Preferred Security Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book
Entry Interest, as reflected on the books of the Clearing Agency, or on
the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing
Agency or Clearing Agency Participant).
"Purchase Price" for any Preferred Security means the
amount paid per Preferred Security pursuant to the Underwriting
Agreement.
"Redemption Price" has the meaning set forth in Section
6.2(d).
"Rating Agencies" means Fitch, Moody's and S&P.
"Securities Act" means the Securities Act of 1933, as
amended.
"Special General Partner" means the Person appointed (i)
to enforce Preferred Security Holders' rights under the Guarantee, (ii) to
enforce the Partnership's rights against Corning under the Subordinated
Debentures or (iii) to exercise rights otherwise exercisable by the
General Partner to declare and pay distributions on the Preferred
Securities as provided in Section 6.2(g) of this Agreement.
"S&P" means Standard & Poor's Ratings Group or any
successor thereof.
"Subordinated Debentures" means the convertible
subordinated debentures of Corning issued pursuant to the Fiscal
Agency Agreement and sold by Corning to the Partnership in
connection with the issuance and sale by the Partnership of the
Preferred Securities.
"Tax Event" means that Corning shall have obtained an
opinion of nationally recognized independent tax counsel experienced in
such matters to the effect that, as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or
any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein after ______, 1994, (b)
any amendment to, or change in, an interpretation or application of any
such laws or regulations by any legislative body, court, governmental
agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination) occurring or effective on or after ________, 1994, (c)
any interpretation or pronouncement that provides for a position with
respect to such laws or regulations that differs from the generally
accepted position as of _______, 1994 or (d) any action taken by any
governmental agency or regulatory authority, which amendment or
change is enacted, promulgated, issued or effective or which
interpretation or pronouncement is issued or announced or which action
is taken, in each case occurring or effective on or after ______, 1994,
there is more than an insubstantial risk that (i) the Partnership is subject
to federal income tax with respect to interest received or accrued on the
Subordinated Debentures, or (ii) the Partnership is subject to more than
a de minimis amount of taxes, duties or other governmental charges.
"Tax Event Date" has the meaning specified in Section
6.2(b)(v).
"Tax Matters Partner" means the General Partner
designated as such in Section 9.11 hereof.
"Transfer Agent" means Harris Trust and Savings Bank
and its successors and assigns.
"Treasury Regulations" means the income tax regulations,
including temporary regulations, promulgated under the Code, as such
regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"Underwriting Agreement" means the Underwriting
Agreement dated _____, 1994, among Corning, the Partnership and the
several Underwriters named therein relating to the issuance of the
Preferred Securities.
Section 1.2 Headings. The headings and subheadings
in this Agreement are included for convenience and identification
purposes only and are in no way intended to describe, interpret, define
or limit the scope, extent or intent of this Agreement or any provision
hereof.
<PAGE>
<PAGE>
ARTICLE II
CONTINUATION OF THE PARTNERSHIP;
ADMISSION OF PREFERRED SECURITIES HOLDERS;
WITHDRAWAL OF INITIAL LIMITED PARTNER
Section 2.l Continuation of the Partnership. The
parties hereto agree to continue the Partnership in accordance with the
terms of this Agreement. The General Partner, for itself and as agent
for the Limited Partners, shall make every reasonable effort to assure
that an amendment to the Certificate of Limited Partnership reflecting
this Agreement, and all other certificates and documents, are properly
executed and shall accomplish all filing, recording, publishing and other
acts necessary or appropriate for compliance with all the requirements
for the continuation of the Partnership as a limited partnership under the
Act and under all other laws of the State of Delaware or such other
jurisdictions in which the General Partner determines that the
Partnership may conduct business. The rights and duties of the Partners
shall be as provided herein and, subject to the terms hereof, the Act.
Section 2.2 Name. The name of the Partnership is
"Corning Delaware, L.P.", as such name may be modified from time to
time by the General Partner following written notice to the Limited
Partners.
Section 2.3 Business of the Partnership. The purposes
of the Partnership are (a) to issue limited partnership interests in the
Partnership in the form of Preferred Securities, and to use substantially
all of the proceeds thereof and substantially all of the proceeds from the
capital contributed to the Partnership by the General Partner to purchase
Subordinated Debentures of Corning, (b) to invest, at all times, at least
1% of the total capital contributed to the Partnership by the Partners in
the Eligible Investment Account as provided herein and (c) except as
otherwise limited herein, to enter into, make and perform all contracts
and other undertakings, and engage in all activities and transactions as
the General Partner may reasonably deem necessary or advisable for the
carrying out of the foregoing purposes of the Partnership. The
Partnership may not conduct any other business or operations except as
contemplated by the preceding sentence.
Section 2.4 Term. The term of the Partnership shall
commence upon the filing of the Certificate in the Office of the
Secretary of State of the State of Delaware and shall continue until
December 31, 2039, unless dissolved before such date in accordance
with the provisions of this Agreement.
Section 2.5 Registered Agent and Office. The
Partnership's registered agent and office in Delaware shall be The
Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. At any time,
the General Partner may designate another registered agent and/or
registered office.
Section 2.6 Principal Place of Business. The principal
place of business of the Partnership shall be at c/o Corning
Incorporated, One Riverfront Plaza, Corning, New York 14831. Upon
ten days written notice to the Partners, the General Partner may change
the location of the Partnership's principal place of business, provided
that such change has no material adverse effect upon any Partner.
Section 2.7 Name and Business Address of General
Partner. The name and address of the General Partner are as follows:
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Attention: Secretary
The General Partner may change its name or business address from time
to time, in which event the General Partner shall promptly notify the
Limited Partners of any such change.
Section 2.8 Qualification to Do Business. The General
Partner shall cause the Partnership to become qualified, formed or
registered under the applicable qualification, fictitious name or similar
laws of any jurisdiction in which the Partnership transacts business.
Section 2.9 Admission of Holders of Preferred
Securities; Withdrawal of Initial Limited Partner.
(a) Without execution of this Agreement, upon the
acquisition of an LP Certificate by a Person, whether by purchase, gift
or devise or otherwise, which acquisition shall be deemed to constitute a
request by such Person that the books and records of the Partnership
reflect such Person's admission as a Limited Partner, such Person shall
be admitted to the Partnership as a Limited Partner and shall become
bound by this Agreement.
(b) Following the first admission of a Preferred
Security Holder to the Partnership as a Limited Partner, the Initial
Limited Partner shall withdraw from the Partnership and shall receive
the return of its capital contribution without interest or deduction.
(c) The name and mailing address of each Partner and
the amount contributed by such Partner to the capital of the Partnership
shall be listed on the books and records of the Partnership. The General
Partner shall be required to update the books and records from time to
time as necessary to accurately reflect such information.<PAGE>
<PAGE>
ARTICLE III
CAPITAL CONTRIBUTIONS, REPRESENTATION OF
PREFERRED SECURITY HOLDER'S INTEREST; CAPITAL
ACCOUNTS
Section 3.1 Capital Contributions.
(a) The General Partner has, on or prior to the first
Closing Date, contributed an aggregate of $______ to the capital of the
Partnership. The General Partner shall on or prior to each subsequent
Closing Date, make such additional capital contributions as are
necessary to maintain its Capital Account balance at an amount equal to
at least 21% of the aggregate positive Capital Account balances of all
Partners as of the time of each such Closing Date.
(b) The Initial Limited Partner has, prior to the date
hereof, contributed the amount of $50 to the capital of the Partnership,
which amount will be returned to the Initial Limited Partner as
contemplated by Section 2.9(b).
(c) On each Closing Date, each Person who acquires
a Preferred Security from the Partnership shall, in connection with the
acquisition of such Preferred Security, contribute to the capital of the
Partnership an amount in cash equal to the Purchase Price for such
Preferred Security.
(d) No Limited Partner shall at any time be required
to make any additional capital contributions to the Partnership, except as
may be required by law.
Section 3.2 Preferred Security Holder's Interest
Represented by Preferred Securities. A Preferred Security Holder's
Interest shall be represented by the L.P. Certificate held by or on behalf
of such Holder. Each Preferred Security Holder's respective ownership
of Preferred Securities shall be set forth on the books and records of the
Partnership. Each Holder hereby agrees that its Interest represented by
its L.P. Certificate shall for all purposes be personal property. A
Preferred Security Holder shall have no interest in specific Partnership
property.
Section 3.3 Capital Accounts. An individual capital
account (a "Capital Account") shall be established and maintained on
the books of the Partnership for each Partner in compliance with
Treasury Regulation Section l.704-l(b)(2)(iv) and 1.704-2, as amended.
Subject to the preceding sentence, each Capital Account will be
increased by the amount of the capital contributions (including the
Purchase Price) made by, and the Net Income allocated to, such Partner
(or predecessor in interest) and reduced by the amount of distributions
made by the Partnership, and Net Losses allocated, to the Partner (or
predecessor thereof). In addition, a Partner's Capital Account shall be
increased or decreased, as the case may be, for any items specifically
allocated to such Partner under Section 4.2 of this Agreement, and, to
the extent permitted under such Treasury Regulation, the General
Partner's Capital Account will be increased to the extent the General
Partner pays any costs or expenses of the Partnership directly out of the
General Partner's own funds.
Section 3.4 Interest on Capital Contributions. Except
as provided herein, no Partner shall be entitled to interest on or with
respect to any capital contribution to the Partnership.
Section 3.5 Withdrawal and Return of Capital
Contributions. Subject to Section 3.1(b), no Partner shall be entitled to
withdraw any part of such Partner's capital contribution to the
Partnership. No Partner shall be entitled to receive any distributions
from the Partnership, except as provided in this Agreement.
Section 3.6 Investment of Capital Contributions.
(a) The General Partner shall establish and maintain
in the name of the Partnership an Eligible Investment Account bearing a
designation clearly indicating that the funds deposited therein are held
for the benefit of the Partners. On each Closing Date, the General
Partner shall deposit from the proceeds of the aggregate capital
contributions received from the Partners an amount equal to at least 1%
of such aggregate capital contributions into the Eligible Investment
Account. On the first Closing Date, the amount so deposited by the
General Partner shall equal $___________.
(b) Funds on deposit in the Eligible Investment
Account shall be invested by the General Partner; provided, however, it
is understood and agreed that the General Partner shall not be liable for
any loss arising from such investment in Eligible Investments; provided
further that none of the funds deposited in the Eligible Investment
Account shall be invested in an Eligible Investment or Eligible
Investments issued by the General Partner or an Affiliate thereof for a
period of 5 years following the Closing Date. All such Eligible
Investments shall be held by the General Partner for the benefit of the
Partnership, provided, however, that on the day preceding each
Dividend Payment Date all interest and other investment income (net of
losses and investment expenses) on funds on deposit in the Eligible
Investment Account shall be deposited into the Partnership account
maintained by the Partnership for receipt of income on the Subordinated
Debentures as designated pursuant to Section 3.1 of the Fiscal Agency
Agreement (the "Partnership Distribution Account") and shall constitute
a portion of the Partnership's Net Income eligible for distribution to the
Partners. Funds on deposit in the Eligible Investment Account shall be
invested in Eligible Investments that will mature prior to the next
succeeding Dividend Payment Date.<PAGE>
<PAGE>
ARTICLE IV
ALLOCATIONS
Section 4.1 Profits and Losses. After giving effect to
the special allocations set forth in Section 4.2,
(a) the Partnership's Net Income for each Fiscal
Period of the Partnership shall be allocated as follows:
(i) First, among Holders, as of the close of
business on the record date for such Fiscal Period, an
amount of Net Income equal to the excess of (x) the
Dividends accrued on each Holder's Preferred Securities
from the first Closing Date through and including the
close of business on the record date for such Fiscal
Period, including any Additional Dividends payable with
respect thereto, over (y) the amount of Net Income
allocated to each such Holder pursuant to this Section
4.1(a)(i) in all prior Fiscal Periods, including any
Additional Dividends payable with respect thereto.
(ii) Second, to each Holder of a Preferred
Security in an amount equal to the excess of (x) all Net
Losses allocated to each such
Holder from the date of issuance of
the Preferred Security through and
including the close of such Fiscal
Period pursuant to Section 4.1(b)(ii)
over (y) the amount of Net Income
allocated to each such Holder
pursuant to this Section 4.1(a)(ii) in
all prior Fiscal Periods.
(iii) Any remaining Net Income shall be
allocated to the General Partner.
(b) The Partnership's Net Loss for any Fiscal Period
shall be allocated as follows:
(i) First, to the General Partner until the
balance of the General Partner's Capital Account is
reduced to zero.
(ii) Second, among the Holders in proportion
to their respective aggregate Capital Account balances,
until the Capital Account balances of such Holders are
reduced to zero; provided, however, that the General
Partner shall make appropriate adjustments in these
allocations, in accordance with Section 4.1(c), with
respect to any Preferred Securities as to which Net
Income has been allocated with respect to Dividends that
accrued but were not paid.
(iii) Any remaining Net Loss shall be allocated
to the General Partner.
(c) The General Partner shall make such changes to
the allocations in Sections 4.1(a) and 4.1(b) as it deems reasonably
necessary so that, in the year of the Partnership's liquidation, amounts
distributed to the Preferred Security Holders in accordance with Section
11.4(ii) shall equal their Liquidation Distributions.
Section 4.2 Special Allocations.
(a) If a Holder delivers an irrevocable notice of
conversion ("Notice of Conversion") to the Partnership pursuant to
Section 6.3(b) of this Agreement, income, gain or loss, if any, realized
or recognized by the Partnership upon a conversion of Subordinated
Debentures into Corning Common Stock pursuant to such Notice of
Conversion shall be allocated to the Holder on whose behalf the
Partnership converted such Subordinated Debentures.
(b) If a Holder delivers a Notice of Conversion to the
Partnership which instructs the Partnership to convert Subordinated
Debentures into Corning Common Stock, such Holder shall be allocated
any interest (including original issue discount) accruing on a daily basis
on the Subordinated Debentures so converted until the date of such
conversion, but only to the extent such interest was not previously
allocated to the Partners in a prior Fiscal Period as part of Net Income
under Section 4.1(a) of this Agreement.
(c) After the Tax Event Date, the Net Income
allocated to Holders shall be reduced to the extent any Dividends
payable to Holders are reduced pursuant to Section 6.2(b)(v) of this
Agreement.
<PAGE>
(d) If the Partnership receives a prepayment premium
upon a prepayment of some or all of the Subordinated Debentures,
income, gain or loss realized or recognized by the Partnership from such
prepayment shall be allocated to the Holders whose Preferred Securities
are redeemed pursuant to Section 6.2(e) of this Agreement as a result of
such prepayment.
(e) All expenditures described in Code Section
705(a)(2)(B) that are incurred by, or on behalf of, the Partnership and
paid by the General Partner shall be allocated entirely to the General
Partner.
(f) In the event any Holder unexpectedly receives any
adjustments, allocations or distributions described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership
Net Income shall be specially allocated to such Holder in an amount and
manner sufficient to eliminate, to the extent required by the Treasury
Regulations, the deficit, if any, in the balance of the Capital Account of
such Holder as quickly as possible. This Section 4.2(e) is intended to
comply with the qualified income offset provision in Section 1.704-
1(b)(2)(ii)(d) of the Treasury Regulations.
(g) For purposes of determining the profits, losses or
any other items allocable to any period, profits, losses and any such
other items shall be determined on a daily, monthly or other basis, as
determined by the General Partner using any method that is permissible
under Section 706 of the Code and the Treasury Regulations promulgated
thereunder. Unless otherwise required, such profits, losses or other
items shall be determined for each Fiscal Period.
(h) The Partners are aware of the income tax
consequences of the allocations made by this Article IV and hereby
agree to be bound by the provisions of this Article IV in reporting their
shares of Partnership Net Income and Net Loss for U.S. federal income
tax purposes.
(i) Notwithstanding anything to the contrary that may
be expressed or implied in this Article IV, the interest of the General
Partner in each item of income, gain, loss, deduction and credit will be
equal to at least (i) at any time that aggregate capital contributions to
the Partnership are equal to or less than $50,000,000, 1% of each such
item and (ii) at any time that aggregate capital contributions to the
Partnership are greater than $50,000,000, at least 1%, multiplied by a
fraction (not exceeding one and not less than 0.2), the numerator of
which is $50,000,000 and the denominator of which is the lesser of the
aggregate Capital Account balances of the Capital Accounts of all
Partners at such time and the aggregate capital contributions to the
Partnership of all Partners at such time.
(j) The Partners intend that the allocations under
Section 4.1 conform to Treasury Regulation Section 1.704-1(b) and 1.704-2
(including, without limitation, the minimum gain chargeback,
chargeback of partner nonrecourse debt minimum gain, qualified income
offset and partner nonrecourse debt provisions of such Treasury
Regulations), and the General Partner shall make such changes in the
allocations under Section 4.1 as it believes are reasonably necessary to
meet the requirements of such Treasury Regulations.
(k) Solely for the purpose of adjusting the Capital
Accounts of the Partners, and not for tax purposes, if any property is
distributed in kind to any Partner, the difference between its fair market
value and its book value at the time of distribution shall be treated as
gain or loss recognized by the Partnership and allocated pursuant to the
provisions of Section 4.1.
Section 4.3 Allocations for Income Tax Purposes. The
income, gains, losses, deductions and credits of the Partnership shall be
allocated in the same manner as the items entering into the computation
of Net Income and Net Loss are allocated under Sections 4.1 and 4.2;
provided however, that solely for federal, state and local income and
franchise tax purposes, but not for book or Capital Account purposes,
income, gain, loss and deductions with respect to any property properly
carried on the Partnership's books at a value other than the tax basis of
such property shall be allocated in a manner determined in the General
Partner's discretion, so as to take into account (consistently with Code
Section 704(c) principles) the difference between such property's book
value and its tax basis. Notwithstanding anything to the contrary set
forth in this Agreement, the General Partner is authorized to modify the
allocations of this Section 4.3, and Sections 4.1 and 4.2, if necessary or
appropriate, in the General Partner's sole discretion, for the allocations
to fairly reflect the economic gain, income or loss to each of the
Partners, or as otherwise required by the Code or the Treasury
Regulations.
<PAGE>
Section 4.4 Withholding. The Partnership shall
comply with withholding requirements under federal, state and local law
and shall remit amounts withheld to and file required forms with
applicable jurisdictions. To the extent that the Partnership is required to
withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Partner, the amount withheld shall be
deemed to be a distribution in the amount of the withholding to the
Partner. In the event of any claimed over-withholding, Partners shall be
limited to an action against the applicable jurisdiction. If the amount
withheld was not withheld from actual distributions, the Partnership may
reduce subsequent distributions by the amount of such withholding.
Each Partner agrees to furnish the Partnership with any representations
and forms as shall reasonably be requested by the Partnership to assist it
in determining the extent of, and in fulfilling, its withholding
obligations.
ARTICLE V
DIVIDENDS AND DISTRIBUTIONS
Section 5.1 Dividends. Limited Partners shall receive
periodic Dividends, if any, redemption payments and liquidation
distributions in accordance with the terms of the Preferred Securities set
forth in Article VI. Subject to the rights of the Preferred Security
Holders, all cash remaining in the Partnership Distribution Account shall
be distributed to the General Partner at such time as the General Partner
shall determine.
Section 5.2 Limitations on Distributions. The
Partnership shall not make a distribution to any Partner on account of
such Partner's Interest if such distribution would violate Section 17-607
of the Act or other applicable law.
<PAGE>
<PAGE>
ARTICLE VI
ISSUANCE OF PREFERRED SECURITIES
Section 6.1 General Provisions Regarding Preferred
Securities.
(a) There is hereby authorized for issuance and sale
Preferred Securities having an aggregate liquidation preference not
greater than $____ and having the designation, annual Dividend rate,
liquidation preference, redemption terms, conversion and exchange
rights and other powers, preferences and special rights and limitations
set forth in this Article VI. The aggregate liquidation preference of
Preferred Securities authorized hereunder shall be reduced 30 days after
the first Closing Date to the amount purchased by the Underwriters.
(b) The payment of Dividends and payments of
distributions by the Partnership in liquidation or on redemption in
respect of Preferred Securities shall be guaranteed by Corning pursuant
to the Guarantee. In the event of an appointment of a Special General
Partner pursuant to Section 6.2(g), among other things, to enforce the
Guarantee, the Special General Partner may take possession of the
Guarantee for such purpose. The Preferred Security Holders, by
acceptance of such Preferred Securities, acknowledge and agree to the
subordination provisions in, and other terms of, the Guarantee.
(c) The proceeds received by the Partnership from the
issuance of Preferred Securities, together with the proceeds of the
capital contributed by the General Partner pursuant to Section 3.1(a) of
this Agreement, but less any amounts deposited by the General Partner
in the Eligible Investment Account pursuant to Section 3.6(a), shall be
invested by the Partnership in Subordinated Debentures with (i) an
aggregate principal amount equal to such aggregate proceeds and (ii) an
interest rate at least equal to the Dividend rate of the Preferred
Securities.
(d) The Partnership may not issue any other interests
in the Partnership, without the approval of the Holders of not less than
66 2/3% in Liquidation Preference of the Preferred Securities; provided,
however, that the Partnership may issue a general partnership interest to
the Special General Partner. All Preferred Securities shall rank senior
to all other Interests in the Partnership in respect of the right to receive
Dividends or other distributions and the right to receive payments out of
the assets of the Partnership upon voluntary or involuntary liquidation,
dissolution, winding-up or termination of the Partnership. All Preferred
Securities redeemed, purchased or otherwise acquired by the Partnership
(including Preferred Securities surrendered for conversion or exchange)
shall be canceled. The Preferred Securities will be issued in registered
form only. Dividends on all Preferred Securities shall be cumulative.
(e) No Holder shall be entitled as a matter of right to
subscribe for or purchase, or have any preemptive right with respect to,
any part of any new or additional limited partnership interests, or of
securities convertible into any Preferred Securities or other limited
partnership interests, whether now or hereafter authorized and whether
issued for cash or other consideration or by way of a Dividend.
(f) Neither Corning nor any Affiliate of Corning shall
have the right to vote or give or withhold consent with respect to any
Preferred Security owned by it, directly or indirectly, and, for purposes
of any matter upon which the Limited Partners may vote or give or
withhold consent as provided in this Agreement, Preferred Securities
owned by Corning or any Affiliate shall be treated as if they were not
outstanding.
Section 6.2 Preferred Securities.
(a) Designation. The Preferred Securities, liquidation
preference $50 per Preferred Security, are hereby designated as " %
Convertible Monthly Income Preferred Securities."
(b) Dividends. (i) Preferred Security Holders shall
be entitled to receive, when, as and if declared by the General Partner,
cumulative Dividends at a rate per annum of % of the stated
liquidation preference of $50 per Preferred Security, calculated on the
basis of a 360-day year consisting of 12 months of 30 days each. For
any period shorter than a full monthly Dividend period, Dividends will
be computed on the basis of the actual number of days elapsed in
such period. Dividends shall be payable in United States dollars
monthly in arrears on the last day of each calendar month of
each year, commencing 1994. Such Dividends will accrue
and be cumulative whether or not they have been declared and
whether or not there are funds of the Partnership legally available
for the payment of Dividends. Dividends on the Preferred Securities
shall be cumulative from the first Closing Date. Additional
Dividends upon any Dividend arrearages shall be declared
and paid in order to provide, in effect, monthly compounding on such
Dividend arrearages at a rate of % per annum compounded monthly
and such Additional Dividends shall accumulate. In the event that any
date on which Dividends are payable on the Preferred Securities is not a
Business Day, then payment of the Dividend payable on such date will
be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on
such date.
(ii) Dividends on the Preferred Securities must be
declared monthly and paid on the last day of each calendar month (each
a "Dividend Payment Date") to the extent that the Partnership has, on
such date, (x) funds legally available for the payment of such Dividends
and (y) cash on hand sufficient to permit such payments, it being
understood that to the extent that funds are not available to pay in full
all accumulated and unpaid Dividends, the Partnership may pay partial
Dividends to the extent of funds legally available therefor. For
purposes of this Section 6.2(b), net interest and investment income from
funds on deposit in the Eligible Investment Account that is transferred
into the Partnership Distribution Account shall be considered funds
available for the payment of Dividends; provided, however, that the
principal amount of Eligible Investments shall not be available as
distributions as Dividends or otherwise except in connection with a
liquidating distribution pursuant to Section 11.4 of this Agreement.
Dividends will be payable to the Holders as they appear on the books
and records of the Partnership on the relevant record dates, which will
be one Business Day prior to the related Dividend Payment Date. In the
event of any extended interest payment period with respect to the
Subordinated Debentures resulting in the deferral of the payment of
Dividends on the Preferred Securities, the General Partner shall notify
the Holders as to such extended interest payment period.
(iii) The Partnership shall not:
(A) pay, declare or set aside for payment, any
dividends or other distributions on any other Interests in the
Partnership; or
(B) redeem, purchase or otherwise acquire any other
Interests in the Partnership;
until, in each case, such time as all accumulated and unpaid Dividends
on all of the Preferred Securities, including any Additional Dividends
thereon, shall have been paid in full for all Dividend periods terminating
on or prior to the date of such payment or the date of such redemption,
purchase or acquisition, as the case may be.
(iv) In the event of an election by the Holder to
convert its Preferred Securities into Corning Common Stock pursuant to
Section 6.3 of this Agreement, neither Corning nor the Partnership shall
make, or be required to make, any payment, allowance or adjustment
with respect to accumulated and unpaid Dividends on such Preferred
Securities; provided that Holders of Preferred Securities at the close of
business on any record date for the payment of Dividends will be
entitled to receive the Dividend payable on such Preferred Securities on
the corresponding Dividend Payment Date notwithstanding the
conversion of such Preferred Securities into Corning Common Stock
following such record date.
(v) In the case of a Tax Event, Dividends (including
any Additional Dividends) accruing and payable after the date (the "Tax
Event Date") that is the earlier of (A) the date three months after the
Notice Date and (B) the Meeting Date, shall be reduced by the portion
of Additional Taxes, if any, after such date that are allocable to Holders
of the Preferred Securities. For purposes of this Agreement, Additional
Taxes shall be allocated between the General Partner and the Limited
Partners (and among the Limited Partners) in accordance with the
Partners' respective Interests in the Partnership. Distributions to the
General Partner by the Partnership after such date shall be reduced by
the amount of Additional Taxes allocable to the General Partner.
Pursuant to Section 9.3(b) of this Agreement, the General Partner shall
pay all Additional Taxes imposed on or payable by the Partnership
through the Tax Event Date.
(d) Redemption. (i) The Preferred Securities are
redeemable, at the option of the Partnership, in whole or in part from
time to time, on or after 1998, upon not fewer than 35 nor more
than 60 days' prior notice, during the twelve-month periods beginning
on _____ in each of the years below, at the following redemption prices
(expressed as a percentage of the liquidation preference), plus
accumulated and unpaid dividends, whether or not earned or declared
(the "Redemption Price"):
Date Redemption Price
1998 %
1999
2000
2001
2002
2003
2004 and thereafter 100
(ii) Upon repayment or prepayment of the
Subordinated Debentures, including as a result of the acceleration of the
Subordinated Debentures upon the occurrence of an Event of Default
with respect to the Subordinated Debentures, the proceeds from such
repayment or prepayment shall be applied to redeem the Preferred
Securities at the redemption price of $50 per Preferred Security plus
accumulated and unpaid Dividends (whether or not earned or declared)
plus Additional Dividends, if any, accrued thereon to the date fixed for
redemption, plus, in the case of a redemption as a result of any
prepayment of the Subordinated Debentures, any applicable premium.
(iii) In the event there is a prepayment or repayment of
Subordinated Debentures, with a corresponding redemption of Preferred
Securities, after the Tax Event Date, then the Redemption Price for any
Preferred Security shall be reduced by the amount of any Additional
Taxes attributable to the redemption of the Subordinated Debentures and
allocable to the Holders of the Preferred Securities that are redeemed as
a result of the prepayment or repayment of the Subordinated
Debentures.
(e) Redemption Procedures. (i) Notice of any
redemption (a "Notice of Redemption") of the Preferred Securities to be
redeemed will be given by the Partnership by mail to each record
Holder of Preferred Securities to be redeemed not fewer than 35 nor
more than 60 days prior to the date fixed for redemption thereof
following the issuance of a notice of prepayment or redemption of the
Subordinated Debentures by Corning to the Partnership. For purposes
of the calculation of the date of redemption and the dates on which
notices are given pursuant to this paragraph (e)(i), a Notice of
Redemption shall be deemed to be given on the day such notice is first
mailed by first-class mail, postage prepaid, to each Holder of Preferred
Securities to be redeemed. Each Notice of Redemption shall be
addressed to each Holder of Preferred Securities to be redeemed at the
address of the Holder appearing in the books and records of the
Partnership. No defect in the Notice of Redemption or in the mailing
thereof with respect to any Preferred Security shall affect the validity of
the redemption proceedings with respect to any other Preferred Security.
(ii) In the event that fewer than all the outstanding
Preferred Securities are to be redeemed, the Preferred Securities to be
redeemed will be selected in accordance with paragraph (e)(iv) hereof.
The Partnership may not redeem fewer than all the outstanding
Preferred Securities unless all accumulated and unpaid Dividends,
including any Additional Dividends, have been paid in full on all
Preferred Securities for all monthly Dividend periods terminating on or
prior to the date of redemption.
(iii) If, following a notice of prepayment of the
Subordinated Debentures, the Partnership issues a Notice of
Redemption, then, by 12:00 noon, New York time, on the redemption
date, Corning will repay to the Partnership an aggregate principal
amount of the Subordinated Debentures, which, together with accrued
and unpaid interest and any Additional Interest thereon, will be an
amount sufficient to pay the applicable Redemption Price, less any
amounts retained by the Partnership for the payment of Additional
Taxes pursuant to Section 6.2(d)(iii) of this Agreement. If all of the
Preferred Securities are represented by Book-Entry Interests, the
Partnership shall irrevocably deposit such funds with the Clearing
Agency and give the Clearing Agency irrevocable instructions and
authority to pay the applicable Redemption Price to the Holders of
Preferred Securities to be redeemed and otherwise the Partnership may
pay the Redemption Price by check. If Notice of Redemption shall
have been issued and funds deposited as required or a check deposited
in the U.S. mails postage prepaid, then upon the date of such deposit,
all rights of the Preferred Security Holders who hold such Preferred
Securities so called for redemption will cease, except the right of the
Holders of such securities to receive the Redemption Price, but without
interest from and after such redemption date. In the event that any date
fixed for redemption of Preferred Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on
the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if
such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that
payment of the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by the Partnership or
by Corning pursuant to the Guarantee, Dividends on such Preferred
Securities (including any Additional Dividends thereon) will continue to
accumulate at the then applicable rate, from the original redemption date
to the date that the Redemption Price is actually paid.
(iv) If all of the Preferred Securities are represented by
Book-Entry Interests, Notices of Redemption shall be sent to the
Clearing Agency. If less than all of the Preferred Securities are being
redeemed, Interests to be redeemed shall, if all of the Preferred
Securities are represented by Book-Entry Interests, be determined in
accordance with the Clearing Agency's practice, which at the date
hereof is to determine by lot the amount of Preferred Securities of each
Preferred Security Owner that are to be redeemed, and otherwise by
such method as the General Partner determines to be fair and
reasonable.
(f) Liquidation Rights. In the event of any voluntary
or involuntary liquidation, dissolution, winding-up or termination of the
Partnership, the Holders of Preferred Securities at the time outstanding
will be entitled to receive out of the assets of the Partnership (including
any Eligible Investments or amounts deposited in the Eligible
Investment Account) legally available for distribution to Partners after
satisfaction of liabilities of creditors as required by the Act before any
distribution of assets is made with respect to any other Interest in the
Partnership, an amount equal to the aggregate of the stated liquidation
preference of $50 per Preferred Security and accumulated and unpaid
Dividends (whether or not earned or declared) to the date of payment,
including any Additional Dividends accrued thereon (the "Liquidation
Distribution").
(g) Voting Rights -- Special General Partner. (i) If
(x) the Partnership fails to pay Dividends in full on the Preferred
Securities for 15 consecutive months (other than as a result of a
determination by Corning to extend the interest payment period of the
Subordinated Debentures in accordance with the terms thereof), (y) an
Event of Default under the Subordinated Debentures occurs and is
continuing or (z) Corning is in default on any of its payment obligations
under the Guarantee, then the Holders, upon the affirmative vote of at
least a Majority in Liquidation Preference of the Preferred Securities,
will be entitled to appoint and authorize a special general partner (the
"Special General Partner") to enforce the Partnership's rights as a
creditor under the Subordinated Debentures, enforce the rights of the
Holders under the Guarantee and to declare and pay Dividends
(including Additional Dividends) on the Preferred Securities. Upon the
appointment of a Special General Partner, the Special General Partner
shall be authorized, and shall to the extent of legally available funds,
declare and pay Dividends (including Additional Dividends) on the
Preferred Securities. So long as the appointment of the Special General
Partner is effective, the Special General Partner shall manage the
business and affairs of the Partnership to the exclusion of the General
Partner.
(ii) In furtherance of the foregoing, and without
limiting the powers of any Special General Partner so appointed and for
the avoidance of any doubt concerning the powers of the Special
General Partner, any Special General Partner, in its own name and as
Special General Partner of the Partnership, may institute a proceeding,
including, without limitation, any suit in equity, an action at law or
other judicial or administrative proceeding, to enforce the Partnership's
rights directly against Corning, or any other obligor in connection with
such obligations on behalf of the Partnership, and may prosecute such
proceeding to judgment or final decree, and enforce the same against
Corning or any other obligor in connection with such obligations and
collect, out of the property, wherever situated, of Corning or any such
other obligor upon such obligations, the monies adjudged or decreed to
be payable in the manner provided by law.
(iii) For purposes of determining whether the
Partnership has failed to pay Dividends in full for 15 consecutive
months, Dividends shall be deemed to remain in arrears,
notwithstanding any payments in respect thereof, until full cumulative
Dividends have been or contemporaneously are declared and paid with
respect to all monthly Dividend periods terminating on or prior to the
date of payment of such full cumulative Dividends. Not later than 30
days after such right to appoint a Special General Partner arises, the
General Partner will convene a meeting to elect a Special General
Partner. If the General Partner fails to convene such meeting within
such 30-day period, the Holders of not less than 10% in Liquidation
Preference of the Preferred Securities will be entitled to convene such
meeting. The provisions of Section 12.3 relating to the convening and
conduct of meetings of the Partners will apply with respect to any such
meeting. Any Special General Partner so appointed shall vacate office
immediately if the Partnership (or Corning pursuant to the Guarantee)
shall have paid in full all accumulated and unpaid Dividends (including
any Additional Dividends) on the Preferred Securities or such Event of
Default or default, as the case may be, shall have been cured.
(h) Voting Rights -- Certain Amendments. (i) If any
proposed amendment of this Agreement provides for, or the General
Partner otherwise proposes to effect, (x) any action that would
materially adversely affect the powers, preferences or rights of the
Preferred Securities, whether by way of amendment of this Agreement
or otherwise or (y) the liquidation, dissolution, winding-up or
termination of the Partnership (other than in connection with the
exchange of Corning Preferred Stock for all of the Preferred Securities
upon the occurrence of an Exchange Event), then the Holders of
outstanding Preferred Securities will be entitled to vote on such
amendment or action of the General Partner (but not on any other
amendment or action) and such amendment or action shall not be
effective except with the approval of Holders of not less than 66 2/3%
in Liquidation Preference of the Preferred Securities; provided, however,
that no such approval shall be required if the liquidation, dissolution,
winding-up or termination of the Partnership is proposed or initiated
pursuant to Section 11.2 hereof.
(ii) Any required approval of Holders may be given at
a separate meeting of such Holders convened for such purpose or
pursuant to written consent. The Partnership will cause a notice of any
meeting at which Holders are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be
mailed to each Holder. Each such notice will include a statement
setting forth (x) the date of such meeting or the date by which such
action is to be taken, (y) a description of any matter on which such
Holders are entitled to vote or upon which written consent is sought and
(z) instructions for the delivery of proxies or consents. No vote or
consent of the Holders will be required for the Partnership to redeem
and cancel Preferred Securities in accordance with this Agreement.
(iii) Except as provided in this Section 6.2, Holders
shall have no voting rights, and the Holders may not remove the
General Partner.
Section 6.3. Conversion Rights of Preferred Securities.
The Holders of Preferred Securities shall have the right, at their option,
to cause the Partnership to convert the Subordinated Debentures into
shares of Corning Common Stock and to have the Partnership distribute
such Corning Common Stock to the converting Holder in exchange for
such Holder's Preferred Securities at any time on and subject to the
following terms and conditions:
(a) The Preferred Securities will be convertible at the
office of the Transfer Agent for the Partnership and at such other office
or offices, if any, as the General Partner may designate, into Corning
Common Stock by directing the Partnership to convert Subordinated
Debentures on the basis of one Preferred Security per $50 principal
amount of Subordinated Debentures, which amount of Subordinated
Debentures shall then be converted into _____ shares of Corning
Common Stock (which is equivalent to a conversion price of $___ per
share of Corning Common Stock), subject to certain adjustments set
forth in the terms of the Subordinated Debentures.
(b) In order to convert Preferred Securities into
Corning Common Stock through the Partnership, the Holder of such
Preferred Securities shall deliver an irrevocable Notice of Conversion to
the Partnership at the office referred to above setting forth the number
of Preferred Securities to be converted and the name or names in which
the shares of Corning Common Stock should be issued. Upon receipt
of such notice, the Partnership shall notify Corning of its election to
convert a principal amount of Subordinated Debentures equal to the
aggregate stated liquidation preferences of the Preferred Securities
(exclusive of any Dividends, including Additional Dividends) specified
in such notice into shares of Corning Common Stock. Holders of
Preferred Securities at the close of business on a dividend payment
record date will be entitled to receive the Dividend payable on such
securities on the corresponding Dividend Payment Date notwithstanding
the conversion of such Preferred Securities following such dividend
payment record date. Except as provided above, no payment, allowance
or adjustment shall be made by the Partnership or Corning upon any
conversion on account of any accumulated and unpaid Dividends
accrued on the Preferred Securities (including any Additional Dividends
accrued thereon) surrendered for conversion, or on account of any
accumulated and unpaid dividends on the shares of Corning Common
Stock issued upon such conversion. Preferred Securities shall be
deemed to have been converted immediately prior to the close of
business on the day on which Notice of Conversion is delivered in
accordance with the foregoing provision (the "conversion date"). The
Person or Persons entitled to receive the Corning Common Stock
issuable upon conversion of the Subordinated Debentures shall be
treated for all purposes as the record holder or holders of such Corning
Common Stock at such time. As promptly as practicable on or after
the conversion date, Corning shall issue and deliver at said office a
certificate or certificates for the number of full shares of Corning
Common Stock issuable upon such conversion, together with the cash
payment, if any, in lieu of any fraction of any share to the Person or
Persons entitled to receive the same, unless otherwise directed by the
Holder in the notice of conversion and the Partnership shall cause such
certificate or certificates to be distributed to the converting Holders.
(c) Preferred Securities that have been called for
redemption will not be convertible after the close of business on the
second calendar day preceding the date fixed for redemption, unless the
Partnership defaults in making payment of the amount payable upon
such redemption. Conversion rights will terminate upon the making of
an Exchange Election referred to in Section 6.4.
(d) No fractional shares of Corning Common Stock
will be issued as a result of conversion, but in lieu thereof, such
fractional interest will be paid in cash by Corning to the Partnership,
which in turn will make such payment to the Holder or Holders of
Preferred Securities so converted.
(e) Each share of Corning Common Stock issuable
upon conversion as contemplated by this Section 6.3 shall be issued
with one right to purchase Series A Junior Participating Preferred Stock
of Corning (or other securities in lieu thereof) pursuant to the Amended
Rights Agreement, dated as of October 4, 1989 (the "Rights
Agreement"), between Corning and Harris Trust and Savings Bank, as
Rights Agent, as such Rights Agreement may from time to time be
amended, or any similar rights issued to holders of Corning Common
Stock in addition thereto or in replacement therefor (such rights,
together with any additional or replacement rights, being collectively
referred to as the "Rights"), whether or not such Rights shall be
exercisable at such time, but only if such Rights are issued and
outstanding and held by other holders of Corning Common Stock (or
are evidenced by outstanding share certificates representing Corning
Common Stock) at such time and have not expired or been redeemed.
(f) Corning shall at all times reserve and keep
available out of its authorized and unissued Corning Common Stock,
solely for issuance upon the conversion of the Subordinated Debentures,
free from any preemptive or other similar rights, such number of shares
of Corning Common Stock as shall from time to time be issuable upon
the conversion of all the Subordinated Debentures then outstanding.
Notwithstanding the foregoing, Corning shall be entitled to deliver upon
conversion of Subordinated Debentures, shares of Corning Common
Stock reacquired and held in the treasury of Corning (in lieu of the
issuance of authorized and unissued shares of Corning Common Stock),
so long as any such treasury shares are free and clear of all liens,
charges, security interests or encumbrances. Any shares of Corning
Common stock issued upon conversion of the Subordinated Debentures
shall be duly authorized, validly issued and fully paid and non-
assessable. The Partnership shall deliver the shares of Corning
Common Stock received upon conversion of the Subordinated
Debentures to the converting Holder free and clear of all liens, charges,
security interests and encumbrances, except for United States
withholding taxes. Each of Corning and the Partnership shall prepare
and shall use its best efforts to obtain and keep in force such
governmental or regulatory permits or other authorizations as may be
required by law, and shall comply with all applicable requirements as to
registration or qualification of the Corning Common Stock (and all
requirements to list the Corning Common Stock issuable upon
conversion of Subordinated Debentures that are at the time applicable),
in order to enable Corning to lawfully issue Corning Common Stock to
the Partnership upon conversion of the Subordinated Debentures and the
Partnership to lawfully deliver the Corning Common Stock to each
Holder upon conversion of the Preferred Securities.
(g) Corning will pay any and all taxes that may be
payable in respect of the issue or delivery of shares of Corning
Common Stock on conversion of Subordinated debentures and the
delivery of the shares of Corning Common Stock by the Partnership
upon conversion of the Preferred Securities. Corning shall not,
however, be required to pay any tax which may be payable in respect of
any transfer involved in the issue and delivery of shares of Corning
Common Stock in a name other than that in which the Preferred
Securities so converted were registered, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid
to the Partnership the amount of any such tax, or has established to the
satisfaction of the Partnership that such tax has been paid.
(h) If Corning Common Stock is distributed by the
Partnership to the Holders after the Tax Event Date, the amount so
distributable shall be reduced by the amount of Additional Taxes
imposed on or payable by the Partnership as a result of such
distribution.
(i) Nothing in Section 6.3(g) shall limit the
requirement of the Partnership to withhold taxes pursuant to Section 4.4
or otherwise require the General Partner or the Partnership to pay any
amounts on account of such withholdings.
Section 6.4 Optional Exchange for Corning Preferred
Stock.
(a) Upon the occurrence of an Exchange Event, the
Holders of a Majority in Liquidation Preference of the Preferred
Securities, voting as a class or by written consent, may, at their option,
cause the Partnership to exchange all (but not less than all) of the
Subordinated Debentures for Corning Preferred Stock at the Exchange
Price for shares of Corning Preferred Stock and distribute such stock to
the Holders in exchange for their Preferred Securities.
(b) The following events are "Exchange Events":
(i) the failure of Holders to receive, for 15
consecutive months, the full amount of Dividends on the
Preferred Securities; or
(ii) a Tax Event.
(c) As soon as practicable, but in no event later than
30 days after the occurrence of an Exchange Event, the General Partner
shall convene a general meeting of the Holders (an "Exchange Election
Meeting") for the purpose of acting on the matter of whether to cause
the Partnership to exchange all of the Subordinated Debentures for the
Corning Preferred Stock. If the General Partner fails to convene such
Exchange Election Meeting within such 30-day period, the Holders of
not less than 10% in Liquidation Preference of the Preferred Securities
will be entitled to convene such Exchange Election Meeting. Upon the
affirmative vote of the Holders of a Majority in Liquidation Preference
of the Preferred Securities at an Exchange Election Meeting or, in the
absence of such meeting, upon receipt by the Partnership of a written
consent signed by the Holders of a Majority in Liquidation Preference
of the Preferred Securities, an election to exchange all outstanding
Preferred Securities on the basis described above (an "Exchange
Election") will be deemed to have been made. In the case of a Tax
Event, the Partnership will continue to pay Dividends on the Preferred
Securities without adjustment for Additional Taxes until the earlier of
(i) the date that is three months after the Notice Date and (ii) the
Meeting Date; provided, however, that thereafter Dividends on the
Preferred Securities shall be reduced by an amount equal to the
Holders' allocable share of Additional Taxes.
Holders, by becoming a party to this Agreement pursuant
to Section 2.9 of this Agreement, will be deemed to have agreed to be
bound by these optional exchange provisions in regard to the exchange
of Preferred Securities for Corning Preferred Stock pursuant to the
terms described above.
(d) Corning shall at all times reserve and keep
available out of its authorized and unissued Corning Preferred Stock,
solely for issuance upon the exchange of Subordinated Debentures, free
from any preemptive or other similar rights, such number of shares of
Corning Preferred Stock as shall from time to time be issuable upon the
exchange of all the Subordinated Debentures then outstanding. Each of
Corning and the Partnership shall prepare and shall use its best efforts
to obtain and keep in force such governmental or regulatory permits or
other authorizations as may be required by law, and shall comply with
all applicable requirements as to registration or qualification of the
Corning Preferred Stock in order to enable Corning to lawfully issue the
Corning Preferred Stock upon exchange of the Subordinated Debentures
and the Partnership to lawfully deliver Corning Preferred Stock upon
exchange of the Preferred Securities. All shares of Corning Preferred
Stock issued upon conversion of the Subordinated Debentures shall be
duly authorized, validly issued and fully paid and non-assessable and
the terms of the Corning Preferred Stock shall be valid and binding on
Corning. The Partnership shall deliver the shares of Corning Preferred
Stock received upon exchange of the Preferred Securities to the
exchanging Holder, free and clear of all liens, charges, security interests
and encumbrances.
(e) Corning will pay any and all taxes that may be
payable in respect of the issue or delivery of shares of Corning
Preferred Stock upon exchange of the Subordinated Debentures and
the delivery of the shares of Corning Preferred Stock by the
Partnership upon exchange of the Preferred Securities. Corning
shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issue and
delivery of Corning Preferred Stock in a name other than that
in which Preferred Securities so exchanged were registered, and no such
issue or delivery shall be made unless and until the person requesting
such issue has paid to the Partnership the amount of any such tax, or
has established to the satisfaction of the Partnership that such tax has
been paid.
(f) Preferred Securities shall be deemed to have been
exchanged immediately prior to the close of business on the day on
which the Exchange Election is made. The Person or Persons entitled
to receive the Corning Preferred Stock issuable upon exchange of the
Preferred Securities shall be treated for all purposes as the record holder
or holders of such Corning Preferred Stock at such time. As promptly
as practicable on or after the date on which the Exchange Election is
made, Corning shall issue and deliver to the Partnership for distribution
to the Persons entitled thereto, a certificate or certificates for the
number of full shares of Corning Preferred Stock issuable upon such
exchange and the Partnership shall promptly distribute such certificates
to the Persons entitled thereto.
(g) The terms of the Corning Preferred Stock
exchanged for the Preferred Securities shall provide that all accumulated
and unpaid Dividends (including any Additional Dividends thereon) that
are not paid by the Partnership or Corning pursuant to the Guarantee
shall be treated as accumulated and unpaid dividends on such Corning
Preferred Stock.
(h) If Corning Preferred Stock is distributed by the
Partnership to the Holders after the Tax Event Date, the amount so
distributable shall be reduced by the amount of Additional Taxes
imposed on or payable by the Partnership as a result of such
distribution.
(i) Nothing in Section 6.4(e) shall limit the
requirement of the Partnership to withhold taxes pursuant to Section 4.4
or otherwise require the General Partner or the Partnership to pay any
amounts on account of such withholdings.
ARTICLE VII
BOOKS OF ACCOUNT, RECORDS AND REPORTS
Section 7.1 Books and Records.
(a) Proper and complete records and books of account
of the Partnership shall be kept by the General Partner in which shall be
entered fully and accurately all transactions and other matters relative to
the Partnership's business as are usually entered into records and books
of account maintained by Persons engaged in businesses of a like
character, including a Capital Account for each Partner. The books and
records of the Partnership, together with a certified copy of this
Agreement and of the Certificate, shall at all times be maintained at the
principal office of the General Partner and shall be open to the
inspection and examination of the Partners or their duly authorized
representatives for a proper purpose during reasonable business hours.
(b) The General Partner may, for such period of time
that the General Partner deems reasonable, keep confidential from the
Partners any information with respect to the Partnership the disclosure
of which the General Partner reasonably believes is not in the best
interests of the Partnership or is adverse to the interests of the
Partnership or which the Partnership or the General Partner is required
by law or by an agreement with any Person to keep confidential.
(c) Within three months after the close of each Fiscal
Year, the General Partner shall transmit to each Partner, a statement
indicating such Partner's share of each item of Partnership income, gain,
loss, deduction or credit for such Fiscal Year for federal income tax
purposes.
Section 7.2 Accounting Method. For both financial
and tax reporting purposes and for purposes of determining profits and
losses, the books and records of the Partnership shall be kept on the
accrual method of accounting applied in a consistent manner and shall
reflect all Partnership transactions and be appropriate and adequate for
the Partnership's business.
Section 7.3 Annual Audit. As soon as practical after
the end of each Fiscal Year, but not later than 90 days after such end,
the financial statements of the Partnership shall be audited by a firm of
independent certified public accountants selected by the General Partner,
and such financial statements shall be accompanied by a report of such
accountants containing their opinion. The cost of such audits will be an
expense of the Partnership.
ARTICLE VIII
POWERS, RIGHTS AND DUTIES
OF THE LIMITED PARTNERS
Section 8.1 Limitations. Other than as set forth in this
Agreement, the Limited Partners shall not participate in the management
or control of the Partnership's business, property or other assets nor
shall the Limited Partners transact any business for the Partnership, nor
shall the Limited Partners have the power to act for or bind the
Partnership, said powers being vested solely and exclusively in the
General Partner (and, upon appointment, the Special General Partner).
Except for shares of Corning Common Stock or Corning Preferred
Stock deliverable upon conversion or exchange of the Preferred
Securities, the Limited Partners shall have no interest in the properties
or assets of the General Partner, or any equity therein, or in any
proceeds of any sales thereof (which sales shall not be restricted in any
respect by virtue of acquiring or owning an Interest in the Partnership).
Section 8.2 Liability. Subject to the provisions of the
Act, no Limited Partner shall be liable for the repayment, satisfaction or
discharge of any debts or other obligations of the Partnership in excess
of the Capital Account balance of such Limited Partner.
Section 8.3 Priority. No Limited Partner shall have
priority over any other Limited Partner as to Partnership allocations or
distributions.
ARTICLE IX
POWERS, RIGHTS AND DUTIES
OF THE GENERAL PARTNER
Section 9.1 Authority. Subject to the limitations
provided in this Agreement, the General Partner or, upon appointment
pursuant to Section 6.2(g), the Special General Partner, shall have
exclusive and complete authority and discretion to manage the
operations and affairs of the Partnership and to make all decisions
regarding the business of the Partnership. Any action taken by the
General Partner or, upon appointment pursuant to Section 6.2(g), the
Special General Partner, shall constitute the act of and serve to bind the
Partnership. In dealing with the General Partner or, upon appointment
pursuant to Section 6.2(g), the Special General Partner, acting on behalf
of the Partnership no Person shall be required to inquire into the
authority of the General Partner or, upon appointment pursuant to
Section 6.2(g), the Special General Partner, to bind the Partnership.
Persons dealing with the Partnership are entitled to rely conclusively on
the power and authority of the General Partner or, upon appointment
pursuant to Section 6.2(g), the Special General Partner, as set forth in
this Agreement.
Section 9.2 Powers and Duties of General Partner.
Except as otherwise specifically provided herein, the General Partner
(or, upon appointment pursuant to Section 6.2(g), the Special General
Partner), shall have all rights and powers of a general partner under the
Act, and shall have all authority, rights and powers in the management
of the Partnership business to do any and all other acts and things
necessary, proper, convenient or advisable to effectuate the purposes of
this Agreement, including by way of illustration but not by way of
limitation, the following:
(a) to secure the necessary goods and services
required in performing the General Partner's duties for the
Partnership;
(b) to exercise all powers of the Partnership, on
behalf of the Partnership, in connection with enforcing the
Partnership's rights under the Subordinated Debentures and the
Guarantee;
(c) to issue Preferred Securities and to admit Limited
Partners in connection therewith in accordance with this
Agreement;
(d) to act as registrar and transfer agent for the
Preferred Securities or designate an entity to act as registrar and
transfer agent;
(e) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including with respect to Dividends and voting rights
and to make determinations as to the payment of Dividends, and
make or cause to be made all other required payments to
Holders and to the General Partner;
(f) to open, maintain and close bank accounts and to
draw checks and other orders for the payment of money;
(g) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Partnership;
(h) to deposit, withdraw, invest, pay, retain and
distribute the Partnership's funds in a manner consistent with the
provisions of this Agreement;
(i) to take all action which may be necessary or
appropriate for the preservation and the continuation of the
Partnership's valid existence, rights, franchises and privileges as
a limited partnership under the laws of the State of Delaware
and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Limited Partner or
to enable the Partnership to conduct the business in which it is
engaged;
(j) to cause the Partnership to enter into and perform,
on behalf of the Partnership, the Underwriting Agreement and to
cause the Partnership to purchase the Subordinated Debentures
without any further act, vote or approval of any Partner; and
(k) to execute and deliver any and all documents or
instruments, perform all duties and powers and do all things for
and on behalf of the Partnership in all matters necessary or
desirable or incidental to the foregoing.
Section 9.3 Expenses Payable by General Partner.
(a) The General Partner hereby agrees to pay to each
Person or entity to whom the Partnership is now or hereafter becomes
indebted or liable (including, without limitation, payment obligations
arising under Sections 7.3, 9.5 and 9.7 of this Agreement and those in
respect of certain Additional Taxes as provided in clause (b) below, but
excluding payment obligations of Corning or the Partnership to Holders
of the Preferred Securities in such Holders' capacities as Holders of
such Preferred Securities, such obligations being separately guaranteed
under the Guarantee) (the "Beneficiaries") the full payment of such
indebtedness and liabilities, when and as due. This agreement is
intended to be for the benefit of and to be enforceable by all such
Beneficiaries whether or not such Beneficiaries have received notice
hereof.
(b) The General Partner will pay any and all
Additional Taxes, liabilities, costs and expenses with respect to such
Additional Taxes of the Partnership for the period from the formation of
the Partnership through the Tax Event Date. Thereafter, the Partnership
shall pay any Additional Taxes.
Section 9.4 Liability. Except as expressly set forth in
this Agreement, (a) the General Partner shall not be personally liable for
the return of any portion of the capital contributions (or any return
thereon) of the Limited Partners; (b) the return of such capital
contributions (or any return thereon) shall be made solely from assets of
the Partnership; and (c) the General Partner shall not be required to pay
to the Partnership or to any Limited Partner any deficit in any Limited
Partner's Capital Account upon dissolution or otherwise. Other than as
provided in Sections 6.3 and 6.4 of this Agreement or under the Act, no
Limited Partner shall have the right to demand or receive property other
than cash for its respective Interest in the Partnership.
Section 9.5 Exculpation.
(a) No Indemnified Person, other than the General
Partner, shall be liable, responsible or accountable in damages or
otherwise to the Partnership or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the
Partnership and in a manner reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this
Agreement or by law except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such
Indemnified Person's bad faith recklessness or willful misconduct.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Partnership and upon such
information, opinions, reports or statements presented to the Partnership
by any Person as to matters the Indemnified Person reasonably believes
are within such other Person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the
Partnership, including information, opinions, reports or statements as to
the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
distributions to Partners might properly be paid.
Section 9.6 Fiduciary Duty.
(a) To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Partnership or to any other Covered Person, an
Indemnified Person acting under this Agreement shall not be liable to
the Partnership or to any other Covered Person for its good faith
reliance on the provisions of this Agreement. The provisions of this
Agreement, to the extent that they restrict the duties and liabilities of an
Indemnified Person otherwise existing at law or in equity, are agreed by
the parties hereto to replace such other duties and liabilities of such
Indemnified Person.
(b) Unless otherwise expressly provided herein, (i)
whenever a conflict of interest exists or arises between Covered
Persons, or (ii) whenever this Agreement or any other agreement
contemplated herein or therein provides that an Indemnified Person shall
act in a manner that is, or provides terms that are, fair and reasonable to
the Partnership or any Partner, the Indemnified Person shall resolve
such conflict of interest, taking such action or providing such terms,
considering in each case the relative interest of each party (including its
own interest) to such conflict, agreement, transaction or situation and
the benefits and burdens relating to such interests, any customary or
accepted industry practices, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by the
Indemnified Person, the resolution, action or terms so made, taken or
provided by the Indemnified Person shall not constitute a breach of this
Agreement or any other agreement contemplated herein or of any duty
or obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Agreement an Indemnified
Person is permitted or required to make a decision (i) in its "discretion"
or under a grant of similar authority, the Indemnified Person shall be
entitled to consider only such interests and factors as it desires,
including its own interests, and shall have no duty or obligation to give
any consideration to any interest of, or factors affecting, the Partnership
or any other Person, or (ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard
and shall not be subject to any other or different standard imposed by
this Agreement or other applicable law.
Section 9.7 Indemnification.
(a) To the fullest extent permitted by applicable law,
the Partnership shall indemnify and hold harmless each Indemnified
Person from and against any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the
Partnership and in a manner reasonably believed to be within the scope
of authority conferred on such Indemnified Person by this Agreement,
except that no Indemnified Person shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by such Indemnified
Person by reason of gross negligence or willful misconduct with respect
to such acts or omissions; provided, however, that any indemnity under
this Section 9.7 shall be provided out of and to the extent of Partnership
assets only, and no Covered Person shall have any personal liability on
account thereof.
(b) To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon
receipt by the Partnership of an undertaking by or on behalf of the
Indemnified Person to repay such amount if it shall be determined that
the Indemnified Person is not entitled to be indemnified as authorized in
Section 9.7(a).
Section 9.8 Investment Company or Tax Actions. The
General Partner is authorized and directed to conduct its affairs and to
operate the Partnership in such a way that the Partnership would not be
deemed to be an "investment company" required to be registered under
the Investment Company Act of 1940 (the "1940 Act") or taxed as a
corporation for federal income tax purposes and so that the
Subordinated Debentures will be treated as indebtedness of Corning for
federal income tax purposes . In this connection, the General Partner is
authorized to take any action not inconsistent with applicable law or this
Agreement, and that does not materially and adversely affect the
interests of Holders, that the General Partner determines in its discretion
to be necessary or desirable for such purposes.
Section 9.9 Outside Businesses. Any Partner or
Affiliate thereof may engage in or possess an interest in other business
ventures of any nature or description, independently or with others,
similar or dissimilar to the business of the Partnership, and the
Partnership and the Partners shall have no rights by virtue of this
Agreement in and to such independent ventures or the income or profits
derived therefrom and the pursuit of any such venture, even if
competitive with the business of the Partnership, shall not be deemed
wrongful or improper. No Partner or Affiliate thereof shall be obligated
to present any particular investment opportunity to the Partnership even
if such opportunity is of a character that, if presented to the Partnership,
could be taken by the Partnership, and any Partner or Affiliate thereof
shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular
investment opportunity.
Section 9.10 Limits on General Partner's Powers. (a)
Anything in this Agreement to the contrary notwithstanding, the General
Partner (or, upon appointment pursuant to Section 6.2(g), the Special
General Partner) shall not cause or permit the Partnership to
(i) acquire any assets other than as expressly
provided herein;
(ii) do any act which would make it impractical or
impossible to carry on the ordinary business of the Partnership;
(iii) possess Partnership property for other than a
Partnership purpose;
(iv) admit a Person as a Partner, except as expressly
provided in this Agreement;
(v) make any loans to the General Partner or its
Affiliates, other than loans represented by the Subordinated
Debentures;
(vi) perform any act that would subject any Limited
Partner to liability as a general partner in any jurisdiction;
(vii) engage in any activity that is not consistent with
the purposes of the Partnership, as set forth in Section 2.3;
(viii) without the written consent of not less than 66
2/3% in Liquidation Preference of the Preferred Securities have
an order for relief entered with respect to the Partnership or
commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a
substantial part of the Partnership's property, or make any
assignment for the benefit of creditors of the Partnership; or
(ix) borrow money or become liable for the
borrowings of any third party or to engage in any financial or
other trade or business.
(b) So long as the Subordinated Debentures are held
by the Partnership, the General Partner shall not:
(i) direct the time, method and place of conducting any
proceeding for any remedy available to the Special General
Partner, or exercising any trust or power conferred on the
Special General Partner with respect to the Subordinated
Debentures,
(ii) waive any past default which is waivable under the
Subordinated Debentures,
(iii) exercise any right to rescind or annul a declaration
that the principal of all the Subordinated Debentures shall be due
and payable,
(iv) consent to any amendment, modification or
termination of the Fiscal Agency Agreement or the Subordinated
Debentures without, in each case, obtaining the prior approval of
the Holders of not less than 66 2/3% in Liquidation Preference
of the Preferred Securities, provided, however, that where a
consent under the Subordinated Debentures would require the
consent of each holder of Subordinated Debentures affected
thereby, no such consent shall be given by the General Partner
without the prior consent of each Holder of Preferred Securities.
(c) The General Partner shall not revoke any action
previously authorized or approved by the Special General Partner or by
a vote of Holders without the approval of the Holders of not less than
66 2/3% in Liquidation Preference of the Preferred Securities. The
General Partner shall notify all Holders of any notice of default received
from the Fiscal Agent with respect to the Subordinated Debentures.
Section 9.11 Tax Matters Partner.
(a) For purposes of Code Section 6231(a)(7), the "Tax
Matters Partner" shall be the General Partner as long as it remains the
general partner of the Partnership. The Tax Matters Partner shall keep
the Limited Partners fully informed of any inquiry, examination or
proceeding.
(b) The General Partner shall not make an election in
accordance with Section 754 of the Code.
(c) The General Partner and the Preferred Security
Holders acknowledge that they intend, for U.S. federal income tax
purposes, that the Partnership shall be treated as a partnership and that
the General Partner and the Preferred Security Holders shall be treated
as Partners of such Partnership for such purposes.
(d) The General Partner shall retain, at the expense of
the Partnership and at its sole discretion, a nationally recognized firm of
certified public accountants which shall prepare all federal, state, local
or other tax returns (including information returns) of the Partnership, as
required by law, and the Schedule K-1's or any successor or similar
forms or schedules required by law.
Section 9.12 Consolidation, Merger or Sale of Assets.
(a) Corning may not merge or consolidate with or
into another entity or permit another entity to merge or consolidate with
or into, or sell, transfer or lease all or substantially all of its assets to
another entity (each such event, a "Transaction") unless (i) at the time
of such Transaction, no Event of Default (as defined in the Fiscal
Agency Agreement) shall have occurred and be continuing, or would
occur as a result of such Transaction, (ii) the survivor of such merger or
consolidation or the entity to which Corning's assets are sold,
transferred or leased is an entity organized under the laws of the United
States or any state thereof, such entity becomes a party to this
Agreement and becomes the General Partner, assumes all of Corning's
obligations under this Agreement, and has a net worth equal to at least
10% of the total capital contributions made by the Partners to the
Partnership, (iii) prior to such Transaction, Corning obtains an opinion
of nationally recognized independent counsel experienced in such
matters to the effect that the Partnership will continue to be taxable as a
partnership for federal income tax purposes after such Transaction and
(iv) in the case of any sale, transfer or lease of all or substantially all of
Corning's assets that includes Corning's Interest in the Partnership,
Corning has obtained the consent of the Holders of not less than 66
2/3% in the Liquidation Preference of the Preferred Securities to the
sale, transfer or lease of its Interest in the Partnership .
(b) In addition, the General Partner shall not cause or
allow the Partnership to enter into a Transaction, except as described
below and as permitted or required under Section 11.3 of this
Agreement. The Partnership may, for purposes of changing its state of
domicile in order to avoid a Tax Event or 1940 Act consequences
adverse to Corning, itself or the Holders, without the consent of the
Holders, merge or consolidate with or into a limited partnership or trust
organized as such under the laws of any state of the United States of
America; provided, that (i) such successor entity either (x) expressly
assumes all of the obligations of the Partnership under the Preferred
Securities or (y) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank, with
respect to participation in the profits or assets of the successor entity, at
least as high as the Preferred Securities rank, with respect to
participation in the profits or assets of the Partnership, (ii) Corning
expressly acknowledges such successor entity as the holder of the
Subordinated Debentures, (iii) such Transaction does not cause the
Preferred Securities (or the Successor Securities) to be delisted by any
national securities exchange or other organization on which the
Preferred Securities are then listed, (iv) such Transaction does not cause
the Preferred Securities (or the Successor Securities) to be downgraded
by any nationally recognized statistical rating organization, as that term
is defined by the Securities and Exchange Commission for purposes of
Rule 436(g) (2) under the Securities Act, (v) such Transaction does not
adversely affect the powers, preferences and other special rights of
Holders of Preferred Securities (including Successor Securities) in any
material respect (other than with respect to any dilution of the holders'
interest in the new entity), (vi) prior to such Transaction, Corning has
received an opinion of nationally recognized independent counsel to the
Partnership experienced in such matters to the effect that (x) such
successor entity will be treated as a partnership for federal income tax
purposes, (y) following such Transaction, Corning and such successor
entity will be in compliance with the 1940 Act without registering
thereunder as an investment company and (z) such Transaction will not
adversely affect the limited liability of the Holders.
ARTICLE X
TRANSFERS OF INTERESTS BY PARTNERS
Section 10.1 Transfer of Interests.
(a) Preferred Securities shall be freely transferable by
a Holder.
(b) Except as provided in the succeeding sentence, the
General Partner may not assign or transfer its Interest in the Partnership
in whole or in part unless, prior to such assignment or transfer, the
General Partner has obtained the consent of the Holders of not less than
66 2/3% in Liquidation preference of the Preferred Securities. The
General Partner may assign or transfer its interest in the Partnership
without such consent only to an entity that is the survivor of a merger
or consolidation of the General Partner in a transaction that meets the
requirements of Section 9.12(a). "Permitted Successor" shall mean an
entity that is an assignee or transferee of the Interest of the General
Partner as permitted by this Section 10.1(b).
(c) Except as provided above, no Interest shall be
transferred, in whole or in part, except in accordance with the terms and
conditions set forth in this Agreement. Any transfer or purported
transfer of any Interest not made in accordance with this Agreement
shall be null and void.
Section 10.2 Transfer of LP Certificates. The General
Partner shall provide for the registration of LP Certificates and of
transfers of LP Certificates. Upon surrender for registration of transfer
of any LP Certificate, the General Partner shall cause one or more new
LP Certificates to be issued in the name of the designated transferee or
transferees. Every LP Certificate surrendered for registration of transfer
shall be accompanied by a written instrument of transfer in form
satisfactory to the General Partner duly executed by the Preferred
Security Holder or his or her attorney duly authorized in writing. Each
LP Certificate surrendered for registration of transfer shall be canceled
by the General Partner. A transferee of an LP Certificate shall be
admitted to the Partnership as a Limited Partner and shall be entitled to
the rights and subject to the obligations of a Preferred Security Holder
hereunder upon the receipt by a transferee of an LP Certificate.
Section 10.3 Persons Deemed Preferred Security
Holders. The Partnership may treat the Person in whose name any LP
Certificate shall be registered on the books and records of the
Partnership as the sole holder of such LP Certificate and of the
Preferred Securities represented by such LP Certificate for purposes of
receiving Dividends and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such LP Certificate or in the Preferred Securities
represented by such LP Certificate on the part of any other Person,
whether or not the Partnership shall have actual or other notice thereof.
Section 10.4 Book Entry Interests. The LP Certificates,
on original issuance, will be issued in the form of a global LP
Certificate or LP Certificates representing the Book Entry Interests, to
be delivered to DTC, the initial Clearing Agency, by, or on behalf of,
the Partnership. Such LP Certificate or LP Certificates shall initially be
registered on the books and records of the Partnership in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Owner
will receive a definitive LP Certificate representing such Preferred
Security Owner's interests in such LP Certificate, except as provided in
Section 10.6. Unless and until definitive, fully registered LP
Certificates (the "Definitive LP Certificates") have been issued to the
Preferred Security Owners pursuant to Section 10.6:
(i) The provisions of this Section shall be in full
force and effect;
(ii) The Partnership, the General Partner and any
Special General Partner shall be entitled to deal with the
Clearing Agency for all purposes of this Agreement (including
the payment of Dividends, Redemption Price and liquidation
proceeds on the LP Certificates and receiving approvals, votes or
consents hereunder) as the Preferred Security Holder and the sole
holder of the LP Certificates and shall have no obligation to the
Preferred Security Owner;
(iii) None of the Partnership, the General Partner, any
Special General Partner or any agent of the General Partner, the
Partnership or any Special General Partner shall have any
liability with respect to or responsibility for the records of the
Clearing Agency.
Section 10.5 Notices to Clearing Agency. Whenever a
notice or other communication to the Preferred Security Holders is
required under this Agreement, unless and until Definitive LP
Certificates shall have been issued to the Preferred Security Owners
pursuant to Section 10.6, the General Partner and any Special General
Partner shall give all such notices and communications specified herein
to be given to the Preferred Security Holders to the Clearing Agency,
and shall have no obligations to the Preferred Security Owners.
Section 10.6 Definitive LP Certificates. If (i) the
Clearing Agency elects to discontinue its services as securities
depository, (ii) the Partnership elects to terminate the book entry system
through the Clearing Agency, or (iii) there is an Event of Default under
the Subordinated Debentures, then Definitive LP Certificates shall be
prepared by the Partnership. Upon surrender of the global LP
Certificate or LP Certificates representing the Book Entry Interests by
the Clearing Agency, accompanied by registration instructions, the
General Partner shall cause Definitive LP Certificates to be delivered to
Preferred Security Owners in accordance with the instructions of the
Clearing Agency. Neither the General Partner nor the Partnership shall
be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such
instructions. Any Person receiving a Definitive LP Certificate in
accordance with this Article X shall be admitted to the Partnership as a
Limited Partner upon receipt of such Definitive LP Certificate and shall
be registered on the books and records of the Partnership as a Preferred
Security Holder. The Definitive LP Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as
may be required by any national securities exchange on which the
Preferred Securities may be listed and is reasonably acceptable to the
General Partner, as evidenced by its execution thereof.
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ARTICLE XI
WITHDRAWAL; DISSOLUTION;
LIQUIDATION AND DISTRIBUTION OF ASSETS
Section 11.l Withdrawal of Partners. The General
Partner shall not at any time retire or withdraw from the Partnership
except as otherwise permitted hereunder. If the General Partner retires
or withdraws in contravention of this Section 11.1, it shall indemnify,
defend and hold harmless the Partnership and the other Partners from
and against any losses, expenses, judgments, fines, settlements or
damages suffered or incurred by the Partnership or such other Partners
arising out of or resulting from such retirement or withdrawal.
Section 11.2 Dissolution of the Partnership.
(a) The Partnership shall not be dissolved by the
admission of Partners in accordance with the terms of this Agreement.
Except as provided in Section 11.2(b)(ii), the death, retirement,
resignation, expulsion, bankruptcy or dissolution of a Partner, or the
occurrence of any other event which terminates the Interest of a Partner
in the Partnership, shall not cause the Partnership to be dissolved and its
affairs wound up so long as the Partnership at all times has at least two
Partners. Upon the occurrence of any such event, the business of the
Partnership shall be continued without dissolution.
(b) The Partnership shall be dissolved and terminated
and its affairs shall be wound up upon the earliest to occur of any of
the following events:
(i) The expiration of the term of the Partnership, as
provided in Section 2.4 of this Agreement;
(ii) Upon the bankruptcy, insolvency or dissolution of
the General Partner;
(iii) the entry of a decree of judicial dissolution under
Section 17-802 of the Act; or
(iv) the written consent of all Partners.
(c) Upon dissolution of the Partnership, the Liquidator
shall promptly notify the Partners of such dissolution.
Section 11.3 Liquidation.
(a) In the event of the dissolution of the Partnership
for any reason, the General Partner (or, if the Partnership is dissolved
pursuant to Section 11.2(b)(ii), then a liquidating agent appointed by
Holders of not less than 66 2/3% in Liquidation Preference of the
Preferred Securities (the General Partner or such person so appointed is
hereinafter referred to as the "Liquidator")) shall commence to wind up
the affairs of the Partnership and to liquidate the Partnership's assets,
including the Partnership's Eligible Investments and/or amounts
deposited in the Eligible Investment Account; provided, however, that a
reasonable time shall be allowed for the orderly liquidation of the assets
of the Partnership and the satisfaction of liabilities to creditors so as to
enable the Partners to minimize the normal losses attendant upon
liquidation. The Partners shall continue to share all income, losses and
distributions during the period of liquidation in accordance with Articles
IV and V. Subject to the provisions of this Article XI, the Liquidator
shall have full right and unlimited discretion to determine the time,
manner and terms of any sale or sales of Partnership property pursuant
to such liquidation, giving due regard to the activity and condition of
the relevant market and general financial and economic conditions.
(b) The Liquidator shall have all of the rights and
powers with respect to the assets and liabilities of the Partnership in
connection with the liquidation and termination of the Partnership that
the General Partner would have with respect to the assets and liabilities
of the Partnership during the term of the Partnership, and the Liquidator
is hereby expressly authorized and empowered to execute any and all
documents necessary or desirable to effectuate the liquidation and
termination of the Partnership and the transfer of any assets.
(c) Notwithstanding the foregoing, a Liquidator that is
not the General Partner shall not be deemed a Partner in this Partnership
and shall not have any of the economic interests in the Partnership of a
Partner; and such Liquidator may be compensated for its services to the
Partnership at normal, customary and competitive rates for its services
to the Partnership as reasonably determined by all the Limited Partners.
Section 11.4 Distribution in Liquidation. Subject to
Section 9.3, the proceeds of liquidation shall be applied in the following
order of priority (and without regard to the provisions of Section 17-804
of the Act):
(i) to creditors of the Partnership, including Preferred
Security Holders who are creditors, to the extent otherwise
permitted by law, in satisfaction of the liabilities of the
Partnership (whether by payment or the making of reasonable
provision for payment thereof), other than liabilities for
distributions (including Dividends) to Partners; and
(ii) following any allocations required under Section
4.1(c) of this Agreement, to the Partners in proportion to the
Partner's positive Capital Account balances.
Section 11.5 Rights of Limited Partners. Each Limited
Partner shall look solely to the assets of the Partnership for all
distributions with respect to the Partnership and such Partner's capital
contribution (including returns thereof), and such Partner's share of
profits or losses thereof, and shall have no recourse therefor (upon
dissolution or otherwise) against the General Partner, except under the
Guarantee. Except as provided in Sections 6.3 and 6.4 of this
Agreement, no Partner shall have any right to demand or receive
property other than cash upon dissolution and termination of the
Partnership.
Section 11.6 Termination. The Partnership shall
terminate when all of the assets of the Partnership shall have been
disposed of and the assets shall have been distributed as provided in
Section 11.4. The Liquidator shall then execute and cause to be filed a
certificate of cancellation of the Partnership.
ARTICLE XII
AMENDMENTS AND MEETINGS
Section 12.1 Amendments. Except as provided by
Section 6.2(h), this Agreement may be amended by a written instrument
executed by the General Partner without the consent of any Limited
Partner; provided, however, that no amendment shall be made, and any
such purported amendment shall be void and ineffective, to the extent
the result thereof would be to cause the Partnership to be treated as
anything other than a partnership for purposes of United States income
taxation or require the Partnership to register under the 1940 Act.
Section 12.2 Amendment of Certificate. In the event
this Agreement shall be amended pursuant to Section 12.1, the General
Partner shall amend the Certificate to reflect such change if it deems
such amendment of the Certificate to be necessary or appropriate.
Section 12.3 Meetings of Partners.
(a) Meetings of the Limited Partners who are Holders
may be called at any time by the General Partner to consider and act on
any matter on which Limited Partners are entitled to act under the terms
of this Agreement or the Act. The General Partner shall call a meeting
of Holders if directed to do so by Holders of not less than 10% in
Liquidation Preference as permitted by this Agreement. Such direction
shall be given by delivering to the General Partner a request in writing
stating that the signing Limited Partners desire to call a meeting and
indicating the general or specific purpose for which the meeting is to be
called.
(b) Notice of any such meeting shall be given to all
Partners not less than seven Business Days nor more than 60 days prior
to the date of such meeting. Each such notice shall set forth the date,
time and place of the meeting, a description of the any matter on which
Holders are entitled to vote and instructions for the delivery of proxies
or written consents.
(c) Any action that may be taken at a meeting of the
Limited Partners may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by Limited Partners owning
not less than the minimum Interests that would be necessary to
authorize or take such action at a meeting in which all Limited Partners
having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the Limited
Partners entitled to vote who have not consented in writing. The
General Partner may provide that any written ballot submitted to the
Limited Partners for the purpose of taking any action without a meeting
shall be returned to the Partnership within a specified time.
(d) Each Partner may authorize any Person to act for
it by proxy on all matters as to which a Partner is entitled to participate,
including waiving notice of any meeting, or voting or participating at a
meeting. Every proxy must be signed by the Partner or its
attorney-in-fact. No proxy shall be valid after the expiration of 11
months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Partner executing
it.
(e) Each meeting of Partners shall be conducted by
the General Partner or by such other Person that the General Partner
may designate.
(f) The General Partner may establish all other
reasonable procedures relating to meetings of Partners or the giving of
written consents, in addition to those expressly provided, including
notice of time, place or purpose of any meeting at which any matter is
to be voted on by any Partners, waiver of any such notice, action by
consent without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. All notices provided for in this
Agreement shall be in writing, and shall be delivered or mailed by first
class or registered or certified mail or, with respect to the Partnership
and General Partner, telecopied, as follows:
(a) if given to the Partnership, in care of the General
Partner at the Partnership's mailing address set forth below:
Corning Delaware, L.P.
c/o Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Attention: Secretary
Telecopy No:
(b) if given to the General Partner, at its mailing
address set forth below:
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Attention: Secretary
Telecopy No:
(c) if given to any other Partner at the address set
forth on the books and records of the Partnership.
Section 13.2 Power of Attorney. Each Holder does
hereby constitute and appoint the General Partner, and if applicable, any
Special General Partner appointed pursuant to Section 6.2(g) of this
Agreement, as its true and lawful representative and attorney-in-fact, in
its name, place and stead to make, execute, sign, deliver and file (a) any
amendment of the Certificate required because of an amendment of this
Agreement or in order to effect any change in the Partnership, (b) this
Agreement, (c) any amendments to this Agreement and (d) all such
other instruments, documents and certificates which from time to time
may required by the laws of the United States of America, the State of
Delaware or any other jurisdiction, or any political subdivision or
agency thereof, to effectuate, implement and continue the valid and
subsisting existence of the Partnership or to dissolve the Partnership for
any other purpose consistent with this Agreement and the transactions
contemplated hereby.
The power of attorney granted hereby is coupled with an
interest and shall (a) survive and not be affected by the subsequent
death, incapacity, disability, dissolution, termination, or bankruptcy of
the Holder granting the same or the transfer of all or any portion of
such Holder's Interest and (b) extend to such Holder's successors,
assigns and legal representatives.
Section 13.3 Entire Agreement. This Agreement
constitutes the entire agreement among the parties. It supersedes any
prior agreement or understandings among them, and it may not be
modified or amended in any manner other than as set forth herein.
Section 13.4 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE
WITH THE LAW OF THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL
BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
Section 13.5 Effect. Except as herein otherwise
specifically provided, this Agreement shall be binding upon and inure to
the benefit of the parties and their legal representatives, successors and
assigns.
Section 13.6 Pronouns and Number. Wherever from the
context it appears appropriate, each term stated in either the singular or
the plural shall include the singular and the plural, and pronouns stated
in either the masculine, feminine or neuter shall include the masculine,
feminine and neuter.
Section 13.7 Captions. Captions contained in this
Agreement are inserted only as a matter of convenience and in no way
define, limit or extend the scope or intent of this Agreement or any
provision hereof.
Section 13.8 Partial Enforceability. If any provision of
this Agreement, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Agreement, or
the application of such provision to persons or circumstances other than
those to which it is held invalid, shall not be affected thereby.
Section 13.9 Counterparts. This Agreement may
contain more than one counterpart of the signature page and this
Agreement may be executed by the affixing of the signature of each of
the Partners to one of such counterpart signature pages. All of such
counterpart signatures pages shall be read as though one, and they shall
have the same force and effect as though all of the signers had signed a
single signature page.
Section 13.10 Remedies. The failure of any party to
seek redress for violation of, or to insist upon the strict performance of,
any provision of this Agreement shall not prevent a subsequent act,
which would have originally constituted a violation, from having the
effect of an original violation. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by
any party shall not preclude or waive its right to use any or all other
remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first above stated.
General Partner:
CORNING INCORPORATED,
a New York corporation
By:
Name:
Title:
Initial Limited Partner:
CORNING FINANCE CORPORATION, a
Delaware corporation
By:
Name:
Title:
<PAGE>
Annex A
Certificate Number Number of Preferred Securities
R-1
CUSIP NO.
Certificate Evidencing Preferred Securities
of
Corning Delaware, L.P.
___% Convertible Monthly Income Preferred Securities
(liquidation preference $50 per Preferred Security)
Corning Delaware, L.P., a limited partnership formed
under the laws of the State of Delaware (the "Partnership"), hereby
certifies that _______ (the "Holder") is the registered owner of
preferred securities of the Partnership representing limited
partnership interests in the Partnership, which are designated the___%
Convertible Monthly Income Preferred Securities (liquidation preference
$50 per Preferred Security) (the "Preferred Securities"). The Preferred
Securities are fully paid and are nonassessable interests in the
Partnership, as to which the Partners in the Partnership who hold the
Preferred Securities (the "Preferred Security Holders"), in their
capacities as Partners in the Partnership, will have no liability solely by
reason of being Preferred Security Holders (subject to the obligation of
a Preferred Security Holder to repay any funds wrongfully distributed to
it), and are freely transferable on the books and records of the
Partnership, in person or by a duly authorized attorney, upon surrender
of this certificate duly endorsed and in proper form for transfer. The
powers, preferences and special rights and limitations of the Preferred
Securities are set forth in, and this certificate and the Preferred
Securities represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and Restated
Limited Partnership Agreement of the Partnership dated as of ________
1994, as the same may be amended from time to time in accordance
with its terms (the "Limited Partnership Agreement"), authorizing the
issuance of the Preferred Securities and determining the powers,
preferences and other special rights and limitations, regarding
Dividends, voting, return of capital and otherwise, and other matters
relating to the Preferred Securities. Capitalized terms used herein but
not defined herein shall have the meaning given them in the Limited
Partnership Agreement. The Holder is entitled to the benefits of the
Guarantee Agreement of Corning Incorporated, a New York corporation
("Corning"), dated as of _______,1994 (the "Guarantee") to the extent
provided therein. The partnership will furnish a copy of the Limited
Partnership Agreement and the Guarantee to the Holder without charge
upon written request to the Partnership at its principal place of business
or registered office.
The Holder, by accepting this certificate, is deemed to
have agreed (i) to be bound by the provisions of the Limited Partnership
Agreement, including the provisions of such Agreement concerning the
exchange of the Preferred Securities for Corning Preferred Stock and
(ii) that the Subordinated Debentures acquired by the Partnership with
the proceeds from the issuance of the Preferred Securities are
subordinated and junior in right of payment to all Senior Indebtedness
of Corning as and to the extent provided in the Subordinated Debentures
and (iii) that the Guarantee ranks subordinate and junior in right of
payment to all liabilities of Corning as and to the extent provided in the
Guarantee. Upon receipt of this certificate, the Holder is admitted to
the partnership as a Limited Partner, is bound by the Limited
Partnership Agreement and is entitled to the benefits thereunder.
<PAGE>
IN WITNESS WHEREOF, the Partnership has executed
this certificate this day of 19__.
CORNING DELAWARE, L.P.
By: CORNING INCORPORATED,
its General Partner
By:
<PAGE>
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
OF
THE CERTIFICATE OF INCORPORATION
Under Section 805 of the Business Corporation Law
WE, JAMES R. HOUGHTON and A. JOHN PECK,
JR., being, respectively, the Chairman and the Secretary of
Corning Incorporated, a corporation organized under the laws
of the State of New York, DO HEREBY CERTIFY as follows:
FIRST: The name of the Corporation is Corning
Incorporated. The Corporation was formed under the name
Corning Glass Works.
SECOND: The Certificate of Incorporation of the
Corporation (being the Preliminary Certificate of Consolidation
Forming the Corporation) was filed in the Office of the
Secretary of State of the State of New York on December 24,
1936.
THIRD: The said Certificate of Incorporation, as
heretofore amended and restated, is hereby amended pursuant
to Section 801(b) of the Business Corporation Law by the
addition of the following provisions stating the number,
designation, relative rights, preferences and limitations of a
series of Series Preferred Stock, par value $100 per share, as
fixed by the Board of Directors of the Corporation before the
issuance of such shares, such provisions so added to be
designated as paragraph 4C of the Restated Certificate of
Incorporation of the Corporation and to read as follows:
4C. Series C Cumulative Convertible Preferred Stock
SECTION 1. Designation and Amount; Special
Purpose; Restriction on Senior Series.
(A) The shares of this series of Preferred Stock shall be
designated as "Series C Cumulative Convertible Preferred
Stock" (the "Series C Preferred Stock") and the number of
shares constituting such series shall be with a par value
of $100 per share.
(B) Shares of Series C Preferred Stock shall be issued
only upon exchange of all of the __% convertible subordinated
debentures due _____, 2024 of the Corporation (the
"Subordinated Debentures") by Corning Delaware, L.P., a
Delaware limited partnership ("Corning Delaware") pursuant to
a valid exchange election (the "Exchange Election") by the
holders of a majority of the aggregate liquidation preference of
preferred securities, liquidation preference of $50 per security,
of Corning Delaware (the "Corning Delaware Preferred
Securities").
(C) So long as any Corning Delaware Preferred
Securities are outstanding, the Corporation shall not issue any
other class or series of capital stock ranking senior as to the
payment of dividends or amounts upon liquidation, dissolution
or winding-up to the Series C Preferred Stock without the
approval of the holders of not less than 66--% of the aggregate
liquidation preference of the Corning Delaware Preferred
Securities then outstanding.
SECTION 2. Dividends and Distributions.
(A) (1) The holders of shares of Series C Preferred
Stock shall be entitled to receive, when, as and if declared by
the Board of Directors of the Corporation out of funds legally
available therefor, cumulative cash dividends in an amount per
share per annum equal to $_____ (equivalent to a rate per
annum of % of the stated liquidation preference of $100
per share of Series C Preferred Stock), calculated on the basis
of a 360-day year consisting of 12 months of 30 days each,
and for any period shorter than a full monthly dividend period,
dividends will be computed on the basis of the actual number
of days elapsed in such period, and payable in United States
dollars monthly in arrears on the last day of each calendar
month of each year.
(2) Dividends, when, as and if declared by the Board of
Directors of the Corporation out of funds legally available
therefor, must be paid on the last day of each month. Such
dividends will accrue and be cumulative whether or not they
have been earned or declared and whether or not there are
funds of the Corporation legally available for the payment of
dividends. Dividends on the Series C Preferred Stock shall be
cumulative from the date of the Exchange Election. Accrued
but unpaid interest on the Subordinated Debentures, if any, on
the date of the issuance of the Series C Preferred Stock in
exchange for such Subordinated Debentures shall constitute,
and be treated as, accumulated and unpaid dividends on the
Series C Preferred Stock; provided, however, that the amount
which shall constitute such accumulated and unpaid dividends
on the Corning Series C Preferred Stock shall be neither less
than nor greater than the amount of accumulated and unpaid
dividends (including Additional Dividends), if any, on the
Preferred Securities on the date of such Exchange Election.
The record date for each dividend payment date shall be the
Business Day (as defined below) immediately preceding such
dividend payment date. In the event that any date on which
dividends are payable on the Series C Preferred Stock is not a
day other than a day on which banking institutions in The City
of New York or Chicago are authorized or required by law to
close (a "Business Day"), then payment of the dividend
payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on
such date.
(B) In the event that full cumulative dividends on
the Series C Preferred Stock have not been declared and paid
or set apart for payment when due, then the Corporation shall
not, and shall not permit any majority-owned subsidiary to
declare or pay any dividend on, or redeem, purchase, acquire
for value or make a liquidation payment with respect to, any
Junior Stock (other than as a result of a reclassification of
Junior Stock or the exchange or conversion of one class or
series of Junior Stock for another class or series of Junior
Stock), or make any guarantee payments with respect to the
foregoing (other than payments under the Guarantee or
dividends or guarantee payments to Corning)].
When dividends are not paid in full, all dividends
declared upon the Series C Preferred Stock and all dividends
declared upon any Pari Passu Stock (as defined herein) shall be
declared ratably in proportion to the respective amounts of
dividends accumulated and unpaid on the Series C Preferred
Stock and accumulated and unpaid on such Pari Passu Stock.
"Pari Passu Stock" means the Corporation's Series B
Cumulative Convertible Preferred Stock, par value $100 per
share (the "Series B Preferred Stock"), and any preference
stock or preferred stock of the Corporation, or any guarantee
now or hereafter entered into by the Corporation in respect of
any preferred or preference stock of any affiliate of the
Corporation, ranking, in such case, as to the payment of
dividends and amounts upon liquidation, dissolution and
winding-up on a parity with the Series B Preferred Stock.
"Junior Stock" means Common Stock, the Series A Preferred
Stock, par value $100 per share, of the Corporation and any
other class or series of capital stock of the Corporation or any
of its affiliates which by its express terms ranks junior in the
payment of dividends or amounts upon liquidation, dissolution
or winding-up to the Series C Preferred Stock.
SECTION 3. Voting Rights.
(A) In the event that full cumulative dividends on the
Series C Preferred Stock have not been paid for 18 monthly
dividend periods, the number of directors of the Corporation
constituting the entire Board of Directors shall be increased by
two persons and the holders of the Series C Preferred Stock
shall have the right to elect such persons to fill such positions
at any annual meeting of shareholders or special meeting held
in place thereof, or at a special meeting of the holders of the
Series C Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends on the Series C Preferred
Stock then outstanding shall have been paid and dividends
thereon for the current monthly period shall have been paid or
declared and set apart for payment, then the right of the
holders of the Series C Preferred Stock to elect such additional
two directors shall cease (but subject always to the same
provisions for the vesting of such voting rights in the case of
any similar future arrearages in dividends), and the terms of
office of all persons elected as directors by the holders of the
Series C Preferred Stock shall forthwith terminate and the
number of directors of the Corporation constituting the entire
Board of Directors shall be reduced accordingly. At any time
after such voting power shall have been so vested in the
holders of shares of the Series C Preferred Stock, the Secretary
of the Corporation may, and upon the written request of any
holder of Series C Preferred Stock (addressed to the Secretary
at the principal office of the Corporation) shall, call a special
meeting of the Series C Preferred Stock for the election of the
two directors to be elected by them as herein provided, such
call to be made by notice similar to that provided in the by-
laws for a special meeting of the shareholders or as required
by law. If any such special meeting required to be called as
above provided shall not be called by the Secretary within 20
days after receipt of any such request, then any holder of
Series C Preferred Stock may call such meeting, upon the
notice above provided, and for that purpose shall have access
to the stock books and records of the Corporation. The
directors elected at any such special meeting shall hold office
until the next annual meeting of the shareholders or special
meeting held in place thereof if such office shall not have
previously terminated as above provided. In case any vacancy
shall occur among the directors elected by the holders of the
Series C Preferred Stock, a successor shall be elected by the
Board of Directors to serve until the next annual meeting of
the shareholders or special meeting held in place thereof upon
the nomination of the then remaining director elected by the
holders of the Series C Preferred Stock or the successor of
such remaining director.
(B) Except as otherwise required by law or set forth
herein, holders of Series C Preferred Stock shall have no
special voting rights and their consent shall not be required for
the taking of any corporate action. So long as any shares of
Series C Preferred Stock are outstanding, the consent of the
holders of not less than 66 2/3% of the outstanding shares of
Series C Preferred Stock, given in person or by proxy either at
a regular meeting or at a special meeting called for that
purpose, at which the holders of Series C Preferred Stock shall
vote separately as a series, shall be necessary for effecting,
validating or authorizing any one or more of the following:
(1) the amendment, alteration or repeal of any of the
provisions of the Certificate of Incorporation, as amended, of
the Corporation, or any amendment thereto or any other
certificate filed pursuant to law (including any such
amendment, alteration or repeal effected by any merger or
consolidation to which the Corporation is a party) that would
adversely affect any of the rights, powers or preferences of
outstanding shares of Series C Preferred Stock, provided,
however, that the amendment of the provisions of the
Certificate of Incorporation so as to authorize or create, or the
increase the authorized amount of, any Junior Stock or Pari Passu
Stockshall not be deemed to affect adversely the voting powers, rights or
preferences of the holders of the Series C Preferred Stock;
(2) The creation of any shares of any class or series or
any security convertible into shares of any class or series of
capital stock ranking prior to the Series C Preferred Stock in
the distribution of assets on any liquidation, dissolution or
winding-up of the Corporation or in the payment of dividends;
or
(3) any merger or consolidation with or into, or any
sale, transfer, exchange or lease of all or substantially all of the
assets of the Corporation to, any other corporation, in either
case that would adversely affect any of the rights, powers or
preferences of outstanding shares of Series C Preferred Stock.
SECTION 4. Redemption.
(A) The shares of Series C Preferred Stock are
redeemable, at the option of the Corporation, in whole or in
part from time to time, on or after 1998 during the
twelve-month periods beginning on ________ in each of the
following years, at the following redemption prices (expressed
as a percentage of liquidation preference), plus accumulated
and unpaid dividends, whether or not earned or declared, to the
date of redemption (the "Redemption Price"):
Date Redemption Price
,1998 . %
,1999
,2000
,2001
,2002
,2003
,2004 and thereafter
From and after the date fixed for redemption, dividends on
shares of Series C Preferred Stock called for redemption will
cease to accrue, such shares will no longer be deemed to be
outstanding and all rights in respect of such shares of the
Corporation shall cease, except the right to receive the
Redemption Price, provided that shares of Series C Preferred
Stock may be converted pursuant to Section 6 hereof at any
time prior to the close of business on the date fixed for
redemption of such shares. If less than all of the outstanding
shares of Series C Preferred Stock are to be redeemed, the
Corporation shall either redeem a portion of the shares held by
each holder or shall select the shares to be redeemed by lot, as
may be determined by the Board of Directors of the
Corporation.
(B) Unless otherwise required by law, notice of redemption
will be sent to the holders of Series C Preferred Stock by first-
class mail, postage prepaid, mailed not less than thirty, nor
more than sixty days prior to the redemption date. Each such
notice shall state: (i) the redemption date; (ii) the total number
of shares of Series C Preferred Stock to be redeemed and, if
fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from
such holder; (iii) the Redemption Price; (iv) the place or places
where certificates for such shares are to be surrendered for
payment of the Redemption Price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption
date; and (vi) the conversion rights of the shares to be
redeemed, the period within which conversion rights may be
exercised, and the conversion price of a share of Series C
Preferred Stock on the date such notice is sent. Upon
surrender of the certificates for any shares so called for
redemption and not previously converted (properly endorsed or
assigned for transfer, if the Board of Directors of the
Corporation shall so require and the notice shall so state), such
shares shall be redeemed by the Corporation on the date fixed
for redemption and at the Redemption Price set forth in this
Section 4.
SECTION 5. Liquidation, Dissolution or Winding-Up.
(A) Upon any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Corporation, the holders of
Series C Preferred Stock at the time outstanding will be
entitled to receive out of the net assets of the Corporation
available for payment to stockholders and subject to the rights
of the holders of any stock of the Corporation ranking senior
to or on a parity with the Series C Preferred Stock in respect
of distributions upon liquidation, dissolution, winding-up or
termination of the Corporation, before any amount shall be
paid or distributed with respect to any Junior Stock liquidating
distributions in the amount of $100 per share plus an amount
equal to all accrued and unpaid dividends thereon (whether or
not earned or declared) to the date fixed for distribution. If,
upon any liquidation, dissolution, winding up or termination of
the Corporation, the amounts payable with respect to the Series
C Preferred Stock and any Pari Passu Stock are not paid in
full, the holders of the Series C Preferred Stock and such Pari
Passu Stock shall share ratably in any distribution of assets
based on the proportion of their full respective liquidation
preference to the entire amount of unpaid liquidation
preference. After payment of the full amount to which they
are entitled as provided by the foregoing provisions of this
Section 5(A), the holders of shares Stock shall not be entitled
to any further right or claim to any of the remaining assets of
the Corporation.
(B) Neither the merger or consolidation of the Corporation
with or into any other corporation, nor the merger or
consolidation of any other corporation with or into the
Corporation, nor the sale, transfer, exchange or lease of all or
any portion of the assets of the Corporation, shall be deemed
to be a dissolution, liquidation or winding-up of the affairs of
the Corporation for purposes of this Section 5.
(C) Written notice of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, stating the
payment date or dates when, and the place or places where, the
amounts distributable to holders of Series C Preferred Stock in
such circumstances shall be payable, shall be given by first-
class mail, postage prepaid, mailed not less than twenty days
prior to any payment date stated therein, to the holders of
Series C Preferred Stock, at the address shown on the books of
the Corporation or the transfer agent for the Series C Preferred
Stock; provided, however, that a failure to give notice as
provided above or any defect therein shall not affect the
Corporation's ability to consummate a voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation.
SECTION 6. Conversion Rights of Series C Preferred Stock.
(A) The shares of Series C Preferred Stock are convertible at
any time at the option of the holder thereof into shares of
Common Stock at the initial conversion price $_________,
subject to adjustment as provided in Section 7. For this
purpose, each share of Series C Preferred Stock shall be taken
at $100.00.
(B) Holders of record of Series C Preferred Stock at the close
of business on a dividend payment record date will be entitled
to receive the dividend payable on such shares of Series C
Preferred Stock on the corresponding dividend payment date
notwithstanding the conversion thereof following such dividend
payment record date. Except as provided in the immediately
preceding sentence, the Corporation will make no payment or
allowance for accumulated and unpaid dividends, whether or
not in arrears, on converted shares of Series C Preferred Stock
or for dividends on the shares of Common Stock issued upon
such conversion.
(C) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Corporation shall
pay a cash adjustment in an amount equal to the same fraction
of the Closing Price (as hereinafter defined) on the date on
which the certificate or certificates for such shares were duly
surrendered for conversion, or, if such date is not a Trading
Day (as hereinafter defined), on the next Trading Day.
(D) The shares of Series C Preferred Stock that have been
called for redemption will not be convertible after the close of
business on the second calendar day preceding the date fixed
for redemption, unless the Corporation defaults in making
payment of the amount payable upon such redemption.
(E) Any holder of shares of Series C Preferred Stock desiring
to convert such shares into shares of Common Stock shall
surrender the certificate or certificates representing the shares
of Series C Preferred Stock being converted, duly assigned or
endorsed for transfer to the Corporation (or accompanied by
duly executed stock powers relating thereto), at the principal
executive office of the Corporation or the offices of the
transfer agent for the Series C Preferred Stock or such office
or offices in the continental United States of an agent for
conversion as may from time to time be designated by notice
to the holders of the Series C Preferred Stock by the
Corporation or the transfer agent for the Series C Preferred
Stock, accompanied by written notice of conversion, on any
day that is a Business Day in The City of New York. Such
notice of conversion shall specify (i) the number of shares of
Series C Preferred Stock to be converted and the name or
names in which such holder desires the certificate or
certificates for Common Stock and for any shares of Series C
Preferred Stock not to be so converted to be issued (subject to
compliance with applicable legal requirements if any of such
certificates are to be issued in a name other than the name of
the holder), and (ii) the address to which such holder wishes
delivery to be made of such new certificates to be issued upon
such conversion.
(F) Upon surrender of a certificate representing a share or
shares of Series C Preferred Stock for conversion, the
Corporation shall issue and send by hand delivery (with receipt
to be acknowledged) or by first-class mail, postage prepaid, to
the holder thereof, at the address designated by such holder, a
certificate or certificates representing the number of shares of
Common Stock to which such holder shall be entitled upon
conversion. In the event that there shall have been surrendered
a certificate or certificates representing shares of Series C
Preferred Stock, only part of which are to be converted, the
Corporation shall issue and deliver to such holder or such
holder's designee in the manner provided in the immediately
preceding sentence a new certificate or certificates representing
the number of shares of Series C Preferred Stock that shall not
have been converted.
(G) The issuance by the Corporation of shares of Common
Stock upon a conversion of shares of Series C Preferred Stock
into shares of Common Stock made at the option of the holder
thereof shall be effective upon the surrender by such holder or
such holder's designee of the certificate or certificates for the
shares of Series C Preferred Stock to be converted, duly
assigned or endorsed for transfer to the Corporation (or
accompanied by duly executed stock powers relating thereto).
The person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common
Stock as of the close of business on the effective date of the
conversion. No allowance or adjustment shall be made in
respect of dividends payable to holders of Common Stock of
record as of any date prior to such effective date.
(H) Whenever the Corporation shall issue shares of Common
Stock upon conversion of shares of Series C Preferred Stock as
contemplated by this Section 6, the Corporation shall issue,
together with each such share of Common Stock, one right to
purchase Series A Junior Participating Preferred Stock of the
Corporation (or other securities in lieu thereof) pursuant to the
Amended Rights Agreement, dated as of October 4, 1989 (the
"Rights Agreement"), between the Corporation and Harris
Trust and Savings Bank, as Rights Agent, as such Rights
Agreement may from time to time be amended, or any similar
rights issued to holders of Common Stock of the Corporation
in addition thereto or in replacement therefor (such rights,
together with any additional or replacement rights, being
collectively referred to as the "Rights"), whether or not such
Rights shall be exercisable at such time, but only if such
Rights are issued and outstanding and held by other holders of
Common Stock of the Corporation (or are evidenced by
outstanding share certificates representing Common Stock) at
such time and have not expired or been redeemed.
(I) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Common Stock,
solely for issuance upon the conversion of shares of Series C
Preferred Stock as herein provided, free from any preemptive
or other similar rights, such number of shares of Common
Stock as shall from time to time be issuable upon the
conversion of all the shares of Series C Preferred Stock then
outstanding. Notwithstanding the foregoing, the Corporation
shall be entitled to deliver upon conversion of shares of Series
C Preferred Stock, as herein provided, shares of Common
Stock reacquired and held in the treasury of the Corporation
(in lieu of the issuance of authorized and unissued shares of
Common Stock), so long as any such treasury shares are free
and clear of all liens, charges, security interests or
encumbrances. All shares of Common Stock delivered upon
conversion of the Series C Preferred Stock shall be duly
authorized, validly issued, fully paid and non-assessable, free
and clear of all liens, claims, security interests and other
encumbrances. The Corporation shall prepare and shall use its
best efforts to obtain and keep in force such governmental or
regulatory permits or other authorizations as may be required
by law, and shall comply with all applicable requirements as to
registration or qualification of the Common Stock (and all
requirements to list the Common Stock issuable upon
conversion of Class C Preferred Stock that are at the time
applicable), in order to enable the Corporation lawfully to issue
and deliver to each holder of record of Series C Preferred
Stock such number of shares of its Common Stock as shall
from time to time be sufficient to effect the conversion of all
shares of Series C Preferred Stock then outstanding and
convertible into shares of Common Stock.
SECTION 7. Adjustment of Conversion Price.
(A) Adjustment of Conversion Price. The conversion price at
which a share of Series C Preferred Stock is convertible into
Common Stock shall be subject to adjustment from time to
time as follows:
(i) In case the Corporation shall pay or make a dividend or
other distribution on any class or series of capital stock of the
Corporation exclusively in Common Stock, the conversion
price in effect at the opening of business on the day following
the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by
multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such
number of shares and the total number of shares constituting
such dividend or other distribution or exchange, such reduction
to become effective immediately after the opening of business
on the day following the date fixed for such determination.
For the purposes of this subparagraph (i), the number of shares
of Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation. The Corpo-
ration shall not pay any dividend or make any distribution on
shares of any class or series of capital stock of the Corporation
exclusively in Common Stock held in the treasury of the
Corporation.
(ii) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock consisting exclusively
of, or shall otherwise issue to all holders of its Common Stock,
rights or warrants entitling the holders thereof to subscribe for
or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided
in subparagraph (vii) of this Section 7(A)) of the Common
Stock on the date fixed for the determination of stockholders
entitled to receive such rights or warrants, the conversion price
in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multi-
plying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number
of shares of Common Stock so offered for subscription or
purchase would purchase at such current market price and the
denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. For the
purposes of this subparagraph (ii), the number of shares of
Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation. The
Corporation shall not issue any rights or warrants in respect of
shares of Common Stock held in the treasury of the
Corporation. In case any rights or warrants referred to in this
subparagraph (ii) in respect of which an adjustment shall have
been made shall expire unexercised within 45 days after the
same shall have been distributed or issued by the Corporation,
the conversion price shall be readjusted at the time of such
expiration to the conversion price that would have been in
effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock,
the conversion price in effect at the opening of business on the
day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and conversely, in
case outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common Stock,
the conversion price in effect at the opening of business on the
day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately
after the opening of business on the day following the day
upon which such subdivision or combination becomes
effective.
(iv) Subject to the last sentence of this subparagraph (iv), in
case the Corporation shall, by dividend or otherwise, distribute
to all holders of its Common Stock evidences of its
indebtedness, shares of any class or series of capital stock,
cash or assets (including securities, but excluding any rights or
warrants referred to in subparagraph (ii) of this Section 7(A),
any dividend or distribution paid exclusively in cash and any
dividend or distribution referred to in subparagraph (i) of this
Section 7(A)), the conversion price shall be reduced so that the
same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the
effectiveness of the conversion price reduction contemplated by
this subparagraph (iv) by a fraction of which the numerator
shall be the current market price per share (determined as
provided in subparagraph (vii) of this Section 7(A)) of the
Common Stock on the date fixed for the payment of such
distribution (the "Reference Date") less the fair market value
(as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution
of the Board of Directors), on the Reference Date, of the
portion of the evidences of indebtedness, shares of capital
stock, cash and assets so distributed applicable to one share of
Common Stock and the denominator shall be such current
market price per share of the Common Stock, such reduction to
become effective immediately prior to the opening of business
on the day following the Reference Date. If the Board of
Directors determines the fair market value of any distribution
for purposes of this subparagraph (iv) by reference to the
actual or when issued trading market for any securities
comprising such distribution, it must in doing so consider the
prices in such market over the same period used in computing
the current market price per share of Common Stock pursuant
to subparagraph (vii) of this Section 7(A). For purposes of
this subparagraph (iv), any dividend or distribution that
includes shares of Common Stock or rights or warrants to
subscribe for or purchase shares of Common Stock shall be
deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, shares of capital stock, cash or
assets other than such shares of Common Stock or such rights
or warrants (making any conversion price reduction required
by this subparagraph (iv)) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or
such rights or warrants (making any further conversion price
reduction required by subparagraph (i) or (ii) of this Section
7(A), except (A) the Reference Date of such dividend or distri-
bution as defined in this subparagraph (iv) shall be substituted
as "the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution," "the date fixed
for the determination of stockholders entitled to receive such
rights or warrants" and "the date fixed for such determination"
within the meaning of subparagraphs (i) and (ii) of this Section
7(A) and (B) any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the
close of business on the date fixed for such determination"
within the meaning of subparagraph (i) of this Section 7(A).
(v) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock exclusively in cash
(excluding, in the case of any regular cash dividend on the
Common Stock, the portion thereof that does not exceed the
per share amount of the next preceding regular cash dividend
on the Common Stock (as adjusted to appropriately reflect any
of the events referred to in subparagraphs (i), (ii), (iii), (iv), (v)
and (vi) of this Section 7(A), or all of such regular cash
dividend if the annualized amount thereof per share of
Common Stock does not exceed 15% of the current market
price per share (determined as provided in subparagraph (vii)
of this Section 7(A)) of the Common Stock on the Trading
Day (as defined in Section 7(E)) next preceding the date of
declaration of such dividend), the conversion price shall be
reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to
the effectiveness of the conversion price reduction
contemplated by this subparagraph (v) by a fraction of which
the numerator shall be the current market price per share
(determined as provided in subparagraph (vii) of this Section
7(A)) of the Common Stock on the date fixed for the payment
of such distribution less the amount of cash so distributed and
not excluded as provided above applicable to one share of
Common Stock and the denominator shall be such current
market price per share of the Common Stock, such reduction to
become effective immediately prior to the opening of business
on the day following the date fixed for the payment of such
distribution.
(vi) In case a tender or exchange offer made by the
Corporation or any subsidiary of the Corporation for all or any
portion of the Corporation's Common Stock shall expire and
such tender or exchange offer shall involve the payment by the
Corporation or such subsidiary of consideration per share of
Common Stock having a fair market value (as determined in
good faith by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board
of Directors) at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange
offer (as it shall have been amended) that exceeds 10% of the
current market price per share (determined as provided in
subparagraph (vii) of this Section 7(A)) of the Common Stock
on the Trading Day next succeeding the Expiration Time, the
conversion price shall be reduced so that the same shall equal
the price determined by multiplying the conversion price in
effect immediately prior to the effectiveness of the conversion
price reduction contemplated by this subparagraph (vi) by a
fraction of which the numerator shall be the number of shares
of Common Stock outstanding (including any tendered or
exchanged shares) at the Expiration Time multiplied by the
current market price per share (determined as provided in
subparagraph (vii) of this Section 7(A)) of the Common Stock
on the Trading Day next succeeding the Expiration Time and
the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not
withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time and the current market price per
share (determined as provided in subparagraph (vii) of this
Section 7(A)) of the Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the
day following the Expiration Time. Notwithstanding anything
contained in this Section 7(A)(vi) to the contrary, no
adjustment shall be made to the conversion price in the case of
a tender offer that complies with Rule 13e-4(h)(v) under the
Exchange Act, or any successor rule thereto.
(vii) For the purpose of any computation under subparagraphs
(ii), (iv), (v) and (vi) of this Section 7(A), the current market
price per share of Common Stock on any date in question shall
be deemed to be the average of the daily Closing Prices (as
defined in Section 7(E)) for the five consecutive Trading Days
selected by the Company commencing not more than 20
Trading Days before, and ending not later than, the earlier of
the day in question and, if applicable, the day before the "ex"
date with respect to the issuance or distribution requiring such
computation; provided, however, that in each event another
event occurs that would require an adjustment pursuant to
subparagraph (i) through (vi), inclusive, the Board of Directors
may make such adjustments to the Closing Prices during such
five Trading Day period as it deems appropriate to effectuate
the intent of the adjustments in this Section 7(A), any such
determination by the Board of Directors shall be set forth in a
Board Resolution and shall be conclusive. For purposes of this
paragraph, the term "ex" date, (1) when used with respect to
any issuance or distribution, means the first date on which the
Common Stock trades regular way on the relevant exchange or
in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or
distribution, and (2) when used with respect to any tender or
exchange offer means the first date on which the Common
Stock trades regular way on such exchange or in such market
after the Expiration Time of such offer.
(viii) The Corporation may make such reductions in the
conversion price, in addition to those required by
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this Section
7(A), as it considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase
Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as
such for income tax purposes. The Corporation from time to
time may reduce the conversion price by any amount for any
period of time if the period is at least twenty days, the
reduction is irrevocable during the period, and the Board of
Directors of the Corporation shall have made a determination
that such reduction would be in the best interest of the
Corporation, which determination shall be conclusive.
Whenever the conversion price is reduced pursuant to the
preceding sentence, the Corporation shall mail to holders of
record of the Series C Preferred Stock a notice of the reduction
at least fifteen days prior to the date the reduced conversion
price takes effect, and such notice shall state the reduced
conversion price and the period it will be in effect.
(ix) No adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease
of at least 1% in the conversion price; provided, however, that
any adjustments which by reason of this subparagraph (ix) are
not required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(x) Whenever the conversion price is adjusted as herein
provided:
(1) the Corporation shall compute the adjusted conversion price
and shall prepare a certificate signed by the Treasurer of the
Corporation setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be
filed with the transfer agent for the Series C Preferred Stock;
and
(2) a notice stating the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be
required, and as soon as practicable after it is required such
notice shall be mailed by the Corporation to all record holders
of shares of Series C Preferred Stock at their last addresses as
they shall appear upon the stock transfer books of the
Corporation.
(B) Reclassification, Consolidation, Merger or Sale of Assets.
In the event that the Corporation shall be a party to any
transaction (including without limitation any recapitalization or
reclassification of the Common Stock (other than a change in
par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or
combination of the Common Stock), any consolidation of the
Corporation with, or merger of the Corporation into, any other
person, any merger of another person into the Corporation
(other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of outstanding shares of
Common Stock of the Corporation), any sale or transfer of all
or substantially all of the assets of the Corporation or any
compulsory share exchange) pursuant to which the Common
Stock is converted into the right to receive other securities,
cash or other property), then lawful provisions shall be made
as part of the terms of such transaction whereby the holder of
each share of Series C Preferred Stock then outstanding shall
have the right thereafter, to convert such share only into (i) in
the case of any such transaction other than a Common Stock
Fundamental Change (as defined in Section 7(E)), the kind and
amount of securities, cash and other property receivable upon
such transaction by a holder of the number of shares of
Common Stock of the Corporation into which such share of
Series C Preferred Stock could have been converted
immediately prior to such transaction, after giving effect, in the
case of any Non-Stock Fundamental Change, to any adjustment
in the conversion price required by the provisions of Section
7(D), and (ii) in the case of a Common Stock Fundamental
Change, common stock of the kind received by holders of
Common Stock as a result of such Common Stock
Fundamental Change in an amount determined pursuant to the
provisions of Section 7(D). The Corporation or the person
formed by such consolidation or resulting from such merger or
which acquires such assets or which acquires the Corporation's
shares, as the case may be, shall make provisions in its
certificate or articles of incorporation or other constituent
document to establish such right. Such certificate or articles of
incorporation or other constituent document shall provide for
adjustments which, for events subsequent to the effective date
of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 7.
The above provisions shall similarly apply to successive
transactions of the foregoing type.
(C) Prior Notice of Certain Events. In case:
(i) the Corporation shall (1) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend
payable in shares of Common Stock or (B) a dividend that
would not require an adjustment pursuant to Section 7(A)(iv)
or (v) or (2) authorize a tender or exchange offer that would
require an adjustment pursuant to Section 7(A)(vi); or
(ii) the Corporation shall authorize the granting to all holders
of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or series or of any
other rights or warrants; or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock,
or a change in par value, or from par value to no par value, or
from no par value to par value), or of any consolidation or
merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation shall be
required, or of the sale or transfer of all or substantially all of
the assets of the Corporation or of any compulsory share
exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer
agent for the Series C Preferred Stock, and shall cause to be
mailed to the holders of record of the Series C Preferred Stock,
at their last addresses as they shall appear upon the stock
transfer books of the Corporation, at least fifteen days prior to
the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record (if any) is to be
taken for the purpose of such dividend, distribution,
redemption, repurchase, rights or warrants or, if a record is not
to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution,
redemption, repurchase, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation
or winding up is expected to become effective, and the date as
of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing
thereof shall affect the validity of the corporate action required
to be specified in such notice).
(D) Adjustments in Case of Fundamental Changes.
Notwithstanding any other provision in this Section 7 to the
contrary, if any Fundamental Change (as defined in Section
7(E)) occurs, then the conversion price in effect will be
adjusted immediately after such Fundamental Change as
described below. In addition, in the event of a Common Stock
Fundamental Change (as defined in Section 7(E)), each share
of Series C Preferred Stock shall be convertible solely into
common stock of the kind and amount received by holders of
Common Stock as the result of such Common Stock
Fundamental Change as more specifically provided in the
following clauses (D)(i) and (D)(ii).
For purposes of calculating any adjustment to be made
pursuant to this Section 7(D) in the event of a Fundamental
Change, immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined
in Section 7(E)), the conversion price of the Series C Preferred
Stock shall thereupon become the lower of (A) the conversion
price in effect immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to this Section 7, and (B) the
result obtained by multiplying the greater of the Applicable
Price (as defined in Section 7(E)) or the then applicable
Reference Market Price (as defined in Section 7(E)) by a
fraction of which the numerator shall be $50.00 and the
denominator shall be (x) the then-current Redemption Price per
share of Series C Preferred Stock or (y) for any Non-Stock
Fundamental Change that occurs before the Series C Preferred
Stock becomes redeemable by the Corporation pursuant to
Section 4, the applicable price per share set forth for the date
of such Non-Stock Fundamental Change in the following table:
Date of Non-Stock Fundamental Change Price
After date of original issuance of Series C Preferred Stock and
on or before _______, 1995
After _____ __, 1995, and on or before _____ __, 1996
After _____ __, 1996, and on or before _____ __, 1997
After _____ __, 1997, and on or before _____ __, 1998
plus, in any case referred to in this clause (y), an amount equal
to all dividends on the Series C Preferred Stock accrued and
unpaid thereon, whether or not earned or declared, to but
excluding the date of such Non-Stock Fundamental Change;
and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the Series C Preferred Stock in effect
immediately prior to such Common Stock Fundamental
Change, but after giving effect to any other prior adjustments
effected pursuant to this Section 7, shall thereupon be adjusted
by multiplying such conversion price by a fraction of which
the numerator shall be the Purchaser Stock Price (as defined in
Section 7(E)) and the denominator shall be the Applicable
Price; provided, however, that in the event of a Common Stock
Fundamental Change in which (A) 100% by value of the
consideration received by a holder of Common Stock is
common stock of the successor, acquiror or other third party
(and cash, if any, is paid with respect to any fractional interests
in such common stock resulting from such Common Stock
Fundamental Change) and (B) all of the Common Stock shall
have been exchanged for, converted into or acquired for
common stock (and cash with respect to fractional interests) of
the successor, acquiror or other third party, the conversion
price of the Series C Preferred Stock in effect immediately
prior to such Common Stock Fundamental Change shall
thereupon be adjusted by multiplying such conversion price by
a fraction of which the numerator shall be one (1) and the
denominator shall be the number of shares of common stock of
the successor, acquiror, or other third party received by a
stockholder for one share of Common Stock as a result of such
Common Stock Fundamental Change.
(E) Definitions. The following definitions shall apply to terms
used in this Section 7:
(1) "Applicable Price" shall mean (i) in the event of a
Non-Stock Fundamental Change in which the holders of the
Common Stock receive only cash, the amount of cash received
by a stockholder for one share of Common Stock and (ii) in
the event of any other Non-Stock Fundamental Change or any
Common Stock Fundamental Change, the average of the daily
Closing Prices of the Common Stock for the ten consecutive
Trading Days prior to and including the record date for the
determination of the holders of Common Stock entitled to
receive securities, cash or other property in connection with
such Non-Stock Fundamental Change or Common Stock
Fundamental Change, or, if there is no such record date, the
date upon which the holders of the Common Stock shall have
the right to receive such securities, cash or other property, in
each case, as adjusted in good faith by the Board of Directors
of the Corporation to appropriately reflect any of the events
referred to in subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of
Section 7(A).
(2) "Closing Price" of any common stock on any day shall
mean the last reported sale price regular way on such day or,
in case no such sale takes place on such day, the average of
the reported closing bid and asked prices regular way of the
common stock in each case on the principal national securities
exchange on which the Common Stock is traded, or if the
Common Stock is not listed or traded on any national
securities exchange, on the National Market System of the
National Association of Securities Dealers, Inc., or, if the
common stock is not quoted or admitted to trading on such
quotation system, on the quotation system on which the
common stock is listed or admitted to trading or quoted, or, if
not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the
closing bid and asked prices of the common stock in the over-
the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similarly
generally accepted reporting service, or, if not so available in
such manner, as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of
Directors of the Corporation for that purpose or, if not so
available in such manner, as otherwise determined in good
faith by the Board of Directors.
(3) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50% by value (as
determined in good faith by the Board of Directors of the
Corporation) of the consideration received by holders of
Common Stock consists of common stock that for each of the
ten consecutive Trading Days referred to with respect to such
Fundamental Change in Section 7(E)(1) above has been
admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the
National Market System of the National Association of
Securities Dealers, Inc.; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental Change
unless either (i) the Corporation continues to exist after the
occurrence of such Fundamental Change and the outstanding
shares of Series C Preferred Stock continue to exist as
outstanding shares of Series C Preferred Stock, or (ii) not later
than the occurrence of such Fundamental Change, the
outstanding shares of Series C Preferred Stock are converted
into or exchanged for shares of convertible preferred stock of a
corporation succeeding to the business of the Corporation,
which convertible preferred stock has powers, preferences and
relative, participating, optional or other rights, and
qualifications, limitations and restrictions, substantially similar
to those of the Series C Preferred Stock.
(4) "Fundamental Change" shall mean the occurrence of any
transaction or event in connection with a plan pursuant to
which all or substantially all of the Common Stock shall be
exchanged for, converted into, acquired for or constitute solely
the right to receive securities, cash or other property (whether
by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification,
recapitalization or otherwise); provided, however, in the case of
a plan involving more than one such transaction or event, for
purposes of adjustment of the conversion price, such
Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock of the Corporation shall
be exchanged for, converted into, or acquired for or constitute
solely the right to receive securities, cash or other property, but
the adjustment shall be based upon the highest weighted
average of consideration per share which a holder of Common
Stock could have received in such transactions or events as a
result of which more than 50% of the Common Stock of the
Corporation shall have been exchanged for, converted into, or
acquired for or constitute solely the right to receive securities,
cash or other property.
(5) "Non-Stock Fundamental Change" shall mean any
Fundamental Change other than a Common Stock Fundamental
Change.
(6) "Purchaser Stock Price" shall mean, with respect to any
Common Stock Fundamental Change, the average of the daily
Closing Prices of the common stock received in such Common
Stock Fundamental Change for the ten consecutive Trading
Days prior to and including the record date for the
determination of the holders of Common Stock entitled to
receive such common stock, or, if there is no such record date,
the date upon which the holders of the Common Stock shall
have the right to receive such common stock, in each case, as
adjusted in good faith by the Board of Directors of the Cor-
poration to appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of Section 7(A);
(7) "Reference Market Price" shall initially mean $_____ and
in the event of any adjustment to the conversion price other
than as a result of a Non-Stock Fundamental Change, the
Reference Market Price shall also be adjusted so that the ratio
of the Reference Market Price to the conversion price after
giving effect to any such adjustment shall always be the same
as the ratio of $_____ to the initial conversion price per share.
(8) "Trading Day" shall mean a day on which securities are
traded on the national securities exchange or quotation system
or in the over-the-counter market used to determine the
Closing Price.
(F) Dividend or Interest Reinvestment Plans. Notwithstanding
the foregoing provisions, the issuance of any shares of
Common Stock pursuant to any present or future plan
providing for the reinvestment of dividends or interest payable
on securities of the Corporation and the investment of addi-
tional optional amounts in shares of Common Stock under any
such plan, and the issuance of any shares of Common Stock or
options or rights to purchase such shares pursuant to any
present or future employee benefit plan or program of the
Corporation or pursuant to any option, warrant, right or
exercisable, exchangeable or convertible security outstanding as
of the date the Series C Preferred Stock is first issued, shall
not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the
Corporation to which any of the adjustment provisions
described above applies. There shall also be no adjustment of
the conversion price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of the
Corporation except as specifically described in this Section 7.
If any action would require adjustment of the conversion price
pursuant to more than one of the provisions described above,
only one adjustment shall be made and such adjustment shall
be the amount of adjustment which has the highest absolute
value to holders of Series C Preferred Stock.
(G) Certain Additional Rights. In case the Corporation shall,
by dividend or otherwise, declare or make a distribution on its
Common Stock referred to in Section 7(A)(iv) or 7(A)(v)
(including, without limitation, dividends or distributions
referred to in the last sentence of Section 7(A)(iv)), the holder
of each share of Series C Preferred Stock, upon the conversion
thereof subsequent to the close of business on the date fixed
for the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the conversion
price adjustment in respect of such distribution, shall also be
entitled to receive for each share of Common Stock into which
such share of Series C Preferred Stock is converted, the portion
of the shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Corporation
(whose election shall be evidenced by a resolution of the
Board of Directors) with respect to all holders so converting,
the Corporation may, in lieu of distributing to such holder any
portion of such distribution not consisting of cash or securities
of the Corporation, pay such holder an amount in cash equal to
the fair market value thereof (as determined in good faith by
the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of
Directors). If any conversion of a share of Series C Preferred
Stock described in the immediately preceding sentence occurs
prior to the payment date for a distribution to holders of
Common Stock which the holder of the share of Series C
Preferred Stock so converted is entitled to receive in
accordance with the immediately preceding sentence, the
Corporation may elect (such election to be evidenced by a
resolution of the Board of Directors) to distribute to such
holder a due bill for the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock,
cash or assets to which such holder is so entitled, provided that
such due bill (i) meets any applicable requirements of the
principal national securities exchange or other market on which
the Common Stock is then traded and (ii) requires payment or
delivery of such shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or
assets no later than the date of payment or delivery thereof to
holders of shares of Common Stock receiving such distribution.
SECTION 8. Ranking; Attributable Capital and Adequacy of
Surplus; Retirement of Shares.
(A) The Series C Preferred Stock shall rank senior to all shares
of Junior Stock and pari passu with the Pari Passu Stock of
the Corporation as to the payment of dividends and amounts
upon the liquidation, dissolution or winding-up of the
Corporation. The ranking of any subsequent series of
Preferred Stock, par value $100 per share, issued by the
Corporation as compared to the Series C Preferred Stock as to
the payment of dividends and amounts upon the liquidation,
dissolution or winding-up of the Corporation shall be as
specified in the Certificate of Incorporation, as amended, of the
Corporation and, if appropriate, shall also be subject to the
provisions of paragraph (B) of Section 2 hereof.
(B) The capital of the Corporation allocable to the Series C
Preferred Stock for purposes of the New York Business
Corporation Law (the "BCL") shall be $100 per share.
(C) Any shares of Series C Preferred Stock acquired by the
Corporation by reason of the conversion or redemption of such
shares, or otherwise so acquired, shall be retired as shares of
Series C Preferred stock and restored to the status of
authorized but unissued shares of Preferred Stock, par value
$100 per share, of the Corporation, undesignated as to series,
and may thereafter be reissued as part of a new series of such
Preferred Stock as permitted by law.
SECTION 9. Miscellaneous.
(A) All notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon the
earlier of receipt thereof or three business days after the
mailing thereof if sent by registered or certified mail (unless
first-class mail shall be specifically permitted for such notice
under the terms of this paragraph 4C) with postage prepaid
addressed: (i) if to the Corporation, to its office at Corning,
New York 14831 (Attention: the Secretary) or to the transfer
agent for the Series C Preferred Stock, or other agent of the
Corporation designated as permitted by this paragraph 4C, or
(ii) if to any holder of the Series C Preferred Stock or
Common Stock, as the case may be, to such holder at the
address of such holder as listed in the stock record books of
the Corporation (which may include the records of any transfer
agent for the Series C Preferred Stock or Common Stock, as
the case may be) or (iii) to such other address as the
Corporation or any such holder, as the case may be, shall have
designated by notice similarly given.
(B) The term "Common Stock" as used in this paragraph 4C
means the Corporation's Common Stock, par value $0.50 per
share, as the same exists at the date of filing of a Certificate of
Amendment to the Certificate of Incorporation of the
Corporation relating to the Series C Preferred Stock or any
other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of
changes in par value, or from par value to no par value, or
from no par value to par value. However, subject to the
provisions of Section 7(B), shares of Common Stock issuable
on conversion of shares of Series C Preferred Stock shall
include only shares of the class designated as Common Stock
of the Corporation at the date of the filing of this instrument
with the State of New York or shares of any class or classes
resulting from any reclassification or reclassifications thereof
and which have no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation and
which are not subject to redemption by the Corporation;
provided that if at any time there shall be more than one such
resulting class, the shares of each such class then so issuable
shall be substantially in the proportion which the total number
of shares of such class resulting from all such reclassifications
bears to the total number of shares of such classes resulting
from all such reclassifications.
(C) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any
issuance or delivery of shares of Series C Preferred Stock or
shares of Common Stock or other securities issued on account
of Series C Preferred Stock pursuant hereto or certificates
representing such shares or securities. The Corporation shall
not, however, be required to pay any such tax that may be
payable in respect of any transfer involved in the issuance or
delivery of shares of Series C Preferred Stock or Common
Stock or other securities in a name other than that in which the
shares of Series C Preferred Stock with respect to which such
shares or other securities are issued or delivered were
registered, or in respect of any payment to any person with
respect to any such shares or securities other than a payment to
the registered holder thereof, and shall not be required to make
any such issuance, delivery or payment unless and until the
person otherwise entitled to such issuance, delivery or payment
has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that such tax
has been paid or is not payable.
(D) In the event that a holder of shares of Series C Preferred
Stock shall not by written notice designate the name in which
shares of Common Stock to be issued upon conversion of such
shares should be registered or to whom payment upon
redemption of shares of Series C Preferred Stock should be
made or the address to which the certificate or certificates
representing such shares, or such payment, should be sent, the
Corporation shall be entitled to register such shares, and make
such payment, in the name of the holder of such Series C
Preferred Stock as shown on the records of the Corporation
and to send the certificate or certificates representing such
shares, or such payment, to the address of such holder shown
on the records of the Corporation.
(E) The Corporation may appoint, and from time to time
discharge and change, a transfer agent for the Series C
Preferred Stock. Upon any such appointment or discharge of a
transfer agent, the Corporation shall send notice thereof by
first-class mail, postage prepaid, to each holder of record of
Series C Preferred Stock.
FOURTH: This amendment of the Certificate of Incorporation
was authorized by resolutions duly adopted by the Board of
Directors of the Corporation at a meeting thereof duly called
and held on , 1994, and by the Executive
Committee of the Board of Directors of the Corporation, acting
pursuant to delegated authority, at a meeting thereof duly called and held
on , 1994at which, in each case, a quorum was present and
acting throughout.
IN WITNESS WHEREOF, we have signed this Certificate this
day of , 1994.
JAMES R. HOUGHTON
Chairman
[SEAL]
A. JOHN PECK, JR.
Secretary
<PAGE>
STATE OF NEW YORK)
) s.s.:
COUNTY OF STEUBEN)
JAMES R. HOUGHTON and A. JOHN PECK, JR.,
being severally duly sworn, say, and each for himself says, that
the said James R. Houghton is the Chairman and the said A.
John Peck, Jr. is the Secretary of Corning Incorporated, which
is a corporation organized under the laws of the State of New
York and is the corporation described in the foregoing
Certificate; that they have read the said Certificate and know
the contents thereof and that the same is true to their own
knowledge.
JAMES R. HOUGHTON
Chairman
A. JOHN PECK, JR.
Secretary
Subscribed and sworn to before
me this day of , 1994
Notary Public [NOTARIAL SEAL]
<PAGE>
EXHIBIT 4.3
FISCAL AGENCY AGREEMENT
among
CORNING DELAWARE, L.P.
and
CORNING INCORPORATED
and
HARRIS TRUST AND SAVINGS BANK,
Agent
Dated as of _________, 1994
$___________
___% Convertible Subordinated Debentures Due ________, 2024
<PAGE>
<PAGE>
FISCAL AGENCY AGREEMENT, dated as of ____________, 1994, among
Corning Incorporated, a New York corporation ("Corning"
or the "General Partner"), Corning Delaware, L.P. ("Corning
Delaware"), a Delaware limited partnership, and Harris
Trust and Savings Bank, as fiscal agent, transfer agent,
paying and conversion agent (in any such capacity, the
"Agent"). Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings ascribed to
them in the Amended and Restated Limited Partnership
Agreement of Corning Delaware, dated as of _______, 1994
(the "Limited Partnership Agreement").
WHEREAS, Corning Delaware may pursuant to the Underwriting
Agreement issue up to $__________ aggregate liquidation
preference of its % Convertible Monthly Income
Preferred Securities (the "Preferred Securities") with
a stated liquidation preference of $50 per Preferred Security;
WHEREAS, Corning is guaranteeing the payment of Dividends
on the Preferred Securities, and payment of the Redemption
Price and payments on liquidation with respect to the
Preferred Securities to the extent provided in the
Guarantee;
WHEREAS, Corning wishes to sell to Corning
Delaware, and Corning Delaware wishes to purchase from
Corning, Subordinated Debentures (as defined below) in an
aggregate principal amount equal to the sum of the capital
contributed by Corning to Corning Delaware (the "General
Partner Contribution") and the aggregate stated liquidation
preference of the Preferred Securities issued and sold by
Corning Delaware pursuant to the Underwriting Agreement
less $ , which is equal to 1% of such sum; and
WHEREAS, Corning has duly authorized the creation of an
issue of its Subordinated Debentures of substantially
the tenor and amount hereinafter set forth, and to
provide therefor, Corning has duly authorized the execution
and delivery of this Fiscal Agency Agreement; and
WHEREAS, all things necessary to make the Subordinated
Debentures, when executed by Corning and authenticated
and delivered hereunder and duly issued by Corning, the
valid obligations of Corning, and to make this
Fiscal Agency Agreement a valid agreement of Corning, in
accordance with their and its terms, have been done.
NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Corning, Corning Delaware
and the Agent hereby agree as follows:
Article I
The Subordinated Debentures
1.1 The Subordinated Debentures. Subject to
the terms and conditions herein, on the first Closing Date,
Corning agrees to issue and sell to Corning Delaware, and
Corning Delaware agrees to purchase from Corning,
$___________ aggregate principal amount of __ % Convertible
Subordinated Debentures of Corning (the "Subordinated
Debentures") for an amount payable by check in next day
funds equal to the principal amount of such Subordinated
Debentures. After the first Closing Date, subject to the terms
and conditions of this Agreement, Corning agrees to issue and
sell to Corning Delaware, and Corning Delaware agrees to
purchase, an aggregate principal amount of Subordinated
Debentures equal to the difference between (i) the sum of the
total capital contributions paid to the Partnership by Corning
after the first Closing Date plus the aggregate stated liquidation
preference of Preferred Securities sold by Corning Delaware
after such date pursuant to the Underwriting Agreement and
(iii) the product of the amount determined in accordance with
clause (i) and 1%, for an amount payable by check in next day
funds equal to such aggregate principal amount of such
Subordinated Debentures.
1.2 Authentication. The Agent shall, upon delivery
of Subordinated Debentures to it by Corning, duly
executed on behalf of Corning, and a written order or orders to
authenticate and deliver Subordinated Debentures in a stated
amount, (i) authenticate and register not more than said
aggregate principal amount of Subordinated Debentures and
deliver them in accordance with the written order or orders of
Corning and (ii) thereafter authenticate and register
Subordinated Debentures and deliver them in accordance with
the provisions of this Agreement.
1.3 Form. The Subordinated Debentures shall
be issued in fully registered form without coupons, shall be in
denominations of U.S. $1,000 and integral multiples thereof or
such other amount as the holder of the Subordinated
Debentures shall request and shall be dated the date of
authentication thereof and shall bear interest from the date
specified therein. The Subordinated Debentures will be in
substantially the form set forth in Exhibit 1 hereto. The
Subordinated Debentures shall be executed on behalf of
Corning by the signature, manual or in facsimile, of its duly
authorized representative. In the event that any representative
of Corning who shall have executed or whose facsimile
signature shall appear upon any of the Subordinated
Debentures shall cease to be such a representative before the
Subordinated Debentures so executed shall actually have been
authenticated or delivered, such Subordinated Debentures
nevertheless may be authenticated, issued and delivered with
the same force and effect as though the person who executed
such Subordinated Debentures had not ceased to be such
representative of Corning.
1.4 Term of the Subordinated Debentures.
The entire principal amount of the Subordinated Debentures
shall become due and payable, together with any accrued and
unpaid interest (and Additional Interest (as hereinafter
defined)) thereon, on the earliest of __________, 2024 or the
date upon which Corning Delaware is dissolved, liquidated,
wound-up or terminated (the "Maturity Date"), unless
previously paid or redeemed pursuant to their terms.
1.5 Optional Prepayment. Corning will have
the right to prepay or redeem the Subordinated Debentures, in
whole or in part (together with any accrued but unpaid interest
(and Additional Interest) on the portion being prepaid), at any
time on or after ______, 1998, during the twelve-month
periods beginning on ________ in each of the following years
at the following prepayment prices including any accrued and
unpaid interest (and Additional Interest) (the "Prepayment
Price") (expressed as a percentage of the principal amount of
the Subordinated Debentures being prepaid):
Prepayment Price
Year (% of
principal amount)
1998 %
1999 %
2000 %
2001 %
2002 %
2003 %
2004 and thereafter %
1.6 Notice of Redemption. Corning shall give
notice of any redemption or prepayment (a "Notice of
Redemption") to Corning Delaware not fewer than 35 days nor
more than 60 days prior to the date fixed for redemption or
prepayment (the "Redemption Date") of the Subordinated
Debentures. Such Notice shall indicate the Redemption Date
and the principal amount of Subordinated Debentures to be
redeemed or prepaid and any accrued and unpaid interest (and
Additional Interest) thereon. Corning shall give a copy of such
Notice of Redemption to the Agent together with instructions
and authority to pay such principal amount of Subordinated
Debentures together with any accrued and unpaid interest (and
Additional Interest) to the account of Corning Delaware
designated in such instructions.
1.7 Deposit of Prepayment Price. On or prior
to 12:00 noon New York City time on a Redemption Date,
Corning shall deposit with the Agent an amount of money in
immediately available funds sufficient to pay the Prepayment
Price of all of the Subordinated Debentures to be prepaid on
the Redemption Date.
<PAGE>
<PAGE>
Article II
Interest
2.1 Interest on the Subordinated Debentures.
The Subordinated Debentures will bear interest at the rate of
% per annum from the date such Subordinated
Debentures are originally issued and sold by Corning to
Corning Delaware, payable monthly in arrears on the last day
of each calendar month of each year (each an "Interest
Payment Date"), commencing _______, 1994. Interest will
compound monthly and will accrue at the rate of __% per
annum on any interest installment that is not paid when due or
during an extension of an interest payment period as set forth
in Section 2.2 below ("Additional Interest"). The amount of
interest payable for any period will be computed on the basis
of twelve 30-day months and a 360-day year and, for any
period shorter than a full monthly interest period, will be
computed on the basis of the actual number of days elapsed in
such period. In the event that any date on which interest is
payable on the Subordinated Debentures is not a Business Day,
then a payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the
same force and effect as if made on such date. A "Business
Day" shall mean any day other than a day on which banking
institutions in The City of New York or Chicago are
authorized or required by law to close.
2.2 Extension of Interest Payment Period.
Corning shall have the right at any time and from time to time
during the term of the Subordinated Debentures, to extend an
interest payment period for up to 60 months, provided that
during the period of any such extension, interest will continue
to accrue and compound monthly. Corning shall have the right
to make partial payments of interest during any extended
interest payment period. At the end of any such extended
interest payment period, Corning shall pay all interest then
accrued and unpaid (together with Additional Interest thereon).
Prior to the termination of any such extended interest payment
period, Corning may further extend the interest payment
period, provided that such extended interest payment period
together with all such further extensions thereof may not
exceed 60 months. Corning shall give Corning Delaware
notice of its selection of an extended interest payment period at
least one Business Day prior to the earlier of (i) the Interest
Payment Date and (ii) the date Corning Delaware is required to
give notice of the record or payment date of any Dividend
payable on the Preferred Securities to the New York Stock
Exchange or other applicable self-regulatory organization or to
holders of the Preferred Securities, but in any event not less
than two Business Days prior to such record date. The
General Partner shall give notice of Corning's selection of an
extended interest payment period to the holders of the
Preferred Securities.
<PAGE>
<PAGE>
Article III
Payments
3.1 Method and Date of Payment. (a) Each
payment by Corning of principal and interest (including
Additional Interest) on the Subordinated Debentures shall be
made by Corning or the Agent to Corning Delaware in
immediately available funds at such place and to such account
as may be designated by Corning Delaware.
(b) Any moneys deposited with the Agent
for the payment of the principal of or interest on any
Subordinated Debentures remaining unclaimed for two years
after such principal or interest shall have become due and
payable shall be repaid to Corning, and Corning Delaware, as
holder of the Subordinated Debentures, shall thereafter look
only to Corning for any payment to which it may be entitled.
Article IV
Subordination
4.1 Subordination. (a) Corning and Corning
Delaware covenant and agree that the Subordinated Debentures
are subordinate and junior in right of payment to all Senior
Indebtedness (as defined below) of Corning.
The term "Senior Indebtedness" is defined to
mean the principal of, premium, if any, interest on, and any
other payment due pursuant to any of the following, whether
outstanding on the date hereof or hereafter incurred, created or
assumed:
(i) all indebtedness of Corning for money
borrowed (including any indebtedness secured by a
mortgage or other lien which is (a) given to secure all
or part of the purchase price of property subject thereto,
whether given to the vendor of such property or to
another or (b) existing on property at the time of
acquisition thereof), but, in either case, excluding trade
accounts payable or similar accrued liabilities arising in
the ordinary course of business;
(ii) all indebtedness of Corning for money
borrowed evidenced by notes, debentures, bonds or
other securities;
(iii) all lease obligations of Corning which are
capitalized on the books of Corning in accordance with
generally accepted accounting principles;
(iv) all indebtedness of others of the kinds
described in either of the preceding clauses (i) or (ii)
and all lease obligations of others of the kind described
in the preceding clause (iii) assumed by or guaranteed
in any manner by Corning or in effect guaranteed by
Corning through an agreement to purchase, contingent
or otherwise;
(v) all obligations of Corning with respect to
letters of credit issued in connection with indebtedness
of others of the kind described in the preceding clauses
(i) or (ii) or lease obligations of the kind described in
the preceding clause (iii); and
(vi) all renewals, extensions or refundings of
indebtedness of the kinds described in any of the
preceding clause (i), (ii) or (iv), all renewals or
extensions of lease obligations of the kinds described in
either of the preceding clauses (iii) and (iv) and all
renewals or extensions of obligations with respect to
letters of credit of the kind described in the preceding
clause (v);
unless, in the case of any particular indebtedness, lease
obligation, renewal, extension, refunding or obligations with
respect to letters of credit, the instrument or lease creating or
evidencing the same or the assumption or guarantee of the
same expressly provides that such indebtedness, lease,
obligation, renewal, extension or refunding is not superior in
right of payment to or is pari passu with the Subordinated
Debentures. Such Senior Indebtedness shall continue to be
Senior Indebtedness and entitled to the benefits of the
subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior
Indebtedness.
(b) In the event of (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connec-
tion therewith, relative to Corning or to its creditors, as such,
or to its assets, or (ii) any liquidation, dissolution or other
winding up of Corning whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (iii) any
assignment for the benefit of creditors or any other marshalling
of assets and liabilities of Corning, then and in any such event
the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in
respect of all Senior Indebtedness, or provision shall be made
for such payment in money or money's worth, before the
holders of the Subordinated Debentures are entitled to receive
any payment on account of principal of or interest on the
Subordinated Debentures, and to that end the holders of Senior
Indebtedness shall be entitled to receive, for application to the
payment thereof, any payment or distribution of any kind or
character, whether in cash, property or securities, which may
be payable or deliverable in respect of the Subordinated
Debentures in any such case, proceeding, dissolution,
liquidation or other winding up or event.
In the event that, notwithstanding the foregoing
provisions of this Section 4.1, the holder of Subordinated
Debentures shall have received any payment or distribution of
assets of Corning of any kind or character, whether in cash,
property or securities, before all Senior Indebtedness is paid in
full or payment thereof provided for, and if such fact shall, at
or prior to the time of such payment or distribution, have been
made known to such holder, then and in such event such
payment or distribution shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other person making
payment or distribution of assets of Corning for application to
the payment of all Senior Indebtedness remaining unpaid, to
the extent necessary to pay all Senior Indebtedness in full,
after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness.
For purposes of this Section 4.1 only, the words
"cash, property or securities" shall not be deemed to include
shares of stock of Corning as reorganized or readjusted, or
securities of Corning or any other corporation provided for by
a plan of reorganization or readjustment which are
subordinated in right of payment to all Senior Indebtedness
which may at the time be outstanding to substantially the same
extent as, or to a greater extent than, the Subordinated
Debentures are so subordinated.
The consolidation of Corning with, or the
merger of Corning into, another entity or the liquidation or
dissolution of Corning following the conveyance or transfer of
its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Limited
Partnership Agreement shall not be deemed a dissolution,
winding up, liquidation, reorganization, assignment for the
benefit of creditors or marshalling of assets and liabilities of
Corning for the purposes of this Section 4.1(b) if the entity
formed by such consolidation or into which Corning is merged
or the entity which acquires by conveyance or transfer such
properties and assets substantially as an entirety, as the case
may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in
Limited Partnership Agreement.
(c) In the event that the Subordinated
Debentures are declared due and payable before the Maturity
Date, then and in such event the holders of Senior
Indebtedness outstanding at the time such Subordinated
Debentures so become due and payable shall be entitled to
receive payment in full of all amounts due on or in respect of
such Senior Indebtedness, or provision shall be made for such
payment in money or money's worth, before the holders of the
Subordinated Debentures are entitled to receive any payment
by Corning on account of the principal of or interest on the
Subordinated Debentures or on account of the purchase or
other acquisition of Subordinated Debentures.
In the event that, notwithstanding the foregoing,
Corning shall make any payment to any the holder of the
Subordinated Debentures prohibited by the foregoing
provisions, and if such fact shall, at or prior to the time of
such payment, have been made known to such holder, then and
in such event such payment shall be paid over and delivered
forthwith to Corning.
The provisions of this paragraph (c) shall not
apply to any payment with respect to which paragraph (b)
would be applicable.
(d) In the event and during the continuation of
any default in the payment of principal of (or premium, if any)
or interest on any Senior Indebtedness beyond any applicable
grace period with respect thereto, or in the event that any event
of default with respect to any Senior Indebtedness shall have
occurred and be continuing and shall have resulted in such
Senior Indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise have
become due and payable, unless and until such event of default
shall have been cured or waived or shall have ceased to exist
and such acceleration shall have been rescinded or annulled, or
(b) in the event any judicial proceeding shall be pending with
respect to any such default in payment or event of default, then
no payment shall be made by Corning on account of principal
of or interest on the Subordinated Debentures or on account of
the purchase or other acquisition of the Subordinated
Debentures.
In the event that, notwithstanding the foregoing,
Corning shall make any payment to the holder of the
Subordinated Debentures prohibited by the foregoing
provisions of paragraph (d), and if such fact shall, at or prior
to the time of such payment, have been made known to such
holder, then and in such event such payment shall be paid over
and delivered forthwith to Corning.
The provisions of this paragraph (d) shall not
apply to any payment with respect to which paragraph (b)
would be applicable.
(e) Nothing contained in this Agreement or
in any of the Subordinated Debentures shall prevent Corning,
at any time except during the pendency of any case,
proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of
assets and liabilities of Corning referred to in paragraph (b) or
under the conditions described in paragraphs (c) or (d), from
making payments at any time of principal of or interest on the
Subordinated Debentures.
(f) Subject to the payment in full of all
Senior Indebtedness, the holders of the Subordinated
Debentures shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments and distributions
of cash, property and securities applicable to the Senior
Indebtedness until the principal of and interest on the
Subordinated Debentures shall be paid in full. For purposes of
such subrogation, no payments or distributions to the holders
of the Senior Indebtedness of any cash, property or securities
to which the holders of the Subordinated Debentures would be
entitled except for the provisions of this Section 4.1, and no
payments over pursuant to the provisions of this Section 4.1 to
the holders of Senior Indebtedness by holders of the
Subordinated Debentures, shall, as among Corning, its creditors
other than holders of Senior Indebtedness and the holders of
the Subordinated Debentures, be deemed to be a payment or
distribution by Corning to or on account of the Senior
Indebtedness.
(g) The provisions of this Section 4.1 are
and are intended solely for the purpose of defining the relative
rights of the holders of the Subordinated Debentures on the
one hand and the holders of Senior Indebtedness on the other
hand. Nothing contained in this Article or elsewhere in this
Agreement or in the Subordinated Debentures is intended to or
shall (a) impair, as among Corning, its creditors other than
holders of Senior Indebtedness and the holders of the
Subordinated Debentures, the obligation of Corning, which is
absolute and unconditional, to pay to the holder of the
Subordinated Debentures the principal of (and premium, if any)
and interest on the Subordinated Debentures as and when the
same shall become due and payable in accordance with their
terms; or (b) affect the relative rights against Corning of the
holders of the Subordinated Debentures and creditors of
Corning other than the holders of Senior Indebtedness; or
(c) prevent the holders of any Subordinated Debentures from
exercising all remedies otherwise permitted by applicable law
upon default under this Agreement, subject to the rights, if
any, under this Section 4.1 of the holders of Senior
Indebtedness to receive cash, property and securities otherwise
payable or deliverable to such holder.
(h) No right of any present or future holder
of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of Corning or
by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by Corning with the terms,
provisions and covenants of this Agreement, regardless of any
knowledge thereof any such holder may have or be otherwise
charged with.
Without in any way limiting the generality of
the foregoing paragraph, the holders of Senior Indebtedness
may, at any time and from time to time, without the consent of
or notice to the holders of the Subordinated Debentures,
without incurring responsibility to the holders of the
Subordinated Debentures and without impairing or releasing
the subordination provided in this Section 4.1 or the
obligations hereunder of the holders of the Subordinated
Debentures to the holders of Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew
or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (iii) release any person
liable in any manner for the collection of Senior Indebtedness;
and (iv) exercise or refrain from exercising any rights against
Corning and any other person.
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Article V
Representations and Warranties
5.1 Representations and Warranties. Corning
represents and warrants that:
(a) It is a corporation, validly existing and in
good standing under the laws of the State of New York,
with all power and authority (corporate and other) to
own its properties and conduct its business as now
being conducted.
(b) It has full power and authority to enter into
this Agreement and to incur and perform the obligations
provided for herein, all of which have been duly
authorized by all proper and necessary corporate action.
(c) The execution and delivery of this
Agreement and the performance by Corning of all its
obligations hereunder will not conflict with or result in
a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, fiscal agency
agreement or other agreement or instrument to which
Corning is a party or by which Corning is bound or
subject, nor will this Agreement result in a violation of
the provisions of the Corning Certificate of
Incorporation or by-laws.
(d) This Agreement and the Subordinated
Debentures have been duly authorized, executed and
delivered by Corning and constitute the valid and
legally binding obligation of Corning enforceable in
accordance with their respective terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors'
rights and to general equity principles.
Article VI
Covenants
6.1 Covenants. Corning agrees that neither it
nor any majority-owned subsidiary of Corning will declare or
pay any dividend on, or redeem, purchase, acquire for value or
make a liquidation payment with respect to, any Junior Stock
(other than as a result of a reclassification of Junior Stock or
the exchange or conversion of one class or series of Junior
Stock for another class or series of Junior Stock), or make any
guarantee payments with respect to the foregoing (other than
payments under the Guarantee or dividends or guarantee
payments to Corning), if at such time (a) there shall have
occurred any event that, with the giving of notice or the lapse
of time or both, would constitute an Event of Default
hereunder or under the Subordinated Debentures, (b) Corning
shall be in default with respect to its payment obligations
under the Guarantee or (c) Corning shall have given notice of
its selection of an extended interest payment period as
provided herein and such period, or any extension thereof shall
be continuing; provided, however, that Corning may declare
dividends on the Preferred Securities and any Pari Passu Stock
ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Preferred Securities and
accumulated and unpaid on such Pari Passu Stock. "Pari Passu
Stock" means Corning's Series B Cumulative Convertible
Preferred Stock, par value $100 per share (the "Series B
Preferred Stock"), and any series or class of preferred stock
issued by Corning, or any guarantee now or hereafter entered
into by Corning in respect of any preferred or preference stock
of any affiliate of Corning, ranking, in each case as to the
payment of dividends and amounts upon liquidation,
dissolution and winding-up on a parity with the Series B
Preferred Stock. "Junior Stock" means Corning Common
Stock, the Series A Preferred Stock, par value $100 per share,
of Corning and any other class or series of capital stock of
Corning or any of its affiliates which by its express terms
ranks junior in the payment of dividends or amounts upon
liquidation, dissolution or winding-up to the Series B Preferred
Stock. Corning also covenants (i) to remain the General
Partner of Corning Delaware; provided that any permitted
successor of Corning under the Limited Partnership Agreement
may succeed to Corning's duties as General Partner, (ii) to
cause at least 21% of the total value of Corning Delaware and
at least 21% of all interests in the capital, income, gain, loss,
deduction and credit of Corning Delaware to be held by
Corning, as a General Partner of Corning Delaware, (iii) not to
voluntarily dissolve, wind-up or liquidate Corning Delaware,
(iv) to perform timely all of its duties as General Partner
(including the duty to declare and pay Dividends on the
Preferred Securities), (v) to maintain direct ownership of all
partnership interests of Corning Delaware other than the
Preferred Securities and any Special General Partnership
Interest, except as permitted by Section 11.2 of this
Agreement, (vi) to use its reasonable efforts to cause Corning
Delaware to remain a limited partnership and otherwise to
continue to be treated as a partnership for United States federal
income tax purposes and (vii) to issue Corning Series C
Preferred Stock or Corning Common Stock upon an election
by Corning Delaware to exchange or convert the Subordinated
Debentures.
Corning also covenants that so long as any
Subordinated Debentures are held by Corning Delaware, the
General Partner shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the
Special General Partner, or exercising any trust or power
conferred on the Special General Partner with respect to the
Subordinated Debentures, (ii) waive any past default, which is
waivable under this Fiscal Agency Agreement, (iii) exercise
any right to rescind or annul a declaration that the principal of
all the Subordinated Debentures shall be due and payable, (iv)
consent to any amendment, modification or termination of the
Subordinated Debentures or of this Fiscal Agency Agreement
without, in each case, obtaining the prior approval of the
holders of at least 66 2/3% or more of the aggregate
liquidation preference of the Preferred Securities then
outstanding, provided, however, that where a consent under the
Subordinated Debentures would require the consent of each
holder affected thereby, no such consent shall be given by the
General Partner without the prior consent of each holder of the
Preferred Securities. The General Partner shall not revoke any
action previously authorized or approved by a vote of Preferred
Securities, without the approval of the holders of Preferred
Securities representing 66 2/3% or more of the aggregate
liquidation preference of the Preferred Securities then
outstanding. The General Partner shall notify all holders of
Preferred Securities of any notice of default received from the
Fiscal Agent with respect to the Subordinated Debentures.
Article VII
Events of Default
7.1 Events of Default. If one or more of the
following events (each an "Event of Default") shall occur and
be continuing:
(a) failure to pay any principal of the
Subordinated Debentures when due;
(b) failure to pay any interest on the
Subordinated Debentures, including any Additional
Interest, when due and such failure continues for a
period of 10 days; provided that a valid extension of
the interest payment period by Corning pursuant to
Section 2.2 of this Agreement shall not constitute a
default in the payment of interest for this purpose;
(c) failure by Corning to issue Corning Series C
Preferred Stock or Corning Common Stock upon an
election to exchange or convert the Subordinated
Debentures;
(d) failure by Corning to perform in any
material respect any other covenant herein for the
benefit of the holders of Subordinated Debentures
continued for a period of 60 days after written notice to
Corning from Corning Delaware or any holder of
Preferred Securities;
(e) the dissolution, winding up, liquidation or
termination of Corning Delaware; or
(f) the bankruptcy, insolvency or liquidation of
Corning,
then Corning Delaware, or any subsequent holder of
Subordinated Debentures, will have the right to declare the
principal of and the interest on the Subordinated Debentures
(including any Additional Interest) and any other amounts
payable hereunder to be forthwith due and payable and to
enforce its other rights as a creditor with respect to the
Subordinated Debentures. Upon any such declaration of
acceleration, the principal of and all accrued interest on the
Subordinated Debentures shall immediately become due and
payable. Corning expressly acknowledges that, under the
terms of the Preferred Securities, the holders of outstanding
Preferred Securities shall have the right to appoint a Special
General Partner, which Special General Partner shall be
authorized to exercise Corning Delaware's right to accelerate
the principal amount of the Subordinated Debentures and to
enforce Corning Delaware's other rights hereunder and under
the Subordinated Debentures.
Article VIII
Conversion of the Subordinated Debentures
8.1 Conversion Rights. (a) The Subordinated
Debentures are convertible at any time on or before the close
of business on the Maturity Date at the option of Corning
Delaware into shares of common stock, par value $.50 per
share, of Corning ("Corning Common Stock") at an initial
conversion price of $_____ per share of Corning Common
Stock, subject to adjustment as described herein. The holder
of Subordinated Debentures may convert any portion of the
principal amount of the Subordinated Debentures into that
number of fully paid and non-assessable shares of Corning
Common Stock (calculated as to each conversion to the nearest
1/100th of a share) obtained by dividing the principal amount
of the Subordinated Debentures to be converted by such
conversion price.
(b) In order to convert a portion of the
Subordinated Debentures, Corning Delaware shall deliver a
notice of conversion (a "Notice of Conversion") to Corning
and the Agent, setting forth the principal amount of
Subordinated Debentures to be converted, together with the
name or names in which the shares of Corning Common Stock
should be issued upon conversion. In the case of a Notice of
Conversion given on the Business Day immediately preceding
the next Interest Payment Date, Corning Delaware will be
entitled to receive the interest payable on the portion of
Subordinated Debentures to be converted on the Interest
Payment Date notwithstanding the conversion thereof on such
Interest Payment Date. Each conversion will be deemed to
have been effected immediately prior to the close of business
on the day on which the notice was received (the "Conversion
Date") by Corning Delaware from a holder of the Preferred
Securities effecting a conversion thereof pursuant to its
conversion rights under the Limited Partnership Agreement.
Upon conversion of the Subordinated Debentures, Corning will
not make, nor be required to make, any other payment,
adjustment or allowance with respect to accrued but unpaid
interest on the Subordinated Debentures being converted. The
Person or Persons entitled to receive the Corning Common
Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common
Stock as of the Conversion Date. As promptly as practicable
on or after the Conversion Date, Corning shall issue and
deliver at the office of the Agent, unless otherwise directed by
the Holder in the Notice of Conversion, a certificate or
certificates for the number of full shares of Common Stock
issuable upon such conversion, together with the cash payment,
if any, in lieu of any fraction of any share to the Person or
Persons entitled to receive the same. The Agent shall deliver
such certificate or certificates to such Person or Persons.
(c) Corning's delivery of the fixed number of
shares of Corning Common Stock into which the Subordinated
Debentures are convertible (together with the cash payment, if
any, in lieu of fractional shares) shall be deemed to satisfy
Corning's obligation to pay the principal amount at maturity of
the portion of Subordinated Debentures so converted and any
unpaid interest accrued on such portion of Subordinated
Debentures at the time of such conversion.
(d) No fractional shares of Corning Common
Stock will be issued as a result of conversion, but in lieu
thereof, such fractional interest will be paid in cash by
Corning.
8.2 Conversion Price Adjustments. (a) The
conversion price shall be subject to adjustment from time to
time as follows:
(i) In case Corning shall pay or make a
dividend or other distribution on any class or series of
capital stock of Corning exclusively in Corning
Common Stock, the conversion price in effect at the
opening of business on the day following the date fixed
for the determination of stockholders entitled to receive
such dividend or other distribution shall be reduced by
multiplying such conversion price by a fraction of
which the numerator shall be the number of shares of
Corning Common Stock outstanding at the close of
business on the date fixed for such determination and
the denominator shall be the sum of such number of
shares and the total number of shares constituting such
dividend or other distribution or exchange, such
reduction to become effective immediately after the
opening of business on the day following the date fixed
for such determination. For the purposes of this
subparagraph (i), the number of shares of Corning
Common Stock at any time outstanding shall not
include shares held in the treasury of Corning. Corning
shall not pay any dividend or make any distribution on
shares of any class or series of Capital Stock of
Corning exclusively in Corning Common Stock held in
the treasury of Corning.
(ii) In case Corning shall pay or make a
dividend or other distribution on its Corning Common
Stock consisting exclusively of, or shall otherwise issue
to all holders of its Corning Common Stock, rights or
warrants entitling the holders thereof to subscribe for or
purchase shares of Corning Common Stock at a price
per share less than the current market price per share
(determined as provided in subparagraph (vii) of this
Section 8.2(a)) of the Corning Common Stock on the
date fixed for the determination of stockholders entitled
to receive such rights or warrants, the conversion price
in effect at the opening of business on the day
following the date fixed for such determination shall be
reduced by multiplying such conversion price by a
fraction of which the numerator shall be the number of
shares of Corning Common Stock outstanding at the
close of business on the date fixed for such
determination plus the number of shares of Corning
Common Stock which the aggregate of the offering
price of the total number of shares of Corning Common
Stock so offered for subscription or purchase would
purchase at such current market price and the
denominator shall be the number of shares of Corning
Common Stock outstanding at the close of business on
the date fixed for such determination plus the number
of shares of Corning Common Stock so offered for
subscription or purchase, such reduction to become
effective immediately after the opening of business on
the day following the date fixed for such determination.
For the purposes of this subparagraph (ii), the number
of shares of Corning Common Stock at any time
outstanding shall not include shares held in the treasury
of Corning. Corning shall not issue any rights or
warrants in respect of shares of Corning Common Stock
held in the treasury of Corning. In case any rights or
warrants referred to in this subparagraph (ii) in respect
of which an adjustment shall have been made shall
expire unexercised within 45 days after the same shall
have been distributed or issued by Corning, the
conversion price shall be readjusted at the time of such
expiration to the conversion price that would have been
in effect if no adjustment had been made on account of
the distribution or issuance of such expired rights or
warrants.
(iii) In case outstanding shares of Corning
Common Stock shall be subdivided into a greater
number of shares of Corning Common Stock, the
conversion price in effect at the opening of business on
the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Corning
Common Stock shall each be combined into a smaller
number of shares of Corning Common Stock, the
conversion price in effect at the opening of business on
the day following the day upon which such combination
becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to
become effective immediately after the opening of
business on the day following the day upon which such
subdivision or combination becomes effective.
(iv) Subject to the last sentence of this sub-
paragraph (iv), in case Corning shall, by dividend or
otherwise, distribute to all holders of its Corning
Common Stock evidences of its indebtedness, shares of
any class or series of capital stock, cash or assets
(including securities, but excluding any rights or
warrants referred to in subparagraph (ii) of this
Section 8.2(a), any dividend or distribution paid
exclusively in cash and any dividend or distribution
referred to in subparagraph (i) of this Section 8.2(a)),
the conversion price shall be reduced so that the same
shall equal the price determined by multiplying the
conversion price in effect immediately prior to the
effectiveness of the conversion price reduction
contemplated by this subparagraph (iv) by a fraction of
which the numerator shall be the current market price
per share (determined as provided in subparagraph (vii)
of this Section 8.2(a)) of the Corning Common Stock
on the date fixed for the payment of such distribution
(the "Reference Date") less the fair market value (as
determined in good faith by the Board of Directors,
whose determination shall be conclusive and described
in a resolution of the Board of Directors), on the
Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Corning Common
Stock and the denominator shall be such current market
price per share of the Corning Common Stock, such
reduction to become effective immediately prior to the
opening of business on the day following the Reference
Date. If the Board of Directors determines the fair
market value of any distribution for purposes of this
subparagraph (iv) by reference to the actual or when
issued trading market for any securities comprising such
distribution, it must in doing so consider the prices in
such market over the same period used in computing
the current market price per share of Corning Common
Stock pursuant to subparagraph (vii) of this
Section 8.2(a). For purposes of this subparagraph (iv),
any dividend or distribution that includes shares of
Corning Common Stock or rights or warrants to
subscribe for or purchase shares of Corning Common
Stock shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, shares of
capital stock, cash or assets other than such shares of
Corning Common Stock or such rights or warrants
(making any conversion price reduction required by this
subparagraph (iv)) immediately followed by (2) a
dividend or distribution of such shares of Corning
Common Stock or such rights or warrants (making any
further conversion price reduction required by
subparagraph (i) or (ii) of this Section 8.2(a), except
(A) the Reference Date of such dividend or distribution
as defined in this subparagraph (iv) shall be substituted
as "the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution,"
"the date fixed for the determination of stockholders
entitled to receive such rights or warrants" and "the
date fixed for such determination" within the meaning
of subparagraphs (i) and (ii) of this Section 8.2(a) and
(B) any shares of Corning Common Stock included in
such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed
for such determination" within the meaning of sub-
paragraph (i) of this Section 8.2(a).
(v) In case Corning shall pay or make a
dividend or other distribution on its Corning Common
Stock exclusively in cash (excluding, in the case of any
regular cash dividend on the Corning Common Stock,
the portion thereof that does not exceed the per share
amount of the next preceding regular cash dividend on
the Corning Common Stock (as adjusted to
appropriately reflect any of the events referred to in
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this
Section 8.2(a)), or all of such regular cash dividend if
the annualized amount thereof per share of Corning
Common Stock does not exceed 15% of the current
market price per share (determined as provided in
subparagraph (vii) of this Section 8.2(a) of the Corning
Common Stock on the Trading Day (as defined in
Section 8.2(e)) next preceding the date of declaration of
such dividend), the conversion price shall be reduced so
that the same shall equal the price determined by
multiplying the conversion price in effect immediately
prior to the effectiveness of the conversion price
reduction contemplated by this subparagraph (v) by a
fraction of which the numerator shall be the current
market price per share (determined as provided in
subparagraph (vii) of this Section 8.2(a)) of the Corning
Common Stock on the date fixed for the payment of
such distribution less the amount of cash so distributed
and not excluded as provided above applicable to one
share of Corning Common Stock and the denominator
shall be such current market price per share of the
Corning Common Stock, such reduction to become
effective immediately prior to the opening of business
on the day following the date fixed for the payment of
such distribution.
(vi) In case a tender or exchange offer made
by Corning or any subsidiary of Corning for all or any
portion of Corning's Corning Common Stock shall
expire and such tender or exchange offer shall involve
the payment by Corning or such subsidiary of
consideration per share of Corning Common Stock
having a fair market value (as determined in good faith
by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of
Directors) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such
tender or exchange offer (as it shall have been
amended) that exceeds 10% of the current market price
per share (determined as provided in subparagraph (vii)
of this Section 8.2(a)) of the Corning Common Stock
on the Trading Day (as defined in Section 8.2(e)) next
succeeding the Expiration Time, the conversion price
shall be reduced so that the same shall equal the price
determined by multiplying the conversion price in effect
immediately prior to the effectiveness of the conversion
price reduction contemplated by this subparagraph (vi)
by a fraction of which the numerator shall be the
number of shares of Corning Common Stock
outstanding (including any tendered or exchanged
shares) at the Expiration Time multiplied by the current
market price per share (determined as provided in
subparagraph (vii) of this Section 8.2(a)) of the Corning
Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum
of (x) the fair market value (determined as aforesaid) of
the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified
in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as
the "Purchased Shares") and (y) the product of the
number of shares of Corning Common Stock
outstanding (less any Purchased Shares) at the
Expiration Time and the current market price per share
(determined as provided in subparagraph (vii) of this
Section 8.2(a)) of the Corning Common Stock on the
Trading Day next succeeding the Expiration Time, such
reduction to become effective immediately prior to the
opening of business on the day following the Expiration
Time.
(vii) For the purpose of any computation
under subparagraphs (ii), (iv) and (v) and (vi) of this
Section 8.2(a), the current market price per share of
Corning Common Stock on any date in question shall
be deemed to be the average of the daily Closing Prices
(as defined in Section 8.2(e)) for the for the five
consecutive Trading Days selected by the Company
commencing not more than 20 Trading Days before,
and ending not later than, the earlier of the day in
question and, if applicable, the day before the "ex" date
with respect to the issuance or distribution requiring
such computation; provided, however, that in each
event another event occurs that would require an
adjustment pursuant to subparagraph (i) through (vi),
inclusive, the Board of Directors may make such
adjustments to the Closing Prices during such five
Trading Day period as it deems appropriate to
effectuate the intent of the adjustments in this Section
8.2(a), any such determination by the Board of
Directors shall be set forth in a Board Resolution and
shall be conclusive. For purposes of this paragraph, the
term "ex" date, (1) when used with respect to any
issuance or distribution, means the first date on which
the Corning Common Stock trades regular way on the
relevant exchange or in the relevant market from which
the Closing Price was obtained without the right to
receive such issuance or distribution, and (2) when used
with respect to any tender or exchange offer means the
first date on which the Corning Common Stock trades
regular way on such exchange or in such market after
the Expiration Time of such offer.
(viii) Corning may make such reductions in the
conversion price, in addition to those required by
subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this
Section 8.2(a), as it considers to be advisable to avoid
or diminish any income tax to holders of Corning
Common Stock or rights to purchase Corning Common
Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. Corning from
time to time may reduce the conversion price by any
amount for any period of time if the period is at least
twenty days, the reduction is irrevocable during the
period, and the Board of Directors of Corning shall
have made a determination that such reduction would
be in the best interest of Corning, which determination
shall be conclusive. Whenever the conversion price is
reduced pursuant to the preceding sentence, Corning
shall mail to holders of record of the Subordinated
Debentures a notice of the reduction at least fifteen
days prior to the date the reduced conversion price
takes effect, and such notice shall state the reduced
conversion price and the period it will be in effect.
(ix) No adjustment in the conversion price
shall be required unless such adjustment would require
an increase or decrease of at least 1% in the conversion
price; provided, however, that any adjustments which
by reason of this subparagraph (ix) are not required to
be made shall be carried forward and taken into account
in any subsequent adjustment.
(x) Whenever the conversion price is
adjusted as herein provided:
(1) Corning shall compute the
adjusted conversion price and shall prepare a
certificate signed by the Treasurer of Corning
setting forth the adjusted conversion price and
showing in reasonable detail the facts upon
which such adjustment is based, and such
certificate shall forthwith be filed with the
transfer agent for the Preferred Securities; and
(2) a notice stating the conversion
price has been adjusted and setting forth the
adjusted conversion price shall forthwith be
required, and as soon as practicable after it is
required such notice shall be mailed by Corning
to all record holders of Preferred Securities at
their last addresses as they shall appear upon the
stock transfer books of Corning.
(b) Reclassification, Consolidation, Merger
or Sale of Assets. In the event that Corning shall be a party to
any transaction (including without limitation any
recapitalization or reclassification of the Corning Common
Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result
of a subdivision or combination of the Corning Common
Stock), any consolidation of Corning with, or merger of
Corning into, any other person, any merger of another person
into Corning (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of
outstanding shares of Corning Common Stock of Corning), any
sale or transfer of all or substantially all of the assets of
Corning or any compulsory share exchange) pursuant to which
the Corning Common Stock is converted into the right to
receive other securities, cash or other property), then lawful
provisions shall be made as part of the terms of such
transaction whereby the holder of each Subordinated Debenture
then outstanding shall have the right thereafter to convert such
share only into (i) in the case of any such transaction other
than a Common Stock Fundamental Change (as defined in
Section 8.2(e)), the kind and amount of securities, cash and
other property receivable upon such transaction by a holder of
the number of shares of Corning Common Stock of Corning
into which such Subordinated Debenture could have been
converted immediately prior to such transaction, after giving
effect, in the case of any Non-Stock Fundamental Change, to
any adjustment in the conversion price required by the
provisions of Section 8.2(d), and (ii) in the case of a Common
Stock Fundamental Change, common stock of the kind
received by holders of Corning Common Stock as a result of
such Common Stock Fundamental Change in an amount
determined pursuant to the provisions of Section 8.2(d).
Corning or the person formed by such consolidation or
resulting from such merger or which acquires such assets or
which acquires Corning's shares, as the case may be, shall
make provisions in its certificate or articles of incorporation or
other constituent document to establish such right. Such
certificate or articles of incorporation or other constituent
document shall provide for adjustments which, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly
equivalent as may be practicable to the adjustments provided
for in this Section 8.2. The above provisions shall similarly
apply to successive transactions of the foregoing type.
(c) Prior Notice of Certain Events. In case:
(i) Corning shall (1) declare any dividend
(or any other distribution) on its Corning Common
Stock, other than (A) a dividend payable in shares of
Corning Common Stock or (B) a dividend payable in
cash that would not require an adjustment pursuant to
8.2(a)(iv) or (v) or other extraordinary dividend or
(2) authorize a tender or exchange offer that would
require an adjustment pursuant to Section 8.2(a)(vi); or
(ii) Corning shall authorize the granting to
all holders of Corning Common Stock of rights or
warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or
warrants; or
(iii) of any reclassification of Corning
Common Stock (other than a subdivision or
combination of the outstanding Corning Common
Stock, or a change in par value, or from par value to no
par value, or from no par value to par value), or of any
consolidation or merger to which Corning is a party and
for which approval of any stockholders of Corning shall
be required, or of the sale or transfer of all or
substantially all of the assets of Corning or of any
compulsory share exchange whereby the Corning
Common Stock is converted into other securities, cash
or other property; or
(iv) of the voluntary or involuntary
dissolution, liquidation or winding up of Corning;
then Corning shall cause to be filed with the transfer agent for
the Preferred Securities, and shall cause to be mailed to the
holders of record of the Preferred Securities, at their last
addresses as they shall appear upon the stock transfer books of
Corning, at least fifteen days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date
on which a record (if any) is to be taken for the purpose of
such dividend, distribution, redemption, repurchase, rights or
warrants or, if a record is not to be taken, the date as of which
the holders of Corning Common Stock of record to be entitled
to such dividend, distribution, redemption, repurchase, rights or
warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that
holders of Corning Common Stock of record shall be entitled
to exchange their shares of Corning Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing
thereof shall affect the validity of the corporate action required
to be specified in such notice).
(d) Adjustments in Case of Fundamental
Changes. Notwithstanding any other provision in this Section
8.2 to the contrary, if any Fundamental Change (as defined in
Section 8.2(e)) occurs, then the conversion price in effect will
be adjusted immediately after such Fundamental Change as
described below. In addition, in the event of a Common Stock
Fundamental Change (as defined in Section 8.2(e)), each
Subordinated Debenture shall be convertible solely into
common stock of the kind and amount received by holders of
Corning Common Stock as the result of such Common Stock
Fundamental Change as more specifically provided in the
following clauses (d)(i) and (d)(ii).
For purposes of calculating any adjustment to be made
pursuant to this Section 8.2(d) in the event of a Fundamental
Change, immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental
Change (as defined in Section 8.2(e)), the conversion
price of the Subordinated Debentures shall thereupon
become the lower of (A) the conversion price in effect
immediately prior to such Non-Stock Fundamental
Change, but after giving effect to any other prior
adjustments effected pursuant to this Section 8.2, and
(B) the result obtained by multiplying the greater of the
Applicable Price (as defined in Section 8.2(e)) or the
then applicable Reference Market Price (as defined in
Section 8.2(e)) by a fraction of which the numerator
shall be $50.00 and the denominator shall be (x) the
then-current Redemption Price for the Subordinated
Debentures or (y) for any Non-Stock Fundamental
Change that occurs before the Subordinated Debentures
become redeemable by Corning pursuant to Section 1.4,
the applicable price (expressed as a percentage of the
principal amount of Subordinated Debentures) set forth
for the date of such Non-Stock Fundamental Change in
the following table:
Date of Non-Stock Fundamental Change (% of principal
amount)
After date of original issuance of Subordinated Debentures and
on or before _____ ___, 1995 ___%
After _____ ___, 1995, and on or before _____ ___, 1996
After _____ ___, 1996, and on or before _____ ___, 1997
After _____ ___, 1997, and on or before _____ ___, 1998
plus, in any case referred to in this clause (y), an
amount equal to all interest on the Subordinated
Debentures accrued and unpaid thereon, to but
excluding the date of such Non-Stock Fundamental
Change; and
(ii) in the case of a Common Stock
Fundamental Change, the conversion price of the
Subordinated Debentures in effect immediately prior to
such Common Stock Fundamental Change, but after
giving effect to any other prior adjustments effected
pursuant to this Section 8.2, shall thereupon be adjusted
by multiplying such conversion price by a fraction of
which the numerator shall be the Purchaser Stock Price
(as defined in Section 8.2(e)) and the denominator shall
be the Applicable Price; provided, however, that in the
event of a Common Stock Fundamental Change in
which (A) 100% of the value of the consideration
received by a holder of Corning Common Stock is
common stock of the successor, acquiror or other third
party (and cash, if any, is paid with respect to any
fractional interests in such common stock resulting from
such Common Stock Fundamental Change) and (B) all
of the Corning Common Stock shall have been
exchanged for, converted into or acquired for common
stock (and cash with respect to fractional interests) of
the successor, acquiror or other third party, the
conversion price of the Subordinated Debentures in
effect immediately prior to such Common Stock
Fundamental Change shall thereupon be adjusted by
multiplying such conversion price by a fraction of
which the numerator shall be one (1) and the
denominator shall be the number of shares of common
stock of the successor, acquiror, or other third party
received by a stockholder for one share of Corning
Common Stock as a result of such Common Stock
Fundamental Change.
(e) Definitions. The following definitions shall apply to
terms used in this Section 8.2:
(1) "Applicable Price" shall mean (i) in the event of a
Non-Stock Fundamental Change in which the holders of
the Corning Common Stock receive only cash, the
amount of cash received by a stockholder for one share
of Corning Common Stock and (ii) in the event of any
other Non-Stock Fundamental Change or any Common
Stock Fundamental Change, the average of the daily
Closing Prices of the Corning Common Stock for the
ten consecutive Trading Days prior to and including the
record date for the determination of the holders of
Corning Common Stock entitled to receive securities,
cash or other property in connection with such
Non-Stock Fundamental Change or Common Stock
Fundamental Change, or, if there is no such record date,
the date upon which the holders of the Corning
Common Stock shall have the right to receive such
securities, cash or other property, in each case, as
adjusted in good faith by the Board of Directors of
Corning to appropriately reflect any of the events
referred to in subparagraphs (i), (ii), (iii), (iv), (v) and
(vi) of Section 8.2(a).
(2) "Closing Price" of any common stock on any day
shall mean the last reported sale price regular way on
such day or, in case no such sale takes place on such
day, the average of the reported closing bid and asked
prices regular way of the common stock in each case
on the principal national securities exchange on which
the Corning Common Stock is listed, if the Corning
Common Stock is not listed on a national securities
exchange or the National Market System of the
National Association of Securities Dealers, Inc., or, if
the common stock is not quoted or admitted to trading
on such quotation system, on the principal quotation
system on which the common stock is listed or
admitted to trading or quoted, or, if not listed or
admitted to trading or quoted on any national securities
exchange or quotation system, the average of the
closing bid and asked prices of the common stock in
the over-the-counter market on the day in question as
reported by the National Quotation Bureau
Incorporated, or a similarly generally accepted reporting
service, or, if not so available in such manner, as
furnished by any New York Stock Exchange member
firm selected from time to time by the Board of
Directors of Corning for that purpose or, if not so
available in such manner, as otherwise determined in
good faith by the Board of Directors.
(3) "Common Stock Fundamental Change" shall mean
any Fundamental Change in which more than 50% of
the value (as determined in good faith by the Board of
Directors of Corning) of the consideration received by
holders of Corning Common Stock consists of common
stock that for each of the ten consecutive Trading Days
referred to with respect to such Fundamental Change in
Section 8.2(e)(1) above has been admitted for listing or
admitted for listing subject to notice of issuance on a
national securities exchange or quoted on the National
Market System of the National Association of Securities
Dealers, Inc.; provided, however, that a Fundamental
Change shall not be a Common Stock Fundamental
Change unless either (i) Corning continues to exist after
the occurrence of such Fundamental Change and the
outstanding Subordinated Debentures continue to exist
as outstanding Subordinated Debentures, or (ii) not later
than the occurrence of such Fundamental Change, the
outstanding Subordinated Debentures are converted into
or exchanged for convertible subordinated debentures of
a corporation succeeding to the business of Corning,
which convertible subordinated debentures have terms
substantially similar to those of the Subordinated
Debentures.
(4) "Fundamental Change" shall mean the occurrence of
any transaction or event in connection with a plan
pursuant to which all or substantially all of the Corning
Common Stock shall be exchanged for, converted into,
acquired for or constitute solely the right to receive
securities, cash or other property (whether by means of
an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification,
recapitalization or otherwise); provided, however, in the
case of a plan involving more than one such transaction
or event, for purposes of adjustment of the conversion
price, such Fundamental Change shall be deemed to
have occurred when substantially all of the Corning
Common Stock of Corning shall be exchanged for,
converted into, or acquired for or constitute solely the
right to receive securities, cash or other property, but
the adjustment shall be based upon the highest weighted
average of consideration per share which a holder of
Corning Common Stock could have received in such
transactions or events as a result of which more than
50% of the Corning Common Stock of Corning shall
have been exchanged for, converted into, or acquired
for or constitute solely the right to receive securities,
cash or other property.
(5) "Non-Stock Fundamental Change" shall mean any
Fundamental Change other than a Common Stock
Fundamental Change.
(6) "Purchaser Stock Price" shall mean, with respect to
any Common Stock Fundamental Change, the average
of the daily Closing Prices of the common stock
received in such Common Stock Fundamental Change
for the ten consecutive Trading Days prior to and
including the record date for the determination of the
holders of Corning Common Stock entitled to receive
such common stock, or, if there is no such record date,
the date upon which the holders of the Corning
Common Stock shall have the right to receive such
common stock, in each case, as adjusted in good faith
by the Board of Directors of Corning to appropriately
reflect any of the events referred to in subparagraphs
(i), (ii), (iii), (iv), (v) and (vi) of Section 8.2(a);
(7) "Reference Market Price" shall initially mean
$_____ and in the event of any adjustment to the
conversion price other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall
also be adjusted so that the ratio of the Reference
Market Price to the conversion price after giving effect
to any such adjustment shall always be the same as the
ratio of $_____ to the initial conversion price per share.
(8) "Trading Day" shall mean a day on which securities
traded on the national securities exchange or quotation
system or in the over-the-counter market used to
determine the Closing Price.
(f) Dividend or Interest Reinvestment Plans.
Notwithstanding the foregoing provisions, the issuance of any
shares of Corning Common Stock pursuant to any plan
providing for the reinvestment of dividends or interest payable
on securities of Corning and the investment of additional
optional amounts in shares of Corning Common Stock under
any such plan, and the issuance of any shares of Corning
Common Stock or options or rights to purchase such shares
pursuant to any employee benefit plan or program of Corning
or pursuant to any option, warrant, right or exercisable,
exchangeable or convertible security outstanding as of the date
the Subordinated Debentures were first issued, shall not be
deemed to constitute an issuance of Corning Common Stock or
exercisable, exchangeable or convertible securities by Corning
to which any of the adjustment provisions described above
applies. There shall also be no adjustment of the conversion
price in case of the issuance of any stock (or securities
convertible into or exchangeable for stock) of Corning except
as specifically described in this Section 8.2. If any action
would require adjustment of the conversion price pursuant to
more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value to the
holder of Subordinated Debentures.
(g) Certain Additional Rights. In case Corning shall,
by dividend or otherwise, declare or make a distribution on its
Corning Common Stock referred to in Section 8.2(a)(iv) or
8.2(a)(v) (including, without limitation, dividends or
distributions referred to in the last sentence of Section
8.2(a)(iv)), the holder of the Subordinated Debentures, upon
the conversion thereof subsequent to the close of business on
the date fixed for the determination of stockholders entitled to
receive such distribution and prior to the effectiveness of the
conversion price adjustment in respect of such distribution,
shall also be entitled to receive for each share of Corning
Common Stock into which the Subordinated Debentures are
converted, the portion of the shares of Corning Common
Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash and assets so distributed applicable to one
share of Corning Common Stock; provided, however, that, at
the election of Corning (whose election shall be evidenced by
a resolution of the Board of Directors) with respect to all
holders so converting, Corning may, in lieu of distributing to
such holder any portion of such distribution not consisting of
cash or securities of Corning, pay such holder an amount in
cash equal to the fair market value thereof (as determined in
good faith by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board
of Directors). If any conversion of Subordinated Debentures
described in the immediately preceding sentence occurs prior
to the payment date for a distribution to holders of Corning
Common Stock which the holder of Subordinated Debentures
so converted is entitled to receive in accordance with the
immediately preceding sentence, Corning may elect (such
election to be evidenced by a resolution of the Board of
Directors) to distribute to such holder a due bill for the shares
of Corning Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets to which
such holder is so entitled, provided that such due bill (i) meets
any applicable requirements of the principal national securities
exchange or other market on which the Corning Common
Stock is then traded and (ii) requires payment or delivery of
such shares of Corning Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or
assets no later than the date of payment or delivery thereof to
holders of shares of Corning Common Stock receiving such
distribution.
<PAGE>
<PAGE>
Article IX
Exchange
9.1 Optional Exchange for Corning Preferred Stock.
For so long as the Subordinated Debentures are outstanding,
the Subordinated Debentures shall be exchangeable at the
request of Corning Delaware for shares of Corning Series C
Preferred Stock, subject to the following terms and conditions:
(a) Corning shall, after an Exchange Event shall occur, at the
request of Corning Delaware, exchange all (but not less than
all) of the Subordinated Debentures for shares of its Series C
Preferred Stock at the rate of one share of Corning Series C
Preferred Stock for each $100 principal amount of
Subordinated Debentures (which rate is equivalent to one share
of Corning Series C Preferred Stock for two Preferred
Securities).
(b) The following events are "Exchange Events":
(i) the failure of holders of Preferred Securities to receive, for
15 consecutive months (including any arrearage with respect to
the Preferred Securities) the full amount of dividend payments
on the Preferred Securities; and
(ii) a Tax Event.
(c) In order to exchange the Subordinated Debentures, Corning
Delaware, after receiving notice of an Exchange Election by
the holders of a Majority in Liquidation Preference of the
Preferred Securities, shall deliver an irrevocable notice of
exchange (a "Notice of Exchange") to Corning and the Agent.
Upon receipt of such notice, Corning shall issue shares of its
Series C Preferred Stock in the names of the holders of
Preferred Securities designated in the Notice of Exchange in
exchange for the principal amount of the Subordinated
Debentures then outstanding. Any accrued but unpaid interest
on the Subordinated Debentures surrendered for exchange,
including any Additional Interest accrued thereon, shall be
treated as accrued and unpaid dividends on the Corning Series
C Preferred Stock issued in exchange for the Subordinated
Debentures to the extent provided in paragraph 4C of the
Restated Certificate of Incorporation regarding such Corning
Series C Preferred Stock. The Subordinated Debentures shall
be deemed to have been exchanged immediately prior to the
close of business on the date of the Exchange Election (the
"exchange date"). The Person or Persons entitled to receive
the Corning Series C Preferred Stock issuable upon an
exchange of the Preferred Securities shall be treated for all
purposes as the record holder or holders of such Series C
Preferred Stock at such time. As promptly as practicable on
or after the exchange date, Corning shall issue and deliver at
the office of the Agent a certificate or certificates for the
number of shares of Corning Series C Preferred Stock issuable
upon such exchange, unless otherwise directed by Corning
Delaware in the Notice of Exchange.
Article X
The Agent
10.1 Appointment of Agent. Corning hereby appoints
Harris Trust and Savings Bank as its fiscal agent, registrar,
transfer agent and paying and conversion agent with respect to
the Subordinated Debentures (Harris Trust and Savings Bank
and its successor or successors acting in any such capacity
being called herein the "Agent"). The Agent shall have the
powers and authority granted to and conferred upon it herein,
and such further powers and authority acceptable to it, to act
on behalf of Corning as Corning may hereafter grant to or
confer upon it in writing.
10.2 Register. (a) The Agent shall act as registrar of
the Subordinated Debentures and shall maintain at its corporate
trust office, in The City of New York or Chicago, a register
for the Subordinated Debentures for the registration and
transfer of the Subordinated Debentures. Transfers of the
Subordinated Debentures shall be completed as provided for
herein. No service charge shall be made for any registration,
registration of transfer, exchange or conversion of Subordinated
Debentures, but the Agent may require payment of a sum
sufficient to cover any stamp or other tax or governmental
charge in connection therewith.
(b) Corning and the Agent may treat the person in whose name
any Subordinated Debenture is registered as the owner of such
Subordinated Debenture for the purpose of receiving payment
of principal of and interest (including Additional Interest) on
such Subordinated Debenture and for all other purposes
whatsoever.
(c) Upon surrender of any Subordinated Debenture at the office
of the Agent for exchange or transfer, the Agent shall register
and deliver in exchange for such Subordinated Debenture a
Subordinated Debenture or Debentures of the appropriate
denominations and for a like aggregate principal amount in
accordance with the provisions of Section 8.1.
(d) All Subordinated Debentures paid or otherwise returned, all
mutilated Debentures surrendered in exchange for new
Subordinated Debentures (with receipt of proof of the
destruction, theft or loss of the Subordinated Debenture) and
all Subordinated Debentures surrendered in exchange for other
Subordinated Debentures pursuant to any of the provisions of
this Agreement shall be cancelled by the Agent. The Agent
shall deliver a certificate of any such destruction to Corning.
(e) The Agent shall record in the register whether any
Subordinated Debentures have been redeemed or otherwise
paid, cancelled, or in the case of mutilated destroyed, stolen or
lost Subordinated Debentures whether such Subordinated
Debentures have been replaced. In the case of the replacement
of any of the Subordinated Debentures, the Agent will keep a
record of the Subordinated Debentures so replaced and the
Subordinated Debentures issued in replacement thereof. In the
case of the cancellation of any of the Subordinated
Debentures, the Agent will keep a record of the Subordinated
Debentures so cancelled and the date on which such
Subordinated Debentures was cancelled.
10.3 Conversion and Exchange. The Agent is hereby
authorized to deliver (i) shares of Corning Common Stock
from time to time upon conversion of all or a portion of the
Subordinated Debentures in accordance with the provisions of
Article VIII and to deliver to Corning Delaware a new
Subordinated Debenture or Subordinated Debentures for the
resulting principal amount and (ii) shares of Corning Series C
Preferred Stock in exchange for all of the Subordinated
Debentures upon the occurrence of an Exchange Event in
accordance with the provisions of Article IX hereof.
10.4 Payments. The Agent is hereby authorized to make any
payments on the Subordinated Debentures with respect to
prepayments or redemption and at final maturity in accordance
with the provisions of this Agreement. Regular payments of
interest (including any Additional Interest) on the Subordinated
Debentures shall be made by Corning, unless the Agent is
directed by Corning to make such payments. In the event
Corning fails to make such interest payments, the Agent shall
be under no obligation in its own right to make such interest
payments.
10.5 Limit on Liability. The Agent shall not be responsible or
accountable to anyone for any other reason whatsoever, with
respect to the validity of this Agreement or of the Subordinated
Debentures (other than its execution of this Agreement and its
certificates of authentication of the Subordinated Debentures),
or for any act done or omitted by it in good faith, or for
anything whatsoever in connection with this Agreement or any
Subordinated Debenture, except for its own wilful misconduct
or negligence in the performance of any duty to be performed
by the Agent hereunder. In acting under this Agreement, the
Agent is acting solely as agent of Corning and does not
assume any obligation or relationship of agency or trust for or
with Corning Delaware, as holder of the Subordinated
Debentures, except that all funds held by the Agent for
payment of principal of, premium, if any, or interest on the
Subordinated Debentures shall be held in trust and, subject to
the provisions set forth herein relating to its duties, the Agent
will be under no obligation to exercise any of its rights or
powers hereunder at the request, order or direction of Corning
Delaware, as holder of the Subordinated Debentures, or the
holders of the Preferred Securities.
10.6 Acceptance of Appointment. The Agent accepts its
obligations set forth in or arising under this Agreement and the
Subordinated Debentures upon the terms and conditions hereof
and thereof, including the following, to all of which Corning
agrees and to all of which the rights of Corning Delaware, as
holder of the Subordinated Debentures shall be subject:
(i) the Agent may consult with lawyers selected by it, who
may be, but are not required to be, internal lawyers employed
by or regular independent counsel to Corning, and the Agent
shall be protected and shall incur no liability for action taken,
or suffered to be taken, with respect to such matters in good
faith and in accordance with the opinion of such lawyers;
(ii) the Agent shall be protected and shall incur no liability for
or in respect of any action taken or thing suffered by it in
reliance upon any Subordinated Debenture, notice, direction,
consent, certificate, affidavit, statement or document reasonably
believed by it to be genuine and to have been delivered or
signed by the proper parties, except as may result from its own
negligence or wilful misconduct or that of its directors,
officers, employees or agents;
(iii) the Agent, and its officers, directors and employees, may
become the holder of, or acquire any interest in, the
Subordinated Debentures or Preferred Securities, with the same
rights that it or they would have if it were not the Agent, or
they were not such officers, directors, or employees, and may
engage or be interested in any financial or other transaction
with Corning and may act on, or as depository, trustee or agent
for, any committee or body of holders of Subordinated
Debentures or other obligations of Corning as freely as if it
were not the Agent hereunder or they were not such officers,
directors, or employees;
(iv) the Agent shall not be under any liability for interest on
any money at any time received by it pursuant to any of the
provisions of this Agreement, except as otherwise agreed with
Corning;
(v) the Agent shall be obliged to perform such duties and only
such duties as are herein and in the Subordinated Debentures
specifically set out, and no implied duties or obligations shall
be read into this Agreement or the Subordinated Debentures
against the Agent. The Agent shall not be under any
obligation to take any action hereunder which may tend to
involve it in any expenses or liability, the payment of which
within a reasonable time is not, in its reasonable opinion,
assured to it. The Agent shall not be accountable or under any
duty or responsibility for the application by Corning of the
proceeds of the issue of the Subordinated Debentures. The
Agent shall not have any duty or responsibility in case of any
default of which the Agent has knowledge by Corning in the
performance of its obligations contained in the Subordinated
Debentures (including, without limiting the generality of the
foregoing, any duty or responsibility to initiate or to attempt to
initiate any proceedings at law or otherwise or to make any
demand for payment upon Corning);
(vi) in acting under this Agreement in connection with the
Subordinated Debentures, the Agent is acting solely as agent of
Corning and does not assume any obligations to, or
relationship of agency or trust for or with, Corning Delaware,
as holder of the Subordinated Debentures, or the holders of the
Preferred Securities, except that (i) the Agent shall, pending
exchange in accordance with Article IX and conversion in
accordance with Article VIII of this Agreement, hold the
definitive Subordinated Debentures, Corning Preferred Stock
and Corning Common Stock for the benefit of Corning
Delaware and (ii) all funds held by the Agent for payment of
principal of, premium, if any, or interest on the Subordinated
Debentures shall be held in trust (but need not be segregated
from other funds except as required by law) for Corning
Delaware provided that money held in respect of the
Subordinated Debentures and remaining unclaimed at the
expiry of the period referred to in Section 3.1(b) of this
Agreement shall be repaid to Corning as provided in such
section whereupon the aforesaid trusts shall terminate; and
(vii) the Agent shall, as between itself and Corning Delaware,
as holder of the Subordinated Debentures, as regards all the
obligations, powers, authorities, and discretions vested in it
hereunder and under the Subordinated Debentures have
absolute and uncontrolled discretion as to the exercise thereof
whether in relation to the manner or as to the mode of and
time for the exercise thereof and, in the absence of negligence
or wilful misconduct on the part of the Agent, or its officers or
employees shall be in no way responsible for any loss, costs,
damages or inconvenience that may result from the exercise or
non-exercise thereof.
10.7 Signatures. Unless herein otherwise specifically
provided, any order, notice, request or other instrument of
Corning made or given by it under any provision of this
Agreement shall be sufficient if signed by a [ ]
or such other person as a [ ] appoints in
writing. The Agent shall be fully justified and protected in
relying and acting or refraining from acting upon any
instructions received by it and signed in the manner provided
in the preceding sentence, or upon the advice of counsel
satisfactory to it, who may be counsel for Corning, and shall
be fully justified and protected in relying and acting upon and
dealing with any Subordinated Debenture, assignment, power
of attorney, certificate, order, instruction, notice or other
instrument or paper reasonably believed by the Agent to be
genuine and duly authorized and property executed.
10.8 Expenses and Indemnity. In connection with the Agent's
appointment and duties as Agent, Corning will pay the Agent
compensation agreed upon by them. The obligation of Corning
under this paragraph 10.5 shall survive payment of the
Subordinated Debentures and resignation or removal of the
Agent. Corning will indemnify the Agent against any loss or
liability and agrees to pay or reimburse the Agent for any
reasonable expense which may be incurred by the Agent by
reason of, or in connection with, the Agent's appointment and
duties as Agent, except as such result from the Agent's own
negligence or wilful misconduct.
10.9 Successor Agent. In case at any time the Agent shall
resign, or shall be removed, or shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Agent or of its property shall be appointed or any public
officer shall take charge or control of the Agent or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation, a successor Agent (which to
qualify as such, shall be a bank or trust company organized
and doing business under the laws of the United States of
America or the State of New York, in good standing and
having an established place of business in The City of New
York, and authorized under such laws to exercise corporate
trust powers) shall be appointed by Corning by an instrument
in writing, delivered to such successor Agent. Upon the
appointment of a successor Agent and acceptance by such
successor of such appointment, the Agent so succeeded shall
cease to be Agent hereunder. If no successor Agent shall have
been so appointed by Corning and shall have accepted
appointment as hereinafter provided, then Corning Delaware or
the Agent may petition any court of competent jurisdiction for
the appointment of a successor agent.
10.10 Resignation. The Agent may at any time resign as such
agent by giving written notice to Corning of its resignation,
specifying the date on which its resignation shall become
effective (which shall not be less than 60 days after the date on
which such notice is given unless Corning shall agree to a
shorter period). Corning may remove the Agent at any time by
giving written notice of not less than 60 days to the Agent
specifying the date on which such removal shall become
effective. Such resignation or removal shall only take effect
upon the appointment by Corning of a successor Agent and
upon the acceptance of such appointment by such successor
Agent.
<PAGE>
<PAGE>
Article XI
Miscellaneous
11.1 Third Party Beneficiaries. Corning's obligations under
this Agreement shall be for the benefit of the holders from
time to time of the Preferred Securities.
11.2 Transfer of Subordinated Debentures. Corning
Delaware may sell, transfer or assign the Subordinated
Debentures only as permitted under the Limited Partnership
Agreement.
11.3 Notices. All notices hereunder shall be deemed
given by a party hereto if in writing and delivered
personally or by telegram or facsimile transmission or by
registered or certified mail (return receipt requested) to the
other party at the following address for such party (or at such
other address as shall be specified by like notice):
If to Corning Delaware to:
c/o Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Fax No.:
Attention: Secretary
If to Corning to:
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Fax No.:
Attention: Secretary
If to the Agent to:
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, IL 60606
Fax No.: 312-461-3525
Attention: Indenture Trust
Any notice given by mail or telegram or facsimile transmission
shall be effective when received.
11.4 Amendment. This Agreement may be amended by
mutual consent of the parties in the manner the parties shall
agree; provided, that, so long as any of the Preferred Securities
shall remain outstanding, no such amendment shall be made
that adversely affects the holders of the Preferred Securities,
and no termination of this Agreement shall occur, and no
Event of Default or compliance with any covenant under this
Agreement may be waived by Corning Delaware, without the
prior consent of the holders of at least 66 2/3% of the
aggregate liquidation preference of the outstanding Preferred
Securities unless and until the Subordinated Debentures and all
accrued and unpaid (and Additional Interest) interest thereon
has been paid in full.
11.5 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of Corning, Corning Delaware and the
Agent and their respective successors and assigns.
11.6 GOVERNING LAW. THIS AGREEMENT AND THE SUBORDINATED DEBENTURES
WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
11.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
11.8 Headings. The headings for the sections of this
Agreement are for convenience only and are not part of this
Agreement.
The Agent accepts its obligations herein set forth, upon the
terms and conditions hereof, to all of which Corning agrees
and to all of the rights hereunder of Corning Delaware as
holder of the Subordinated Debentures.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Fiscal Agency Agreement as of the date first written
above.
CORNING INCORPORATED
By:____________________________
Name:
Title:
CORNING
DELAWARE, L.P.
By: CORNING INCORPORATED,
its General Partner
By:____________________________
Name:
Title:
Accepted and agreed to:
HARRIS TRUST AND SAVINGS BANK
By:____________________________
Name:
Title:
<PAGE>
EXHIBIT 1
CORNING INCORPORATED
___% Convertible Subordinated Debentures Due __________,
2024
No._____ $____
Corning Incorporated, a corporation duly organized and
existing under the laws of the State of New York (herein
called "Corning", which term includes any successor
corporation under the Fiscal Agency Agreement hereinafter
referred to), for value received, hereby promises to pay to
, or registered
assigns, the principal sum of on ____________,
2024 and to pay interest at the rate of % per annum
from the date of original issuance and sale, payable monthly in
arrears on the last day of each calendar month of each year
(each an "Interest Payment Date"), commencing ,
1994. Interest will compound monthly and will accrue at the
rate of __% per annum on any interest installment that is not
paid at the end of any monthly interest period or when
otherwise due ("Additional Interest"). The amount of interest
payable for any period will be computed on the basis of twelve
30-day months and a 360-day year and, for any period shorter
than a full monthly interest period, will be computed on the
basis of the actual number of days elapsed in such period. In
the event that any date on which interest is payable on the
Subordinated Debentures is not a Business Day, then a
payment of the interest payable on such date will be made on
the next succeeding day which is a Business Day (and without
any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and
effect as if made on such date. A "Business Day" shall mean
any day other than a day on which banking institutions in The
City of New York or Chicago are authorized or required by
law to close.
Corning shall have the right at any time and from time to time
during the term of the Subordinated Debentures, to extend
interest payment periods for up to 60 months, during which
periods interest will compound monthly and during which
Corning shall have the right to make partial payments of
interest and at the end of which period Corning shall pay all
interest then accrued and unpaid (together with Additional
Interest); provided that, during any such extended interest
payment period neither Corning nor any majority-owned
subsidiary of Corning shall declare or pay any dividend on, or
redeem, purchase, acquire for value or make a liquidation
payment with respect to, any Junior Stock (other than as a
result of a reclassification of Junior Stock or the exchange or
conversion of one class or series of Junior Stock for another
class or series of Junior Stock), or make any guarantee
payments with respect to the foregoing (other than payments
under the Guarantee or dividends or guarantee payments to
Corning). Prior to the termination of any such extended
interest payment period, Corning may further extend the
interest payment period, provided that such extended interest
payment period together with all such further extensions
thereof may not exceed 60 months. Corning shall give
Corning Delaware notice of its selection of an extended
interest payment period one Business Day prior to the earlier
of (i) the date the related dividends are payable or (ii) the date
Corning Delaware is required to give notice of the record or
payment date of such related dividend to the New York Stock
Exchange or other applicable self-regulatory organization or to
holders of the Preferred Securities, but in any event not less
than two Business Days prior to such record date.
Each payment by Corning of principal and interest on the
Subordinated Debentures shall be made to Corning Delaware
in immediately available funds in lawful money of the United
States at such place and to such account as may be designated
by Corning Delaware.
Reference is hereby made to the further provisions of the
Fiscal Agency Agreement summarized on the reverse hereof,
which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Fiscal Agent referred to on the reverse hereof
by manual signature, this Subordinated Debenture shall not be
entitled to any benefit under the Fiscal Agency Agreement or
be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Corning has caused this
instrument to be duly executed under its corporate seal.
Dated:
CORNING INCORPORATED
By
[CORPORATE SEAL]
This is one of the Subordinated Debentures
designated therein referred to in the within-mentioned Fiscal
Agency Agreement.
HARRIS TRUST AND SAVINGS
BANK, as Fiscal Agent
By
Authorized Officer
<PAGE>
[FORM OF REVERSE OF SECURITY]
This Convertible Subordinated Debenture is one of a duly
authorized issue of securities of Corning (herein called the
"Subordinated Debentures"), issued under a Fiscal Agency
Agreement, dated as of _______________ (herein called the
"Fiscal Agency Agreement"), between Corning and Harris
Trust and Savings Bank, as fiscal agent, transfer agent, paying
agent and conversion agent (in any such capacity, the "Agent",
which term includes any successor Agent under the
Subordinated Debentures), to which reference is hereby made
for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of Corning, the Agent, the
holders of Senior Indebtedness and the holders of the
Subordinated Debentures and of the terms upon which the
Subordinated Debentures are, and are to be, delivered. All
terms used in this Security which are defined in the Fiscal
Agency Agreement shall have the meanings assigned to them
in the Fiscal Agency Agreement. This Subordinated Debenture
is one of the securities designated on the face hereof, limited
in aggregate principal amount to $__________.
The indebtedness evidenced by this Subordinated Debenture is to
the extent provided in the Fiscal Agency Agreement,
subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is
issued subject to the provisions of the Fiscal Agency
Agreement with respect thereto. Each holder of this Security,
by accepting the same, agrees to and shall be bound by such
provisions.
This Subordinated Debenture is subject to prepayment at any time
on or after _______________, 1998, as a whole or in part, at
the election of Corning, at the prepayment prices set forth in
the Fiscal Agency Agreement.
In the event of prepayment of this Subordinated Debenture in part
only, a new Subordinated Debenture for the unredeemed
portion hereof will be issued in the name of the holder hereof
upon the cancellation hereof.
If an Event of Default with respect to the Subordinated Debentures
shall occur and be continuing, the principal of the Subordinated
Debentures may be declared due and payable in the manner
and with the effect provided in the Fiscal Agency Agreement.
The Fiscal Agency Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modification
of the rights and obligations of Corning, Corning Delaware and
the rights of any other holders of the Subordinated Debentures
at any time by Corning, Corning Delaware and the Agent.
The Subordinated Debentures are convertible at any time on or
before the close of business on the Maturity Date at the option
of the holder into shares of Corning Common Stock at an
initial conversion price of $_____ per share of Corning
Common Stock, subject to adjustment as provided for in the
Fiscal Agency Agreement. The holder of the Subordinated
Debentures will be entitled to receive the interest payable on
the Subordinated Debentures on the Interest Payment Date
notwithstanding the conversion thereof following the Business
Day immediately preceding such Interest Payment Date. Each
conversion will be deemed to have been effected immediately
prior to the close of business on the day on which notice was
received by Corning Delaware from a holder of the Preferred
Securities effecting a conversion thereof pursuant to its
conversion rights under the Limited Partnership Agreement.
No fractional shares of Corning Common Stock will be issued
as a result of conversion, but in lieu thereof, in the sole
discretion of Corning, such fractional interest will be paid in
cash by Corning.
The Subordinated Debentures are exchangeable (in whole but not in
part) upon the occurrence of an Exchange Event at the
Exchange Price for Corning Series C Preferred Stock as
provided under the terms of the Fiscal Agency Agreement.
The Subordinated Debentures are issuable only in registered form
without coupons in denominations of $1,000 and any integral
multiple thereof.
<PAGE>
<PAGE>
Exhibit 4.5
S&C Draft of June 22, 1994
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT (this "Guarantee"), dated as of
, 1994, is executed and delivered by Corning Incorporated, a
corporation organized under the laws of the State of New York
("Corning"), for the benefit of the Holders (as hereinafter defined) from
time to time of the Preferred Securities (as hereinafter defined) of
Corning Delaware, L.P., a Delaware limited partnership ("Corning
Delaware" or the "Partnership").
WHEREAS, Corning Delaware is issuing up to
shares of its % Convertible Monthly Income Preferred Securities,
with a liquidation preference of $50 per share (the "Preferred
Securities"), and Corning desires to issue this Guarantee for the benefit
of the Holders, as provided herein;
WHEREAS, Corning Delaware will purchase the Subordinated
Debentures (as hereinafter defined) issued pursuant to the Fiscal
Agency Agreement (as hereinafter defined) with substantially all of the
proceeds from the issuance and sale of the Preferred Securities and its
other partnership interests (the "Partnership Interests"); and
WHEREAS, Corning desires hereby to unconditionally and
irrevocably agree, to the extent set forth herein, to pay to the Holders
the Guarantee Payments (as hereinafter defined) and to perform the
other obligations set forth herein.
NOW, THEREFORE, in consideration of the purchase by each
Holder of the Preferred Securities, which purchase Corning hereby
agrees shall benefit Corning, Corning executes and delivers this
Guarantee for the benefit of the Holders.
Article I
Definitions
As used in this Guarantee, the terms set forth below shall,
unless the context otherwise requires, have the following meanings.
Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed to such terms in the Amended and Restated
Limited Partnership Agreement of Corning Delaware, dated as of June
__, 1994 (the "Limited Partnership Agreement").
1.1 "Additional Dividends" means Dividends that shall be
declared and paid by the Partnership on any Dividend arrearages in
respect of the Preferred Securities at the rate of ___% per annum
compounded monthly.
1.2 "Corning Common Stock" shall mean the shares of
common stock, par value $.50 per share, of Corning.
1.3 "Corning Preferred Stock" shall mean the Series C
Cumulative Convertible Preferred Stock of Corning with a liquidation
preference of $100 per share.
1.4 "Dividends" means the cumulative cash distributions
from the Partnership with respect to the Interests represented by the
Preferred Securities, accruing from the first Closing Date and payable
monthly in arrears on the last day of each calendar month of the year,
commencing _______, 1994.
1.5 "Fiscal Agency Agreement" shall mean the Fiscal
Agency Agreement dated as of June __, 1994, among Corning, Corning
Delaware and Harris Trust and Savings Bank.
1.6 "General Partner" means Corning in its capacity as
general partner in Corning Delaware or any permitted successor general
partner in Corning Delaware admitted as such pursuant to the
applicable provisions of the Limited Partnership Agreement.
1.7 "Guarantee Payments" shall mean the following
payments, without duplication, to the extent not paid by Corning
Delaware: (a) any accumulated and unpaid Dividends (including any
Additional Dividends accrued thereon) which have been theretofore
declared on the Preferred Securities from moneys legally available
therefor; (b) the redemption price (including all accumulated and unpaid
Dividends and distributions) payable with respect to Preferred Securities
called for redemption by Corning Delaware out of funds legally
available therefor; and (c) upon a liquidation of Corning Delaware, the
lesser of (i) the Liquidation Distribution and (ii) the amount of assets
of Corning Delaware available for distribution to Holders in liquidation
of Corning Delaware.
1.8 "Holder" shall mean any holder from time to time of
any Preferred Securities of Corning Delaware; provided, however, that
in determining whether the Holders of the requisite percentage of
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include Corning or any majority-owned
entity, either directly or indirectly.
1.9 "Liquidation Distribution" shall mean the aggregate of
the stated liquidation preference of $50 per Preferred Security and all
accumulated and unpaid dividends and distributions (whether or not
declared) to the date of payment, including any Additional Dividends
accrued thereon.
1.10 "Redemption Price" shall have the meaning ascribed to
such term in the Limited Partnership Agreement.
1.11 "Subordinated Debentures" shall mean the ___%
Convertible Subordinated Debentures of Corning issued pursuant to the
Fiscal Agency Agreement and sold by Corning to the Partnership in
connection with the issuance and sale by the Partnership of the
Preferred Securities. The Subordinated Debentures will evidence the
loan to be made by Corning Delaware to Corning from time to time of
the proceeds received by Corning Delaware from the issuance and sale
of the Preferred Securities and substantially all of the Partnership
Interests.
Article II
Guarantee
2.1 General. Corning irrevocably and unconditionally agrees
to pay in full to the Holders the Guarantee Payments, as and when due
(except to the extent paid by Corning Delaware), regardless of any
defense, right of set-off or counterclaim which Corning Delaware may
have or assert. This Guarantee is continuing, irrevocable, unconditional
and absolute. Corning's obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by Corning to
the Holders or by causing Corning Delaware to pay such amounts to
the Holders.
2.2 Waiver of Certain Rights. Corning hereby waives
notice of acceptance of this Guarantee and of any liability to which it
applies or may apply, presentment, demand for payment, protest, notice
of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
2.3 Obligations Not Affected. The obligations, covenants,
agreements and duties of Corning under this Guarantee shall in no way
be affected or impaired by reason of the happening from time to time
of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by Corning
Delaware of any express or implied agreement, covenant, term
or condition relating to the Preferred Securities to be performed
or observed by Corning Delaware;
(b) the extension of time for the payment by
Corning Delaware of all or any portion of the Dividends,
distributions, Additional Dividends, Redemption Price,
Liquidation Distribution or any other sums payable under the
terms of the Preferred Securities or the extension of time for
the performance of any other obligation under, arising out of,
or in connection with, the Preferred Securities;
(c) any, failure, omission, delay or lack of
diligence on the part of the Holders to enforce, assert or
exercise any right, privilege, power or remedy conferred on the
Holders pursuant to the terms of the Preferred Securities, or
any action on the part of Corning Delaware granting indulgence
or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, Corning
Delaware or any of the assets of Corning Delaware;
(e) any invalidity of, or defect or deficiency in, any
of the Preferred Securities; or
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred.
There shall be no obligation of the Holders to give notice to, or obtain
any consent of, Corning with respect to the happening of any of the
foregoing.
2.4 Holders May Proceed Directly Against Corning. This
Guarantee is a guarantee of payment and not of collection. A Holder
may enforce this Guarantee directly against Corning, and Corning
waives any right or remedy to require that any action be brought
against Corning Delaware or any other person or entity before
proceeding against Corning. Subject to Section 2.5 hereof, all waivers
herein contained shall be without prejudice to the Holders' right at the
Holders' option to proceed against Corning Delaware, whether by
separate action or by joinder. Corning agrees that this Guarantee shall
not be discharged except by payment of the Guarantee Payments in full.
2.5 Subrogation. Corning shall be subrogated to all (if any)
rights of the Holders against Corning Delaware in respect of any
amounts paid to the Holders by Corning under this Guarantee and shall
have the right to waive payment of any amount of dividends or
distributions in respect of which payment has been made to the Holders
by Corning pursuant to Section 2.1 hereof; provided, however, that
Corning shall not (except to the extent required by mandatory
provisions of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of a payment under this Guarantee, if, at the time of
any such payment, any amounts are due and unpaid under this
Guarantee. If any amount shall be paid to Corning in violation of the
preceding sentence, Corning agrees to pay over such amount to the
Holders.
2.6 Independent Obligations. Corning acknowledges that
its obligations hereunder are independent of the obligations of Corning
Delaware with respect to the Preferred Securities and that Corning shall
be liable as principal and sole debtor under this Guarantee to make
Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections
(a) through (f), inclusive, of Section 2.3 hereof.
2.7 Termination. This Guarantee shall terminate and be of
no further force and effect upon full payment of the Redemption Price
of all Preferred Securities, upon full payment of the amounts payable
to the Holders upon liquidation of Corning Delaware or upon the
conversion or exchange of all Subordinated Debentures into Corning
Common Stock or Corning Preferred Stock, as the case may be, and the
distribution of such stock to the Holders of the Preferred Securities then
outstanding; provided, however, that this Guarantee shall continue to be
effective or shall be reinstated, as the case may be, if at any time any
Holder of Preferred Securities must restore payment of any sums paid
under the Preferred Securities under this Guarantee for any reason
whatsoever.
Article III
Certain Covenants of Corning
3.1 Dividends and Other Payments. So long as any
Preferred Securities remain outstanding, neither Corning, nor any
majority owned subsidiary of Corning, shall declare or pay any
dividend or distribution on, or redeem, purchase or otherwise acquire
or make a liquidation payment with respect to, any class or series of
capital stock issued by Corning which ranks junior to the Corning
Preferred Stock in right of payment of dividends and amounts on
liquidation, dissolution and winding-up (other than as a result of a
reclassification of capital stock or the exchange or conversion of one
class or series of capital stock for another class or series of capital
stock) or make any guarantee payments with respect to the foregoing
(other than payments under this Guarantee or dividends or guarantee
payments to Corning), if at such time Corning shall be in default with
respect to its payment or other obligations hereunder or there shall have
occurred any event that, with the giving of notice or the lapse of time
or both, would constitute an Event of Default under the Subordinated
Debentures. Corning shall take all actions necessary to ensure the
compliance of its subsidiaries with this Section 3.1.
3.2 Certain Other Covenants. Corning covenants that, so
long as any Preferred Securities remain outstanding: (a) to maintain
direct 100% ownership of the Partnership Interests and any other
interests in Corning Delaware other than the Preferred Securities; (b) to
cause at least 21% of the total value of Corning Delaware and at least
21% of all interest in the capital, income, gain, loss, deduction and
credit of Corning Delaware to be held by Corning as a General Partner;
(c) not to voluntarily dissolve, wind up or liquidate itself or Corning
Delaware; (d) to remain the General Partner of Corning Delaware and
to timely perform all of its duties as General Partner (including the duty
to cause Corning Delaware to declare and pay dividends on the
Preferred Securities), unless a permitted successor General Partner is
appointed pursuant to the Limited Partnership Agreement; and (e)
subject to the terms of the Preferred Securities, to use reasonable efforts
to cause Corning Delaware to remain a Delaware limited partnership
and otherwise continue to be treated as a partnership for United States
federal income tax purposes.
Article IV
Subordination
4.1 Subordination. Corning covenants and agrees that this
Guarantee constitutes an unsecured obligation of Corning ranking (i)
subordinate and junior in right of payment to all liabilities of Corning,
(ii) pari passu with the Series B Preferred Stock, par value $100 per
share, of Corning, any guarantee now or hereafter entered into by
Corning in respect of any preferred or preference stock of any affiliate
of Corning and any other class or series of Corning preferred stock
ranking as to the payment of dividends and amounts upon liquidation,
dissolution and winding up on a parity with the Series B Preferred
Stock and (iii) senior to Corning Common Stock and the Series A
Preferred Stock, par value $100 per share, of Corning and any other
class or series of capital stock issued by Corning or any of its affiliates
which by its express terms ranks junior in the payment of dividends or
amounts on liquidation, dissolution and winding-up to the Preferred
Securities.
Article V
Miscellaneous
5.1 Third Party Beneficiaries. All of Corning's obligations
under this Guarantee shall be directly enforceable by the Holders from
time to time of the Preferred Securities. Each Holder of Preferred
Securities is an intended third-party beneficiary of this Guarantee.
5.2 Successors and Assigns. All guarantees and agreements
contained in this Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of Corning and shall inure to the benefit of
the Holders. Except as permitted by Section 5.4, Corning shall not
assign its rights or delegate its obligations hereunder without the prior
approval of the Holders of not less than 66-2/3% of the aggregate
liquidation preference of all Preferred Securities then outstanding.
5.3 Amendments. Except with respect to any changes
which do not adversely affect the rights of Holders (in any of which
cases no vote will be required), this Guarantee may only be amended
by an instrument in writing signed by Corning with the prior approval
of the Holders of not less than 66-2/3% of the aggregate liquidation
preference of all Preferred Securities then outstanding.
5.4 Merger or Consolidation. Corning may, without the
consent of any Holders of Preferred Securities, merge or consolidate
with or into another entity or may permit another entity to merge or
consolidate with or into Corning, or may sell, transfer or lease all or
substantially all of Corning's assets to another entity, if (a) at such time
no Event of Default (as defined in the Fiscal Agency Agreement) shall
have occurred and be continuing, or would occur as a result of such
merger, consolidation, sale, transfer or lease and (b) the successor is an
entity organized under the laws of the United States or any state
thereof, becomes the General Partner, assumes all of Corning's
obligations under this Guarantee and has a net worth equal to at least
10% of the total capital contributions in Corning Delaware.
5.5 Notices. Any notice, request or other communication
required or permitted to be given hereunder to Corning shall be given
in writing by delivering the same against receipt therefor by registered
mail, hand delivery, facsimile transmission (confirmed by registered
mail) or telex, addressed to Corning, as follows (and if so given, shall
be deemed given when mailed; upon receipt of facsimile confirmation,
if sent by facsimile transmission; or upon receipt of an answer-back, if
sent by telex):
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Facsimile no.: (607) 974-9000
Attention: Secretary
Any notice, request or other communication required or
permitted to be given hereunder to the Holders shall be given by
Corning in the same manner as notices are sent by Corning Delaware
to the Holders.
5.6 Genders. The masculine and neuter genders used herein
shall include the masculine, feminine and neuter genders.
5.7 Guarantee Not Separately Transferable. This Guarantee
is solely for the benefit of the Holders and is not separately transferable
from the Preferred Securities.
5.8 Governing Law. THIS GUARANTEE SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
5.9 Severability. In case any provision of this Guarantee
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
5.10 Headings. The Article and section headings herein are
for convenience only and shall not affect the construction hereof.
IN WITNESS WHEREOF, Corning has caused this
Guarantee to be duly executed as of the day, and year first above
written.
CORNING INCORPORATED
By:___________________________________
Name:
Title:
ATTEST:
A. John Peck, Jr.
Secretary
<PAGE>
<PAGE>
EXHIBIT 4.9
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of June 7,
1994 by and among Corning Incorporated, a New York business corporation
("Corning"); Maryland Medical Laboratory, Inc., a Maryland corporation
("MML"), on behalf of and for the benefit of the former MML Shareholders who
hold or will hold restricted shares of Corning Common Stock, acting through
an MML Shareholder Representative, Selvin Passen, M.D.; Maryland Medical
Data, Inc., a Maryland corporation ("MMD"), on behalf of and for the benefit
of former MMD Shareholders who hold or will hold restricted shares of
Corning Common Stock, acting through an MMD Shareholder Representative,
Selvin Passen, M.D.; Pharmaceutical Laboratory Services, Inc., a Maryland
Corporation ("PLS"), on behalf of and for the benefit of former PLS
Shareholders who hold or will hold restricted shares of Corning Common
Stock, acting through a PLS Shareholder Representative, Selvin Passen, M.D.;
Passen Professional Services, P.A., a Maryland professional association
("PPS"), on behalf of and for the benefit of its former shareholder, Selvin
Passen, M.D.; and Podiatric Pathology Laboratories, Inc., a Maryland
corporation ("PPL"), on behalf of and for the benefit of the former PPL
Shareholders who hold or will hold restricted shares of Corning Common
Stock, acting through a PPL Shareholder Representative, Steven Berlin.
RECITALS:
WHEREAS, pursuant to an Agreement and Plans of Merger dated as of May 3,
1994 (the "Merger Agreement") between Corning, several Corning subsidiaries,
and MML, MMD, PLS, PPS and PPL and certain of their respective shareholders,
each of MML, MMD, PLS, PPS and PPL has agreed to merge with a subsidiary of
Corning such that the MML, MMD, PLS, PPS and PPL Shareholders will receive
pursuant to the Merger (as defined in the Merger Agreement) restricted
shares of Corning Common Stock;
<PAGE>
WHEREAS, the MML, MMD, PLS, PPS and PPL Shareholders wish to have the right
to require Corning to register their shares of Corning Common Stock under
the Securities Act of 1933, as amended; and
WHEREAS, the execution and delivery of this Agreement by Corning is a
condition to the Closing under the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained and other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) Closing Date: The Closing Date defined in the
Merger Agreement.
(b) Exchange Act: The Securities Exchange Act of 1934, as it
is or may be amended.
(c) Person: Any individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
(d) Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
(e) Registrable Securities: As defined in Section 2(a) below.
<PAGE>
(f) Registration: As defined in Section 3 below.
(g) Registration Statement: Any registration statement of
Corning which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such
Registration Statement.
(h) SEC: The Securities and Exchange Commission.
(i) Securities Act: The Securities Act of 1933, as it is or
may be amended.
(j) Underwritten Registration or Underwritten Offering: A
Registration in which securities of Corning are sold to an underwriter for
reoffering to the public.
2. Securities Subject to this Agreement
(a) Registrable Securities. The securities entitled to the
benefit of this Agreement (the "Registrable Securities") are all shares of
Corning Common Stock issued to MML, MMD, PLS, PPS and PPL Shareholders
pursuant to the Merger Agreement and including the shares held in escrow
under the Escrow Agreement as provided therein (including such shares
received as share dividends or shares issued on stock splits, mergers,
consolidations or other reorganizations), provided that, (subject to the
shareholder election provided in the next sentence) a share of Corning
Common Stock shall be a Registrable Security only for so long as such share
continues to be a Restricted Security. A share of Corning Common Stock
ceases to be a "Restricted Security" when it (i) has been effectively
registered under the Securities Act and disposed of in accordance with the
Registration Statement covering it, or (ii) can be sold to the public
pursuant to Rule 144 (or any similar provisions then in force) under the
Securities Act; provided, however, that any Shareholder may elect to sell
pursuant to a Registration statement despite the availability of Rule 144,
and
(b) Holders of Registrable Securities. A Person is deemed to
be a "holder" of Registrable Securities for purposes of this Agreement
whenever such Person owns Registrable Securities or has the right to acquire
such Registrable Securities, whether or not such acquisition has actually
been effected and disregarding any legal restrictions upon the exercise
<PAGE>
of such right. A Person is deemed to be the holder of all Registrable
Securities deposited by or on behalf of such Person with the Escrow Agent
under the Escrow Agreement.
3. Registration of Registrable Securities
(a) Upon the written request of the MML Shareholder
Representative (on behalf of the former MML, MMD, PLS, PPS and PPL
Shareholders), Corning shall file, for the entire issue of Registrable
Securities, a "shelf" registration statement on any appropriate form
pursuant to Rule 415 (or similar rule that may be adopted by the SEC) under
the Securities Act, as promptly as practicable but in no event later than 5
days after such request or, if such 5th day is not a business day, the first
business day thereafter (the "Registration"). Corning shall use its best
efforts to cause such Registration to become effective as promptly as
possible after such filing and thereafter to keep such Registration
continuously effective, and to prevent the happening of any event of the
kind described in Section 4(c) (2)-(5) hereof that requires Corning to give
notice pursuant to the last paragraph of Section 4 hereof, for a period (the
"Applicable Period") of two years from the date on which the SEC declares
the Registration effective or such shorter period which will terminate when
all the Registrable Securities covered by the Registration have been sold
pursuant to such Registration or under Rule 144.
(b) The MML Shareholder Representative shall advise Corning in
such written request of the proposed method of distribution and the holders
who desire to sell their Registerable Securities pursuant to the
Registration Statement.
(c) Notwithstanding the foregoing, Corning may postpone the
filing of a registration statement (for a period not exceeding 90 days) if
its Board of Directors or the Executive Committee thereof in good faith
determines that the filing or the distribution of the Registerable
Securities will adversely interfere with a public offering by Corning or
with a financing, acquisition, corporate reorganization or similar corporate
transaction.
4. Registration Procedures
In connection with the registration of Registrable Securities
pursuant to Section 3 hereof, Corning will use its best efforts to
effect such registration to permit the sale of such
<PAGE>
Registrable Securities in accordance with the intended method or
methods of distribution by the selling holders thereof and accordingly will:
(a) prepare and file with the SEC, as soon as practicable, a
Registration Statement or Registration Statements on any appropriate form
under the Securities Act, which form shall be available for the sale of the
Registrable Securities to be covered thereby in accordance with the intended
method or methods of distribution by the selling holders thereof and shall
include all financial statements required by the SEC to be filed therewith;
provided that before filing a Registration Statement or any amendments or
supplements thereto or Prospectus, including in each case documents
incorporated by reference, Corning will furnish to the holders of the
Registrable Securities covered by such Registration Statement and the
underwriters, if any, copies of all such documents at least five business
days prior to the day they are proposed to be filed, which documents will be
subject to the reasonable review of the MML and PPL Shareholder
Representative and underwriters, and Corning will not file any Registration
Statement or any amendment or supplement thereto or any Prospectus
(including in each case such documents as are incorporated by reference) to
which the MML or PPL Shareholder Representative or the underwriters, if any,
shall reasonably object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the Applicable Period;
cause the Prospectus used in connection therewith to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such Registration Statement during the Applicable Period in accordance with
the intended method or methods of distribution by the selling holders
thereof set forth in such Registration Statement as amended or supplement to
the Prospectus used in connection therewith;
(c) notify the selling holders of Registrable Securities and
the managing underwriters, if any, promptly, and (if requested by any such
Person) confirm such advice in writing, (1) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when
the same has become effective, (2) of any request by the SEC for
<PAGE>
amendments or supplements to the Registration Statement or the Prospectus or
for additional information, (3) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the initiation
of any proceedings for that purpose, (4) of the receipt by Corning of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceedings for such purpose, and (5) of the happening of
any event which makes any statement made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated therein by reference untrue or which requires the making of any
changes in the Registration Statement, the Prospectus or any document
incorporated therein by reference in order to make the statements therein
not misleading;
(d) upon the occurrence of any event contemplated by paragraph
(c)(5) above, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(e) use its best efforts to obtain the withdrawal at the
earliest possible time of any order suspending or preventing the use of any
Prospectus or suspending the effectiveness of the Registration Statement or
any amendment or supplement thereto or suspending the qualification of any
Corning Common Stock included in such Registration Statement for sale in any
jurisdiction;
(f) furnish each selling holder of Registrable Securities and
each managing underwriter, if any, without charge, at least one signed copy
of the Registration Statement and every post-effective amendment thereto,
including financial statements and schedules, all documents incorporated
therein by reference, and all exhibits (including those incorporated by
reference);
(g) deliver to each selling holder of Registrable Securities
and the underwriters, if any, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; consent to
<PAGE>
the use of the Prospectus or any amendment or supplement thereto by each of
the selling holders of Registrable Securities and the underwriters, if any,
in connection with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities,
register or qualify or cooperate with the selling holders of Registrable
Securities, the underwriters, if any, and their respective counsel on a best
efforts basis to register or qualify such Registrable Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any
selling holder or underwriter reasonably requests in writing and do any and
all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by the Registration
Statement; provided that Corning will not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified;
(i) cooperate with the selling holders of Registrable
Securities and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
to be sold and not bearing any restrictive legends; enable such Registrable
Securities to be in such denominations and registered in such names as the
selling holders or managing underwriters may request at least two business
days prior to any sale of Registrable Securities to the underwriters;
(j) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the applicable registration;
(k) enter into such agreements (including any underwriting
agreements) and take all such other actions as the MML and PPL Shareholder
Representatives may reasonably require in order to expedite or facilitate
the disposition of such Registrable Securities and in such connection,
whether or not an underwriting agreement is entered into and whether or not
the registration is an underwritten registration (1) make such
representations and warranties to the holders of such Registrable Securities
and the underwriters, if any, in form, substance and scope as are
customarily made by issuers comparable to Corning to underwriters in primary
underwritten offerings; (2) obtain opinions of counsel to Corning and
updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the
<PAGE>
managing underwriters,if any, and the MML and PPL Shareholder Representatives)
addressed to each selling holder and the underwriters, if any, covering the
matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such holders and
underwriters; (3) obtain "cold comfort" letters and updates thereof from
Corning's independent certified public accountants addressed to the selling
holders of Registrable Securities and the underwriters, if any, such letters
to be in customary form and covering such matters of the type customarily
covered in "cold comfort" letters and as the MML and PPL Shareholder
Representatives and underwriters, if any, shall reasonably require; and (4)
deliver such documents and certificates as may be requested by the MML and PPL
Shareholder Representatives and the managing underwriters, if any, to
evidence compliance with clause (1) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by
Corning, provided that if an underwriting agreement is entered into, the
same shall set forth in full the indemnification provisions and procedures
of Section 6 hereof with respect to all parties to be indemnified pursuant
to said Section. The above shall be done at each closing under such
underwriting or similar agreement or as and to the extent required
thereunder;
(l) make available for inspection by the MML and PPL
Shareholder Representatives, any underwriter, or any attorney or accountant
retained by the MML and PPL Shareholder Representatives or any underwriter,
all financial and other records, pertinent corporate documents and
properties of Corning, and cause Corning's officers, directors and employees
to supply all information reasonably requested by any such representative,
underwriter, attorney or accountant in connection with such registration;
provided, that any records, information or documents that are designated by
Corning in writing as confidential shall be kept confidential by such
Persons unless disclosure of such records, information or documents is
required by court or administrative order to become publicly available or
becomes publicly available without the fault of such Person;
(m) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to
its security holders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder, as soon as
practicable but in any event no later than 45 days after the end of any
12-month period (or 90 days, if such period is a fiscal year) (1) commencing
at the end of any fiscal quarter in which
<PAGE>
Registrable Securities are sold to underwriters in a firm or best efforts
Underwritten Offering, or (2) if not sold to underwriters in such an offering,
beginning with the first month of Corning's first fiscal quarter commencing
after the effective date of the Registration Statement, which statements shall
cover said 12-month periods; and
(n) permit any selling holder of Registrable Securities which
holder believes he, she or it may be deemed to be an underwriter to require
the insertion in the Registration Statement, Prospectus, preliminary
prospectus, or any supplement or amendment thereto, any material which in
such holder's reasonable judgment should be inserted therein, provided that
such material be furnished under circumstances as shall cause it to be
subject to the indemnification provisions of Section 6(b) hereto and
provided that Corning shall not be required to insert any material that it
believes to contain any untrue statement of a material fact or any omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading.
Corning may require such holder of Registrable Securities as to
which any registration is being effected to furnish to Corning such
information regarding the distribution of such securities as Corning may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by reason of its
acquisition and holding of such Registrable Securities that, upon receipt of
any notice from Corning of the happening of any event of the kind described
in Section 4(c) (2)-(5) hereof, such holder will forthwith discontinue
disposition of Registrable Securities until such holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section
4(d) hereof, or until it is advised in writing (the "Advice") by Corning
that the use of the Prospectus may be resumed, and, if so directed by
Corning in writing, such holder will deliver to Corning (at Corning's
expense) all copies, other than permanent file copies then in such holder's
possession, of the Prospectus covering such Registrable Securities current
at the time of receipt of such notice.
<PAGE>
5. Registration Expenses
(a) Except as such expenses provided in Section 5(b) below
regarding the expenses incident to Corning's performance of or compliance
with Section 3 of this Agreement are to be borne by Corning, all expenses,
commissions, fees or discounts of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Registrable Securities and legal expenses of any Person
other than Corning will be borne by the holders of Registrable Securities,
regardless of whether the Registration Statement becomes effective.
(b) All expenses incident to Corning's performance of or
compliance with this Agreement including without limitation all registration
and filing fees, fees with respect to listings or filings required to be
made with the New York Stock Exchange Inc., fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger, telephone
and delivery expenses, fees and disbursements of counsel for Corning and of
all independent certified public accountants of Corning (including the
expenses of any special audit and "cold comfort" letters required by or
incidental to such performance), and securities acts liability insurance if
Corning so desires, and reasonable fees and expenses of other Persons
retained by Corning in connection with the registration, will be borne by
Corning.
6. Indemnification
(a) Indemnification by Corning. Corning agrees to indemnify
and hold harmless, to the full extent permitted by law, each holder of
Registrable Securities, against all losses, claims, damages, liabilities and
expenses (including reasonable attorney's fees and disbursements) caused by
(i) any violation of law by Corning in connection with or any breach by
Corning of its undertakings hereunder or (ii) any untrue or alleged untrue
statement of a material fact contained in any Registration Statement or any
amendment or supplement thereto, Prospectus, preliminary prospectus or
amendment or supplement thereto, or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are caused by
or contained in any information furnished in writing to Corning by such
holder expressly for use therein or by
<PAGE>
such holder's failure to deliver a copy of the Registration Statement or
Prospectus or any amendment or supplement thereto after Corning has furnished
such holder with a sufficient number of copies of the same. Corning will also
indemnify underwriters, selling brokers, dealer-managers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such persons (within the
meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities, if
requested.
(b) Indemnification by Holders of Registrable Securities. In
connection with the Registration, each holder of Registrable Securities will
furnish to Corning in writing such information and affidavits as Corning
reasonably requests in connection with any Registration Statement or
Prospectus and agrees to indemnify and hold harmless, to the full extent
permitted by law, Corning, its directors and officers and each Person who
controls Corning (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses (including reasonable
attorney's fees and disbursements) resulting from any untrue statement of a
material fact contained in the Registration Statement, Prospectus,
preliminary prospectus, amendment or supplement thereto, or any omission of
a material fact required to be stated in the Registration Statement or
Prospectus or preliminary prospectus necessary to make the statements
therein not misleading, to the extent, but only the extent, that such untrue
statement or omission is contained in any information or affidavit so
furnished in writing by such holder to Corning specifically for inclusion in
such Registration Statement, Prospectus, preliminary prospectus, amendment
or supplement thereto. Corning shall be entitled to receive indemnities
from underwriters, selling brokers, dealer-managers and similar securities
industry professionals participating in the distribution, to the same extent
as provided above with respect to information so furnished in writing by
such Person specifically for the inclusion in any Prospectus or Registration
Statement.
(c) Conduct of Indemnification Proceedings. Any Person
entitled to indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the
defense of such claims with counsel reasonably satisfactory to the
indemnified party, provided, however, that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel
and to participate in the defense of such claims, but the fees
<PAGE>
and expense of such counsel shall be at the expense of such Person unless (a)
the indemnifying party has agreed to pay such fees or expenses, or (b) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person, or (c) in the
reasonable judgment of any such Person, based upon advice of its counsel, a
conflict of interest may exist between such Person and the indemnifying
party with respect to such claims (in which case, if the Person notifies
the indemnifying party in writing that such Person elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of such claim on behalf of
such Person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent will not
be unreasonably withheld). No indemnifying party will be required to
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to the indemnified party of a release from all liability in
respect to such claim or litigation. An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) Contribution. If for any reason the indemnification
provided for in Sections 6(a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless as contemplated by Sections 6(a) and
(b), then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations, provided that no selling holder shall be
required to contribute an amount greater than the dollar amount of the
proceeds received by such selling holder with respect to the sale of the
shares of Corning Common Stock giving rise to the claim.
<PAGE>
(e) Survival of Indemnification Obligation. The
indemnifications provided for under this Agreement will remain in full force
and effect regardless of any investigation made by or on behalf of the
indemnified party or the controlling Person of each indemnified party and
will survive the transfer of the Registrable Securities.
7. Rule 144. In addition to its other obligations hereunder, Corning
shall file the reports required to be filed by it under the Securities Act
and the Exchange Act and the rules and regulations adopted by the SEC
thereunder (or, if Corning is not required to file such reports, it will,
upon the request of any holder of Registrable Securities made after the
Closing Date, make publicly available other information so long as necessary
to permit sales pursuant to Rule 144 under the Securities Act), and it will
take such further action as any holder of the Registrable Securities may
reasonably request, all to the extent required from time to time to enable
such holder to sell Corning Common Stock without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act, as such Rule may be amended from time to time,
or (b) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of any holder of Registrable Securities, Corning will deliver to
such holder a written statement as to whether it has complied with such
information and requirements.
8. Participation in Underwritten Registrations. If any of the
Registrable Securities covered by the Registration Statement filed pursuant
to Section 3 above are to be sold in an Underwritten Offering, the
investment banker or investment bankers and manager or managers who will
administer the offering will be selected by the holders of a majority of the
outstanding shares of such Registrable Securities included in such offering,
provided that such investment bankers and managers must be reasonably
satisfactory to Corning.
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Person entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements,
provided that no selling holder of Registered Securities in any underwritten
registration shall be required to make any representation or warranty to
Corning or the underwriters other than
<PAGE>
representations and warranties regarding such holder and such holder's
intended method of distribution. Nothing in this Section 8 shall be construed
to create any additional rights regarding the registration of Registrable
Securities in any Person otherwise than as set forth therein.
9. Miscellaneous
(a) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be waived, amended,
modified or supplemented except by a written instrument signed on behalf of
Corning and the MML, MMD, PLS, PPS and PPL Shareholder Representatives
making specific reference to this agreement and expressing the intention to
waive, amend, modify or supplement it.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
or certified first-class mail, telex, telecopier, or air courier
guaranteeing overnight delivery:
(i) if to MML, MMD, PLS, PPS Selvin Passen, M.D.
Shareholders: c/o Maryland Medical
Laboratory, Inc.
(c/o MML, MMD, PLS, PPS 1901 Sulphur Spring Road
Shareholder Representative) Baltimore, MD 21227-0580
Facsimile: (410) 536-1633
(ii) if to PPL Shareholders: Steven J. Berlin
(c/o PPL Shareholder c/o Podiatric Pathology
Laboratories, Inc.
Representative) 1900 Sulphur Spring Road
P.O. Box 7378
Baltimore, MD 21227-0378
Facsimile: (410)247-4770
copies to: Adelberg, Rudow,Dorf, Hendler
& Sameth
600 Mercantile
Bank & Trust Building
2 Hopkins Plaza
Baltimore, MD 21201
Attn: David B. Rudow, Esq.
Facsimile: (410) 539-5834
<PAGE>
Piper & Marbury
36 South Charles St.
Baltimore, MD 21212
Attn: L. P. Scriggins, Esq.
Facsimile: (410) 576-5052
(iii) if to Corning: Corning Incorporated
One Riverfront Plaza
HQ E2-10
Corning, NY 14831
Attention: The Secretary
Facsimile: (607) 974-6135
All such notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if by facsimile transmission;
and on the next business day if timely delivered to an air courier
guaranteeing overnight delivery.
(c) Successors and Assigns, Shareholder Representatives. This
Agreement shall inure to the benefit of and be binding upon the successors
and assigns of each of the parties, including without limitation and without
the need for an express assignment, each subsequent holder of Registrable
Securities. The MML and PPL Shareholder Representatives may resign and
appoint successors only with the consent of the former MML, MMD, PLS, PPS
and PPL Shareholders, and Corning shall be entitled to rely on the
directions of the MML and PPL Shareholder Representatives herein until
receipt of notice from them as to the due appointment of a successor, and
Corning shall thereupon be entitled to rely on such notice in dealing with
such successor representative.
(d) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
<PAGE>
(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of any provision hereof.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Maryland.
(g) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any provision in any other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(h) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the registration rights granted
by Corning with respect to the securities issued pursuant to the Merger
Agreement. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
CORNING INCORPORATED
By:_____________________________
MARYLAND MEDICAL LABORATORY, INC.
By:_____________________________
________________________________
MML Shareholder Representative,
Selvin Passen, M.D.
MARYLAND MEDICAL DATA, INC.
By:_____________________________
________________________________
MMD Shareholder Representative,
Selvin Passen, M.D.
PHARMACEUTICAL LABORATORY
SERVICES, INC.
By:_____________________________
________________________________
PLS Shareholder Representative,
Selvin Passen, M.D.
PASSEN PROFESSIONAL SERVICES, P.A.
By:_____________________________
Selvin Passen, M.D.
Sole Shareholder
PODIATRIC PATHOLOGY LABORATORIES,
INC.
By:_____________________________
________________________________
PPL Shareholder Representative,
Stephen J. Brick
REG.RTS.2
<PAGE>
Exhibit 5.1
June 28, 1994
To the Board of Directors
of Corning Incorporated and
Corning Incorporated,
as general partner of
Corning Delaware, L.P.
Dear Sirs:
As General Counsel of Corning Incorporated ("Corning")
and Corning Delaware, L.P. ("Corning Delaware"), I have participated in
the preparation of the Registration Statement on Form S-3 (No. 33-53821),
as amended (the "Registration Statement"), filed by Corning and Corning
Delaware today with the Securities and Exchange Commission with
respect to (i) the issuance and sale of Corning Delaware's Convertible
Monthly Income Preferred Securities (the "Preferred Securities"), (ii) the
shares of Corning Series C Convertible Preferred Stock, $100 par value
(the "Corning Series C Preferred Stock"), issuable upon certain events in
exchange for the Preferred Securities, (iii) the shares of Corning Common
Stock, $.50 par value (the "Corning Common Stock"), issuable upon
conversion of the Preferred Securities and (iv) the guarantee (the
"Guarantee") of the Preferred Securities by Corning.
In this capacity, I have examined signed copies of the
Registration Statement. I have also examined the originals, or copies
identified to my satisfaction, of such corporate and partnership records of
Corning and Corning Delaware, respectively, such other agreements and
instruments, certificates of public officials and officers of Corning and
Corning Delaware and other persons, and such other documents as I have
deemed necessary as a basis for the opinions hereinafter expressed.
Based upon the foregoing and having regard for such legal
considerations that I deem relevant, I am of the opinion that:
1. Corning has been duly incorporated and is validly
existing under the laws of the State of New York and Corning Delaware
has been duly formed and is validly existing as a limited partnership under
the laws of the State of Delaware.
2. When delivered and paid for as contemplated by the
Registration Statement, the issuance of Preferred Securities in a public
offering pursuant to the Registration Statement will have been duly
authorized by all necessary partnership action on the part of Corning
Delaware and the Preferred Securities will be legally issued, fully paid and
non-assessable.
3. The shares of the Corning Series C Preferred Stock
issuable upon exchange of the Preferred Securities, when issued in
accordance with the terms of Preferred Securities and the Fiscal Agency
Agreement among Corning, Corning Delaware and Harris Trust and
Savings Bank (the "Fiscal Agency Agreement"), will have been duly
authorized by all necessary corporate action on the part of Corning and
will be legally issued, fully paid and non-assessable.
4. The shares of the Corning Common Stock issuable
upon conversion of the Preferred Securities, when issued in accordance
with the terms of the Preferred Securities and the Fiscal Agency
Agreement, will have been duly authorized by all necessary corporate
action on the part of Corning and will be legally issued, fully paid and
non-assessable.
5. The execution and delivery of the Guarantee has
been duly authorized by Corning and, when duly executed and delivered
by Corning in the manner described in the Registration Statement, the
Guarantee will be legally issued, and constitute the legal, valid and
binding obligation of Corning.
I hereby consent to the use of this opinion as an exhibit to
the Registration Statement and to the use of my name under the heading
"Validity of the Securities" in the related prospectus.
Very truly yours,
/s/ William C. Ughetta
12079
<PAGE>
18595.1/NYL-4
Exhibit 8.1
[Draft]
June __, 1994
Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Corning Delaware, L.P.
c/o Corning Incorporated
One Riverfront Plaza
Corning, New York 14831
Registration Statement on Form S-3
(Registration No. 33-53821)
Dear Sirs:
We are acting as special federal income tax counsel for
Corning Delaware, L.P. ("Corning Delaware") and Corning Incorporated
("Corning") in connection with the registration of Convertible Monthly
Income Preferred Securities (the "Preferred Securities") pursuant to a
registration statement (No. 33-53821) on Form S-3 (the "Registration
Statement") filed by Corning and Corning Delaware with the Securities
and Exchange Commission. In connection therewith, we have
participated in the preparation of, and have reviewed, the prospectus (the
"Prospectus") included in the Registration Statement.
We have examined and relied upon the Registration
Statement and, in each case as filed with the Registration Statement, the
form of the Amended and Restated Agreement of Limited Partnership of
Corning Delaware, L.P., the form of the Fiscal Agency Agreement
among Corning Delaware and Corning and Harris Trust and Savings
Bank, as agent (the "Fiscal Agency Agreement"), the form of the
convertible subordinated debentures issued and sold by Corning to
Corning Delaware under the Fiscal Agency Agreement, and the
Guarantee Agreement of Corning (collectively, the "Operative
Documents").
Based on the foregoing and assuming that the Operative
Documents are executed and delivered in substantially the form we have
examined and that the transactions contemplated to occur under the
Operative Documents in fact occur in accordance with the terms thereof,
we hereby confirm that the discussion set forth in the Prospectus under
the caption "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" accurately
describes, subject to the limitations stated therein, the material
federal income tax considerations relevant to the purchase, ownership
and disposition of the Preferred Securities.
We hereby consent to the use of this letter as an exhibit
to the Registration Statement and to the use of our name under the
caption "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" in
the Prospectus.
Very truly yours,
SHEARMAN & STERLING
LMB
PFR
<PAGE>
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED DIVIDENDS
(DOLLARS IN MILLIONS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
12 Weeks Ended Fiscal Year Ended
Mar. Mar. Jan. Jan. Dec. Dec.
27, 28, 2, 3, 29, 30, DEC. 31,
1994 1993 1994 1993 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
Income before taxes on income $ 79.0 $ 69.6 $ 156.7 $336.6 $327.4 $328.1 $253.8
Adjustments:
Share of earnings (losses) before
taxes of 50% owned companies 26.9 23.1 (137.0) 103.2 165.4 175.9 206.9
Loss before taxes of greater than
50% owned unconsolidated
subsidiaries (1.7) (1.4) (3.1) (2.1) (2.2) (2.0) (1.3)
Distributed income of less than 50%
owned companies and share of loss
if debt is guaranteed 1.5 4.5 (4.3) 6.6 0.9 3.3
Amortization of capitalized interest 2.9 2.7 13.0 11.8 10.2 8.8 7.2
Fixed charges net of capitalized
interest 42.2 29.3 155.8 130.3 126.4 112.5 91.2
Earnings before taxes and fixed
charges as adjusted $149.3 $124.8 $ 189.9 $575.5 $633.8 $624.2 $561.1
Fixed charges:
Interest incurred $ 26.4 $ 18.1 $ 94.0 $ 68.9 $ 60.4 $ 58.6 $ 53.0
Share of interest incurred of 50%
owned companies and interest on
guaranteed debt of less than 50%
owned companies 9.0 6.8 40.9 42.0 47.5 45.3 33.9
Interest incurred by greater than 50%
owned unconsolidated subsidiaries 0.2 0.2 0.8 0.9 0.9 1.0 1.2
Portion of rent expense which
represents interest factor 8.2 6.8 29.9 27.6 23.0 19.7 15.8
Share of portion of rent expense
which represents interest factor
for 50% owned companies 1.3 1.5 9.1 9.2 9.0 7.6 6.9
Portion of rent expense which
represents interest factor for
greater than 50% owned
unconsolidated subsidiaries 0.3 0.1 0.1 0.1 0.1 0.1
Amortization of debt costs 0.5 1.8 1.5 0.4 0.4 0.3
Total fixed charges 45.6 33.7 176.6 150.2 141.3 132.7 111.2
Capitalized interest (3.4) (4.4) (20.8) (19.9) (14.9) (20.2) (20.0)
Total fixed charges net of capitalized
interest $ 42.2 $ 29.3 $ 155.8 $130.3 $126.4 $112.5 $ 91.2
Preferred dividends:
Preferred dividend requirement $ 0.5 $ 0.5 $ 2.1 $ 2.2 $ 2.4 $ 2.5 $ 0.6
Ratio of pre-tax income to net income 1.60 1.52 1.29 1.38 1.51 1.71 1.85
Pre-tax preferred dividend
requirement 0.8 0.8 2.7 3.0 3.6 4.3 1.1
Fixed charges 45.6 33.7 176.6 150.2 141.3 132.7 111.2
Fixed charges and pre-tax preferred
dividend requirement $ 46.4 $ 34.5 $ 179.3 $153.2 $144.9 $137.0 $112.3
Ratio of earnings to combined fixed
charges and preferred dividends 3.2x 3.6x 1.1x 3.8x 4.4x 4.6x 5.0x
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated January 24, 1994 (except Note 16 which is as of February 7, 1994),
appearing on Page 21 of the Corning Incorporated 1993 Annual Report on Form
10-K for the year ended January 2, 1994. We also consent to the incorporation
by reference of our report dated January 20, 1994 on the financial statements
of Dow Corning Corporation, which appears on Page 56 of the Corning
Incorporated Annual Report on Form 10-K for the year ended January 2, 1994.
We also consent to the references to us under the heading "Experts" and
"Selected Consolidated Financial Data" in such Prospectus. However, it should
be noted that Price Waterhouse has not prepared or certified such "Selected
Consolidated Financial Data".
/s/ Price Waterhouse
1177 Avenue of the Americas
New York, New York
June 28, 1994
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the Prospectus constituting part of this Registration Statement
on Form S-3 of our report dated March 11, 1993 (except with respect to Note
N, as to which the date is July 3, 1993) on the consolidated financial
statements of Damon Corporation and Subsidiaries as of December 31, 1992 and
1991 and for each of the three years ended December 31, 1992 which are
included in Corning's Current Report on Form 8-K filed on August 4, 1993
which is incorporated into this Prospectus. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
/s/ Arthur Andersen & Co.
Boston, Massachusetts
June 27, 1994
