8-K: Current report filing
Published on February 8, 2007
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
February
2, 2007
Date
of Report (Date of earliest event reported)
EMCORE
CORPORATION
Exact
Name of Registrant as Specified in its Charter
|
New
Jersey
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0-22175
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22-2746503
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State
of Incorporation
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Commission
File Number
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IRS
Employer Identification Number
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145
Belmont Drive, Somerset, New Jersey, 08873
Address
of principal executive offices, including zip code
(732)
271-9090
Registrant's
telephone number, including area code
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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ITEM
2.04 Triggering
Events that Accelerate or Increase a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement.
As
previously reported in its Form 12b-25 filed December 15, 2006, EMCORE
Corporation (the “Company”) has delayed filing its Annual Report on Form 10-K
for the fiscal year ended September 30, 2006 due to the Company's voluntary
review of its stock option granting practices and the need to correct its
financial statements for previous periods to account for additional stock-based
compensation expense. On February 2, 2007, the Company was faxed a letter
purporting to constitute a notice of default from an entity claiming to be
the
holder of record for the beneficial owner of substantially all of the Company’s
5% Convertible Senior Subordinated Notes due 2011 issued under an Indenture
dated as of November 16, 2005 (the “2005 Indenture”) between the Company and
Deutsche Bank Trust Company Americas, as trustee (the “Trustee”). The letter
alleges that the delay in filing the Company’s Annual Report on Form 10-K
constitutes a default under Section 6.03 of the 2005 Indenture, which requires
the Company to furnish to the holders of notes copies of reports which the
Company may be required to file with the SEC pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended.
The
Company believes it is not in default under the 2005 Indenture and will contest
any attempt to declare an Event of Default under the 2005 Indenture based on
the
delay in filing the Form 10-K. The Company plans to file its Form 10-K for
the
year ended September 30, 2006 as soon as reasonably practicable.
The
2005
Indenture provides that the Company has 60 days from receipt of a notice of
default to cure the default before an Event of Default occurs under the 2005
Indenture. If an Event of Default occurs and is continuing under the 2005
Indenture, the Trustee or holders of at least 25% in aggregate principal amount
of the notes have the contractual right to declare all unpaid principal and
accrued interest on the notes then outstanding to be immediately due and payable
unless the Company were able to obtain a waiver of the Event of Default from
the
holders of a majority in aggregate principal amount of the notes. Approximately
$16,580,460 aggregate principal amount of the Company’s 5% Convertible Senior
Subordinated Notes due 2011 are outstanding under the 2005 Indenture. As of
November 15, 2006 (the last payment date), all required interest and principal
payments have been timely made on the notes.
ITEM
5.02 Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
EMCORE
Corporation (the “Company”) announced today that Mr. Thomas Werthan, an
Executive Vice President and the Chief Financial Officer of the Company, has
resigned as an officer of the Company and will leave the Company effective
February 19, 2007. Mr. Werthan has been the Chief Financial Officer since
joining the Company in June 1992. The Company sold both its New Jersey based
electronic materials division and its joint venture, GELcore in August of 2006.
Shortly thereafter, in November 2006, the Company announced the relocation
of
company headquarters to Albuquerque, New Mexico. Mr. Werthan decided against
relocation and will become the Chief Financial Officer of a private company.
Mr.
Werthan has been a member of the Board of Directors since joining the Company
in
June 1992, and will retain his status as a member of the Board.
In
connection with his departure, Mr. Werthan entered into a Severance Agreement
with the Company dated as of February 8, 2007 (the “Severance Agreement”)
specifying his severance benefits. In accordance with the Company’s previously
announced Severance Policy, under the terms of the Severance Agreement the
Company will pay Mr. Werthan $387,040 (equal to 82 weeks of his salary), less
applicable tax withholdings and deductions, in a lump-sum payment to be made
as
soon as practicable following August 20, 2007. Additionally, to the extent
Mr.
Werthan elects to continue coverage under the Company’s health plans pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), as
amended, the Company will pay the portion of the COBRA premiums, up to a maximum
of 18 months, equal to the amount that the Company would have otherwise paid
for
health insurance coverage if Mr. Werthan were an active employee of the Company
during such time. Also, until the lump sum severance payment is made, the
Company will pay Mr. Werthan’s portion of the COBRA premiums, which total amount
of premiums will then be deducted from Mr. Werthan’s lump sum severance payment.
A copy of Mr. Werthan’s Severance Agreement is attached hereto as Exhibit 10.1
and is incorporated herein by reference.
At
the
request of the Company,
Mr.
Werthan will provide assistance to the Company in connection with the filing
of
the Company’s fiscal 2006 Form 10-K and Form 10-Q for the period ending December
31, 2006 pursuant to a consulting agreement (the “Consulting Agreement”). A copy
of the Consulting Agreement is attached hereto as Exhibit 10.2 and is
incorporated herein by reference.
In
addition, pursuant to due authorization of the Company's Board of Directors,
EMCORE loaned $85,000 to Mr. Werthan in December 1995. The loan does not bear
interest and provides for offset of the loan via bonuses payable to the CFO
over
a period of up to 25 years. In connection with Mr. Werthan’s resignation and
pursuant to the terms of the promissory note, the Company is forgiving the
loan.
Mr. Werthan shall be responsible for any personal taxes related to the
forgiveness. Mr. Werthan will not receive any portion of his bonus under the
Company’s Fiscal 2006 Executive Bonus Plan.
Mr.
Adam
Gushard has been appointed interim Chief Financial Officer. Mr. Gushard, 37,
is
currently Vice President of Finance and is domiciled in Albuquerque, New Mexico.
Mr. Gushard has been with the Company over nine years and has extensive
experience with the Company's financial operations, controls, and corporate
strategy, having served as an assistant controller, controller and corporate
controller at the Company. Prior to joining the Company in 1997, Mr. Gushard
was
a certified public accountant with the public accounting firm, Coopers &
Lybrand LLP (now PriceWaterhouseCoopers LLP). Mr. Gushard has a Bachelor of
Science degree in Finance from Pennsylvania State University.
Mr.
Gushard’s annual base salary has been increased from $206,000 to $240,000
effective February 19, 2007. He also will be eligible for the Company’s 2007
Executive Bonus Plan providing him the opportunity to earn a bonus for the
Company’s 2007 fiscal year ending September 30, 2007 equal to 50% of his base
salary based on both Company-wide performance parameters and individual
performance as determined by the Compensation Committee of the Board of
Directors. The Company expects that the 2007 Executive Bonus Plan will be
adopted within the next several months. Additionally, the Compensation Committee
resolved to grant Mr. Gushard options to purchase 100,000 shares of the
Company’s common stock under the Company’s 2000 Stock Option Plan (the “Plan”)
at an exercise price equal to the Fair Market Value (as defined in the Plan)
of
a share of the Company’s common stock on February 19, 2007. One
half
of the option grant will be vested on the date of grant, February 19, 2007.
The
other half of the option grant will vest in four equal installments over four
years with the first 25 percent vesting in 2008 on the one-year anniversary
of
the grant date, and are subject to the terms and conditions of the Plan.
ITEM
8.01 Other
Events
On
February 7, 2007, the Company learned that a derivative action was filed by
a
single shareholder on February 2, 2007 purportedly on behalf of the Company
against certain members of the Company’s board of directors and certain current
and former executives of the Company in the United States District Court,
District of New Jersey. The Company has been named as a nominal defendant.
The
complaint, which has not yet been served on the Company, alleges improprieties
and violations of law in connection with the Company’s historical issuances of
stock options. The action seeks on behalf of the Company, among other things,
damages, equitable relief, corporate governance reforms, an accounting,
rescission, restitution and costs and disbursements of the lawsuit. The
Company’s Board of Directors intends to review the allegations in this lawsuit
and will respond appropriately.
ITEM
9.01 Financial
Statements and Exhibits.
(d) Exhibits
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Exhibit
Number
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Description
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10.1
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Werthan
Severance Agreement
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10.2
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Consulting
Agreement
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*
* *
*
Statements
contained in this Current Report on Form 8-K that disclose the Company’s
intentions, expectations or predictions of the future, including statements
about claims of default with respect to the Company’s 5% Convertible Senior
Subordinated Notes due 2011 and potential consequences are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act.
These statements involve risks and uncertainties and other factors that may
cause results to differ materially from those anticipated at the time such
statements are made. In addition, potential risks and uncertainties regarding
the Company include but are not limited to (a) the finalization and audit of
the
Company’s unaudited fourth quarter and fiscal year 2006 results, (b) the effects
of the Company’s voluntary review of its historic stock option granting
practices, including (i) risks and uncertainties relating to developments in
regulatory and legal guidance regarding stock option grants and accounting
for
such grants, (ii) the possibility that the Company will not be able to file
additional reports with the Securities and Exchange Commission in a timely
manner, (iii) the possibility that the Company in consultation with the
Company's independent public accountants or the SEC, may determine that
additional stock-based compensation expenses and other additional expenses
be
recorded in connection with affected option grants (iv) the Company may incur
negative tax consequences arising out of the stock option review, (v) the
possible delisting of the Company’s stock from the Nasdaq National Market
pursuant to Nasdaq Marketplace Rule 4310(c)(14), (vi) the outcome of the Nasdaq
appeal hearing, (vii) the impact of any actions that may be required or taken
as
a result of such review or the Nasdaq hearing and review process, (viii) the
possibility of other bondholders alleging a default under the Company’s
indenture as a result of the delay in filing the 10-K and (ix) risk of
litigation arising out of or related to the Company’s stock option grants or a
restatement of the Company’s financial statements, and (c) factors discussed
from time to time in reports filed by the Company with the Securities and
Exchange Commission. The forward-looking statements contained in this Current
Report on Form 8-K are made as of the date hereof and the Company does not
assume any obligation to update the reasons why actual results could differ
materially from those projected in the forward-looking statements.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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EMCORE
CORPORATION
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Dated:
February 8, 2007
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By: /s/
Reuben Richards
Name:
Reuben Richards
Title:
Chief Executive Officer
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EXHIBIT
INDEX
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Exhibit
Number
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Description
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10.1
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Werthan
Severance Agreement
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10.2
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Consulting
Agreement
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